Gaming and Leisure Properties, Inc. (GLPI) has acquired the property assets of three casinos from Strategic Gaming Management for $105 million. The deal includes Baldini’s Casino in Sparks, Nevada, and the Silverado Franklin Hotel & Gaming Complex and Deadwood Mountain Grand in South Dakota.
GLPI has simultaneously entered into two cross-defaulted triple-net lease agreements with Strategic Gaming Management. Each lease has an initial 25-year term with two ten-year renewal periods. Additionally, GLPI provided $5 million for capital improvements, bringing the total investment to $110 million.
This is GLPI’s second major deal this year. In February, the company announced it was paying $175 million for the property assets of Tioga Downs Casino Resort in Nichols, New York.
Prior to this acquisition, GLPI owned the real estate assets of 62 gaming venues across 19 states. The addition of Baldini’s Casino marks GLPI’s first property in the Reno-Sparks market, increasing its holdings in Nevada to four properties. The acquisitions in South Dakota are GLPI’s first in the state, previously owning properties closest to the Dakotas in Illinois and Iowa.
Silverado Franklin has completed over $32 million in capital projects, including renovations and new restaurant openings. It will begin a hotel renovation in 2024 using a portion of the $5 million in capital improvement funds from GLPI.
The new lease agreements between GLPI and Strategic Gaming Management have an initial aggregate annual cash rent of $9.2 million, with a cap rate of 8.4%. A fixed 2% annual rent escalation starts in the third year, with a CPI-based escalation capped at 2.5% beginning in year 11.
GLPI also secured rights of first refusal on future gaming property sales by Strategic until the EBITDAR related to GLPI-owned assets reaches $40 million annualized.
CEO Comments
Peter Carlino, Chairman and CEO of GLPI, stated, “The addition of Strategic’s properties expands our portfolio to 65 properties across 20 states with 9 tenants and is expected to be immediately accretive to GLPI’s operating results. Strategic is led by CEO J. Grant Lincoln who formed the company in 2009. Under Grant’s stewardship, Strategic operates three properties with solid leadership positions in their respective markets, while generating growth in patronage and cash flows.
“With the initial transaction and our right of first refusal on growth opportunities, we look forward to the start of a long-term mutually beneficial relationship with Grant and Strategic. Our initiatives to expand our portfolio remain active in the current environment as our reputation as the gaming landlord of choice is further strengthened and reinforced by this transaction.”
J. Grant Lincoln, Strategic’s CEO, added, “We are pleased to begin our partnership with GLPI. Our operating approach, informed by decades of successful experience in competitive gaming markets, is laser-focused on bottom-line results. Our platform is well positioned for thoughtful, ongoing growth.
“As we explored the options for a sale-leaseback partner, GLPI rose above the rest given their unique approach and true emphasis on partnership as well as their deep experience as gaming operators. We look forward to collaborating with GLPI to prudently grow our operations over the coming years.”
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