Land & Buildings Wants Gaming and Leisure to Merge With Vici

Land & Buildings Investment Management, LLC, an activist investor focusing on real estate assets, is reportedly pressing Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) to consider a deal with rival Vici Properties (NYSE:VICI), perhaps even a merger.

Activist real estate investor Jonathan Litt wants GLP to merge with rival Vici Properties. (Image: Bloomberg)

Land & Buildings (L&B), run by Jonathan Litt, has angled for change, including deal-making and asset sales, at a slew of well-known real estate companies over the years. The targets include Hudson’s Bay, BRE Properties, and Associated Estates.

The Connecticut-based activist, known for agitating for change at real-estate companies, has been speaking with Gaming and Leisure executives about a tie-up between the firm and fellow gambling real-estate investment trust,” reports The Wall Street Journal.

Without divulging specific numbers, Litt took to Twitter on Wednesday to say that L&B has amassed a “significant” investment in GLP and that it is his firm’s “largest position.”

GLP has become a favorite of hedge funds and other professional investors in recent quarters, and it is believed L&B has been recently adding to a stake in the gaming real estate investment trust (REIT) it initiated earlier this year.

As of the end of the third quarter, L&B was not among the 20 largest GLP investors.

Creating A Goliath

There are just three gaming REITs – GLP, Vici, and MGM Growth Properties (NYSE:MGP). Should Litt prove successful in pushing for a GLP/Vici marriage, that deal would create an industry behemoth.

Pennsylavania-based GLP, which was spun out of Penn National Gaming (NASDAQ:PENN) in 2013 as the first gaming REIT, owns 46 properties in 16 states, including the Tropicana in Atlantic City, N.J. and five casinos in Louisiana. The firm counts Penn National and Eldorado Resorts (NASDAQ:ERI) as its two largest tenants.

Vici was born through a 2017 spin-off from Caesars Entertainment (NASDAQ:CZR) when that company needed to raise cash to stave off bankruptcy. The New York-based company has been growing rapidly this year, adding gaming properties in Missouri, Ohio, and West Virginia, among other locations, through a series of acquisitions.

The company owns the real estate assets of Caesars Palace on the Las Vegas Strip, the Caesars on the Atlantic City Boardwalk, and 10 Harrah’s properties, among others. Caesars and Century Casinos are among Vici’s top tenants.

Based on where the stocks trade at this writing, a combined GLP/Vici has a market capitalization of $20.70 billion.

A ‘Win-Win’

L&B’s Litt believes a merger between the two companies would offer GLP investors significant share price appreciation.

A merger between $GLPI and $VICI could see $GLPI have 20-25% upside and materially reduce tenant concentration for both companies based on our analysis,” he said on Twitter.

Citing avenues for growth and the predictability of the gaming REIT model, Litt views the industry as “mispriced.”

“We have been engaging with GLPI and think there is a win-win here for both companies,” said the L&B boss. “This thesis aligns with our view that the gaming REIT sector is mispriced, given highly predictable cash flows and growth potential.”