Friendly businesses selling casinos to Penn National Real Estate Trust

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Posted on: Dec 7, 2021, 9:16 a.m.

Last update on: December 7, 2021, 9:16 a.m.

The Cordish Companies has agreed to sell the real estate assets of its casino complexes in Maryland and Pennsylvania to Penn National Gaming’s Real Estate Investment Trust (REIT).

Cordish Companies GLPI Penn National REIT
The Cordish Companies sells three casinos in Maryland and Pennsylvania to gaming and entertainment properties, including Live! Casino Hotel Maryland (pictured). Gaming and Leisure Properties is Penn National Gaming’s primary real estate investment trust. (Picture: Casino.org)

Gaming and Leisure Properties, Inc. (GLPI) will pay Baltimore-based Cordish $ 1.81 billion to acquire the physical assets of Live! Maryland Casino and Hotel, Live! Casino & Hotel Philadelphia, and Live! Pittsburgh Casino. The deal, a mix of cash and stocks, is expected to close in early 2022.

The agreement requires GLPI to resume immediately and without interruption the activities of the three casinos in Cordish for a minimum period of 39 years. Cordish will pay GLPI $ 125 million per year to lease the three casinos for the first year, with the rate increasing at a fixed rate of 1.75% each year for the entire lease.

GLPI is partially funding its $ 1.81 billion liability by issuing 7.7 million new common shares. The offering is expected to generate gross proceeds of $ 344.6 million.

GLPI and Cordish Partner

Unlike many other REIT deals in recent years, the Cordish and Gaming and Leisure deal involves the real estate trust investing in future projects with the casino operator. The Live! The agreements include the requirement that GLPI fund 20 percent of Cordish’s equity share in any future casino project over the next seven years.

Cordish CEO and Chairman David Cordish explained that he has long been impressed with Gaming and Leisure’s “pioneering structure” of buying and leasing leading casino assets across the country. The managing director said that the company’s willingness to acquire shares of GLPI under the Live! the sale demonstrates Cordish’s enthusiasm for the future of the real estate business.

Cordish added that the transactions will free up capital that will be used to continue improving the customer experience, as well as better serving the company’s team members and the local communities where it operates.

REIT Popularity

Penn National was the first casino operator in the United States to use a REIT in the gambling industry. The formation of a separate entity that owns the land and physical buildings allows gambling operators to free up money. .

Penn owned 100% of GLPI at its inception. But today, the casino operator no longer owns a controlling stake in the REIT. This has made GLPI more attractive to other casino operators such as Cordish.

Other GLPI tenants include Bally’s Corporation, Caesars Entertainment, and Boyd Gaming. Notable properties owned by GLPI include The Lake Charles Inn, Hollywood Casino St. Louis, M Resort in Henderson, Nv., And Tropicana Atlantic City.

Gaming and leisure properties fueled the creation of other REIT-forming casino giants. MGM Resorts launched MGM Growth Properties in 2015, and Caesars Entertainment launched VICI Properties in 2017.

Real estate is a massive organization because of the large properties they own. As a result, publicly traded organizations have significant market values.

VICI has a market capitalization of $ 17.8 billion, GLPI $ 11.2 billion, and MGM Growth $ 6 billion.

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