Wynn Resorts to Sell Encore Boston Harbor Realty to Realty Income for $1.70 Billion in a Buy-Sell-Reverse Lease Deal

Wynn Resorts has announced it has entered into a definitive agreement to sell all Encore Boston Harbor land and real estate to Real Estate Income (NYSE:O) for $1.70 billion in cash, equating to a capitalization rate of 5.9% (the “transaction”). Wynn Resorts will continue to operate the property to the five star standard the Company is known for.

Concurrently with the closing of the transaction, we enter into a three-time lease on Encore Boston Harbor with Real Estate Income. The lease will have an initial total annual rent of $100.0 million and an initial term of 30 years, with the option of a one thirty year lease extension. Leases will increase by 1.75% during the first ten years of the lease and 1.75% more, and the CPI will increase during the previous year (maximum 2.50%) for the remainder of the lease.

Wynn will retain its 13-acre parcel of land on the east side of Broadway in Everett, Massachusetts, on part of which the Company plans to build an extension that is expected to include additional covered parking as well as other non-gaming amenities. The Company received an option to sell the land and real estate associated with such expansion, Real Estate Income of up to $20 million in additional rent at a cap rate for up to six years after closing.

The transaction is subject to customary terms and conditions closure, including the necessary regulatory approvals, and is expected to be completed in the fourth quarter of 2022.

“Encore Boston Harbor is the premier gaming resort on the East Coast and the rating we received from this sale reflects the quality of the property,” said Craig Billings, CEO of Wynn Resorts.

Last but not least, the individual structure and terms of the lease allow us to maintain greater operational flexibility depending on economic cycles. The proceeds from the transaction also provide us with liquidity for several of our future development projects and the potential to repay other debts.”

Kirkland & Ellis LLP and “Latham & Watkins” acted as legal advisors to Wynn Resorts in connection with the transaction.

Source: Wynn Resorts official website

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