Gaming and Leisure Properties Open to Tropicana Sale, Chicago Casino Buy

Posted on: January 11, 2024, 02:20h. 

Last updated on: January 12, 2024, 11:58h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Gaming and Leisure Properties (NASDAQ: GLPI) could consider selling the Tropicana Las Vegas casino hotel for the right price. That’s if the buyers are committed to maximizing the value of the property.

Gaming and Leisure Properties
A slide from a Gaming and Leisure Properties presentation. The REIT is open to acquisitions in Chicago, Las Vegas, and beyond. (Image: Seeking Alpha)

That’s the take of Truist Securities analyst Barry Jonas following meetings with GLPI Chairman and CEO Peter Carlino, and Senior VP Matthew Demchyk. Jonas noted the executives didn’t go into detail, but it’s possible the real estate investment trust (REIT) could eventually entertain the sale of the Tropicana property. That venue is expected to be the home of a new Major League Baseball (MLB) stadium when the Oakland Athletics move to Las Vegas.

The analyst also pointed out that GLPI is open to potentially acquiring the real estate of Bally’s permanent Chicago casino, which is a couple of years away from opening. Should such a transaction be executed, it would likely result in one of the priciest pieces of property in the GLPI portfolio.

We sensed management was open to potentially participating in Bally’s permanent Chicago property, though GLPI hasn’t made any commitments and would require favorable safety and economics to potentially engage in any deal,” wrote Jonas in a note to clients.

The analyst added the REIT remains interested in acquiring the real estate of Bally’s in Lincoln, R.I., which it has a call option on. But that transaction would be subject to approval from the casino operator’s creditors.

GLPI Could Consider Las Vegas, Tribal Deals

Currently, GLPI owns just two Las Vegas-area assets, the Tropicana on the Strip and the M Resort in Henderson. However, the REIT remains open to adding to its Sin City footprint if the right deal arises.

The executive team also told Jonas that there’s potentially significant opportunity in tribal gaming real estate, though they didn’t clarify if that meant commercial casinos operated by tribes or gaming venues located on tribal land. The latter could present some complexities to real estate buyers.

“Management noted tribal properties were a significant untapped market, though it would require a framework to make investments safely and securely,” Jonas said. “Management noted that its interest in pursuing a Las Vegas Strip asset would be dependent on the quality of potential tenant and lease fundamentals, in addition to the real estate attributes.”

The REIT has an existing relationship with the Seminole Tribe of Florida, which operates gaming venues under the Hard Rock brand. But those agreements pertain to casinos outside of Florida.

GLPI Has Strong Deal Pipeline

While the REIT hasn’t recently been as acquisitive as has rival VICI Properties (NYSE: VICI), GLPI has a robust pipeline of potential acquisitions, some of which could materialize in the coming months.

Jonas added that management said conversations with casino operators have advanced over the past six to 12 months and have resulted in a long list of possible deals for the REIT.

“We are positive on GLPI’s increasingly visible deal pipeline and think balance sheet flexibility will prove highly advantageous on top of the potential for an improving rate environment,” concluded the analyst. “We continue to preach the relative safety of GLPI and gaming REITs and reiterate buy.”