Gaming company Gateway Casinos & Entertainment Ltd is in talks with Asia and North America investors for a sale-lease-back agreement for up to three Vancouver properties worth over $500 million, top company executives told Reuters.
The Burnaby, B.C.-based company expects to sign a deal by the third quarter of 2017, Gateway Executive Chairman Gabriel de Alba said in an interview last week, without disclosing the names of the interested parties.
The company, which said there was some interest from European firms as well, kicked-off a formal review to monetize its real estate portfolio after being approachedby local and international developers interested in acquiring and developing the Vancouver properties, de Alba said.
Gateway's portfolio includes licenses for undeveloped land with no facilities. The company declined to provide the total value of its real estate portfolio outside the three Vancouver sites.
"Now that we're formalizing the process, we're reaching out to other bidders and certainly as the process is known, some other bidders are jumping on board as well," said de Alba.
The proposals include development of condos, hotels, movie theaters, or even an Asian market place, to also attract casual gamers looking for additional forms of entertainment during a visit.
Gateway Casinos was bought in 2010 by Toronto-based private equity firm, The Catalyst Capital Group Inc, which restructured the company, reduced its debt by about $1 billion, and injected $200 million in new capital.
Gateway, which recently expanded operations in Ontario, could eventually launch an initial public offering (IPO) subject to capital market conditions, Chief Executive Tony Santo said in the interview. An IPO could help fund other opportunities Gateway is working on, Santo said, such as further expansion in Ontario or greenfield developments in British Columbia.
The company dropped its 2012 IPO plans and instead did a dividend recapitalization, which allowed the owners to recoup some investments without reducing their stake in the company, De Alba said.
De Alba, who is also a managing director and partner at Catalyst, said Gateway has grown from nine properties and an EBITDA of $93 million in 2011 after restructuring, to 28 properties and an EBITDA target of more than $235 million next year.