Posted date: February 6, 2024, 05:44.
Last updated: February 6, 2024 05:44h.
Gaming and Leisure Properties (NASDAQ: GLPI) announced today that it will pay $175 million for the Tioga Downs Casino Resort real estate assets in Nichols, New York.
Privately held American Racing & Entertainment LLC is selling the land to a Pennsylvania-based real estate investment trust (REIT). In connection with the sale, the parties will enter into a new 30-year triple net lease with an initial annual rent of $14.5 million and a capitalization rate of 8.3%.
The initial annualized rent coverage ratio for this lease is expected to be greater than 2.3x. The rent associated with the lease is subject to a fixed annual increase rate of 1.75% starting from the first anniversary and a fixed annual increase rate of 2.0% starting from his 15th year of the lease agreement throughout the remaining term. An annual increase rate of . ” says the statement.
Prior to the Tioga Downs transaction, GLPI owned real estate assets in 61 gaming establishments located in 18 states. The REIT is entering New York for the first time through the transaction announced today.
Inside Tioga Downs
Tioga Downs is located on 162 acres and includes a 32,600 square foot casino with 895 slot machines and 29 table games. The venue also features a FanDuel sportsbook, a 160-room hotel, a 5/8-mile harness racetrack, seven dining options, and an 18-hole golf course.
GLPI's purchase of the racino property comes as the operator had already allocated $130 million to enhance the property in 2016, when New York regulators granted a Class III gaming permit. Maybe it was the timing.
Sale-leaseback transactions (SLBs) are common in the gaming industry and are considered win-win deals for casino operators and real estate companies. Through these agreements, gaming companies are able to monetize their land assets, often paying large sums of cash upfront that can be used for everything from further acquisitions, shareholder benefits like stock buybacks and dividends, and debt reduction. You can get it.
GLPI funded the acquisition of the Tioga Downs property with cash on hand and $20 million in equity. Citizen JMP Securities advised his REIT on the transaction.
Moving to New York is smart for GLPI
With the purchase of the Tioga Downs property, GLPI adds a ninth new tenant and adds exposure to another state.
This acquisition is consistent with GLPI's track record of adding casino real estate in less volatile markets and areas where acquired venues face little nearby competition. Tioga Downs checks both boxes, and it's something to consider as New York State seeks to expand the game in the downstate region.
“Our locally oriented facility has a well-protected feeder market with no competition within 135 miles and a very loyal following. Its location allows us to expand our gaming operations in lower New York State. ,” American Racing CEO Jeff Gural said in a statement.
