Stadium Commitment Could Grow Larger with Gaming and Leisure Properties
Gaming and Leisure Properties (NASDAQ: GLPI) had earlier said it would invest $175 million in financing for a baseball stadium at the Tropicana location on the Las Vegas Strip. But an analyst, Mitch Germain from JMP Securities, believes this amount could increase if necessary.
After conversations with Gaming and Leisure executives during the most recent Global Gaming Expo in Las Vegas, Germain came away with the impression that the Pennsylvania-based gaming real estate investment trust (REIT) is confident about the Las Vegas ballpark plan and may need to contribute more financially to the project. In a recent letter to clients, he wrote:
"Gaming and Leisure's management displayed an enthusiasm for potential involvement in the project in a more significant capacity than the initial $175 million commitment."
At the moment, GLPI owns the property assets of 59 gaming venues spread across 18 states.
Gaming and Leisure Gets Involved with Tropicana
GLPI has a well-known focus on regional casino real estate; however, it owns the property assets tied to the Tropicana on the Las Vegas Strip. This might put the REIT in a position to profit if the Oakland Athletics were to follow through on plans to relocate to Las Vegas. Bally's, which operates the Tropicana, and GLPI agreed to fund up to $175 million worth of improvements to property, resulting in a raise in rent.
Supposing that the plan entails tearing down the Tropicana, one of the older casinos on the Strip, to make way for a baseball stadium - which seems likely - Bally's would need to be remunerated in some manner. Tropicana is Bally's only venue in Las Vegas.
In April 2021, Bally's acquired the non-real estate assets of Tropicana from GLPI in a deal valued at $308 million. As part of this agreement, Bally's sold the property assets of certain venues in Colorado and Illinois to GLPI and agreed to lease them back. Bally's has a 50-year lease on Tropicana, starting at $10.5 million annually.
Germain mentioned that GLPI's management pointed out there could be ways in which Bally's could reinvent the Tropicana after the stadium is built.
"Management hinted at several moving parts concerning not just the stadium, but also the potential for Bally's to redevelop the Tropicana site," Germain wrote to clients.
More Information Coming Soon
There could be more information on the Las Vegas stadium project and the future of Tropicana emerging soon. The A's will address the Las Vegas Stadium Authority for the first time on Wednesday.
GLPI is scheduled to release its third-quarter results on Friday, and analysts may question management about the stadium plan and Tropicana's future. While official comments have not yet been made, it's likely that demolishing the casino hotel will be a necessity.
Last year, Bally's Chairperson Soo Kim told reporters the company is considering substantial changes at Tropicana, and that demolishing and rebuilding the property could be possible.
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Source: www.casino.org
