Caesars Entertainment (CZR) and MGM Resorts International (MGM) fight for domination over the south and central Las Vegas Strip.
Both companies have made recent moves to one-up the other, with the most notable being MGM essentially — though not literally — trading the Mirage for the sleeker, more modern Cosmopolitan.
That was a bold move that the company thinks improves its Las Vegas portfolio.
Caesars, while it hasn't done anything quite that bold, has not been quiet either.
It plans to rebrand its Bally's hotel/casino to its more iconic Horseshoe Brand.
The Las Vegas casino giant does have a huge move planned that it has been talking about for a few quarters, which is selling one of its Las Vegas Strip properties.
"Well, we're 23,000 rooms today. You're taking out the Rio rooms, and then you take out a property, depending on which property it is, let's say 3,000 to 4,000 rooms," CEO Tom Reeg said during his company's fourth-quarter earnings call, in response to a question about selling a Strip property.
"So you're going to be down to, call it, 16,000, 17,000 rooms in the market. That's about 1/4 of our existing capacity."
Now, one quarter later, the CEO has made it clear that the sale has moved closer to reality.
Image source:Daniel Kline/TheStreet
Caesars Moves Closer to a Las Vegas Strip Sale
Selling billion-dollar properties does not happen quickly. Reeg gave a progress update during Caesars' first-quarter earnings call.
I spoke ... on the last conference call about timing of the Vegas asset sale, I want to be very clear. We started the process to sell a Las Vegas Strip asset early in ‘22.
There are public documents that show you how long the ROFR [right of first refusal] process is and the process to reach a definitive agreement.
Last, which would put us somewhere in the middle of summer for a consummation of a transaction, you shouldn't expect us to be giving you play by play in the interim.
We will be back to you, when that's resolved know that it is in motion and governed by the documents that we that govern our VICI agreement.
Vici owns the underlying real estate assets that the Caesars casinos sit on.
The real estate investment trust has the right of first refusal on the first two Strip properties Caesars chooses to sell, according to the Las Vegas Review-Journal.
Which Property Will Caesars Sell?
Reeg has not given any hints as to what property the company might sell aside from saying that it will be a Las Vegas Strip casino — meaning that it won't be the Rio, which is an off-Strip property.
There are, however, some clues as to which property it might be.
"Securities filings show Vici Holdings has the right of first refusal on the first two Strip properties Caesars intends to sell. The first asset subject to the agreement would be from a group that includes Flamingo, Paris Las Vegas, Planet Hollywood Resort, and Bally’s," the Review-Journal reported.
Of that group, Bally's does not seem likely, as Caesars has already committed to rebranding it under the Horseshoe name.
That's not something the company would spend money on if it intended to put the property up for sale.
Flamingo might make sense as it's the most dated and in need of a refresh of the casinos on the list, but its location next to Linq and touching the Linq Promenada, make it less likely for the company to sell.
Paris Las Vegas and Planet Hollywood seem the most likely targets, given their location.
Planet Hollywood, since that's a licensed brand and not a Caesars-owned one, might be the most likely to be sold —but the company has not hinted at any specific direction.
Reeg did, however, make it clear he was very happy with the business.
"I can't stress enough that this business, particularly in Vegas right now is operating and generating as much cash as it ever has. So we feel very good about the balance of the year," he said.
