Stadium Financing Potential Boosted by Gaming and Leisure Properties

Posted on: October 25, 2023, 04:25h.

Last updated on: October 25, 2023, 04:25h.

Gaming and Leisure Properties (NASDAQ: GLPI) has expressed its intention to provide $175 million in funding for a baseball stadium at the Tropicana site on the Las Vegas Strip. However, an analyst covering the company believes that this figure could be higher if necessary.

The marquee for Tropicana on the Las Vegas Strip. Owner Gaming and Leisure Properties could increase its financial commitment to a baseball stadium project there. (Image: Eater Vegas)

According to JMP Securities analyst Mitch Germain, who recently met with Gaming and Leisure executives at the Global Gaming Expo (G2E) in Las Vegas, the real estate investment trust (REIT) based in Pennsylvania is optimistic about the prospects of the Las Vegas ballpark plan and may consider investing more in the project.

(GLPI management) was enthusiastic about prospects for participation at the project in larger scale, above the original $175 million commitment,” wrote Germain in a recent note to clients.

Currently, GLPI owns the property assets of 59 gaming venues across 18 states.

Gaming and Leisure Talks Tropicana

Despite having a preference for regional casino real estate, GLPI does own the property assets associated with the Tropicana on the Las Vegas Strip. This could put the REIT in a favorable position if the Oakland Athletics move to Las Vegas as anticipated. Bally’s, which operates Tropicana and is owned by GLPI, has agreed to finance up to $175 million in property improvements in exchange for a rent increase.

Assuming the plan to demolish the Tropicana, one of the iconic casinos on the Strip, to make room for a baseball stadium moves forward, Bally’s would need to be compensated. Tropicana is the only Las Vegas venue owned by Bally’s.

In April 2021, Bally’s acquired Tropicana’s non-real estate assets from Gaming and Leisure Properties (NASDAQ: GLPI) in a deal worth $308 million. As part of the agreement, the gaming company sold the property assets of venues in Colorado and Illinois to the GLPI REIT and agreed to lease back those properties. Bally’s holds a 50-year lease for Tropicana, starting at $10.5 million per year.

Germain noted that GLPI management mentioned the possibility for Bally’s to redevelop the Tropicana site after the construction of the stadium.

“Management alluded to several moving pieces about not only the stadium, but the potential for Bally’s to re-develop the Tropicana site,” added the analyst.

Expect More Clarity Soon

More clarity regarding the Las Vegas stadium project and the future of Tropicana could be revealed shortly as the A’s make their debut appearance before the Las Vegas Stadium Authority today.

In addition, GLPI will release its third-quarter results on Friday, and it is likely that analysts will inquire about the stadium plan and the future of Tropicana. While no official comments have been made, it seems that the demolition of the casino hotel is inevitable, based on previous statements from Bally’s Chairman Soo Kim.

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