Gaming and Leisure Properties Announces the Acquisition of Three Casino Resorts in South Dakota and Nevada for $105 Million and Establishes New Tenant Relationship With Strategic Gaming Management
Gaming and Leisure Properties (GLPI) announced the acquisition of three casino resorts: Silverado Franklin Hotel & Gaming Complex, Deadwood Mountain Grand casino, and Baldini’s Casino for $105 million. The deal includes $5 million for capital improvements, totaling a $110 million investment. GLPI and Strategic Gaming Management entered into two 25-year triple-net leases with initial annual cash rent of $9.2 million, representing an 8.4% capitalization rate. The transaction is expected to be immediately accretive, diversifying GLPI's portfolio to 65 properties across 20 states. GLPI secured a right of first refusal on future acquisitions until Strategic’s adjusted EBITDAR from GLPI assets reaches $40 million. The properties in South Dakota and Nevada add significant gaming and hospitality assets to GLPI's portfolio, with notable amenities and recent capital investments.
- Acquisition of three casino resorts for $105 million.
- Total investment of $110 million including $5 million for capital improvements.
- Initial annual cash rent of $9.2 million, representing an 8.4% capitalization rate.
- Expected to be immediately accretive to GLPI’s operating results.
- Diversifies GLPI's portfolio to 65 properties across 20 states.
- Secured right of first refusal on future acquisitions until Strategic’s adjusted EBITDAR reaches $40 million.
- Strategic Gaming Management is a growing operator with a solid market position.
- Addition of significant gaming and hospitality assets with recent capital investments.
- High initial investment of $110 million, which includes $5 million for capital improvements.
- Long-term lease agreements (25 years) could pose risks if market conditions change.
- Dependence on Strategic Gaming Management’s performance for future growth opportunities.
- Annual rent escalation clauses could impact profitability if CPI exceeds projections.
Insights
Gaming and Leisure Properties, Inc. (GLPI) has made a strategic acquisition of three casino resorts, amounting to a total investment of
The transaction includes a right of first refusal (ROFR) on future acquisitions related to Strategic Gaming Management (SGM) until SGM's EBITDAR reaches
From a financial perspective, the annual rent coverage ratio is expected to be 2x, which suggests that the properties should generate enough cash flow to cover the rent by two times. Furthermore, the rent is subject to a fixed
The acquisition diversifies GLPI's property portfolio, expanding its footprint to 65 properties across 20 states. This geographic diversification can help mitigate risks associated with regional economic downturns.
The acquisition of the Silverado Franklin Hotel & Gaming Complex, Deadwood Mountain Grand and Baldini’s Casino by GLPI presents a significant expansion in the gaming market. These properties add to GLPI's portfolio, which already spans numerous states and features a variety of gaming facilities.
Silverado's location adjacent to the city-owned Outlaw Square and close proximity to I-90 enhances its potential for high foot traffic, benefiting from both locals and tourists. Similarly, Baldini's extensive amenities, including a sportsbook and large parking capacity, cater well to the Nevada locals market.
Deadwood Mountain Grand's substantial investment in recent years, including the renovation of its Holiday Inn Resort Hotel, underscores its commitment to maintaining premium offerings. These investments can translate into sustained attractiveness to patrons, driving steady revenue flows.
The partnership with Strategic Gaming Management, led by an experienced operator, introduces a new dynamic to GLPI's tenant roster. Strategic's focus on bottom-line results and growth in competitive markets aligns well with GLPI's goals, indicating potential for robust operational performance and financial returns.
Overall, the properties acquired are strategically positioned to attract a diverse customer base and generate consistent cash flows, which is favorable for GLPI's long-term growth prospects.
Transaction is Expected to be Immediately Accretive
WYOMISSING, Pa., May 16, 2024 (GLOBE NEWSWIRE) -- Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) (“GLPI”) today acquired the real estate assets of the Silverado Franklin Hotel & Gaming Complex (“Silverado”), the Deadwood Mountain Grand (“DMG”) casino, and Baldini’s Casino (“Baldini’s”), for
As part of the transaction, GLPI also secured a right of first refusal, or ROFR, on the real estate related to future acquisitions until Strategic’s adjusted EBITDAR related to GLPI owned assets reaches
Peter Carlino, GLPI’s Chairman and CEO, commented, “With our acquisition of the Silverado, DMG, and Baldini’s properties, we are pleased to further diversify our property portfolio while expanding our tenant roster through our new relationship with Strategic, a dynamic and growing gaming operator. The addition of Strategic’s properties expands our portfolio to 65 properties across 20 states with 9 tenants and is expected to be immediately accretive to GLPI’s operating results. Strategic is led by CEO J. Grant Lincoln who formed the company in 2009. Under Grant’s stewardship, Strategic operates three properties with solid leadership positions in their respective markets, while generating growth in patronage and cash flows. With the initial transaction and our right of first refusal on growth opportunities, we look forward to the start of a long-term mutually beneficial relationship with Grant and Strategic. Our initiatives to expand our portfolio remain active in the current environment as our reputation as the gaming landlord of choice is further strengthened and reinforced by this transaction.”
J. Grant Lincoln, Strategics’ CEO added, “We are pleased to begin our partnership with GLPI. Our operating approach, informed by decades of successful experience in competitive gaming markets, is laser focused on bottom line results. Our platform is well positioned for thoughtful, ongoing growth. As we explored the options for a sale-leaseback partner, GLPI rose above the rest given their unique approach and true emphasis on partnership as well as their deep experience as gaming operators. We look forward to collaborating with GLPI to prudently grow our operations over the coming years.”
Located in Deadwood, SD, Silverado was one of the first gaming properties in the state when it opened in 1990. It is one of the largest gaming facilities in South Dakota, featuring 245 slot machines, 16 table games, two restaurants, four bars, and a 68-room hotel. Silverado has completed over
Located in Sparks, Nevada, Baldini’s is an approximate 9-acre gaming property that offers approximately 492 slot machines across a 43,000 square foot gaming floor that opened in 1988. Baldini’s offers players across the Nevada locals gaming market a wide range of amenities, including restaurants, bars, and over 600 parking spaces, a 2,000 square foot “The Book at Baldini’s” sportsbook, and 37,000 square feet of additional office and support space.
Located in Deadwood, South Dakota, DMG is an 11 acre gaming property that offers 141 slots and 8 table games. Additional amenities include 2 food & beverage locations, a 3-level 208-space parking garage, a 67-seat sportsbook, and a 13,500 square foot Event Center. The property opened in 2011. More than
Citizens JMP Securities acted as financial advisor to Gaming and Leisure Properties. CBRE Securities served as the financial advisor to Strategic.
For further information, the Company has posted a presentation to its website regarding the transaction which can be accessed at https://investors.glpropinc.com/events-and-presentations.
About Gaming and Leisure Properties, Inc.
GLPI is engaged in the business of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements, pursuant to which the tenant is responsible for all facility maintenance, insurance required in connection with the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.
About Strategic Gaming Management LLC
Strategic Gaming Management is a multijurisdictional licensed operator of brick and mortar casinos founded in 2009 by Chief Executive Officer J. Grant Lincoln. Today, the Company operates three casinos in Nevada and South Dakota in collaboration with its real estate partner and owner of the associated real estate Gaming & Leisure Properties (NASDAQ: GLPI).
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including our expectations regarding the anticipated accretion and the benefits of the transaction to our shareholders. Forward-looking statements can be identified by the use of forward-looking terminology such as “expects,” “believes,” “estimates,” “intends,” “may,” “will,” “should” or “anticipates” or the negative or other variation of these or similar words, or by discussions of future events, strategies or risks and uncertainties. Such forward-looking statements are inherently subject to risks, uncertainties and assumptions about GLPI and its subsidiaries, including risks related to the following: GLPI’s ability to expand its relationship with Strategic; the potential negative impact of recent high levels of inflation on our tenants' operations; GLPI's ability to maintain its status as a REIT; our ability to access capital through debt and equity markets in amounts and at rates and costs acceptable to GLPI; the impact of our substantial indebtedness on our future operations and ability to grow through acquisition; changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs or to the gaming or lodging industries; and other factors described in GLPI’s Annual Report on Form 10-K for the year ended December 31, 2023, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, each as filed with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to GLPI or persons acting on GLPI’s behalf are expressly qualified in their entirety by the cautionary statements included in this press release. GLPI undertakes no obligation to publicly update or revise any forward-looking statements contained or incorporated by reference herein, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release may not occur as presented or at all.
Contact
| Gaming and Leisure Properties, Inc. | Investor Relations |
| Matthew Demchyk, Chief Investment Officer | Joseph Jaffoni, Richard Land, James Leahy at JCIR |
| 610/401-2900 | 212/835-8500 |
| investorinquiries@glpropinc.com | glpi@jcir.com |
FAQ
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