Gaming and Leisure Properties Acquires Three Casinos for $105M

Gaming and Leisure Properties, Inc. (GLPI) recently announced it has acquired three casinos in South Dakota and Nevada for a total of $105 million. The properties include the Silverado Franklin Hotel & Gaming Complex and the Deadwood Mountain Grand in Deadwood, South Dakota, as well as Baldini’s Casino in Sparks, Nevada. This move is the first time GLPI is entering the South Dakota market but it also expands the company’s presence in Nevada.

GLPI Expands Portfolio with $110M Investment in Gaming Properties

The total investment the GLPI is making is $110 million. $5 million of those will be used for capital improvements at the acquired properties. GLPI and Strategic Gaming Management, LLC (Strategic) will enter into two cross-defaulted triple-net lease agreements. Each of them will span over an initial 25-year term with options for two 10-year renewals. The lease agreements will start with annual rent at $9.2 million, including the capital improvement funds. The capitalization rate is 8.4%.

Peter Carlino, Chairman and CEO of GLPI, expressed satisfaction with the acquisition:

“With our acquisition of the Silverado, DMG, and Baldini’s properties, we are pleased to further diversify our property portfolio while expanding our tenant roster through our new relationship with Strategic, a dynamic and growing gaming operator. The addition of Strategic’s properties expands our portfolio to 65 properties across 20 states with 9 tenants and is expected to be immediately accretive to GLPI’s operating results.”

Carlino praised Strategic Gaming Management’s CEO, J. Grant Lincoln, for his leadership. He noted that Strategic Gaming Management has robust market positions and growth potential. However, he emphasized the strategic right of first refusal on future acquisitions from Strategic until its adjusted EBITDAR related to GLPI-owned assets reaches $40 million annually.

Strategic Gaming Management CEO Hails GLPI Partnership

J. Grant Lincoln, CEO of Strategic Gaming Management, also expressed his excitement about the partnership: “Our operating approach, informed by decades of successful experience in competitive gaming markets, is laser-focused on bottom-line results. Our platform is well-positioned for thoughtful, ongoing growth. As we explored the options for a sale-leaseback partner, GLPI rose above the rest given their unique approach and true emphasis on partnership as well as their deep experience as gaming operators.”

The Silverado Franklin Hotel & Gaming Complex, opened in 1990, is one of the largest gaming establishments in South Dakota. It offers 245 slot machines, 16 table games, two restaurants, four bars, and a 68-room hotel. The Silverado property has planned renovations for the hotel, which will be partially funded from the $5 million capital improvement fund provided by GLPI.

Deadwood Mountain Grand, another property in South Dakota, spans 11 acres and features 141 slot machines, eight table games, two food and beverage outlets, a 208-space parking garage, a 67-seat sportsbook, and a 13,500-square-foot event center.

The Nevada property, Baldini’s Casino, is located in Sparks. It covers approximately nine acres with 492 slot machines, multiple restaurants and bars, a 2,000-square-foot sportsbook, and extensive office and support space. The acquisition means that GLPI’s portfolio now includes four properties in Nevada adding the Reno-Sparks market to its presence.