The Tribune

By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net

The multi-billion dollar owner of iconic Las Vegas mega resorts such as Caesars Palace, MGM Grand and the Venetian is exploring a deal for Paradise Island's Atlantis resort.
Tribune Business can reveal that VICI Properties, a New York headquartered real estate investment trust (REIT) that owns 93 resort, gaming and hospitality assets spread across the US and Canada, is in talks with Atlantis' current owner, Brookfield Asset Management, although the two parties have yet to reach agreement on a sale or how the potential deal may look.

VICI, which owns the physical real estate assets at all its properties, then leases them back to resort and gaming operators such as Caesars Entertainment, MGM Resorts International and Venetian Las Vegas, was identified as the new potential partner for Atlantis and Brookfield in the Central Bank of The Bahamas' latest quarterly economic report.

That document, which contains a section on recently-approved foreign direct investment (FDI) projects, revealed: "VICI Properties and Brookfield were approved for a $382m project on September 10, 2024, in the hospitality sector." While Atlantis was not identified, the Paradise Island mega resort is the only Bahamas-based asset that Brookfield is involved with.

Subsequent checks with well-placed sources, who only spoke on condition of anonymity given that all persons involved with the VICI negotiations are signed to non-disclosure agreements (NDAs), confirmed that the REIT - which was created in October 2017 when it was spun off from Caesars Entertainment as part of the latter's Chapter 11 bankruptcy reorganisation - is the Atlantis front-runner.

While emphasising that no deal has been reached, and there is no guarantee one will be sealed, they added that the current proposal's structure would see VICI follow its existing model by acquiring and taking over Atlantis's physical buildings and real estate assets.

They said the plan also involves Brookfield, which in common with VICI is principally an asset manager/investor in real estate, remaining involved as a management/operating partner for Atlantis. This would be something of a departure from Brookfield's existing business model, though, and several contacts have already argued it would be better for The Bahamas to have an established mega resort operator involved.

It is also unclear whether the $382m investment mentioned by the Central Bank, details for which were obtained from the Bahamas Investment Authority (BIA), the Government agency charged with processing all major projects, is a prelude to a much wider partnership with Brookfield and involvement by VICI. Atlantis was said to have a $2.5bn price tag in September 2023 when Brookfield formally started seeking bids.
Stephen Melvin, chair of Higgs & Johnson's real estate and development practice group, and who is understood to be VICI's Bahamas legal representative, did no respond to Tribune Business phone calls and messages seeking comment before press time last night. Atlantis representatives did not respond to requests for comment either, while a Brookfield spokesperson also declined to comment.

Documents on VICI's website suggest it potentially may be a good fit for Atlantis from a real estate ownership perspective. The Paradise Island mega resort appears well-aligned with its business model, which includes 54 gaming properties featuring a combined 124 million square feet of space and more than 60,000 hotel rooms. Operations include four million square feet of casino, and seven million square feet of convention, space.

VICI, on its website, describes itself as owning "one of the largest portfolios of market-leading gaming, hospitality and entertainment destinations, including Caesars Palace Las Vegas, MGM Grand and the Venetian Resort Las Vegas, three of the most iconic entertainment facilities on the Las Vegas Strip".

It added: "VICI Properties owns 93 experiential assets across a geographically-diverse portfolio consisting of 54 gaming properties and 39 other experiential properties across the US and Canada. The portfolio is comprised of approximately 127 million square feet and features approximately 60,300 hotel rooms and over 500 restaurants, bars, nightclubs and sports books.

"Its properties are occupied by industry-leading gaming, leisure and hospitality operators under long-term, triple-net lease agreements...... VICI Properties’ goal is to create the highest quality, and most productive, experiential real estate portfolio through a strategy of partnering with the highest quality experiential place makers and operators."

VICI's just released 2024 third quarter results reveal that for the three months to end-September 2024 it generated $964.7m in revenues and profits of $733m. The latter represented a 31.7 percent, or $176.6m, year-over-year increase, and VICI is projecting it will generate between $2.36bn and $2.37bn in adjusted funds from operation (AFFO) during the 2024 calendar year.

Brookfield has been seeking an Atlantis exit for some time but several bidding processes and efforts to find a buyer have failed to bear fruit. Observers have repeatedly suggested this is because Brookfield is seeking too high a price, especially given that Atlantis is a relatively old property compared to Baha Mar and capital investment/maintenance has been deferred, although this has not been confirmed.

The Toronto-headquartered asset manager took over Atlantis in late 2011 as part of a debt-for-equity swap that saw previous owner, Kerzner International, transferred ownership of the resort in a restructuring that saw Brookfield forgive $175m worth of debt in return.