How casinos are unlocking the hidden value in their real estate

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Services for Real Estate Pros with Representative

With time, casinos have become a major industry consisting of gambling facilities that provide various possibilities such as table wagering games and gaming machines, slots, in particular. In the old days, casino gambling was legal solely in Nevada and Atlantic City. Thenceforth, numerous countries have legalized casino gambling, which is largely viewed as a tool for economic growth. Colombia, for instance, is the first country in Latin America with a fully regulated gaming market. Operators are looking for new lines of business and expanding their offerings. Unfortunately, in the international context, there’s no consensus regarding the regulation of gambling. 

Companies looking forward to building and operating casinos are allowed to run their operations downtown, which is bound to have some impact. We’re talking about jobs and fiscal benefits to the state and local governments. Needless to say, this depends largely upon where the visitors and casino workforce come from. Placing a casino in the heart of the city isn’t uncommon. It encourages a perpetual movement of visitors between the gambling establishment and the rest of the city. Land-based casinos operate in tandem with online casinos that have succeeded in drawing in people that used to go to regular casinos.

Traditional casinos need to do something to survive these tough times. Even if more people are finding their way back to real venues, many still prefer to play casino games such as blackjack over the Internet. For the sake of clarification, blackjack es un juego divertido en línea that enjoys great popularity. Getting back on topic, some land-based casinos have rapidly understood that they’re sitting on valuable land. They’re basically rethinking operations and striving to uncover additional value from their real estate assets. If you’d like to know more, please continue reading.

Sale and leaseback compensates for the difficulty of getting new casinos off the ground 

Regular players are now attracted to the online experience, which translates into reduced foot traffic for brick-and-mortar casinos. Many land-based establishments are having a hard time because they’re not able to provide the same gameplay experience. Starting a new gambling business undoubtedly comes with its challenges. Accurate planning, significant investing, and good business management aren’t enough to beat the odds. Existing casino businesses don’t want to close, even if the numbers don’t look very encouraging. But it’s not all bad news for physical casinos.

According to the experts, the sale and leaseback of property significantly compensates for the difficulty of getting new casinos off the ground. Some casino operators are creating new uses for the land they sit on working towards sale and lease agreements. Under this type of financial transaction, the land is sold to an investor and the casino operator gets a lease on the same land for a long time. The lease is generally a triple net lease, which means that the seller-tenant has to pay all the real estate taxes, maintenance, and building insurance on the property, besides other costs that are stipulated in the contract.

What are the advantages of a sale and leaseback?

One of the many advantages of finalizing a sale and leaseback transaction is the ability to maintain the possession and have a high degree of control over the property without having to invest money. After having sold the land, the seller-tenant’s overall bottom line increases because the payments are deductible at the property’s current basis. Gaming companies and their associated properties have managed to draw the attention of savvy investors, who are convinced that they will do well despite the prevailing economic headwinds.

Sale-leasebacks have become commonplace in the real estate investment trust industry and they’re win-win situations for casino businesses and real estate companies alike. By way of this agreement, the business enterprise that directly holds ownership into the casino facility can monetize the land asset; more often than not, the casino operator receives large sums of cash, which can be used for making additional acquisitions such as slot machines (or maquinas de tragamonedas, as they say in Spanish) or reducing debt. The real estate firm, on the other hand, leverages a long-term tenant agreement that implies gradually increasing rates without having to be financially responsible for building enhancements.

Casino REITs have become popular with investors

Owing to the REIT, it’s possible to consolidate the gambling sector. It’s expected that casino REITs will soon be on a hot streak, which doesn’t come as a surprise given that they offer competitive returns, which are based on high, steady dividend income, not to mention long-term capital appreciation. Sale-leaseback deals unlock hidden value in real estate. Traditional investments include properties such as shopping centers, office buildings, warehouses, apartment buildings, and so on. In recent times, investors are seizing innovative opportunities in properties such as casinos.

Attention needs to be paid to the fact that REITs aren’t a gamble. To be more precise, there’s no room for speculation. When you play maquinas tragamonedas nuevas, you take a calculated risk, but are completely unaware of the outcome. With real estate investing, it’s different, in the sense that you rely on data, look at recent trends, and get as much information as possible. You have certain expectations. It’s necessary to take an educated chance on a property that is entirely different and hope to make a profit.

All in all, casino businesses in less desperate situations have taken the sale and leaseback route. Sale-leaseback has transformed into a phenomenon. These days, if you enter a casino, you don’t know for sure if the property is owned by the casino operator, whose name appears on the door. Traditional casinos tend to sell the real estate and the building in their possession, then make a comeback and lease it. The money obtained from selling the property is reinvested into growth or opening a new gambling establishment. As mentioned in the beginning, it’s not easy to get a new casino off the ground. But it certainly isn’t impossible. Despite the fact that foot traffic has been reduced, there will always be people who will visit their local casinos.

Comments (2)

Bill Salvatore - YVP Blog
Arizona Elite Properties - Chandler, AZ
Realtor - Valley of the Sun / golfArizona@cox.net

They must be doing something right. Always making money.  Remmeber to ALWAYS split Ace's and 8's  Great post! Thanks for sharing.  Make it an amazing Thursday.  Bill Salvatore 

Apr 15, 2021 06:15 AM
Rocky Dickerson
Realty One Group - Las Vegas, NV
Superior Service!

Good morning Cynthia! You'll also find a restructuring due to the events of October 1, 2017 in Las Vegas

Apr 15, 2021 07:17 AM