Seeing a match between their strategies, publicly traded entertainment firms Vici Properties and Bowlero have teamed up on a nearly $433 million sale-leaseback deal.
Under the agreement, bowling alley owner Bowlero sold 38 of its centers to Vici, an owner of casinos, waterparks, resorts and golf courses.
Simultaneous with the closing of the sale, New York-based Vici entered into a triple-net master lease agreement with Bowlero for the centers. Under a triple-net lease, the tenant is responsible for building expenses, taxes and insurance.
In September, Bowlero announced it was considering possible sale-leaseback deals to finance further expansion. In the same month, Bowlero had acquired Lucky Strike bowling centers and expanded its national footprint to 345 centers in 36 states.
In the previous month, Vici provided a $140 million loan to health spa operator Canyon Ranch to refinance two of its wellness resorts. The debt refinancing follows its preferred equity investment of $150 million in Fort Worth, Texas-based Canyon Ranch.
The investments were part of Vici's plan to expand its property holdings beyond its 49 casinos, which include Caesars Palace Las Vegas, MGM Grand and the Venetian Resort Las Vegas.
The Bowlero property acquisition diversifies Vici’s tenant base and geographic reach, and gives the firm opportunities to expand its gaming operations, it said. Seven of the bowling centers acquired do not currently have commercial casino gaming operations.
Vici also gained the right of first offer for a term of eight years for future sale-leasebacks.
Bowlero’s lease with Vici will have an initial total annual rent of $31.6 million, representing a return rate of 7.3%, and an initial term of 25 years with six, five-year tenant renewal options. Rent under the lease will escalate at the greater of 2% or the consumer price index, subject to a 2.5% ceiling.