Experiential real estate investment trust VICI Properties has launched the VICI-Canyon Ranch Growth Partnership, a multifaceted investment partnership to support the growth of Canyon Ranch, a leading provider of holistic, integrative health and wellness guest experiences.
VICI committed to a preferred equity investment of up to $150 million 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.
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 rights are exercised, Canyon Ranch would continue to operate the applicable wellness resorts 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.
The initial $90 million tranche of the preferred equity investment was funded with cash on hand.