VICI makes further investment into Canyon Ranch

VICI Properties has announced the VICI-Canyon Ranch Growth Partnership, a multi-faceted investment partnership to support the growth of wellness brand Canyon Ranch.

VICI committed to an up to $150 million preferred equity investment into the controlling entity of Canyon Ranch to support the growth and expansion of the Canyon Ranch Ecosystem, including enhancing Canyon Ranch’s existing destination wellness resorts, launching the Canyon Ranch wellness clubs and growing the capabilities of the Canyon Ranch digital platform. The preferred equity investment has a term of 10 years and may be redeemed by Canyon Ranch at any time, subject to a redemption premium in the first three years.

The initial $90 million tranche of the preferred equity investment was funded with cash on hand.

“This partnership offers Canyon Ranch the potential to accelerate our growth in an ‘asset light’ manner, especially if we are able to capitalize on the robust Canyon Ranch economic model by acquiring with VICI conventional resorts that have high potential for conversion to Canyon Ranch resorts, thereby growing the Canyon Ranch network,” said John Goff, owner of Canyon Ranch.

VICI entered into a call right agreement whereby VICI will have the option to call the real estate assets of each of Canyon Ranch Tucson and Canyon Ranch Lenox, subject to certain conditions. If the call right(s) are exercised, Canyon Ranch would continue to operate the applicable wellness resort(s) subject to a long-term triple net master lease with VICI.

Additionally, VICI entered into a right of first financing pursuant to which VICI will have the first right, but not the obligation, to serve as the real estate capital financing partner for Canyon Ranch with respect to the acquisition, build-out and/or redevelopment of future wellness resorts.

VICI also intends to provide approximately $150 million of mortgage financing secured by Canyon Ranch Tucson and Canyon Ranch Lenox to refinance Canyon Ranch’s existing CMBS debt secured by these two assets. The mortgage financing will have an initial term of two years with three one-year extensions, exercisable at Canyon Ranch’s option, subject to satisfying certain customary extension conditions.

Upon closing the contemplated mortgage financing, VICI will have committed $500 million of capital to Canyon Ranch, including our previously announced agreement to provide up to $200 million of development financing for Canyon Ranch Austin (which comes with a call right on such asset).

“We believe wellness is one of the most powerful secular trends of our time, and that Canyon Ranch is one of the best-positioned global brands for capitalizing on growing demand for wellness and life enhancement, domestically and internationally,” said Edward Pitoniak, CEO of VICI Properties.