- Wynn Resorts has completed the sale of the real property assets of Encore Boston Harbor to Realty Income for $1.7 billion.
- Wynn will continue to operate the casino and keep a 13-acre land on the east side of Broadway.
- Boston Encore Harbor is the top-performing casino in the state as far as revenues are concerned.
Wynn Resorts announced last Thursday that it has completed the previously announced sale of the real property assets of Encore Boston Harbor to Realty Income for $1.7 billion in a sale-leaseback deal.
Sale-leaseback deals are a common practice in the industry. These are often seen as win-win deals for both casino operators and realty companies with the former monetizing their land assets to increase liquidity. Meanwhile, real estate investment trust companies acquire assets for long-term net lease agreements.
Wynn Announces Sale of Encore Real Property
Wynn sells Encore Boston Harbor real estate assets for $1.7bn https://t.co/BNxjFrOdzA
— Gambling Insider (@G_Insider) December 2, 2022,
Wynn Resorts announced the sale last February and the transaction only completed last week. The all-cash deal comes at a cap rate of 5.9% and is Realty Income’s first sale-leaseback transaction involving a gaming company. The REIT company owns over 11,700 real properties owned under a long-term lease agreement.
Under the deal, Wynn Resorts will continue to operate Boston Encore Harbor via a triple net lease agreement worth $100 million over 30 years, with another 30-year renewal option. The rent will escalate at a rate of 1.75% for the first decade, and the greater between 1.75% or the Consumer Price Index (CPI), capped at 2.5%, over the remainder of the lease term.
As part of the accord, Wynn is keeping 13 acres of land on the east side of Broadway in Everett. The casino operator is planning to construct an expansion that is expected to include additional parking and other non-gaming amenities. Wynn has the option to sell that land to the REIT for up to $20 million in rent credits for up to six years after the initial deal.
According to Wynn Resorts, the sale of Encore Boston Harbor will boost its liquidity position, which currently stands at $4.4 billion. It comes at a crucial period when operators in Macau need to allocate additional capital to comply with the special administrative region’s new gaming laws. Wynn is also partnering with Related Companies in its bid for a Manhattan casino license.
Top Revenue Earning Casino in the State
Meanwhile, gross gambling revenue rose at Encore Boston Harbor and Plainridge Park. https://t.co/IArhTcOnRD
— masslivenews (@masslivenews) October 17, 2022
Previously known as Wynn Boston Harbor and Wynn Everett, Encore Boston Harbor opened on June 23, 2019, with a total cost of $2.6 billion at One Broadway in Everett Massachusetts. The property has a gaming area of more than 200,000 square feet with 2,700+ slot machines and more than 185 table game options.
The property has a 671-room hotel tower which owns the largest standard room size in Boston. It also boasts a five-star spa, meeting, and events space with a grand ballroom. It also has a 2,900-slot parking garage and a strip of luxury retail shops.
Encore Boston Harbor is the state’s top-performing casino. During its last report last month, the Massachusetts Gaming Commission said that Encore had total gaming revenue of $62.04 for October 2022, almost twice bigger than second-place MGM Springfield’s $22.8 million, over five times Plainridge Park’s $12.3 million, and slightly better than its own $61.5 million in September and $58.1 million in August.
It also paid $15.5 million of the total $27.92 million in tax revenues generated by the state. Encore Boston Harbor and MGM Springfield are both Category 1 casino license holders. As such, they are mandated to pay 25% of their gross gaming revenue. Under the statute, these payments are allocated to specific state funds, as determined by the state. These purposes include local aid, transportation fund, infrastructure fund, education fund, debt, and long-term reduction trust funds.
