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Long-Term Financing Obligation | 6 Months Ended
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Jun. 30, 2023
Long-Term Financing Obligation [Abstract] |
Long-Term Financing Obligation | 6.LONG-TERM FINANCING OBLIGATION On December 6, 2019, certain subsidiaries of the Company (collectively, the “Tenant”) and certain subsidiaries of VICI PropCo (collectively, the “Landlord”) entered into the sale and leaseback transaction for the 2019 Acquired Casino properties and entered into the Master Lease to lease the real estate assets of the 2019 Acquired Casinos. The Master Lease does not transfer control of the 2019 Acquired Casino properties to VICI PropCo subsidiaries. On December 1, 2022, the Master Lease was amended (the “Master Lease Amendment”) to provide for (i) modifications with respect to certain project work to be done by the Company related to Century Casinos Caruthersville, (ii) modifications to rent under the Master Lease and (iii) other related modifications. The Company accounts for the transaction as a failed sale-leaseback financing obligation. When cash proceeds are exchanged, a failed sale-leaseback financing obligation is equal to the proceeds received for the assets that are sold and then leased back. The value of the failed sale-leaseback financing obligations recognized in this transaction was determined to be the fair value of the leased real estate assets. In subsequent periods, a portion of the periodic payment under the Master Lease will be recognized as interest expense with the remainder of the payment reducing the failed sale-leaseback financing obligation using the effective interest method. The failed sale-leaseback obligations will not be reduced to less than the net book value of the leased real estate assets as of the end of the lease term, which is estimated to be $28.5 million. The fair values of the real estate assets and the related failed sale-leaseback financing obligation were estimated based on the present value of the estimated future payments over the term plus renewal options of 35 years, using an imputed discount rate of approximately 10.1%. The value of the failed sale-leaseback financing obligation is dependent upon assumptions regarding the amount of the payments and the estimated discount rate of the payments required by a market participant. The Master Lease provides for the lease of land, buildings, structures and other improvements on the land, easements and similar appurtenances to the land and improvements relating to the operations of the leased properties. The Master Lease has an initial term of 15 years with no purchase option (which term will be extended for 15 years from the date of the Master Lease amendment). At the Company’s option, the Master Lease may be extended for up to four five year renewal terms beyond the initial 15 year term. The Company exercised one five year renewal option when the Master Lease was amended on December 1, 2022. The renewal terms are effective as to all, but not less than all, of the property then subject to the Master Lease. The Company does not have the ability to terminate its obligations under the Master Lease prior to its expiration without the Landlord’s consent. The Master Lease has a triple-net structure, which requires the Tenant to pay substantially all costs associated with the Company’s Missouri and West Virginia properties, including real estate taxes, insurance, utilities, maintenance and operating costs. The Master Lease contains certain covenants, including minimum capital improvement expenditures. The Company has provided a guarantee of the Tenant’s obligations under the Master Lease. The rent payable under the Master Lease, as amended by the Master Lease Amendment on December 1, 2022, is: An initial annual rent (the “Rent”) of approximately $25.0 million. The Rent will escalate at a rate of 1.01% for the 2 nd and 3 rd years and the greater of either 1.0125% (the “Base Rent Escalator”) or the increase in the Consumer Price Index (“CPI”) for each year starting in the 4 th year. In addition, Rent will increase by approximately $4.2 million on the “CapEx Project Incremental Rent Increase Date” (as defined in the Master Lease Amendment). The Base Rent Escalator is subject to adjustment from and after the 6 th year if the Minimum Rent Coverage Ratio (as defined in the Master Lease) is not satisfied. ‎ The estimated future payments in the table below include payments and adjustments to reflect estimated payments as described in the Master Lease, including an annual escalator of up to 1.0125%. The estimated future payments are not adjusted for increases based on the CPI.
Amounts in thousands |  |  |
2023 |  | $ | 10,759
2024 |  |  | 26,144
2025 |  |  | 26,471
2026 |  |  | 26,802
2027 |  |  | 27,137
Thereafter |  |  | 875,958
Total payments |  |  | 993,271
Less imputed interest |  |  | (736,171)
Residual value |  |  | 28,492
Total |  | $ | 285,592
Total payments and interest expense related to the Master Lease for the three and six months ended June 30, 2023 and 2022 were as follows:
|  | For the three months ended |  | For the six months ended
|  | June 30, |  | June 30,
Amounts in thousands |  | 2023 |  | 2022 |  | 2023 |  | 2022
Payments made |  | $ | 6,866 |  | $ | 6,376 |  | $ | 13,731 |  | $ | 10,626
Interest expense on financing obligation |  | $ | 7,299 |  | $ | 7,103 |  | $ | 14,418 |  | $ | 14,110
Rent adjusted for CPI for the year ended December 31, 2023 is estimated to be $27.5 million, excluding the increased rent due to the Rocky Gap Acquisition and the Canada Real Estate Sale discussed below. As discussed in Note 1, VICI PropCo Buyer purchased a related interest in the land and building associated with Rocky Gap on July 25, 2023 for approximately $203.9 million. In connection with the Rocky Gap Acquisition, the Company and a subsidiary of VICI PropCo entered into an amendment to the Master Lease on July 25, 2023 that (i) added Rocky Gap to the Master Lease, (ii) provided for an increase in initial annualized rent of approximately $15.5 million and (iii) extended the initial Master Lease term for 15 years from the date of the amendment (subject to the existing four five year renewal options). As discussed in Note 1, pursuant to the Canada Real Estate Sale, VICI PropCo agreed to acquire the real estate assets for the Century Canadian Portfolio for approximately CAD 221.7 million ($167.3 million based on the exchange rate on June 30, 2023). In connection with the closing of this transaction, which is expected in the third quarter of 2023, the Company and a subsidiary of VICI PropCo will enter into an amendment to the Master Lease to (i) add the Century Canadian Portfolio to the Master Lease, (ii) provide for an increase in initial annualized rent of approximately CAD 17.3 million ($13.1 million based on the exchange rate on June 30, 2023) and (iii) extend the initial Master Lease term for 15-years from the date of the amendment (subject to the existing four five year renewal options).

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