Published: January 9, 2024, 11:07 AM
Last updated on: January 9, 2024, 11:07 AM
Caesars Entertainment (NASDAQ:CZR) works to reduce its huge debts and could benefit from divesting real estate of two Indiana casinos.
Bank of America analyst Shaun Kelley forecasts the possible sale of Centaur Holdings, the holding company of Harrah’s Hoosier Park and Horseshoe Indianapolis, could generate nearly $2 billion in net proceeds and reduce the company’s debt.
He wrote, “We expect this sale to raise nearly $2 billion in net proceeds that should reduce traditional and lease-adjusted leverage below five times and close to their targeted range.”
VICI Properties (NYSE: VICI), the largest casino real estate investment trust (REIT), is expected to be a prime buyer of the properties as part of earlier agreements with Caesars when Eldorado Resorts offered a takeover of the company.
Valuable Selling Points
Caesars, which has $12.29 billion in liabilities, is looking for ways to continue eliminating debt while maintaining a strong portfolio of cash-generating assets.
Caesars is seen as one of the industry’s top deleveraging stories and a key purveyor of asset sale rumors, with Harrah’s Hoosier Park and Horseshoe Indianapolis among the Indiana casinos under consideration for sale.
“Horseshoe Hammond serves the Chicagoland area and Horseshoe Southern Indiana serves the southern Indiana and Louisville area,” according to Caesars.
Caesars has been working on reducing debts and operating costs, gaining investor favor despite a highly leveraged position and high-interest rates in the market.
“Coupled with accelerating free cash flow as identified project capital plans (New Orleans and Danville) come to an end, Caesars could be worth watching as leverage risks fade,” added Bank of America’s Kelley.
Additionally, VICI Properties stands out as a key player that could add to its non-Las Vegas portfolio of casino real estate.