US-based investor Realty Income, which made its debut in the UK with 2019 with the acquisition of 12 Sainsbury’s supermarkets, has entered into a $1.7bn (£1.2bn) sale-and-leaseback of the 3.1m sq ft Encore Boston Harbor resort in Massachusetts.
The firm has agreed the deal with operator Wynn Resorts on a 30-year term with rental growth for the first 10 years capped at 1.75%, shifting to 1.75% of consumer price inflation, capped at 2.5%, for the remainder of the term. The initial rent will total $100m. The lease also includes an additional 30-year option to renew on expiration.
Wynn will retain its 13-acre of developable land on the east side of the resort, where it plans to build additional covered parking along with other non-gaming amenities. The firm has secured an option to sell the related land and real estate assets of the expansion to Realty for up to $20m of additional rent, at a specified cap rate, for up to six years following the closing of the deal.
The transaction is Realty Income’s first acquisition in the gaming industry.
“This transaction demonstrates our ability to utilise our platform and scale to acquire prime real estate assets across a variety of industries in alignment with our investment criteria,” said Sumit Roy, Realty Income’s president and chief executive. “Our investment philosophy centres around generating favourable risk-adjusted returns by investing in strategically important properties with partners who are leaders in their respective industries. We are pleased to cultivate a new relationship with Wynn Resorts as we expand our universe of net lease investments.”
The firm said its entry into the gaming industry illustrated the “robust opportunities afforded through the global corporate sale-leaseback pipeline”.
Encore Boston Harbor comprises a more than 3.1m sq ft of luxury amenities including slot machines, gaming tables, poker tables, a 671-bedroom hotel, plus a broad array of food and beverage outlets and large group meeting spaces.
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