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US – Gaming and Leisure Properties buys Dover Downs and Tropicana Evansville

By - 29 October 2020

Gaming and Leisure Properties has entered into definitive agreements to acquire the real property assets of Dover Downs Hotel & Casino from Twin River Worldwide Holdings, and to re-acquire the real property assets of Tropicana Evansville from Caesars Entertainment, after the substitution right related to the property was triggered.

Pursuant to the Tropicana Evansville agreement, GLPI will acquire the real property assets for approximately $340m, and Twin River will acquire the operating assets of the property for approximately $140m. GLPI will separately engage in a sale-leaseback transaction directly with Twin River for Dover Downs, and will acquire the real property for $144m. The two properties have an aggregate real estate purchase price of approximately $484 million.

Simultaneous with the closing of these transactions, GLPI will enter into a new triple-net master lease with Twin River for both assets with an initial term of 15 years, with four 5-year tenant renewal options. The initial annual cash rent will be $40m, representing an implied capitalization rate of 8.3 per cent. The trailing rent coverage ratio in the first year after closing is expected to approximate 2.1x and the master lease obligations will be subject to a corporate guarantee from Twin River.

Peter Carlino, Chairman and CEO of GLPI, said: “We are excited to establish a formal relationship with Twin River as they represent another leading operator to add to GLPI’s growing platform. Our new master lease with Twin River will have strong rent coverage at an accretive cap rate and is the result of our team’s hard work to structure and complete a complex transaction that benefits both parties. These transactions further diversify our portfolio with the addition of a new operator and expands our footprint into Delaware.”

“Twin River is pleased to be working with GLPI on these transactions. They allow us to further expand our regional presence into Indiana while monetizing the real estate at Dover Downs,” commented George Papanier, President and Chief Executive Officer of Twin River. “Twin River looks forward to collaborating with GLPI in our efforts to grow and diversify our high-quality portfolio of regional gaming assets.”

The transaction is expected to close in mid-2021, subject to receipt of required regulatory approvals and other customary closing conditions. In a continuation of GLPI’s focus on prudent balance sheet management, we will consider a menu of options to permanently fund the transactions including the use of retained cash flow, potential disposition proceeds from the Tropicana and/or our Perryville option with Penn, issuance under our ATM program, proceeds of one or more future capital markets transactions and/or the use of our revolving credit facility.

“I want to thank all of our Evansville Team Members for their hard work and dedication, especially during the COVID-19 pandemic, and we wish them the best under Twin River’s ownership,” said Tom Reeg, CEO of Caesars Entertainment, Inc.

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