Gaming and Leisure Properties, Inc. (GLPI) has strategically expanded its portfolio with the acquisition of three prominent casino resorts located in South Dakota and Nevada. This move, valued at $105 million, underscores GLPI’s commitment to growth and diversification within the gaming and leisure industry. The acquired properties include the Silverado Franklin Hotel & Gaming Complex and Deadwood Mountain Grand, both situated in South Dakota, and Baldini’s Casino in Nevada. In conjunction with this acquisition, GLPI has entered into long-term lease agreements with Strategic Gaming Management, further enhancing its portfolio and establishing a new tenant relationship.
Details of the Acquisition
GLPI’s acquisition of the Silverado Franklin Hotel & Gaming Complex, Deadwood Mountain Grand, and Baldini’s Casino is a significant investment aimed at expanding the company’s footprint in key gaming markets. The total investment, including proceeds allocated for capital improvements, amounts to $110 million. This acquisition is expected to be immediately accretive to GLPI’s operating results, contributing positively to the company’s financial performance.
Lease Agreements with Strategic Gaming Management
As part of this acquisition, GLPI has established a new tenant relationship with Strategic Gaming Management by entering into long-term lease agreements. The leases, with affiliates of Strategic Gaming Management, are set for an initial 25-year term with two additional ten-year renewal periods. These agreements will generate an initial aggregate annual cash rent of $9.2 million, representing an 8.4% capitalization rate. This steady stream of rental income will bolster GLPI’s revenue and provide a reliable financial foundation for future growth.
Strategic Right of First Refusal
A notable aspect of the agreement is GLPI’s secured right of first refusal on future acquisitions related to Strategic Gaming Management. This right remains in effect until Strategic’s adjusted earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) reach $40 million annually. This strategic move positions GLPI to capitalize on future growth opportunities associated with Strategic Gaming Management, ensuring a continued partnership and potential for further portfolio expansion.
Executive Insights
Peter Carlino, CEO and Chairman of GLPI, expressed enthusiasm about the acquisition and the new tenant relationship. He highlighted the diversification benefits and the expansion of GLPI’s property portfolio, which now encompasses 65 properties across 20 states with nine tenants. Carlino emphasized the immediate accretive impact on GLPI’s operating results, reflecting the company’s strategic approach to growth and partnership.
J. Grant Lincoln, CEO of Strategic Gaming Management, echoed Carlino’s sentiments, expressing satisfaction with the partnership with GLPI. Lincoln underscored Strategic’s operating approach, which is focused on achieving strong bottom-line results through decades of experience in competitive gaming markets. He also noted that GLPI’s unique partnership approach and extensive experience as gaming operators were key factors in choosing GLPI as their sale-leaseback partner.
Impact on the Gaming and Leisure Industry
This acquisition and the resulting lease agreements mark a significant development in the gaming and leisure industry. By expanding its portfolio and establishing a new tenant relationship with Strategic Gaming Management, GLPI is poised to strengthen its market position and drive future growth. The transaction not only enhances GLPI’s revenue stream but also provides Strategic Gaming Management with the support needed to continue its growth trajectory.
The acquisition of the Silverado Franklin Hotel & Gaming Complex, Deadwood Mountain Grand, and Baldini’s Casino represents a strategic move by GLPI to diversify its property portfolio and enhance its tenant roster. With a total investment of $110 million, including capital improvements, and the establishment of long-term lease agreements generating an initial annual cash rent of $9.2 million, GLPI is well-positioned for continued growth. The right of first refusal on future acquisitions related to Strategic Gaming Management further strengthens GLPI’s strategic position in the gaming and leisure industry. This acquisition underscores GLPI’s commitment to growth and partnership, setting the stage for a prosperous future.