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Caesars Pronounces It Will not Transfer Ahead With Strip Asset Sale


Posted on: November 1, 2022, 06:03h. 

Final up to date on: November 1, 2022, 06:03h.

One of many longest-running Las Vegas Strip transaction rumors was put to mattress earlier this afternoon when Caesars Leisure (NASDAQ:CZR) administration mentioned the corporate won’t proceed with promoting one in every of its Sin Metropolis property.

Caesars
Caesars Palace Las Vegas. The operator mentioned at this time it gained’t promote a Strip asset. (Picture: CNBC)

CEO Tom Reeg made the feedback on the corporate’s third-quarter earnings convention name. Getting into 2022, the prevailing knowledge held that Caesars would announce the sale of one in every of its Strip properties within the first half of the yr. Because the months handed, hypothesis largely centered round Flamingo and a potential $1 billion price ticket.

Promoting a Strip property was lengthy considered by analyst and buyers as important to Caesars’ debt-reducing efforts, however the on line casino large is making progress on that entrance. The Horseshoe operator entered the third quarter with $13.7 billion in liabilities, however that determine declined to $13.3 billion, as of Sept. 30. The corporate has $944 million in money and money equivalents not counting $244 million in restricted money.

We continued to cut back debt in the course of the quarter utilizing web asset sale proceeds and free money move totaling $880 million. In early October, we efficiently upsized our professional rata financial institution services to $3 billion, together with a brand new $750 million Time period Mortgage A and a $2.25 billion Revolving Credit score Facility that mature in 2028,” mentioned CFO Bret Yunker in an announcement.

Traders didn’t appear to thoughts information of the asset sale plan being scrapped as shares of Caesars jumped 5.43% in after-hours buying and selling.

Not Shocking Caesars Asset Sale Plan Is Off

As famous above, the prevailing knowledge coming into 2022 was that Caesars would announce a Las Vegas asset sale within the first half of the yr, however as time dragged on, analysts adjusted expectations with some lately saying the transaction most likely wouldn’t happen this yr.

That’s not stunning as a result of the macroeconomic setting quickly turned towards industrial actual property sellers. Rising rates of interest and hypothesis that collectors will quickly tighten lending requirements are among the many elements working towards any firm seeking to offload industrial properties, casinos or in any other case.

Moreover, Reeg indicated on the decision that Caesars couldn’t fetch its desired $1 billion-plus asking worth for Flamingo. Particular to that property, that’s not notably stunning as a result of potential patrons reportedly fretted in regards to the spending mandatory to reinforce the venue and its future efficiency upon being faraway from the Caesars Rewards program.

For now, it could possibly be to Caesars’ benefit to maintain its Strip portfolio as is as a result of Las Vegas is exceeding expectations as highlighted by the truth that the operator mentioned October was the strongest month in firm historical past.

Q3 Earnings Overview

Within the September quarter, the Harrah’s operated 24 cents a share on gross sales of $2.9 billion as same-store adjusted EBITDA climbed to $1 billion from $880 billion a yr earlier. Analysts anticipated earnings of 23 cents a share. Traders are additionally doubtless excited by the outcomes from Caesars Digital, which incorporates Caesars Sportsbook.

“Caesars Digital reported robust income progress within the quarter and a smaller than anticipated EBITDA loss pushed by improved working efficiencies,” mentioned Reeg within the assertion.

Within the July by September interval, that unit misplaced $38 million in contrast with a yr earlier lack of $164 million. The corporate added enhancements to its Atlantic Metropolis properties will probably be accomplished in 2023.

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