Wynn selling real estate in Boston, not Las Vegas

Wynn CEO Craig Billings said during an earnings call this week that Las Vegas is “very different” from regional casino markets, and the “need for continuous and sizable reinvestment in order to stay relevant is high.”

America’s gambling capital is an ultra-competitive market, dominated by big casino chains that operate massive resorts with ever-changing menus of amenities.

If another downturn hits, Billings said he doesn’t want Wynn to be in a position where it has to choose between paying rent and investing in its properties.

He also indicated that a sale of its Las Vegas real estate would trigger an acceleration in debt payments.

“For now, we believe we will deliver far more long-term shareholder value by continuing to own our real estate in Las Vegas,” he said.

Wynn announced Tuesday that it is selling Encore Boston Harbor’s land and real estate to San Diego landlord Realty Income Corp. for $1.7 billion in cash and that it would lease the hotel-casino back for an initial annual rent of $100 million.

The deal — unveiled the same day Wynn reported a net loss of just over $1 billion for 2021 — is expected to close in the fourth quarter.

Wynn operates the high-end Wynn Las Vegas and Encore resort towers on the Strip and controls around 38 acres of land across the street, near Fashion Show Las Vegas.

It hasn’t unveiled plans for that spread. But last month, Wynn announced it was teaming up on plans to develop a multibillion-dollar resort on a man-made island in the United Arab Emirates that calls for 1,000-plus rooms, a high-end mall, restaurants, lounges and more.

The sales proceeds from Boston Harbor would “provide us with liquidity for several of our upcoming development projects and the potential to retire other debt,” Billings said in a news release.

Of course, Wynn isn’t the only casino operator to sell real estate for a mountain of cash and lease it back.

Over the past few years, Las Vegas has seen several similar deals involving towering hotels on or near the Strip, including the Bellagio, the MGM Grand, Aria, Vdara and the Rio.

MGM Resorts International sold the Bellagio, for instance, in 2019 for about $4.2 billion to New York financial conglomerate Blackstone and leased it back for an initial annual rent of $245 million.

As with any real estate deal, there are risks to leasing a resort rather than owning it outright. In a leaseback deal, the seller lands a big pile of money but loses ultimate control over the property and must write hefty rent checks each year.

And while Wynn found plenty of reasons to cash in on the East Coast, its chief executive said the company is “not interested” in selling land on the Strip and has a 20-plus-year view of Las Vegas.

“We love our portfolio here,” Billings said.

No doubt they do — but, if it came along, enough to resist a multibillion-dollar payday?

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.