Wynn Resorts Will Sell Encore Boston Harbor Real Estate To Realty Income for $1.70 Billion as Part Of a Purchase and Sale Transaction with a Leaseback

Wynn Resorts has announced a final agreement to sell all Encore Boston Harbor land and real estate to Real Estate Revenue (NYSE:O) for $1.70 billion in cash, which corresponds to a capitalization rate of 5.9% (“transaction”). Wynn Resort Hotels will continue to operate the property in accordance with the five-star standard for which the Company is famous.

Simultaneously with the closing of the transaction, we conclude a three-time lease agreement on Encore Boston Harbor with the participation of 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 possibility of extending the lease for one thirty years. The rental rent will increase by 1.75% during the first ten years of the lease and by 1.75% more, and the CPI will increase during the previous year (maximum 2.50%) during the remaining lease term.

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 has received an option to sell land plots and real estate related to such an expansion, Real estate income up to $ 20 million in additional rent at the established marginal rate for up to six years after the closing of the transaction.

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

“Encore Boston Harbour is the premier gaming resort on the East Coast and the valuation we received with 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 and Ellis LLP and Latham & Watkins LLP acted as legal advisors to Wynn Resorts in connection with the transaction.

Source: official website of Wynn Resorts

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