Gaming and Leisure Buys Three Casinos in Nevada and South Dakota for $105 Million
Gaming and Leisure Properties, a real estate investment trust (REIT) listed on NASDAQ under the ticker symbol GLPI, announced yesterday that it will spend $105 million to acquire the property assets of three casinos in Nevada and South Dakota from Strategic Gaming Management, LLC.
This deal involves purchasing two casinos in Nevada - Baldini’s Casino in Sparks, and the Silverado Franklin Hotel & Gaming Complex - as well as the Deadwood Mountain Grand in South Dakota.
As part of this transaction, GLPI and affiliates of Strategic Gaming Management, LLC will enter into two lease agreements with a combined initial 25-year term and two ten-year renewal periods, both cross-defaulted. Additionally, GLPI will provide $5 million in capital improvement proceeds at the closing of the deal, bringing the total investment to $110 million.
This is the second major acquisition for GLPI this year, as back in February the gaming landlord announced it would be paying $175 million for the property assets of Tioga Downs Casino Resort in Nichols, New York.
The company has a history of avoiding risky gaming markets and focusing instead on regions that are often overlooked by competitors. Although it doesn't have much presence in Las Vegas, it does own the real estate of the now-closed Tropicana on the Strip and the M Resort in Henderson, and the property assets of Tropicana Laughlin. The purchase of Baldini's will see GLPI's Nevada holdings grow to four, marking its first entry to the Reno-Sparks market.
The addition of the Silverado Franklin Hotel & Gaming Complex and the Deadwood Mountain Grand will also be GLPI's first foray into South Dakota. Previously, its closest properties to the Dakotas were located in Illinois and Iowa. Silverado has already invested over $32 million in capital projects since its inception, with a hotel renovation scheduled to begin in 2024 using a portion of the $5 million in capital improvement proceeds provided by GLPI at the closing of the transactions.
Once completed, the portfolio of GLPI will consist of 65 properties, and its roster of tenants will increase to nine. Strategic Management has granted GLPI the right to buy other gaming properties they might want to sell, as long as Strategic’s adjusted earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) related to GLPI owned assets remains below $40 million annualized.
The initial annual rent payments for all three properties will be $9.2 million, equating to an 8.2% cap rate. Both the previously mentioned 2% annual rent increase starting in year three and the inflation-linked escalator of "the greater of 2.0% or CPI capped at 2.5%" set to begin in year 11 will apply to this transaction as well.
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Source: www.casino.org
