Century Casinos to Enter Reno Gaming Market with Nugget Casino Resort Deal

Century Casinos has tabled an offer to acquire Nugget Casino Resort in a $195 million deal.

On Wednesday, the casino entertainment company announced that it had entered into a definitive agreement with Marnell Gaming to take over 100% of Nugget Sparks LLC, which manages the property's operations.

The agreement also covers 50% purchase of Smooth Bourbon LLC, the subsidiary company responsible for the resort's real estate.

Breaking Down the Aggregate Price

The $195 million represents $100 million paid for Nugget Sparks and $95 million for Smooth Bourbon. The latter represents a capitalization rate of 7.9%.

Century Casino will also have the option to purchase the remaining 50% of Smooth Bourbon in a five-year payment plan valued at $105 million plus 2% interest per annum. However, this is dependent on whether or not the Nevada Gaming Commission gives approval.

Goldman Sachs Bank USA will finance the purchase through a secured term loan of $330 million. The loan will support the acquisition, and the remainder will refinance Century's existing debt and serve general corporate purposes. Goldman Sachs has provided a commitment letter to this effect. Also included is a $30 million senior secured revolving credit facility.

Upon acquisition, Century will enter into a lease with Smooth Bourbon for the Nugget Sparks real estate at a projected annual rent of $15 million.

Strategic Destination

Nugget Casino Resort consists of twin hotel towers with 1,382 hotel rooms. The casino space is 50,200 square feet large and hosts 859 slots and 29 table games. The resort is located in Sparks, Nevada, and sits just outside of Reno.

Reno is a famous destination for casinos, but it's also popular for outdoor recreation thanks to its proximity to Lake Tahoe and several ski resorts. Thriving industries besides gambling and hospitality include healthcare and technologies. Google, Tesla, Switch, Amazon, and Apple are some of the leading companies to have acquired stakes in the region. The casino's strategic location is less than three miles from Reno-Tahoe International Airport.

According to Co-Chief Executive Officers of Century Casinos, Erwin Haitzmann and Peter Hoetzinger, "We have been looking at entering the Reno market for a long time, and we believe the Nugget is a perfect fit for our portfolio. We look forward to welcoming the great team at the Nugget to Century Casinos."

"We believe there is a lot of upside to this transaction and that we identified some areas of improvement to continue the Nugget's growth. We expect the Nugget to seamlessly integrate and provide added synergies for Century Casinos' US portfolio," they concluded.

Within the resort grounds are seven different casual and fine dining outlets with bars and lounges. There is also 110,000 square feet of convention space and an outdoor amphitheater with 8,555 seats. The resort parking area is a five-story garage holding 1,200 vehicle slots and additional parking spaces.

For the 2021 fiscal year ended December 31, Nugget Casino Resort had Adjusted EBITDA* of $32.8 million based on preliminary results. Net operating revenue was reported as $100.4 million.