The acquisition of Tioga Downs Casino Resort in Nichols, New York, by Gaming and Leisure Properties (GLPI) from American Racing & Entertainment for a substantial $175 million is a noteworthy move. This action is in line with GLPI’s larger plan to diversify its portfolio and strengthen its position in the gaming and entertainment industries.
Alongside the purchase, GLPI and American Racing also signed a triple-net master lease for the first thirty years. In accordance with the terms of the deal, GLPI will return the property to American Racing under a $14.5 million first yearly rent, or an 8.3% capitalization rate. Fixed yearly escalations are another feature of the lease conditions that enable consistent growth over the length of the lease.
Property Highlights and Expansion
Nestled in Nichols, NY, Tioga Downs Casino Resort sprawls across approximately 162 acres, offering an array of amenities. These include a sprawling 32,600 sq. ft. gaming floor housing 895 slots and 29 table games, a 2,500 sq. ft. FanDuel sportsbook, a 160-room hotel, a 5/8-mile harness horse track, 7 dining outlets, and an 18-hole championship golf course.
Following the grant of a Class III casino license by the State of New York, the property underwent a substantial $130 million expansion initiative commencing in 2016.
GLPI’s Chairman and CEO, Peter Carlino, expressed contentment with the acquisition, remarking, “We are pleased to add Tioga Downs to our portfolio and the new relationship with American Racing to our tenant roster.” He highlighted the portfolio’s expansion to encompass 62 properties across 19 states with 8 tenants.
Jeff Gural, American Racing’s Founder and CEO, echoed the sentiment, stating, “We are excited to partner with the team at GLPI as we continue to grow our business at Tioga Downs.”
The acquisition was financed through a blend of cash reserves and the issuance of $20.0 million in OP units. GLPI leveraged its ATM program, issuing 4.06 million shares post the third quarter of 2023, garnering net proceeds of $188.9 million. A portion of these proceeds was earmarked to fund this acquisition and sustain the ongoing acquisition pipeline.
In facilitating this transaction, Citizens JMP Securities served as the financial advisor to Gaming and Leisure Properties, while Innovation Capital extended its financial advisory services to American Racing.
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