||Entry into a Material Agreement. |
Purchase of Octavius Tower Property
On July 11, 2018 (the Closing Date), VICI Properties Inc. (together with its subsidiaries, as applicable, the
Company), through an indirect, wholly owned subsidiary, Octavius Propco LLC (Octavius Propco), purchased the membership interests (Membership Interests) of New Octavius Owner, LLC
(Octavius Owner), a newly formed indirect, wholly owned subsidiary of Caesars Entertainment Corporation (CEC or Caesars), which owns all of the land and real property improvements associated
with Octavius Tower at Caesars Palace Las Vegas (the Octavius Property) for a purchase price of $507.5 million in cash, pursuant to a Purchase and Sale Agreement, dated July 11, 2018 (the Octavius Purchase
Agreement) by and between Caesars Octavius, LLC (Octavius Seller) and Octavius Propco. The Company funded the purchase of the Octavius Property using available cash.
On the Closing Date and until the closing of the transactions contemplated by the Harrahs Philadelphia Purchase Agreement (as defined below) (the
Harrahs Philadelphia Closing), the Octavius Property will remain subject to the Second Amended and Restated Operating Lease dated as of October 6, 2017 (as assigned to Octavius Owner on the Closing Date, the
Ground Lease). Pursuant to the Ground Lease, Octavius Owner leases the Octavius Property to an indirect, wholly owned subsidiary of the Company, CPLV Property Owner LLC (CPLV Lease Landlord). The Ground Lease
provides for annual rent of $35 million payable in equal consecutive monthly installments and has an initial term that expires on October 31, 2032, with four five-year renewal options. Pursuant to that certain Lease (CPLV) dated
October 6, 2017 (as amended, the CPLV Lease), which currently provides for the lease of Caesars Palace Las Vegas, including a sublease of the Octavius Property, to certain subsidiaries of Caesars (such subsidiaries,
CPLV Lease Tenant), CPLV Lease Tenant is required to comply with the terms and conditions of the Ground Lease and, among other things, pay the rent for the Octavius Property to Octavius Owner. In connection with the Harrahs
Philadelphia Closing, the Ground Lease will be terminated and Octavius Owner will either merge with and into CPLV Lease Landlord or the Octavius Property will be transferred to CPLV Lease Landlord. In either case, from and after the Harrahs
Philadelphia Closing, the CPLV Lease will be modified such that the Octavius Property will no longer be subleased to CPLV Lease Tenant, but instead will be leased to CPLV Lease Tenant as a direct lease along with all the other real estate assets
constituting the Caesars Palace Las Vegas property under the terms of the CPLV Lease.
The Octavius Purchase Agreement further contemplates a put right
held by the Company and a call right held by Caesars, pursuant to which Caesars may reacquire the Octavius Property under certain circumstances in the event that the Harrahs Philadelphia Purchase Agreement is terminated.
From the Closing Date until the Harrahs Philadelphia Closing, Octavius Propco is subject to certain covenants under the terms of the Octavius Purchase
Agreement, including prohibitions on (i) selling, transferring, assigning or otherwise encumbering the Membership Interests, (ii) selling, granting, leasing (other than pursuant to the Ground Lease), subleasing (other than pursuant to the
CPLV Lease), licensing, encumbering, pledging, mortgaging, disposing of or otherwise transferring the Octavius Property or any interest therein, and (iii) other than in connection with the Harrahs Philadelphia Closing, amending,
modifying, terminating, encumbering, pledging, mortgaging or assigning all or any part of the Ground Lease.
Purchase of Harrahs Philadelphia
On July 11, 2018, the Company, through Philadelphia Propco LLC, a Delaware limited liability company and an indirect, wholly owned subsidiary
of the Company ( Harrahs Philadelphia Propco), and Chester Downs and Marina, LLC (the Harrahs Philadelphia Seller), an indirect, wholly owned subsidiary of CEC, entered into a Purchase and Sale
Agreement (the Harrahs Philadelphia Purchase Agreement), pursuant to which Harrahs Philadelphia Propco agreed to acquire from the Harrahs Philadelphia Seller all of the land and real property improvements
associated with Harrahs Philadelphia in Chester, Pennsylvania (the Harrahs Philadelphia Property) for a purchase price of $241.5 million, which will be reduced by $159 million to reflect the aggregate net
present value of the contemplated modifications (as described below) to certain of the Leases (as defined below), resulting in cash consideration of $82.5 million. The purchase of the Harrahs Philadelphia Property is expected to close
during the fourth quarter of 2018 and is subject to certain customary closing conditions, including obtaining certain regulatory approvals and requisite lender and holder consents under the documents governing certain of the Companys
outstanding debt obligations.
In connection with the closing of the purchase of the Harrahs Philadelphia Property, the Non-CPLV Lease (as defined below), will be amended to include the Harrahs Philadelphia Property, which will be leased back to Caesars for an initial annual rent payment of $21 million, subject to annual
increases in accordance with the Non-CPLV Lease.