Caesars Entertainment is selling the LINQ Promenade on the Strip for $275 million — roughly half of what it cost the company to build the retail, dining and entertainment space more than 10 years ago — as it seeks to pay down nearly $13 billion in debt.
The deal was announced in conjunction with the casino operator’s third-quarter earnings conference call Tuesday afternoon. The 300,000-square-foot property, which includes the 550-foot-tall High Roller Observation Wheel, is being sold to a joint venture between two real estate investment firms.
The company expects the sale to close by the end of the year.
Caesars spent $550 million to develop the LINQ Promenade, which opened many of its retail and dining elements in late 2013 followed by the March 2014 unveiling of the High Roller. The attraction was the world’s tallest observation wheel until 2021 when it was surpassed by the 820-foot-tall Ain Dubai in the United Arab Emirates.
LINQ Promenade includes retail outlets, restaurants including Yard House and Gordon Ramsey’s Fish & Chips and the Brooklyn Bowl concert venue.
J.P. Morgan Securities gaming analyst Joe Greff estimated the LINQ Promenade brought in an estimated $20 million in annual pre-tax cash flow to Caesars.
The sale was announced the same day that Caesars closed a $500 million deal to sell the World Series of Poker. Caesars retained the rights to operate the World Series of Poker in Las Vegas for 20 years.
On the conference call, Caesars CEO Tom Reeg said the proceeds from the sale of two “non-core assets” would help the company pay down a portion of its $12.7 billion in debt, which he called the company’s “No. 1 priority.” He said other parts of the company could be sold to further pay down debt, but didn’t provide details.
“These two [World Series of Poker and LINQ Promenade] were the two simplest [sales] for us to execute,” Reeg said on the conference call. “We’re still working down that path [to sell other company businesses], but that stuff has a … lower probability than the two that were executed.”
Caesars operates eight casinos on the Strip and company officials said two years ago they wanted to sell at least one of the properties, but eventually halted the process.
Caesars has been focused on redeveloping portions of the company’s regional casino operations in 13 states. Earlier this month, Caesars completed a $435 million redevelopment of Harrah’s New Orleans into Caesars New Orleans.
The LINQ Observation Wheel has 28 cabins that each hold up to 30 guests for a 30-minute circular ride. Ticket prices range from $29 ($10 for children) to $39 ($19) for a basic ride — depending on the time of day — up to $69 per person for a happy hour ride that includes a bar in the cabin.
LINQ Promenade is surrounded by two of the company’s Strip resorts — Flamingo and the LINQ Hotel and Casino — and serves as a gateway to the Caesars Forum conference center. Caesars once touted the development as the 50-yard line of the Strip.
At the time, the company said it invested close to $1 billion on both the promenade and to renovate its casinos on the east side of the Strip, including Harrah’s Las Vegas and The Cromwell, to create “a social hub of Las Vegas.”
