WYOMISSING, Pa., March 27, 2020 (GLOBE NEWSWIRE) -- Gaming and Leisure Properties, Inc. (NASDAQ: GLPI), today announced that it has reached agreements with Penn National Gaming, Inc. (PENN: Nasdaq) wherein the Company will acquire the real estate assets of the Tropicana Las Vegas hotel and casino and the land for Penn National’s Morgantown, Pennsylvania development in exchange for an aggregate non-cash rent payment of $337.5 million. The parties will enter into a lease for the Morgantown land which will generate $3 million of initial annual cash rent for GLPI.
In addition, Penn National has agreed to engage in an early renewal for both its master leases with GLPI, which extends their current terms by five years, giving GLPI shareholders enhanced visibility of future cash flows. Furthermore, Penn National is granting GLPI downside protection for any future competitive impact that Penn National’s new Category 4 developments in Pennsylvania may have on the GLPI facilities subject to the Penn National master lease. Penn National will otherwise make cash rent payments for its obligations to GLPI including cash rent in April, September, November, and December. Pursuant to the agreement, GLPI has granted Penn National an option to acquire the operations of Hollywood Casino Perryville, one of its taxable REIT subsidiary (TRS) properties, subject to the execution of a lease agreement with Penn National.
Tropicana Las Vegas is situated on a 35-acre land parcel at the corner of Tropicana Boulevard and Las Vegas Boulevard, approximately 2.5 miles from McCarran International Airport on the southern end of the Las Vegas Strip. Penn National will continue to operate the Tropicana Las Vegas subject to a cancelable lease with nominal rent whereby Penn National assumes all carry costs for GLPI's benefit and will receive a share of the net upside over a threshold to the extent a sale of the property occurs within 24 months. GLPI plans to explore all options with respect to the Tropicana Las Vegas to create and deliver value to its shareholders.
GLPI's Chairman and Chief Executive Officer, Peter Carlino, commented, “This is a win-win agreement that significantly enhances GLPI’s certainty from the master leases with Penn National as it assists Penn National in meeting its GLPI rent obligations while helping to create a stronger liquidity roadmap for Penn National. Given the rapid onset of closures related to COVID-19, these agreements are structured in a manner that allows both companies to achieve their longer term objectives once the virus and its associated impacts abate. For GLPI, we are receiving attractive real estate value which represents a prudent and thoughtful approach toward ensuring that our shareholders are made economically whole while positioning Penn National with a healthier runway to navigate the impacts of COVID-19 over the long term. These strategic transactions strengthen the credit support behind GLPI's rent payments, allows GLPI to control a unique and iconic site on the Las Vegas Strip without carrying costs, offers unique protection to the Penn National master lease from potential competitive pressure, and enhances long term cash flow visibility though the lease renewals. We believe the transactions announced today reflect the strong working relationship and continued alignment of interests between GLPI and Penn National as well as our commitment to enhance long-term shareholder value.”
The planned transactions are subject to negotiation of definitive agreements in the coming weeks and receipt of necessary approvals. The parties plan to consummate the transaction by April 30.
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 and was the first gaming-focused REIT in North America.
