Golden Entertainment's (NASDAQ: GDEN) shares surged on Thursday following CEO Blake Sartini's announcement that the Strat operator will go private and that the firm has signed a $1.16 billion sale-leaseback agreement with VICI Properties (NYSE: VICI).

Golden stock has increased by more than 35% on volume, which is more than nine times the daily average during midday trading following the announcement. The company is valued at $30 per share in Sartini's go-private offer, which is 41% more than the closing price of the stock on November 5.

"Golden stockholders will receive total consideration of a fixed exchange ratio of 0.902 shares of VICI common stock for the sale of seven casino real estate assets and a cash distribution with proceeds from Blake Sartini of $2.75 for each share of Golden stock held at the closing of the transaction,” according to a statement issued by the Las Vegas-based casino operator.

The deal, which is anticipated to close in the middle of next year, puts an end to months of conjecture about Golden's potential involvement in the consolidation of the casino industry. A large portion of that conjecture concerned the Strat's real estate and Golden's nine vacant acres of land close to that off-Strip venue.

VICI Increases Nevada Holdings with Golden Entertainment

The real estate investment trust (REIT) would purchase the property assets of Golden's seven Nevada casinos through a sale-leaseback arrangement between VICI Properties, the biggest owner of gaming real estate, and a recently established organization under Sartini's management.

These gambling establishments include Aquarius Casino Resort and Edgewater Casino Resort in Laughlin, Nevada; Pahrump Nugget Hotel & Casino and Lakeside RV Park & Casino in Pahrump, Nevada; and the Strat, Arizona Charlie's Decatur, and Arizona Charlie's Boulder in the Las Vegas local market. The agreement greatly increases VICI's presence in Nevada outside of Las Vegas.

Golden's 30-year master lease with VICI has an initial rent of $87 million at a cap rate of 7.5%, with an inflation-linked escalator of 2% annually beginning in the third year. There are also four choices for a five-year tenant renewal. The transaction seems to be helping VICI diversify its exposure to Las Vegas and lessen its reliance on Strip properties.

“The transaction also provides VICI with exposure to the Las Vegas Locals market, which was the 2nd largest gaming market in the U.S. in 2024 by gross gaming revenue,” said the REIT in a statement. “The Locals market has long been targeted by VICI due to its key characteristics of consistent and stable growth, strong demographic and demand tailwinds driven by population trends, and high barriers to entry.”

It's Interesting When Golden Will Become Private

Sartini's capture of the Arizona Less than a month after Mario Gabelli's GAMCO Investors acquired what some market watchers thought was an activist stake in the gaming company, Charlie's operator went private. Although it's unclear if Gabelli was involved in the deal, his investment in Golden has paid off handsomely.

The fact that Golden's board of directors received a letter from New York-based money manager Everbay Capital on the day the go-private deal was announced, encouraging the company to sell its real estate and claiming that doing so would help shareholders realize a total value of $42 per share, adds to the mystery surrounding the timing. Everbay commended several of Golden management's recent actions, but pointed out that the stock's poor performance demonstrated that these actions did not produce intrinsic value.

“Golden’s shareholders have suffered trailing 1-year and 3-year total shareholder returns (including dividends) of (27.1%) and (46.3%), respectively, despite generally robust equity markets,” according to the asset manager.  “The Russell 2000 index, for example, has returned 10.8% and 40.4% over the same 1-year and 3-year periods.  Meanwhile, peers of Golden – other land-based gaming operators which own their casino real estate – have averaged trailing 1-year and 3-year returns of 14.5% and 41.1%, respectively.”