For a good portion of 2022, it seemed all but inevitable that Caesars Entertainment would sell one of its Las Vegas holdings—Planet Hollywood was first considered to be available, and eventually the Flamingo was cited by many as the next Strip property set to change hands, but as the year went on it became clear that the company was staying put with its current portfolio.
Now, however, the rumor mill is picking up steam once again, thanks to a recent investor’s note from Deutsche Bank analyst Carlo Santarelli.
Santarelli, who recently met with representatives from Caesars, implied in his note that another Strip property would likely hit the market before the end of 2023, and Caesars will not be involved in either the sale or purchase.
The company paid down over $1 billion in debt last year and is primed to do the same this year.
Due to the fact that interest rates have increased in recent months, Caesars CEO Tom Reeg said on the company’s fourth-quarter earnings call that “today would have been a tough day to try to do something.”
David Katz, an analyst with Jeffries, also recently spent time with Caesars brass, and his outlook on the company was positive, without any mention of a sale.
Katz wrote that for Caesars, the Strip “remains the key profit and cash-flow driver of the business. Management provided updates on the near-term Las Vegas set-up, which reflects strong occupancies in the 96 percent to 97 percent range, with visibility in the next 90 days suggesting continued strength.”
Despite the fact that the company’s leverage profile “bears greater risk” than some of its competitors, Katz established a “buy” of the stock, which currently trades in the mid-$40s.
With Caesars out of the running, Santarelli also posited that the prospective for-sale casino is operational, meaning that the two largest projects currently in development, Fontainebleau Las Vegas and Dream Las Vegas, are not believed to be in consideration.
So which casino is it, then? Todd Shriber of Casino.org believes that the real estate assets of the Bellagio could be in play.
Shriber explained in a recent article that late last year, “Blackstone Real Estate Income Trust, which owns Bellagio’s real estate, was hit with a slew of redemption requests from investors, prompting it to sell some assets to raise capital. Those transactions include the sales of 49.9 percent stakes in Mandalay Bay and MGM Grand to VICI Properties or $4.27 billion.”
Shriber also posited that MGM could also look to sell the operations of Excalibur, Luxor or both, due to the fact that Excalibur “has been the subject of rumors regarding its fate.”
That said, MGM has not given any indication that it is looking to consolidate its Las Vegas holdings.
