Harrah's Reno to be sold for $50M and turned into a non-gaming hotel and mixed-use development

Caesars Entertainment Corporation and VICI Properties Inc. Wednesday announced they have signed an agreement to sell Harrah’s Reno Hotel and Casino to an affiliate of CAI Investments, Reno City Center LLC, for $50 million. The proceeds of the transaction will be split between VICI (75 percent) and Caesars (25 percent).

Caesars will continue to operate the property until the second half of 2020, a time during which it will continue to be part of the Caesars Rewards network. Then the company will deliver the property to CAI to be redeveloped into a non-gaming 20-story boutique hotel and mixed-use development. 

The sale of Harrah’s Reno, one of the Nevada gaming industry’s historic landmarks, end the presence of the Harrah’s name in the Northern Nevada city after 82 years. New York-based VICI has been leasing the property to Caesars Entertainment since VICI was created out of the Caesars bankruptcy in 2017 and took ownership of nearly two dozen Caesars-owned casinos.

"We recognize the long legacy of Harrah's in Reno, where the brand began 82 years ago and our role in the community. We are pleased the Buyer (CAI Investments affiliate) is committed to the community and supports the redevelopment of this wonderful asset. We have worked closely with the Buyer to provide a reasonable closure plan that allows our great staff in Reno ample time to secure their next jobs, including priority consideration for relevant openings at our other properties in Nevada, including Lake Tahoe and Las Vegas," said Tony Rodio, CEO of Caesars Entertainment, in a news release.

"The sale of Harrah's Reno demonstrates our ability to continuously work constructively with our tenants to improve our individual businesses. 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," stated John Payne, President and COO of VICI Properties.

"Being originally from the Reno/Sparks community, it is with great pride that we are investing in the Reno area by redeveloping this property," said Christopher Beavor, CEO of CAI Investments (CAI).  "CAI is excited to be working with Gryphon Private Wealth Management (GPWM) as capital partners for the project. Kirk Walton and Philip Oleson, Principals of GPWM Opportunity Zone Funds, which will be investing the required capital for the project, believe in the long-term growth potential of Reno."

Caesars is merging with Reno-based Eldorado Resorts in a $17.3 billion transaction. Eldorado operates three casinos in downtown Reno —Eldorado, Silver Legacy and Circus Circus, which are collectively referred to as “The Row.”

Gaming analysts said Eldorado management, which would have acquired the Harrah’s Reno lease through the Caesars purchase, wasn’t interested in operating a fourth casino in the Reno market, The Nevada Independent reports. In addition, there might have been federal antitrust concerns with one company owning that many gaming properties in the area.

According to the secretary of state’s website, Reno City Center LLC was formed in November with Las Vegas-based Silver State Realty & Investments listed as its resident agent.

The Gaming Control Board has lengthy procedures policy for casino closures and changeovers, including shutting down gaming pits and slot machines, inventorying and destroying casino chips and tokens, and paying out in-house progressive jackpots. Harrah’s Reno has a 40,000-square-foot casino with table games and 700 slot machines. The property has six restaurants, including Harrah’s Steak House, the first restaurant in Northern Nevada to be elected into the Fine Dining Hall of Fame.