Wynn Resorts (NASDAQ: WYNN) announced today that it has entered into a definitive agreement to sell all of the land and real estate assets of Encore Boston Harbor to Realty Income (NYSE: O) for $1.70 billion in cash, representing a 5.9% cap rate. Wynn Resorts will continue to operate the property.
Simultaneous with the closing of the transaction, we will enter into a triple-net lease agreement for Encore Boston Harbor with Realty Income. The lease will have an initial total annual rent of $100.0 million and an initial term of 30 years, with one thirty-year tenant renewal option. Rent under the lease will escalate at 1.75% for the first ten years of the lease and the greater of 1.75% and the CPI increase during the prior year (capped at 2.50%) over the remainder of the lease term.
Wynn will retain its 13-acre developable land assemblage on the east side of Broadway in Everett, MA, on a portion of which, the Company plans to construct an expansion that is expected to include additional covered parking along with other non-gaming amenities. The Company has secured an option to sell the related land and real estate assets of such expansion to Realty Income for up to $20 million of additional rent, at a specified cap rate, for up to six years following the closing of the transaction.
The transaction is subject to customary closing conditions, including required regulatory approvals, and is expected to be completed during the fourth quarter of 2022.
"Encore Boston Harbor is the premier gaming resort on the East Coast and the valuation we achieved in this sale reflects the property’s quality,” said Craig Billings, CEO of Wynn Resorts. “Equally important, the bespoke structure and terms of the lease allow us to maintain a great deal of operating flexibility across economic cycles. The proceeds of the transaction also provide us with liquidity for several of our upcoming development projects and the potential to retire other debt.”
Kirkland & Ellis LLP and Latham & Watkins LLP acted as legal advisors to Wynn Resorts in connection with the transaction.