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US – Penn spin-off buys first casino

By - 16 December 2013

Gaming and Leisure Properties, a tax-free spin-off from Penn National Gaming, has bought its first casino away from the regional casino operator, with the US$140m of Casino Queen; a riverboat casino in East St. Louis, Illinois.

Gaming and Leisure Properties will acquire the real estate assets associated with Casino Queen, which covers roughly 78 acres and include a 157-room hotel and a 38,000 sq. ft. floating casino.

Gaming and Leisure Properties will provide Casino Queen with a US$43m term loan, which will completely refinance and retire the casino’s outstanding long-term debt obligations. As a condition of the purchase, the real estate investment trust will lease the property back to Casino Queen on a triple net basis for approximately US$14m per year.

Gaming and Leisure Properties CEO, Peter Carlino said: “This is representative of the robust opportunities that exist in the gaming asset markets that our company is targeting.”

The real estate investment trust was spun off from Penn National earlier this year. It saw GLPI own the real estate associated with 21 casino facilities, including two facilities currently under development in Dayton and Youngstown, Ohio. It now leases 19 of these facilities to Penn. The remaining two gaming facilities, located in Baton Rouge, Louisiana and Perryville, Maryland, are owned and operated by subsidiaries of GLPI. Gaming analysts expect GLPI to strike other deals throughout 2014.

Credit Suisse gaming analyst Joel Simkins added: “This deal serves as a case study that GLPI can roll up smaller, single-asset properties as it looks to complete $500m of deals in its first year, while also diversifying its tenant base.

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