Forget Caesars and MGM. The Las Vegas Strip Has a Secret Leader.
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Caesars Entertainment and MGM Resorts International are big-name operators in Las Vegas. They use their names to attract customers and investors. Caesar's has its name splashed across its signature property, Caesar's Palace. MGM has a similar strategy. Neither Caeresars nor MGM is the leading player in the Las Las Strip.
Vici Properties owns the majority of casinos on the Las Vegas Strip. Vici recently completed the $17.2 billion acquisition of MGM Growth Properties. The deal followed Vic's recent acquisition the Venetian. VICI has an estimated enterprise value of $44 billion. It owns 10 premier resorts on Las Las. Strip, consisting of 1.5 million square feet of gaming space, approximately 40,775 hotel rooms, and 5.9 million sq ft of meeting and convention space.
Vici is a landlord rather than a casino operator. Vici has its income locked in and has a good relationship with MGM Resorts International. The company has the right of first refusal to purchase Caesars properties on the Strip. Caeres has made clear it intends to sell one of its casinos on Las Vegas Strip and Vic is well positioned to grow.
The MGM master lease commences as of today. It has an initial term of 25 years, with three 10-year tenant renewal options and an annual rent of $860.0 million. The escalates at a rate of 2.5% per year for the first 10 years and then at the greater of the 2% or the annual increase in the consumer price index.
