GLPI to Acquire Tioga Downs Real Estate for $175 Million

Sports Betting News: February 6, 2024, 05:44h. 

Latest Update: February 6, 2024, 05:44h.

Gaming and Leisure Properties (NASDAQ: GLPI) recently announced its $175 million acquisition of the property assets of Tioga Downs Casino Resort in Nichols, NY.

Tioga Downs
Tioga Downs Casino Resort in Nichols, NY. Casino REIT Gaming and Leisure Properties is paying $175 million for the venue’s real estate. (Image: Tioga Downs)

As part of the acquisition, the property’s real estate investment trust (REIT) will enter into a new 30-year, triple-net lease with initial annual rent of $14.5 million at a capitalization rate of 8.3%. Several rent escalations are also part of the agreement, with an expected initial annualized rent coverage ratio of over 2.3x. Rent will be subject to fixed annual escalation, starting at 1.75%.

GLPI’s purchase of the racino’s real estate may be well-timed because the operator already allocated $130 million to enhancing the property, having done so in 2016 when New York regulators granted it a Class III gaming permit.

Prior to the deal for Tioga Downs, GLPI owned the real estate assets of 61 gaming venues in 18 states. The REIT is entering New York for the first time by way of the transaction announced today.

Inside Tioga Downs

Tioga Downs sits on 162 acres and is home to 32,600-square-foot casino featuring 895 slot machines and 29 table games. The venue also has a FanDuel sportsbook, a 160-room hotel, 5/8-mile harness horse track, and seven eateries as well as an 18-hole golf course.

Sale-leaseback deals, or SLBs, are commonplace in the sports betting industry, and often viewed as win-wins for casino operators and real estate companies. Through these agreements, a gaming company can monetize land assets, often garnering large, upfront sums of cash to use for anything, including more acquisitions, shareholder rewards, such as buybacks and dividends, or to reduce debt.

With $20 million in equity, GLPI has funded the acquisition of the Tioga Downs real estate, consulting with Citizens JMP Securities on the deal.

For GLPI, Prudent Move Into New York

Massachusetts adds a new tenant, its ninth, and exposure to another state, as it adds Tioga Downs real estate to its notable track record of strategically adding casino properties in less volatile markets and areas with minimal competition. Tioga Downs checks both boxes, providing insulation from potential competition in the downstate region as New York pursues gaming expansion.

“Our locals-oriented property has a well-protected feeder market with no competition within 85 miles and a very loyal following. Its location largely insulates it from gaming expansion in the downstate New York region,” said American Racing CEO Jeff Gural in the statement.

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