Gaming and Leisure Properties Interested in Strip Real Estate Acquisition

Posted on: October 30, 2022, 06:05h. 

Last updated on: October 30, 2022, 06:29h.

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

After previously indicating it wasn’t enamored by the prospect of increasing its footprint on the Las Vegas Strip, Gaming and Leisure Properties (NASDAQ:GLPI) is signaling willingness to consider a Sin City acquisition.

Gaming and Leisure Properties
Tropicana on the Las Vegas Strip. Owner Gaming and Leisure Properties may be open to adding to its Las Vegas portfolio. (Image: Bally’s)

The real estate investment trust (REIT) owns the property assets of the Tropicana, but that’s its only holding on the Strip. Previously, GLPI CEO Peter Carlino expressed a preference for regional casino properties in “the hinterlands” while eschewing the volatility of the Strip. But on the company’s third-quarter earnings conference call last week, the chief executive officer said he’s willing to adjust that view and potentially evaluate Strip real estate acquisitions.

We’ve never had any ill feelings toward Strip assets, it’s just a matter of cost,” said Carlino, responding to an analyst’s question. “We’ve found more value in the regional markets.”

The GLPI CEO admitted he was “chastened” by the resilience of the Las Vegas Strip in the wake of the coronavirus pandemic.

“We knew what would happen in the regional markets with people the first minute they could go out of their door would be to head over to our properties, and did so with great enthusiasm. But Vegas, I was a little bit more cautious about it, and I was wrong, frankly,” he said on the call.

GLPI Las Vegas Activity

While its Strip presence is light, GLPI is active in the Las Vegas area. Bally’s recently completed its purchase of Tropicana’s operating rights, and the future of that venue could include a significant overhaul or outright demolition.

Penn Entertainment is planning to double the size of the M Resort in Henderson, Nevada — another property owned by GLPI. The REIT also owns the property assets of Cactus Pete’s in Jackpot, and the Tropicana Laughlin.

As its portfolio stands today, GLPI is a stark contrast to its lone publicly traded competitor — VICI Properties (NYSE:VICI). Not only does VICI own the real estate of Caesars Palace, it’s by far the largest landlord on the Strip.

The bulk of GLPI’s gaming real estate assets are concentrated in the Mid-Atlantic region, the Midwest, and the South by way of significant holdings in Louisiana and Mississippi.

GLPI New View of Las Vegas

The pace of Strip real estate transactions over the past couple of years has been solid, if not brisk, indicating there could be opportunities for GLPI to go shopping. On the conference call, Carlino did not mention specific properties the REIT could target. But he was contrite about ignoring Las Vegas following COVID-19, and appears open to rectifying that mistake.

“But Vegas, I was a little bit more cautious about it. And I was wrong. Frankly, you see the result. So look, it’s only about money,” he said on the call. “There’s nothing that we won’t own. I’ll go both directions. We’d love to have Strip properties. I’ve often said to many of you that I’d own a shack in the beach with no windows and doors if the cash flow was rock solid.”

It’s expected that Caesars Entertainment will sell a Strip venue — potentially Flamingo. That transaction was supposed to occur this year and it did not. But it could be one of the first in 2023.