Company to Amend Master Lease with Gaming
and Leisure Properties to Facilitate and Fund up to $575 Million of
the Approximately $850 Million Overall Project Budget
PENN Entertainment, Inc. (“PENN” or the “Company”) (Nasdaq:
PENN) announced today that it intends to relocate its riverboat
casinos in Aurora and Joliet, Illinois to new land-based facilities
and to build a new hotel at Hollywood Columbus in Ohio and a second
hotel tower at the M Resort in Henderson, Nevada.
Jay Snowden, Chief Executive Officer and President of PENN
Entertainment, commented: “We are delighted to announce these
exciting new growth projects, which we expect will generate strong
free cash flow returns and create long-term value for our
shareholders. Our casino properties remain at the core of our
omni-channel approach to entertainment, which combines
best-in-class retail operations and a database of more than 26
million myChoice members with a rapidly growing interactive
and media footprint.
“Since the change in law to permit land-side casino relocation
in Illinois, we have been exploring the viability of relocating our
aging riverboats in Aurora and Joliet. Thanks to the support of our
local community leaders, in particular the visionary leadership of
Mayor Richard Irvin and his staff in Aurora, we are very excited to
be moving forward with these projects,” said Mr. Snowden.
“Our plan for Aurora is to construct a modern, best-in-class
casino and hotel in an ideal location off I-88 that will allow us
to serve the millions of visitors to the adjacent Simon Premium
Outlet Mall,” said Mr. Snowden. The Aurora development will include
the transfer of certain parcels of land from the city, and up to
$50 million of the project will be funded by the city through a new
bond issuance, all of which is subject to final approval by the
Aurora City Council. “In Joliet, our planned casino will be located
in the Rock Run Crossings development mixed use project in close
proximity to the I-80 and I-55 interchange, which offers
exceptional visibility and accessibility. These two projects will
significantly improve our offerings in the highly attractive
Chicagoland market while creating hundreds of new full-time jobs
for the local communities,” continued Mr. Snowden.
“We are also pleased to announce the expansion of our offerings
at two of our best performing properties – Hollywood Casino
Columbus in Ohio and the M Resort in Henderson, Nevada, subject to
municipal approvals,” said Mr. Snowden. “Since opening in 2012, our
Columbus property has experienced tremendous growth, and the
addition of a hotel at the property will create a true regional
destination. At the M Resort, the addition of a second tower will
benefit from the strong demand in the Henderson locals market while
providing additional capacity for the group business that is drawn
to our market-leading resort and amenities, including our highly
successful partnership with the Las Vegas Raiders,” said Mr.
Snowden.
In connection with these projects, PENN has entered into an
agreement with Gaming and Leisure Properties, Inc. (“GLPI”)
(Nasdaq: GLPI) to create a new master lease that would include the
two new facilities in Aurora and Joliet, in addition to Hollywood
Columbus (OH), Hollywood Toledo (OH), the M Resort (NV), the
Meadows (PA) and Hollywood Perryville (MD). Pursuant to this
agreement, GLPI will provide up to $225 million at a 7.75% cap rate
for the Aurora project. With respect to the Columbus, Joliet and M
Resort projects, PENN may elect to receive up to $350 million of
funding in the aggregate from GLPI for real property improvements
at then-current market rates, which will incorporate a spread to
GLPI’s cost of capital. Additional details on the new master lease,
which will be effective on January 1, 2023, are included in the
Company’s 8-K filing which is available at
www.pennentertainment.com.
“The overall estimated budget for these new growth projects is
approximately $850 million,” said Mr. Snowden. “With the ability to
access attractive financing from GLPI covering up to $575 million
of the anticipated costs, along with up to $50 million from the
City of Aurora, subject to final approvals, we have the opportunity
to pursue these high growth projects while preserving our cash
position and leverage profile,” concluded Mr. Snowden.
Aurora Development Project
PENN intends to develop a new land-based casino and hotel
adjacent to the Chicago Premium Outlets mall, near Exit 119 off
I-88 in Aurora, which would replace the current Hollywood Casino
Aurora riverboat property. The development, with an estimated
budget of $360 million, is expected to include a modern,
best-in-class casino and hotel with approximately 900 slots and 50
live table games (including a baccarat room and a poker room), a
Barstool Sportsbook with the ability to host popular Barstool
personalities and approximately 200 hotel rooms. In addition, the
property will feature a full-service spa, high-quality bars and
restaurants, approximately 10,000 square feet of meeting areas and
an event center. Construction of the new property is expected to
begin in late 2023, subject to city and regulatory approval.
Joliet Development Project
PENN intends to develop a new land-based casino as part of the
Rock Run Crossings development project in Joliet, which is adjacent
to the I-80 and I-55 interchange and several miles from the current
Hollywood Casino Joliet riverboat property which it would replace.
The project, with an estimated budget of $185 million, is expected
to include a modern, best-in-class casino with approximately 800
slots and 45 live table games (including a baccarat room), a
Barstool Sportsbook, high quality bars and restaurants,
approximately 10,000 square feet of meeting areas and an event
center. Construction of the new property is expected to begin in
late 2023, subject to regulatory approval.
Hollywood Columbus Hotel Development
PENN is planning to construct a new hotel at Hollywood Columbus.
The project, with an estimated budget of approximately $100
million, is expected to include 180 rooms and new food and beverage
offerings. The hotel will be attached to the existing property and
will add approximately 100 permanent new jobs, along with hundreds
of temporary construction jobs. Construction of the new property is
expected to begin in late 2023, subject to regulatory approval.
M Resort Hotel Tower Development
PENN is planning the addition of a second hotel tower at M
Resort in Henderson, Nevada. This project, with an estimated budget
of $206 million, would add approximately 384 rooms to the Company’s
property south of the Las Vegas Strip bringing its total to 774
rooms and suites. Along with the rooms, there will be expanded
meeting space, updated amenities and additional local partnerships
that will be announced at a later date.
About PENN Entertainment
PENN Entertainment, Inc. (Nasdaq: PENN) is North America’s
leading provider of integrated entertainment, sports content and
casino gaming experiences. PENN operates 43 properties in 20
states, online sports betting in 14 jurisdictions and iCasino in
five under a portfolio of well-recognized brands including
Hollywood Casino®, L’Auberge®, Barstool Sportsbook® and theScore
Bet®. PENN’s highly differentiated strategy, which is focused on
organic cross-sell opportunities, is reinforced by its investments
in market-leading retail casinos, sports media assets, owned
technology, including a state-of-the-art, fully integrated digital
sports and online casino betting platform, and an in-house iCasino
content studio. The Company’s portfolio is further bolstered by its
industry-leading mychoice customer loyalty program, which offers
its over 26 million members a unique set of rewards and experiences
across business channels. PENN is deeply committed to fostering a
culture that welcomes a diverse set of customers and dedicated team
members. The Company has been consistently ranked in the top two as
“Employer of First Choice” over the last nine years in the Bristol
Associates-Spectrum Gaming’s Executive Satisfaction Survey. In
addition, as a long-standing good corporate citizen, PENN is also
committed to being a trusted and valued member of its communities
and a responsible steward of our finite natural resources.
Forward Looking Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements can be identified using forward-looking
terminology such as “expects,” “believes,” “estimates,” “projects,”
“intends,” “plans,” “goal,” “seeks,” “may,” “will,” “should,” or
“anticipates” or the negative or other variations of these or
similar words, or by discussions of future events, strategies or
risks and uncertainties. Specifically, forward-looking statements
include, but are not limited to, statements regarding: the expected
benefits and potential challenges of development projects in Aurora
and Joliet, Illinois, Columbus, Ohio and Henderson, Nevada and the
transaction with Gaming and Leisure Properties, Inc.; the rapid
growth of our interactive and media footprint; and the timing, cost
and expected impact of planned capital expenditures on the
Company's results of operations.
Such statements are all subject to risks, uncertainties and
changes in circumstances that could significantly affect the
Company’s future financial results and business. Accordingly, the
Company cautions that the forward-looking statements contained
herein are qualified by important factors that could cause actual
results to differ materially from those reflected by such
statements. Such factors include: our ability to secure state and
local permits and regulatory approvals necessary for the proposed
projects; construction factors, including delays, unexpected
remediation costs, and increased cost of labor and materials; the
passage of state, federal or local legislation (including
referenda) that would expand, restrict, further tax, prevent or
negatively impact operations in or adjacent to the jurisdictions in
which we do or seek to do business; the effects of local and
national economic, credit, capital market, housing, and energy
conditions on the economy in general and on the gaming and lodging
industries in particular; the activities of our competitors and the
emergence of new competitors; the timing, cost and expected impact
of product and technology investments, including with respect to
the growth of our interactive and media footprint; and additional
risks and uncertainties described in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2021, subsequent
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K,
each as filed with the U.S. Securities and Exchange Commission. The
Company does not intend to update publicly any forward-looking
statements except as required by law. Considering these risks,
uncertainties and assumptions, the forward-looking events discussed
in this press release may not occur.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221010005228/en/
Felicia Hendrix Chief Financial Officer PENN Entertainment
610-373-2400
Joseph N. Jaffoni, Richard Land JCIR 212-835-8500 or
penn@jcir.com
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