GLPI Acquires Three Casinos in South Dakota and Nevada for $105 Million

Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) announced today that it has acquired the real estate assets of three casinos: the Silverado Franklin Hotel & Gaming Complex (“Silverado”), the Deadwood Mountain Grand (“DMG”) casino, and Baldini’s Casino (“Baldini’s”), for a total of $105 million. This acquisition includes two South Dakota properties and one in Nevada.

Simultaneous with the acquisition, GLPI and s of Strategic Gaming Management, LLC have entered into two cross-defaulted triple-net lease agreements, each with an initial 25-year term and two ten-year renewal options. Additionally, GLPI has provided $5 million in capital improvement funds at the closing of the transactions, bringing the total investment to $110 million.

The initial aggregate annual cash rent for the new leases is $9.2 million, including the capital improvement funding, reflecting an 8.4% capitalization rate. The initial annualized rent coverage ratio for the leases is expected to be 2.0x. Rent for the lease will escalate annually by a fixed 2% starting in year three, with a I-based annual escalation of the greater of 2% or I capped at 2.5% beginning in year 11.

Details of the Properties Acquired

Silverado, located in Deadwood, South Dakota, was one of the state’s first gaming properties, opening in 1990. It is one of the largest gaming facilities in South Dakota, featuring 245 slot machines, 16 table games, two restaurants, four bars, and a 68-room hotel. Since its inception, Silverado has invested over $32 million in capital projects to maintain and enhance its offerings. Future plans include a hotel renovation in 2024, funded by a portion of the $5 million in capital improvement proceeds from GLPI. The property is adjacent to the city-owned entertainment venue “Outlaw Square,” which drives year-round visitation. Its proximity to I-90 also benefits from both local traffic and tourists traveling from the Rapid City Regional Airport.

DMG, also located in Deadwood, South Dakota, is an 11-acre gaming property offering 141 slot machines and 8 table games. The property includes two food and beverage locations, a three-level parking garage with 208 spaces, a 67-seat sportsbook, and a 13,500-square-foot event center. Since opening in 2011, DMG has seen over $10 million in capital expenditures, including a $5 million renovation to its Holiday Inn Resort Hotel, which features 93 standard suites and 5 king suites with amenities such as an indoor swimming pool, banquet facilities, and a fitness center.

Nevada, is a 9-acre gaming property offering 492 slot machines across a 43,000-square-foot gaming floor that opened in 1988. It caters to the Nevada locals gaming market with amenities including restaurants, bars, a 2,000-square-foot sportsbook called “The Book at Baldini’s,” and over 600 parking spaces. The property also includes 37,000 square feet of additional office and space.

Strategic Partnership and Future Prospects

Peter Carlino, GLPI’s Chairman and CEO, expressed satisfaction with the acquisition, stating, “With our acquisition of the Silverado, DMG, and Baldini’s properties, we are pleased to further diversify our property portfolio while expanding our tenant roster through our new relationship with Strategic, a dynamic and growing gaming operator. 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, CEO of Strategic Gaming Management, 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.”

Citizens JMP Securities acted as financial advisor to Gaming and Leisure Properties, while CBRE Securities served as the financial advisor to Strategic.

About Gaming and Leisure Properties, Inc.

GLPI is involved in acquiring, financing, and owning real estate properties leased to gaming operators in triple-net lease arrangements, where the tenant is responsible for all facility maintenance, insurance, taxes, and utilities.

About Strategic Gaming Management LLC

Strategic Gaming Management, founded in 2009 by CEO J. Grant Lincoln, is a multijurisdictional licensed operator of brick-and-mortar casinos. The company operates three casinos in Nevada and South Dakota in collaboration with its real estate partner, Gaming & Leisure Properties (NASDAQ: GLPI).

Source:

“Gaming and Leisure Properties Acquires Three Casinos for $105 Million”. investors.glpropinc.com, May 18, 2024.