Caesars Moves Steps Closer To A Massive Las Vegas Strip Project

Although the firm has made clear what its ambitions are for the Las Vegas Strip, the deadline is drawing near.
The south and central Las Vegas Strips are dominated by MGM Resorts (MGM) and Caesars Entertainment (CZR). All audience segments are catered to by their properties, which range from high-end attractions like MGM Grand and Caesars Palace to budget-friendly ones like Caesars Bally’s and Flamingo and MGM’s Luxor and Excalibur.

Of course, when it comes to Las Vegas, low-end is relative. These are quite nice resort casinos, all of those properties.
Caesars Flamingo, with its actual flamingo habitat and vintage room design, might be the most out-of-date of them all.

Flamingo appears to be the property that Caesars wishes to sell because of the need for renovations. The Flamingo appears to be the one with the “for sale” sign outside, as Caesars Chief Executive Tom Reeg has made it apparent that his business plans to sell off one of its Las Vegas Strip hotels.

During the company’s conference call to discuss its second-quarter earnings, he gave an update on that challenging process. Caesars wants to sell Flamingo, but Vici Properties (VICI) has the right of first refusal if another company submits an offer. As a result, Caesars may decide to sell the facility while continuing to run it.

“You are aware that we are now in the middle of a Strip asset sale process that is governed by the Vici agreements and has about a month left to go. I won’t go into detail there, but just know that our balance sheet is in excellent shape “said Reeg.

The CEO was questioned about it later in the call.
Just to be clear, he added, “we’ve discussed this on past calls. “The period outlined in the Vici documents that control this is pretty clear. The deadline is at the end of the summer, so we launched early this year. And there is work involved in every deadline I’ve ever seen in deal land. There are many people who are interested in us and there.”
Market conditions could make a selling more difficult, Reeg did acknowledge.

“The financial environment is undoubtedly what it is. There is a point when we won’t pursue it if it will affect how much someone will pay. I’m glad to simply clip the free cash flow and return later “said he.

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Although the sale will go through, the CEO of Caesars made it quite clear that the corporation is under no obligation to sell Flamingo (or any other property).

But, he continued, “as we’ve spoken about, this is a discretionary transaction for us. “We still believe we can complete it within the constraints we first established. But we do understand that the market in which we live is dynamic. Additionally, the result could alter if the financial circumstances change.”
Even though the Flamingo is in a good location for Caesars, the firm still wants to sell it. The Flamingo and Linq almost share an outdoor dining, drinking, and shopping space because Linq is owned by the same casino behemoth.
Reeg has however made it obvious why he wants to sell despite this.

“However, I find it humorous that when I first mentioned that we were planning to sell our property on the Las Vegas Strip, both the sell side and the buy side immediately asked, “Why would you want to sell the property?” Look how wonderful it is, “added he.

We further stated, “And we said there are times in the market where you don’t have to travel very far, that where — we didn’t — we wouldn’t want to have had this many rooms.”

In essence, Flamingo requires significant investment, and Caesars does not want to renovate the establishment. Selling it would allow the corporation to reduce its large debt as well as reduce the number of rooms it now owns on the Strip, which should increase the value of its existing inventory on a night-by-night basis.

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