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Wynn Resorts announced today that it has entered into an agreement to sell all of the land and real estate assets of Encore Boston Harbor to Realty Income for $1.70 billion in cash, representing a 5.9% cap rate. Wynn Resorts will continue to operate the property through a triple-net lease agreement with Realty Income. Total project cost of Encore Boston Harbor is around $2.6 billion which includes land purchase, license application fee, and other non-construction expenses.
The lease will have an initial total annual rent of $100 million and an initial term of 30 years, with one thirty-year tenant renewal option. Rent under the lease will escalate at 1.75% for the first ten years of the lease and the greater of 1.75% and the CPI increase during the prior year (capped at 2.50%) over the remainder of the lease term.
Wynn will retain its 13-acre developable land assemblage on the east side of Broadway in Everett, MA, on a portion of which, the Company plans to construct an expansion that is expected to include additional covered parking along with other non-gaming amenities. The Company has secured an option to sell the related land and real estate assets of such expansion to Realty Income for up to $20 million of additional rent, at a specified cap rate, for up to six years following the closing of the transaction.
The transaction is subject to customary closing conditions and is expected to be completed during the fourth quarter of 2022.
“Equally important, the bespoke structure and terms of the lease allow us to maintain a great deal of operating flexibility across economic cycles. The proceeds of the transaction also provide us with liquidity for several of our upcoming development projects and the potential to retire other debt,” said Craig Billings, CEO of Wynn Resorts.
Wynn Resorts announced last month a new 1000+ rooms resort development in Al Marjan Island in United Arab Emirates. The island is 15 minutes from the Ras Al Khaimah International Airport and 45 minutes from the Dubai International Airport. The current scope of the project includes a 1,000+ room hotel, high-end shopping mall, a meeting and convention facility, spa, more than 10 restaurants and lounges, entertainments, a gaming area, and other amenities. It's unclear in Wynn Resort's newest press release whether the "gaming" area means gambling or entertainment/video gaming. More details of the project will be known in the future.
After Max Maddox stepped down as the CEO of Wynn Resorts, Craig Billings became the new CEO and a member of the Board effective February 1, 2022.
Source: Wynn Resorts
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