It’s official. Caesars Entertainment just confirmed that Harrah’s Reno will be sold to an affiliate of CAI Investments for $50 million, closing the chapter on one of downtown Reno’s iconic hotel-casinos.
Caesars, which has been leasing Harrah’s Reno from VICI Properties, made the announcement on Wednesday afternoon after news of the sale leaked the day before. The proceeds of the sale will be split 75-25 between VICI Properties and Caesars Entertainment, reports the Reno Gazette Journal, which is part of the USA TODAY Network.
The sale includes an agreement for Caesars to lease the property from the new owner for the first half of the year. During this time, Harrah's Reno will continue to be part of the Caesars Rewards network. The property will then be handed over to new ownership later this year and turned into a mixed-use, non-gaming property. The sale is subject to regulatory approval.
“The sale of Harrah’s Reno demonstrates our ability to continuously work constructively with our tenants to improve our individual businesses," said John Payne, President and COO of VICI Properties, in a prepared statement sent via e-mail. "This disposition will allow VICI to optimize the quality of our real estate portfolio and redeploy the proceeds toward other attractive growth opportunities while maintaining the existing financial terms of the Non-CPLV Master Lease with Caesars."
The buyer, Reno City Center LLC, is no stranger to The Biggest Little City. State records list Chris Beavor of Las Vegas-based Silver State Realty & Investments as the registered agent for the company. Beavor is also the CEO of CAI Investments, which is planning to build a 20-story boutique hotel on Court Street.
“Being originally from the Reno/Sparks community, it is with great pride that we are investing in the Reno area by redeveloping this property,” Beavor said.
A downtown Reno institution
Harrah’s Reno is a big part of Northern Nevada’s gaming history.
The property’s roots can be traced back to 1937 when William Harrah, a Reno gaming scene upstart in his 20s, opened a bingo parlor on the site. The parlor would unceremoniously close shortly after that but Harrah would soldier on, turning his ragtag collection of parlors into a regional gaming empire with properties in Reno Tahoe and Las Vegas. In 1973, Harrah’s Inc., also became the first gaming company to be listed on the New York Stock Exchange.
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Even after Harrah’s death in 1978, the company he left behind continued to grow. In 2005, Harrah’s pulled off what was then the biggest merger in the industry with its $9 billion acquisition of Caesars Entertainment. The acquisition eclipsed an earlier deal between competitors MGM Mirage and Mandalay Resort Group.
Just a few years later, however, the merged company became the poster child for a rash of leveraged buyouts that preceded the Great Recession. Caesars Entertainment kicked off 2015 by filing for Chapter 11 bankruptcy protection after a $31 billion buyout involving private equity firms Apollo Global Management and TPG saddled the company with billions in debt. Caesars wouldn’t emerge from bankruptcy until 2017.
The company’s woes also led to Harrah’s Reno ownership switching to VICI Properties, a spinoff company that was formed from Caesars’ reorganization. Along the way, the downtown hotel-casino started to lag against local competitors such as the Eldorado, Atlantis and Peppermill, which continued to invest in property improvements while Harrah’s Reno languished.
'It has been a declining gaming facility'
The property’s condition placed it in the crosshairs of the Economic Development Authority of Western Nevada. EDAWN reached out to five different investor groups about the property over the years and encouraged them to turn it into a non-gaming property.
“It has been a declining gaming facility in the center of what could be our innovation zone, or University district, the area between UNR and the River, between Virginia and Evans,” said Mike Kazmierksi, president and CEO of EDAWN. “That roughly 20 block area is the key to future expansion of the University into the downtown and the addition of innovation and technology companies that want to be near or partnering with the University.”
Kazmierski described the sale of Harrah’s Reno as an economic development dream come true and “the most significant and game-changing development in our downtown in decades.”
The sale of Harrah’s Reno also means the property will not be joining the ranks of Eldorado Resorts’ downtown Reno properties, which include the Silver Legacy and Circus Circus. Eldorado is waiting to close on a $17.3 billion deal to acquire Caesars Entertainment, which was announced last year.
Representatives of Harrah’s and Eldorado Resorts did not respond to a request for comment from the Reno Gazette Journal.
This article originally appeared on Reno Gazette Journal: Caesars selling Harrah's Reno, which will cease gaming operations