{"id":330815,"date":"2024-09-17T10:45:36","date_gmt":"2024-09-17T15:45:36","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=330815"},"modified":"2024-09-17T11:27:50","modified_gmt":"2024-09-17T16:27:50","slug":"caesars-set-for-lower-rate-perks-could-sell-linq-promenade","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/caesars-set-for-lower-rate-perks-could-sell-linq-promenade\/","title":{"rendered":"Caesars Set for Lower Rate Perks, Could Sell Linq Promenade, Says Analyst"},"content":{"rendered":"

The Federal Reserve is nearing its first interest rate cut in four years, which is none too soon for debt-laden companies such as Caesars Entertainment (NASDAQ: CZR).<\/p>\n

\"Caesars
Caesars Palace Las Vegas. The operator could sell the Linq Promenade and is poised to benefit from lower interest rates. (Image: YouTube)<\/figcaption><\/figure>\n

In a new report to clients, B. Riley analyst David Bain points out that since the Fed commenced its tightening cycle in March 2022, shares of Caesars slid 50% compared to an average loss of 3% for the casino operators in his coverage universe. The only comparable gaming name that performed worse over that span was Penn Entertainment (NASDAQ: PENN), which tumbled 55%.<\/p>\n

Bain also observed that despite the interest rate headwinds, Caesars\u2019 2024 estimated earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) is 18% higher than the reported 2022 figure. Other data points confirm the gaming company\u2019s leverage to lower borrowing costs.<\/p>\n

For every 100 basis points in lowered rates, CZR\u2019s interest expense declines\/free cash flow increases by $60 million. We believe CZRs could also look to refinance its $1.6 billion 8.125% fixed senior notes sometime next year, as rates are likely to continue to fall, in our view,\u201d wrote Bain.<\/p><\/blockquote>\n

Some market observers believe the Fed could pare rates<\/a> by 150 basis points by the second quarter of next year, implying Caesars could see a larger boost to free cash flow than $60 million before the end of the first half of 2025.<\/p>\n

Caesars Can Make it Rain with Asset Sales<\/h2>\n

Earlier this year, Caesars CEO Tom Reeg said the operator is open to selling noncore assets<\/a> to raise cash that could be used to reduce its debt burden. He didn\u2019t elaborate on what those assets could be.<\/p>\n

Bain speculated that Caesars could consider selling the Linq Promenade, the retail space adjoining that Strip property. Such a transaction could generate $700 million in proceeds, Bain said.<\/strong><\/p>\n

Caesars has already engaged in some sales this year. Last month, it announced the sale of the intellectual property rights<\/a> associated with the World Series of Poker (WSOP) to investment firm NSUS Group Inc. for $500 million. That results in an immediate influx of $250 million in cash, with the remainder coming in five years.<\/p>\n

Combine that with $250 million in capital spending coming off Caesars\u2019 books and the casino giant\u2019s financial position is steadily improving.<\/p>\n

Caesars Could Embrace Buybacks<\/h2>\n

Bain estimates that by the end of next year, Caesars\u2019 net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio should be below 3.5x with lease-adjusted debt below 5x. Should those objectives be reached, it could give the Harrah\u2019s operator the flexibility to repurchase its stock.<\/p>\n

Given the above and an enterprise value\/EBITDA valuation of 6.3x (versus ~10.4x at the time of the Eldorado\/CZR merger in 2020), we believe CZR is in a position to begin to repurchase shares, though we still expect a vast majority of incoming cash will be used to repay debt,\u201d concluded\u00a0 Bain.<\/p><\/blockquote>\n

The gaming company has $141 million remaining on a previously announced buyback program.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Federal Reserve is nearing its first interest rate cut in four years, which is none too soon for debt-laden companies such as Caesars Entertainment (NASDAQ: CZR). In a new report to clients, B. Riley analyst David Bain points out that since the Fed commenced its tightening cycle in March 2022, shares of Caesars slid […]<\/p>\n","protected":false},"author":46,"featured_media":255103,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[62,10,81886],"tags":[81897,81903,23],"acf":[],"yoast_head":"\nCaesars Set For Lower Rate Perks, Could Sell Linq Promenade<\/title>\n<meta name=\"description\" content=\"Caesars Set For Lower Rate Perks, Could Sell Linq Promenade, Says Analyst.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/caesars-set-for-lower-rate-perks-could-sell-linq-promenade\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Caesars Set For Lower Rate Perks, Could Sell Linq Promenade\" \/>\n<meta property=\"og:description\" content=\"Caesars Set For Lower Rate Perks, Could Sell Linq Promenade, Says Analyst.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/caesars-set-for-lower-rate-perks-could-sell-linq-promenade\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2024-09-17T15:45:36+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-09-17T16:27:50+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/01\/CP-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"720\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/caesars-set-for-lower-rate-perks-could-sell-linq-promenade\/\",\"url\":\"https:\/\/www.casino.org\/news\/caesars-set-for-lower-rate-perks-could-sell-linq-promenade\/\",\"name\":\"Caesars Set For Lower Rate Perks, Could Sell Linq Promenade\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/caesars-set-for-lower-rate-perks-could-sell-linq-promenade\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/caesars-set-for-lower-rate-perks-could-sell-linq-promenade\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/01\/CP-1.jpg\",\"datePublished\":\"2024-09-17T15:45:36+00:00\",\"dateModified\":\"2024-09-17T16:27:50+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Caesars Set For Lower Rate Perks, Could Sell Linq Promenade, Says Analyst.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/caesars-set-for-lower-rate-perks-could-sell-linq-promenade\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/caesars-set-for-lower-rate-perks-could-sell-linq-promenade\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/caesars-set-for-lower-rate-perks-could-sell-linq-promenade\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/01\/CP-1.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/01\/CP-1.jpg\",\"width\":1280,\"height\":720,\"caption\":\"Caesars Palace Las Vegas. 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