Activism Investor Litt describes gaming and leisure properties meeting as fruitful, expecting noticeable benefits.
A few days ago, the CEO of Land & Buildings Investment Management, Jonathan Litt, used Twitter to share his thoughts about a recent meeting with Gaming and Leisure Properties, Inc. (GLPI), saying it was beneficial and that he believes in how the company's leadership intends to increase value.
Litt's firm has recently invested in this gaming-focused real estate investment trust (REIT), with the goal of encouraging GLP to join forces with rival Vici Properties (VICI). According to a previous article, Land & Buildings has placed a considerable stake in GLP, making it their most significant equity investment.
In his recent tweet, Litt seemed optimistic about the possible merger between the two companies, stating, "Had a productive meeting with $GLPI management last week. They communicated a no-nonsense practical approach to maximizing value – time will tell."
Since December 19, when L&B's involvement with GLP became public knowledge, the stock has risen by approximately 4.6%, while Vici's has experienced a modest increase as well. The stock prices of both companies, GLP and Vici, demonstrate that Litt's Twitter comments may have influenced the market.
There has been no official mention from Vici regarding the possibility of combining with its competitors. The coy investor, who had earlier openly mentioned the idea of a potential merger between GLP and VICI, this time took a delicate approach in his comments.
In his tweet, Litt added, "Substantial upside can be unlocked through improvements as going concern or through strategic options. L&B is a shareholder of GLPI."
While the specific improvements and strategic options remained undisclosed, "strategic options" often indicates considering a sale. The term "improvements," on the other hand, suggests that if GLP implements the necessary adjustments, it can thrive independently and create value for its shareholders.
Regarding a potential merger, Vici has a market valuation of $11.69 billion, which isn't an implausible amount for acquiring GLP, currently valued at $9.41 billion. However, GLP's liabilities would also play a role: by the end of 2019, it forecast a total of $6.31 billion in liabilities.
Taking on such a significant debt in a potential transaction could be demanding for Vici. Nonetheless, analysts like the idea of a merged GLP and VICI, as it would lead to significant scale. The combined portfolio of GLP and VICI includes the real estate assets of approximately 70 domestic gaming properties.
Furthermore, there are rumors of sellers in the market for 2020: Caesars Entertainment, Eldorado Resorts, and Penn National Gaming, the primary tenants of the two REITs. Their potential sales could add to the number of properties managed by the merged entity.
Regardless of the precise details, it's clear that Litt is hopeful about the prospect of a combination between GLP and VICI.
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