Welcome to the Eldorado Resorts 2019 second quarter earnings conference call. Today's conference is being recorded. At this time, it is my pleasure to now turn the conference over to Mr. Joseph Jaffoni of Investor Relations. Please go ahead, sir.
Thank you, Carrie, good morning, everyone, and welcome to the Eldorado Resorts 2019 second quarter conference call. Joining us today from the company are Chief Executive Officer, Tom Reeg, President and Chief Operating Officer, Anthony Carano, and Chief Financial Officer, Bret Yunker. On today's call, we'll review the company's second quarter financial results and the ongoing success and progress against the company's key strategic priorities, including the status of Eldorado's proposed acquisition of Caesars Entertainment. We will open the call to participants for questions. This morning, Eldorado Resorts issued a press release announcing its second quarter financial results for the period ending June 30th, 2019. The release is available in the investor relations section of the company's website at www.eldoradorresorts.com.
Before we get started, I'd like to remind everyone that the call is being recorded and a webcast replay will be available for 90 days, the detail of which are in today's press release. During our call, we may make certain forward-looking statements about the company's performance. Such forward-looking statements are not guarantees of future performance, and therefore, one should not place an undue reliance on them. Forward-looking statements are also subject to the inherent risks and uncertainties that could cause actual results to differ materially from those expressed. For additional information concerning factors that could cause actual results to differ from those discussed in today's forward-looking statements, you should refer to the cautionary statements contained in our press release, as well as the risk factors contained in the company's filings with the Securities and Exchange Commission.
Eldorado Resorts undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after the call. During today's call, the company may discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure is most directly comparable to each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and in the comparable GAAP financial measure can be found on the company's website at www.eldoradoresorts.com by selecting the press release regarding the company's 2019 second quarter financial results. Thank you for your patience with that. At this time, it's my pleasure to turn the call over to the company's CEO, Tom Reeg. Tom?
Thanks, Joe. Good morning, everybody. Thanks for joining. I'd characterize the quarter as frustrating from an operating perspective, largely due to external events, and very active on the M&A front, both buy and sell side. Coming into the quarter, we knew we were going to be facing a difficult comp in the West. We had construction disruption in Colorado. To give you a sense of the quarter in Colorado, about 30% of our hotel rooms were down in the quarter, and about 35% of our slot floor was offline. That gives you a sense of the disruption that we were facing in Colorado. That was a difficult comp. We're happy to tell you that our Colorado project is complete. It looks great. It's been well-received, and we're getting the word out that the construction disruption is a thing of the past.
In Reno, we knew we were facing a lack of bowlers in the quarter, and that was 15,000 room nights in last year's quarter. That was a headwind that we knew. What we didn't know was coming was the weather, largely in the Midwest. As those of you who know me know, I hate to talk about weather, but it's unavoidable when the center of the country is flooded. We had properties like Bettendorf, where you had flooding. You had construction on the interstate approaching it, the traffic fed to the next exit where our competitor, Rhythm City, sits. That was a tough competitive situation for us. You couldn't even get off at our exit. Boonville, Cape Girardeau had bridges out where, just from an employee standpoint, employees that were minutes from the property normally would take over an hour to get to the property.
Just a difficult situation. We had an access road at Vicksburg that effectively disintegrated that we had to rebuild. A lot of headwinds in the quarter. Despite those, we were able to post over a 2% increase in same-store EBITDA to just under $179 million. On the plus side, if you look at our central region, Anthony's going to get into specifics, but our central region is the cleanest look at our most recent acquisitions. Since you have Elgin, St. Louis, and Evansville in there's no noise from properties owned prior to the acquisitions last fall. You can see that that region performed exceedingly well. Our consolidated EBITDA margin expanded over 230 basis points, over 28%. We were quite pleased with that. I'd tell you that as the quarter turned, a lot of the issues that we've been talking about are now in our rear-view mirror.
You've got the bowling comp is done in Reno. Construction disruption is done in Colorado. The weather for the most part improved, although we did have tropical storm that impacted the south a bit in July. I tell you that despite continuing weather impacts in the beginning of July, that's now in the rear view mirror. Despite those impacts, on a consolidated basis, we had a very good July and feel good about the quarter. In Reno, I point you to, we just signed an agreement with the University of Nevada that had a shortage of beds due to an explosion in existing dorms. We signed an agreement, great work by Stuart Massie, our West Region VP, and Anthony Carano in negotiating an agreement where we can help the University out in a way that makes sense for us economically.
We signed a deal that the university will take the Sky Tower of Circus Circus, which was just remodeled about 18 months ago. It's 902 rooms. They take them for nine months, that's 270,000 room nights. They handle security, they handle housekeeping. It's a very good piece of business for us, and in addition to driving that business through the property, it'll help us yield the rest of the property, going into 2020 as you fill those 900 rooms through May 15th, we get the rooms back for the summer. That's a really good piece of business for us. Also in the quarter, on the M&A side, as everyone is aware, we announced the acquisition of Caesars. I'll touch on that again in a moment. We announced two sales transactions.
We announced the sale to Century Casinos, our Mountaineer asset in West Virginia, Caruthersville and Cape Girardeau in Missouri. We announced the sale to Twin River of our Kansas City asset in Missouri and Vicksburg in Mississippi. Both of those transactions have cleared HSR and are on track for their original expected closing dates. The Caesars acquisition, we have spent a good amount of time with Tony and his management team. We continue to do that as we start to work through how we will operate the combined company. At the time of the announcement, we told you that we expect to generate $500 million of near-term synergies and that we see a path to $4 billion to $4.5 billion of EBITDAR in the combined portfolio. Everything that we've learned to date has further strengthened that confidence.
We feel really good about the numbers that we put out there. In terms of timing, we have had initial discussions with all of our state regulatory agencies. We've met face-to-face with a number of them, continue to do that. We've had initial conversations with the FTC. We set out a first half of 2020 closing target. Obviously that's a range of January 1st-June 30th. As we sit here today, I would expect closing to be closer to January 1st than June 30th. All in all, challenges in the quarter from external forces that are now in the rear view mirror. I should also point out that we've now anniversaried the competition in the competitive openings in Atlantic City, and remarkably, in the first year, post the competitive openings, Tropicana Atlantic City EBITDA was almost identical to the prior 12 months.
That was with us coming in expecting a 20% hit. They didn't see a hit at all. We were extraordinarily pleased with the work of Steve Callender, Jason Gregorec and their team in Atlantic City, and we're excited what we can do there going forward now that we're comparing apples for apples. Expanded EBITDA margins, posted a little bit of growth. We feel good about the third quarter. Started with a good July, so we feel good about where we sit today. With that, I'll turn it to Anthony for more detail.
Thank you, Tom, and good morning to everyone on the call. I'd like to take a few minutes to provide you with some second quarter operational highlights. Looking at our five operating segments, I'll begin with the East Segment where adjusted EBITDA increased 1.1% year-over-year to $47.4 million and the adjusted EBITDA margin rose 130 basis points to 27.8%. Within the East Segment, adjusted EBITDA for Scioto rose for the 18th consecutive quarter, and Scioto delivered a 40% operating margin. In Atlantic City, EBITDA was flat in the first 12 months following the Hard Rock and Ocean opening. Adjusted EBITDA for the South Region was down 5.6% to $29.1 million on a 10.3% decline in net revenues. The South Region's adjusted EBITDA margin improved 120 basis points to 24.9%.
Revenues in the South region were impacted by high water levels on the Mississippi, and in the case of Vicksburg, access road damage. Our property-level teams reacted well and were able to drive margin growth. As we enter the second half of the year, we look forward to starting construction on our new land-based facility in Lake Charles and the anniversary of the smoking ban implemented in 2018 in Baton Rouge. Now turning to the West region, EBITDA was down 13.2% to $34.3 million. Several factors impacted our performance this quarter in the West region, including a tough comp in Reno last year when EBITDA improved 22% due to the addition of the USBC Women's Championships. Additionally, as we discussed during Q1, Black Hawk has been in the process of a $30 million renovation program to redo our hotel rooms and the entire casino floor.
We experienced significant construction disruption at Black Hawk in Q2. Thankfully, all the work has been completed in Black Hawk, and we are optimistic about the second half of 2019. Revenues in the Midwest declined 3.3%, and segment adjusted EBITDA rose 2.3% to $36.8 million, with four of the six properties achieving year-over-year increases despite the flooding impact. The Midwest adjusted EBITDA margin increased 210 basis points to 37.8%. Finally, our Central region delivered an exceptionally strong quarter with EBITDA growth of 17.2% on a 2.5% decline in net revenues. Early results from the recently acquired Grand Vic in Elgin are very promising, with the properties continuing to deliver on the synergy targets we forecasted at the time of the acquisition. Lumiere Place was also a bright spot during the quarter, with the property delivering close to 30% EBITDA growth.
Our ability to achieve targeted synergies at the three acquired properties and operate more efficiently is evident in the 540 basis point improvement in the segment's operating margin to 32.3% during the quarter. As I reflect upon our Q2 results, our diversified portfolio of 26 regional gaming assets performed well despite transitory events like weather and construction disruption. Our recently acquired assets are performing well, and property-level teams continue to find ways to improve operating margins, as evidenced by the 230 basis point improvement in consolidated margins this quarter. As we move into the second half of the year, I remain optimistic about the future given the trends we are seeing in our business. With that, I'll turn the call over to Bret for some additional insights on the second quarter financial performance and details on our balance sheet and capital structure. Bret?
Thanks, Anthony, and good morning, everyone. I'll begin my remarks with a review of our capital structure and other important financial items during the quarter. As of June 30th, 2019, outstanding debt was $3 billion, including the Lumiere note. We ended the quarter with $183 million in cash. During the quarter, we repaid the outstanding $40 million balance on our revolver and spent just under $60 million on capital projects. We continue to estimate full-year 2019 CapEx of roughly $200 million, with $120 million spent on maintenance and $80 million spent on new projects. The bulk of the $80 million project CapEx spend is split among the Black Hawk renovations, which are now complete, room remodels in Reno, and starting the Lake Charles land-based project later this year. As you know, we recently announced two separate transactions to divest five properties in total for expected cash proceeds of $615 million.
We expect to apply the net proceeds from these transactions at closing to reduce debt. For the remainder of the year, we are focused on using free cash flow to further reduce debt ahead of the expected closing of the Caesars transaction. As we look to the second half of 2019, we are encouraged by the pace of operating margin improvements throughout the portfolio. We look forward to extracting synergies from our recently acquired assets. With that, let me turn the call back to Tom.
Thanks, Bret. A couple things to clean up, and then I'll turn it over for questions. All of the one-time items that we've talked about, bowlers in Colorado and weather in the Midwest, our bottoms-up analysis best guess is that cost us $8 million to $10 million of EBITDA in the quarter. I offer that to you for modeling purposes. Obviously, we did what we did in EBITDA for the quarter. In terms of the Caesars transaction, we have been clear that we are strongly considering a sale of a Las Vegas Strip asset. You should expect that that would happen post-closing. You shouldn't expect something to be happening there pre-closing. Any divestiture activity that you'd see between now and closing, you should expect to be certainly smaller than a Vegas Strip asset.
Our intention post-transaction is to focus on fixing the Caesars operating structure, moving it more in line with the way that we operate, harvesting free cash flow and the proceeds from asset sales, and driving leverage down quickly. Our target post-acquisition will be to drive leverage ultimately below three times. I think that we expect that there's a path to generate $4 billion-$5 billion of debt paydown in the first 24 months post-transaction. That's what we intend to execute on. With that, I'll turn back to the operator for Q&A.
Thank you. At this time, we'd like to open the floor for questions. If you would like to ask a question, please press the star key followed by the one key on your touch-tone phone now. Questions will be taken in which the order they are received. If at any time you need to remove yourself from the questioning queue, press star two. Again, that is star one to ask an audio question. Our first question will come from Carlo Santarelli with Deutsche Bank.
Hey, Tom, Anthony, Bret. Thank you for your remarks. Tom, if I could touch on the statement you just made in terms of the one-timers in the 2Q 2019. Extrapolating kind of the 8 to 10 or adding that back kind of implies a 7-ish% adjusted EBITDAR growth rate inclusive of corporate. Is that more or less based on what you're seeing in July trends and kind of trends at non-disrupted and/or non-weather impacted properties? Is that more or less what you see as kind of the cadence of the business as we move towards the back half or through the back half of 2019?
As you know, Carlo, we don't provide guidance. What I would say is, the only thing that you are missing if you look at 2Q 2019, is we now have an easier comp in Atlantic City, certainly easier than it was last quarter, but not necessarily easy. Other than that, I would say, there's no reason to believe that you'd be dramatically different from what we've been doing recently. In markets where we were not impacted by weather, our experience in terms of customer engagement, customer visitation spend was all consistent. Our belief is that most of the variance, or if not all of the variance, was due to the items that we raised. The absence of them would suggest that we can continue on that trajectory.
Understood. Great. Thank you. Then just in terms of the process now and kind of from the last time you guys addressed the investment community, which is a little over a month ago now. As you think about the things you've learned in the last month or so, including kind of Caesars results last night, has there been anything incremental that you guys have foreseen or kind of acknowledged in that process that has made you any more or less bullish in terms of your targets?
Well, I think I'm looking at a different Las Vegas market than the market is. That's been the number one trepidation from investors is, what about the Las Vegas Strip? I just saw Caesars last night post 97.5% occupancy, which I would have told you is virtually impossible for a 90-day period across over 20,000 rooms. Highest cash room revenue ever. They've got convention center coming. You've got convention center expansion here. You've got a better group calendar. I would say as we've gotten more into the weeds in Las Vegas, we feel very good about coming into this market at this moment. In terms of the rest of what we've been finding, it's as we would have expected. There was a lot of detailed analysis done prior to the transaction, just in terms of functionally how it came together.
We had a lot more intelligence on synergies than we typically do at the time of deal announcement, and everything that we have learned since has reinforced that.
Great. Thank you very much.
Thank you. Our next question will be from David Katz with Jefferies.
Hi. Good morning, everyone. Tom, can you elaborate just a little bit more? I think we understand where you're taking the business for the next nine to 12 months. In terms of what we might fairly ask about over the next two to four quarters with respect to property sales, I just want to be clear that a Strip asset sale, are we talking about closing or announced? Is it something that's just not going to come up until after you close again? What can we reasonably expect? I think you sort of see the broad area that I'm trying to get at.
I can affirmatively tell you that our expectation is you will not see a Strip asset sale announcement until post-closing of the larger transaction.
Got it. We might see other smaller ones.
Yeah, you could see some smaller assets. Caesars is operating as it should, as if they're going to remain a standalone company. There are assets in that portfolio that they might consider pruning. Those assets would likely fall in line with what we would consider pruning post-transaction. If an opportunity comes up in this pre-closing period to act on one of those, you should expect us to do that. There's the possibility that we will sell or agree to sell assets for antitrust purposes. Those should be relatively narrow and modest, but that's the type of activity. You should expect to be seeing between now and close to the extent that you see any M&A activity.
Got it. Just following that up, the pro forma leverage that was discussed around the deal announcement, that should be a relatively kind of firm level between now and closing. In other words, the prospects of that coming down ahead of time are low.
No, there are assets that are likely to be required to be sold for antitrust purposes, and I'd be very disappointed if those weren't de-leveraging transactions given we're levered less than six times. I would expect pro forma for the transactions that we would expect to enter into pre-closing, that pro forma leverage at closing on a gross debt or lease adjusted debt to EBITDA basis would be in the mid-fives, which is what we've said pre-deal, it's what we've said post-deal, and it's where we are today. None of that has changed.
Got it. Okay. Thank you very much.
Thanks, Dan.
Thank you. Our next question will be from Barry Jonas with SunTrust.
Hi, guys. Tom, in the past, you've given some parameters about what the existing Eldorado portfolio could achieve. I think you've generally talked about maybe $750 million of EBITDA this year, sort of rising up to $900 million plus. I guess excluding divestitures, has anything changed in your view there? Excluding some of the one-time weather and other hits we've seen this year. Thanks.
No, nothing has changed there. Still see the existing portfolio as a $900 million to $1 billion EBITDA enterprise post the opening of Pompano, the expansion in Lake Charles, and our continued work on executing synergies. I should have touched on synergies in my remarks. We announced $40 million in Tropicana and $15 million in Elgin, and we're on the verge of surpassing both as we sit here today. Certainly, within a very short period of time, we would have realized the $55 million that we announced, and we continue to expect that $900 million to $1 billion is the right range. Again, with your caveat of, obviously there's some assets on there that are selling.
Great. Last night, Tony Rodio on the Caesars call talked about potentially adding some non-gaming amenities to some projects. He talked about strategic deployment of marketing dollars, as he put it, and they also mentioned they will continue to evaluate the Korea project. I’d love to just get your perspective on how this would fit into your post-close strategy.
The idea of adding non-gaming amenities is consistent with what we've been doing across the portfolio, that we've spent probably approaching $200 million in Reno at this point over the last several years, all of that on non-gaming investment. We've added significant pieces to Scioto. We just added another smoking patio that opened toward the end of the second quarter. We added the hotel there. We've added Brew Brothers across the portfolio. We're talking about the Lake Charles move to land-based. We're looking at Elgin in terms of that portfolio or that property. With the legislation, we have the ability to move positions off of the boat and into the land-based pavilion and potentially add more, which could be an opportunity in the period of time between now and when competitive product would open. We're in the middle of design there as well.
What Tony articulated is exactly what we've been doing on our side. We'd expect to be looking at similar opportunities in their portfolio. Strategically moving marketing dollars, that's a big piece of what we do across our portfolio. Certainly, we'd expect to be doing the same thing post-transaction. Keep in mind that they're running 97.5% occupancy on the Strip, rising RevPAR and a cash room revenue record. We're going to introduce an additional 20% demand increase into that pipeline as we plug our properties into Total Rewards, and it's heartening for us to look at what's happening with Centaur since that property was plugged into Total Rewards. That's giving us a lot of optimism about the impact from us as we execute a sale of a Strip asset.
We'll be increasing demand, we'll be reducing supply within our network, which should be very powerful from a yielding perspective in the combined portfolio. You asked about Korea. I'll let the remarks of their management team stand from yesterday. You know that we've historically focused our efforts here, and we have a lot of work to do here to get the combined portfolio on the footing that we want it to be on.
Great. Thanks so much.
Thank you. Once again, that is star one to ask an audio question. Our next question will come from Jared Shojaian with Wolfe Research.
Hi, good morning, everyone. Thanks for taking my question. Tom, can you just talk about the interest level in the transaction market right now? We've heard from a couple of your peers who sort of indicated a rather benign appetite of their own. What are you seeing as you've been marketing some of your assets here in the last month or two?
Obviously, we've executed five separate casino sales in the last quarter, so it was robust for us. I think depending on where you're selling, this is a good time to be a seller of assets. Notwithstanding the last couple of days in the markets, capital is pretty cheap. There are smaller operators that want to get bigger. There's operators that are not on the Vegas Strip that want to get on the Vegas Strip. We feel like in terms of selling individual assets, this is a good time to be looking at that.
Great. Thank you. Can you talk about Black Hawk? How much of the $8 million-$10 million was associated to Black Hawk, and how has Black Hawk performed since you've completed the renovations, maybe in the days and weeks post-renovation, how much is revenue and EBITDA up? Separately, are you expecting any disruption from the Lake Charles move to land-based?
On the Black Hawk question, rather than parsing where that $8 million-$10 million comes from, I tell you Black Hawk EBITDA was down about 20% in the first half of the year on more than a 10% revenue decline. Since we've reopened, those declines have disappeared. We're now getting the word out that the work is complete, and we'd expect to be posting year-over-year gains as we move forward. In Lake Charles, the answer is yes, there will be construction disruption there. The footprint of where we're putting the asset is effectively connecting the existing hotel with the existing parking garage, which sits on where the existing porte cochere is if you're valet parking your car. If you're coming in through the garage, you should see relatively little impact since you can exit the garage and walk to the boat without walking through that area.
We would expect some significant disruption in Lake Charles as we begin.
Okay. Thank you very much.
Thank you. Our next question will be from John DeCree with Union Gaming.
Good morning, everyone. Thanks for taking the questions. Two for me. Tom, I know for everyone who's been following Eldorado for a while knows that your program on marketing and promotional activities isn't contingent upon what your competitors are doing. We have heard over the last several months a little bit of heightened promotional activity in various markets, was wondering if you could comment on that and if you've seen that in your markets, if it's had any impact. As a follow-up, as we kind of track the Caesars results going forward, is there anything that you guys can do ahead of time to share best practices or have any influence in how some of their operations go? I guess directly, if we see Caesars operating results, is there any of Eldorado's best practices that can be incorporated before closing?
I think you heard Tony's remarks yesterday in terms of some of their cost-cutting initiatives and where he expects to go, and I certainly heard some similarities there in terms of what we would target. We cannot direct them to do anything between now and closing. We're two independent companies operating independently. As you know, Tony's only been there a couple of months now, so he's making changes as the new guy in the seat that, in some cases, wouldn't be too dissimilar to what we'd be doing were we in the seat. We're watching that, and we're in discussions with them about how they operate and we'll remark on what we see, and we'll formulate our own plan. We do see some progress in terms of where we would head post-closing. What was your first question, John? Sorry, I blanked.
Yeah. Sorry, Tom, put them all together. Broadly speaking, the promotional environment-
Oh, yeah.
in some of those markets that may be affected.
We see what I would characterize as a normal promotional market on balance. There are pockets where you see people making decisions that seem to be irrational. Atlantic City is a chief example of that, but there's nothing that's impacting the decisions that we're making on the marketing side.
Thanks for the additional color, Tom.
Thank you. Our next question will be from Brian McGill with Telsey. Hello, Brian. Your line is live.
Oh, sorry. Can you hear me now?
Come on, Brian. Let's go.
Okay. Sorry. Don't know what happened there. I wanted to go on Pompano. With the documents that are out there now, it seems like it's a bigger project, possibly, with 1,000 hotel rooms or almost, and 4,100 residential units. Also said, I read a 2029 completion. I'm wondering, what's the cost, and I'm assuming it opens in phases, maybe any color there?
What I'd say is the zoning process for us has taken a bit longer than we anticipated, just in terms of how fast it's moving. There's no issues. We were a bit more optimistic in terms of when we could combine the entire property for zoning purposes. You've seen some of the plans start to leak. You should be expecting that construction begins late this year or early next year. You should be thinking about a typical live entertainment district that's got some of the pieces that have been announced or have been rumored, that opens next year, early 2021. That would include an initial residential tower, an initial office tower. The bulk of the add-on in terms of out to 2029 is additional residential and office tower as demand builds.
You're kind of building a town center, for those of you that live near a town center. It's quite an ambitious development. The interest from third parties has been significantly in excess of what our partners were expecting coming in, which is heartening to us. We continue to believe that we'll be able to fund the bulk of the development either on the JV balance sheet or with third-party money. The only on-balance-sheet investment you should expect from us is an expansion of the casino and the addition of a parking garage, since a fair amount of what's built is on our existing surface parking. As those plans come into focus, we'll have more detail there.
Okay, thanks. Then I wanted to ask on Illinois, with the expansion, would you bid on any of the potential new casino licenses there?
I would say it's unlikely. The timing of their expansion is difficult for us from that perspective, since our number one focus is getting the Caesars transaction closed, so that anything external to that takes focus away from that, it's unlikely that we would pursue.
Okay, last one from me. The theme of the conference call so far has really been that the sports betting has been helping drive regional traffic, which is certainly a positive. We've also, though, had a number of partnerships announced recently around online sports betting and casino, and probably you're going to see more added going forward. Does that change at all how you view sports betting going forward?
I would say the development of sports betting has been as we've expected in terms of driving incremental visitation. The change for us is Caesars has a robust, developed sports betting business already, including sports partnerships. They've got an internet casino business that are material businesses that I think really get little to no value. They got little to no value in their share price when they were an independent company. We bring our own sports business, our partnerships. I'm starting to think about, is there a way to structurally put something together that shines a light on that business in more of a pure-play fashion that would be recognized by the market? It's early days in terms of thoughts, but I think there's a big business there. It's growing very quickly, and it's housed within a much larger business that typically trades at lower EBITDA multiples.
If I can find a way to spotlight that value, you should expect that we're going to look at it.
some sort of spin-off or something like that potentially one day.
Yeah. Is there a way to point people to look at this value that's very high growth business. On a combined basis, real critical mass that's just lost in a much larger story as we sit here today.
Okay, thank you.
Thank you. Our next question will be from Daniel Politzer with JP Morgan. Daniel, your line is live.
Hey, can you hear me?
We got you, Dan.
Hi. Good morning, everybody, and thanks for taking my questions. The first one's on 2020 and the West segment, which I think there's a lot more moving pieces, I guess, there with respect to the headwinds in 2019 thus far that potentially become tailwinds in 2020. If you can just kind of bridge us or walk us through some of the impact you felt so far this year and what should potentially be a benefit next year. The things that come to my mind would be Reno, the weather impact, the housing deal, bowling returning, Black Hawk construction, and then how you're kind of thinking through all these moving pieces with respect to how your revenue and EBITDA growth more broadly have been growing for your entire company.
I would say, we talked about impact of weather on the first quarter call. We've talked about what's happened to Black Hawk in the first six months of the year. Black Hawk, you should be thinking about what it was doing before, plus a return on a $30 million investment where we would expect to get 15% plus cash on cash returns. In Reno, particularly with the deal with the university, I think we should be testing the all-time high for Reno in 2020, given that you've got Safari Club in January, you've got the big bowling group in the second quarter, which was 40,000 room nights the last time they were there, plus this university deal. The renovation of Legacy that's coming online, that finishes our legacy rooms, that finishes our CapEx cycle. The prior record Reno EBITDA was about $110 million across the three properties.
I would expect that to be in jeopardy in 2020.
All right, thanks for that. Just to follow up on last night's Caesars call. They mentioned they were looking to reduce corporate costs by $50 million by, I think, the first quarter of 2020. I guess, how does that integrate with your anticipated $500 million in targeted synergies for that? Is that included, or would that be in addition, or is it kind of something you're still looking at?
It's something that we're still looking at. I would expect that there would be a fair amount of overlap, versus what we would be targeting.
Okay, then one last quick one. I think you said you were looking to drive leverage down three times, once all said and done with the transaction. I just want to clarify, is that on a lease-adjusted basis or just looking at a traditional debt?
That's on a gross lease-adjusted basis.
All right, guys. Thanks so much.
At this time, there are no further questions. I'm sorry. We do have another question from David Katz.
Hi, one quick one, if you don't mind. Apologies if you discussed this already, can you just talk about corporate expense a little bit? It was, I guess, understandably a bit elevated in the quarter and has been jumping around quite a bit. What's in there? How could we potentially think about that for the rest of the year or next year?
You've got sports betting rolls through corporate and other now, so there's a little bit of noise in our corporate number. You should be expecting our pure corporate number to stick around $40 million, so about $10 million a quarter, and the difference would be what rolls through for sports betting, which I believe this quarter was around a million and a half dollars.
Around $40 million? Perfect.
Yeah.
All right. Thanks very much.
Thank you.
Thank you. There are no further questions at this time. I'd like to turn the call back over to Tom Reeg.
Thanks, everybody. We'll talk to you next quarter.
Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect.