(Bloomberg)—Dreamscape Cos., the New York real estate investor that owns the Rio Hotel & Casino, has raised $850 million to remodel the Las Vegas resort and invest in similar properties.
Eric Birnbaum, Dreamscape’s chief executive officer and founder, said in an interview he’s created a real estate investment trust to own the 2,500-room resort. He’s also created a property management company. Birnbaum sees an opportunity to use those vehicles to acquire more gambling and entertainment-related assets as consumers return to business and leisure travel.
“The pandemic has taught us that people crave experiences and being with others,” he said.
REITs, which are exempt from corporate income taxes and pass along most of their earnings to shareholders, have become all the rage in the casino industry. Trusts such as Vici Properties Inc. and Gaming & Leisure Properties Inc. own dozens of casinos across the US, including many famous properties on the Las Vegas Strip.
Closely held Dreamscape bought the Rio from Caesars Entertainment Inc. in 2019 for $516 million. Caesars has continued to manage the property under a deal that ends this year. The property, which opened in 1990, was well known as the home of the World Series of Poker for many years.
Most of the money raised will go to the REIT, with the rest earmarked for the management company, Birnbaum said. Dreamscape is planning a major remodeling of the Rio that will include refurbished rooms, restaurants and entertainment options.
Investors in the financing round include pension funds, insurance companies and high-net worth individuals. Raymond James Financial Inc. helped secure the equity portion of the financing, while Wells Fargo & Co. arranged the debt.
--With assistance from Gillian Tan.
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