Penn National-GLPI deal finalized
Gaming and Leisure Properties (GLPI) has successfully acquired the Tropicana Las Vegas Casino Hotel Resort’s real estate assets in a deal worth $307.5m. GLPI confirmed the closure of the sale in a press release on Monday.
The recipient of the transaction is Penn National Gaming, with payment being effected through rental credits. The rental remuneration will cover more than five months of the existing lease agreement from May through October 2020, as well as for a portion of November.
as much as 75% of net sales proceeds over $308m could go to Penn National
Penn National Gaming will continue to operate the Tropicana facility for two years as per the lease agreement or until the facility itself is sold, depending on which eventuality occurs first. If the Tropicana is sold off within the two-year period, as much as 75% of net sales proceeds over $308m could go to Penn National.
Debt obligations, planned furloughs
Penn National is the owner or manager of 41 racing tracks and casinos in the United States. All facilities are currently closed due to the ongoing coronavirus pandemic.
The company has all-time-high, long-term debt obligations of $11bn. In 2019 alone, it had to pay rent of about $870m. Less than five years ago, Penn National Gaming paid about $52.5m more for the Tropicana than what it is now selling the property for.
From Wednesday onwards, Penn National also plans to furlough 26,000 employees without pay.
CEO Jay Snowden has withdrawn the company’s financial estimates for 2020. From Wednesday onwards, Penn National also plans to furlough 26,000 employees without pay. According to Steven Wieczynski, a casino analyst at Stifel Nicholas & Co., the gaming company has enough liquidity to last for about seven months with continuing closures.
Before its deal with GLPI, it had plans to sell only a vacant portion of land behind the resort to a developer.
A flurry of recent sales
A number of other significant Las Vegas Strip properties have also been sold in recent times. These include the MGM Grand, Mandalay Bay, the Bellagio, and the Circus Circus. Experts believe these types of asset sales could become more common as casinos try to deal with the effects of the COVID-19 pandemic.
Las Vegas remains shut down
The Tropicana remains closed ever since Nevada Governor Steve Sisolak announced on March 18 a statewide shutdown on nonessential businesses. Casinos were quick to suspend operations in an attempt to curtail the spread of the coronavirus in the region.
The governor has not specified a date for the reopening of casinos to date. Some industry operators in Las Vegas have called for the conditional reopening of casino establishments in mid to late May.