Canadian gambling company Gateway Casinos & Entertainment Ltd. announced on Monday that it successfully closed a sale and leaseback deal worth more than CA$500 million. Under the agreement, the buyer, American company Mesirow Financial acquired three real estate properties in the Greater Vancouver Regional District.
Gateway Casinos & Entertainment Ltd., which is one of the largest gambling and entertainment companies in Canada, announced in late February that it has entered into an agreement for a sale and leaseback of three casino properties with Mesirow Financial, a Chicago-based financial services company. The three properties in question were Grand Villa Casino Burnaby, Starlight Casino New Westminster and Cascades Casino Langley, all located in the Greater Vancouver Regional District.
The sale-leaseback deal is now closed, Gateway announced in a press release on Monday, March 12, earning more than $500 million in total proceeds for the company. The net proceeds are estimated at around $483 million, the largest financial transaction in the recent history of Gateway. According to the company CEO Tony Santo, this deal is providing Gateway with additional liquidity and resources that will contribute to the growth of the company and to reducing its debt.
Under the newly reached agreement, Mesirow Realty Sale-Leaseback Inc., the net-lease real estate investment arm of Mesirow Financial, is entering a long-term lease deal and becomes the new landlord of the three casinos. It will not own the casinos – they will still be owned and operated by Gateway through the new landlord or its subsidiaries. This will ensure the exceptional customer experience offered at these facilities. Both the operations and the staff will remain the same.
Continued Growth for the Canadian Gambling Company
With its 25 properties, Gateway is one of the most promising companies on the Canadian gambling market and has an annual revenue of nearly $600 million. Despite the deal with the American company for three of its most popular casinos, it still remains their operator. By December 2016, it operated only 12 casinos in Alberta and British Columbia but then, it entered the Ontario market when it purchased 11 casinos from OLG and expanded its presence greatly.
Compared to it, Mesirow Financial is a business giant, generating an annual revenue of US$96 billion. The Chicago-based financial services company has closed multiple sale-leaseback agreements worth more than $1.5 billion in the past two years, Mesirow Financial’s Senior Managing Director Garry Cohen said in a statement. However, this is the first cross-border transaction of this kind for them, he explained, adding that the three newly acquired casinos are strategic assets for the American company.
The agreement was reached with the help of the Toronto-based The Catalyst Capital Group, Gateway’s private equity sponsor. The Canadian firm specializes in investments in buyouts, operational restructuring, and more.