Tropicana Las Vegas Officially for Sale Again, Penn National Expected to Part with Operating Rights

Posted on: January 12, 2021, 07:38h. 

Last updated on: January 13, 2021, 09:59h.

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

Tropicana Las Vegas is on the market again. The move comes less than 10 months after Penn National Gaming (NASDAQ:PENN) sold the real estate of the famed Strip venue to Gaming & Leisure Properties (NASDAQ:GLPI).

Tropicana Las Vegas
Tropicana Las Vegas. The venue is officially for sale again, and so are the operating rights. (Image: KSNV)

Both the venue and Penn’s operating rights are currently for sale. CBRE Vice President Michael Parks confirmed Tropicana is listed and that there isn’t an official asking price. At the height of the coronavirus pandemic squeezing the gaming industry last March, Penn, then strapped for cash, sold the Trop property and the ground lease of an asset in Morgantown, Pa. to GLPI for $337.5 million worth of rent credits.

At that time, the transaction was viewed as vital to the operator’s survivability. Since then, it’s become not only one of the best-performing gaming names in terms of share appreciation, but also one of the largest domestic casino operators by market capitalization.

Gaming and Leisure, one of the three publicly traded gaming real estate investment trusts (REITs), was spun off from Penn in 2013. Today, the REIT is the operator’s primary landlord.

Parks was the broker for the 2019 sales of Circus Circus and The Rio.

Not Surprising

Rumors about Penn possibly selling the Tropicana surfaced in late 2019, with analysts saying at the time the property could fetch $700 million. That’s more than double what the company got in rent credits in the aforementioned GLPI transaction.

Just months after the REIT acquired the property, the speculation resurfaced that the venue was again being shopped, with GLPI also entertaining a sale-leaseback deal. Penn acquired the Strip venue in August 2015 for $360 million.

Last October, GLPI CEO Peter Carlino said the company had 18 non-disclosure agreements out to parties mulling a bid for the Trop, indicating interest is strong. He also noted, “There’s a lot of tire kickers, not necessarily a lot of check writers.”

Carlino’s preference is to focus on regional gaming properties and eschew the volatility of Las Vegas. In Nevada, the company also owns the real estate of the M Resort, Spa & Casino in Henderson, Tropicana in Laughlin, and Cactus Pete’s Casino Resort in Jackpot.

Buyers Not Known…Yet

Tropicana suitors haven’t been publicly identified, but the sale could draw some interest from big names. Golden Nugget boss Tilman Fertitta is rumored to be interested in Strip assets. Gaming & Leisure could also go another direction and sell the venue to a private equity company.

It’s also possible a gaming operator partners with one of GLPI’s rivals to purchase the property. That transaction style showed success in regional markets over the past two years.

Among public companies that could make for logical Tropicana suitors, Bally’s Corp. (NYSE:BALY) comes to mind. It’s one of the most acquisitive companies in the industry, can easily access capital, and currently has no Las Vegas footprint.