Gaming and Leisure Properties, Inc. Announces Acquisition of the Real Estate Assets of Tropicana Entertainment
April 16 2018 - 6:30AM
– Purchase Price of $1.21 Billion
With Initial Rent of $110
Million –– Increased Tenant
Diversification with Eldorado Resorts, Inc.
–– Announced Acquisitions Are Expected to be
8% to 10% Accretive –
Gaming and Leisure Properties, Inc. (Nasdaq:GLPI) ("GLPI" or the
"Company") today announced that it has entered into a definitive
agreement to acquire the real estate assets of six casino
properties from Tropicana Entertainment for $1.21 billion,
exclusive of taxes and transaction fees of approximately $40.0
million. The assets to be acquired are Tropicana Atlantic City,
Tropicana Evansville, Lumiere Place, Tropicana Laughlin, Trop
Casino Greenville and The Belle of Baton Rouge. The combined
properties include 350,000 casino square feet, 7,416 slot machines,
237 table games and 4,993 hotel rooms. Concurrent with the closing
of this transaction, Eldorado Resorts, Inc. (NASDAQ:ERI) will
acquire the operating assets of these properties and lease the real
estate from the Company through a new master lease with a 15 year
initial term and four 5 year renewal periods. Initial annual rent
is $110 million and the rent coverage is expected to be not less
than 1.85 times as defined by the lease. Terms of the new lease
with Eldorado are similar to the Company’s existing Master Leases,
except the escalator is guaranteed for the first five anniversaries
of the lease so long as the escalator increase does not create an
event of default. The transaction is subject to regulatory approval
and is expected to close by the end of 2018.
The Company expects to fund the transaction with
a combination of debt and equity, however, based on market
conditions the entire transaction could be funded with debt. Upon
completion of this acquisition, along with the previously announced
transactions related to the acquisition of Pinnacle Entertainment,
Inc. (NASDAQ:PNK) by Penn National Gaming, Inc. (NASDAQ:PENN), the
Company anticipates its pro forma ratio of Total Debt to Adjusted
EBITDA will increase to no more than 5.5 times. In aggregate, the
two transactions are expected to result in dividend per share
accretion of 8% to 10% on the first quarter annualized dividend of
$2.52 per share.
Chief Executive Officer, Peter M. Carlino,
commented, “The acquisition of these assets demonstrates the
Company’s continued commitment to pursuing accretive growth
opportunities. This transaction meaningfully grows our annual rent
and diversifies our tenant base, while increasing our geographic
footprint. Eldorado is a highly-respected operator of a large and
diversified portfolio of regional gaming assets with a strong track
record of successful acquisitions. We are excited to work with them
to successfully complete this acquisition and look forward to
additional opportunities to expand our relationship in the
future.”
Goodwin Procter LLP is acting as legal counsel to GLPI in
connection with the proposed transaction.
Disclosure Regarding Non-GAAP Financial
Measures
Adjusted EBITDA and AFFO are non-GAAP
performance measures, which the Company believes may provide
additional meaningful comparisons between current results and
results in prior periods. Non-GAAP performance measures should be
viewed in addition to, and not as an alternative for, the reported
results under accounting principles generally accepted in the
United States. Further information regarding these measures and
reconciliation to GAAP may be found in Gaming & Leisure
Properties, Inc.’s SEC filings on the SEC’s website.
About Gaming and Leisure
Properties
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. GLPI expects to grow its
portfolio by pursuing opportunities to acquire additional gaming
facilities to lease to gaming operators. GLPI also intends to
diversify its portfolio over time, including by acquiring
properties outside the gaming industry to lease to third parties.
GLPI elected to be taxed as a REIT for United States federal income
tax purposes commencing with the 2014 taxable year.
Forward-Looking Statements
This press release includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act
and Section 21E of the Securities Exchange Act of 1934, as amended,
including statements regarding our expectations of growth and
diversification. 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: the consummation of the transactions, including the
ability of the parties to satisfy the conditions set forth in the
definitive transaction documents; disruptions to Tropicana’s
properties, other assets or operations during the pendency of the
closing; adverse changes in general economic conditions in the
regions or the industries in which GLPI, ERI and Tropicana operate,
or general disruptions in the financial, debt, capital, credit or
securities markets; the ability to receive, or delays in obtaining,
the regulatory approvals required to own the Tropicana properties,
or other delays or impediments to completing the planned
acquisitions, including the transactions between PENN and PNK;
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, including through GLPI's
existing ATM program; 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, 2017,
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.
Contact
Investor Relations – Gaming and Leisure
Properties, Inc.
Bill CliffordT: 610-401-2900Email: bclifford@glpropinc.com
Hayes CroushoreT: 610-378-8396Email:
hcroushore@glpropinc.com
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