Summary:
- Gaming and Leisure Properties, Inc. purchased the real estate assets from one Nevada-based and two South Dakota-based casinos for $105 million.
- GLPI also entered two cross-defaulted triple-net lease agreements with Strategic Gaming Management.
- GLPI offered $5 million for capital improvements, taking the total investment to $110 million.
Gaming and Leisure Properties, Inc. (GLPI) has announced the acquisition of the real estate assets belonging to two casinos located in South Dakota and one casino based in Nevada.
GLPI announced it will pay $105 million for the Silverado Franklin Hotel & Gaming Complex and the Deadwood Mountain Grand Casino located in Deadwood, South Dakota and Baldini’s Casino located in Sparks, Nevada.
Two Cross-Defaulted Triple-Net Lease Agreements
At the same time, GLPI and Strategic Gaming Management, which owns the three resorts, also announced they would enter two cross-defaulted triple-net lease agreements.
Each of them has been inked for an initial term of 25 years and they will feature two renewal periods once every 10 years.
The Wyomissing, PA-based real estate investment trust that specializes in casino properties also offered $5 million in terms of capital improvements, taking the total investment to $110 million.
The leases have an initial aggregate annual rent set at $9.2 million. This will include capital-improvement funding and will stand for an 8.4% capitalization rate.
Rent will be subject to a fixed 2% annual escalation starting with the third year while the CPI-based annual escalation will start on year 11 of the greater of 2% or CPI capped at 2.5.
GLPI Now Has 65 Properties in 20 States
GLPI’s chairman and chief executive officer, Peter Carlino, explained that the decision to acquire the three casinos will help them “further diversify” their portfolio while expanding their “tenant roster” through the new relationship with Strategic, which he called a “dynamic and growing gaming operator”.
Strategic’s chief executive officer, J. Grant Lincoln, also expressed their pleasure to initiate their partnership with GLPI, explaining their operating approach “is laser-focused on bottom line results”.
Now, GLPI’s portfolio has expanded to 65 properties located across 20 US states, but their initiatives to further expand the portfolio “remain active in the current environment”, as Carlino explained.
Silverado is one of South Dakota’s first casinos opened in 1990, and it is currently one of the largest casinos in the state with two restaurants, a hotel with 68 rooms, two bars, 245 slots, and 16 table games.
Deadwood Mountain Grand opened in 2011 and spreads across 11 acres and offers two food and beverage locations, 141 slots, eight table games, a sportsbook with 67 seats, a 208-space parking garage, and a 13,500-square-foot event center.
Baldini’s opened in 1988, spreads over 9 acres, and hosts 492 slot machines located in the 43,000-square-foot casino. The property is also home to a 2,000-square-foot sportsbook, as well as bars and restaurants, additional office and support space, and a parking lot with 600 spaces.
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