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Gaming and Leisure Properties to Acquire Two Properties for $1B

Story Highlights

Gaming and Leisure Properties will acquire Bally’s two Rhode island assets for $1.0 billion. Is this a good deal for GLPI stock?

Gaming and Leisure Properties, Inc. (GLPI) signed a deal with Bally’s Corporation (BALY) to acquire its two Rhode Island casino properties worth $1 billion.

Bally will immediately lease back both properties and will continue to maintain ownership and control of all the gaming operations of the facilities.

Based in Wyomissing, Pennsylvania, Gaming and Leisure Properties is a real estate investment trust (REIT) specializing in casino properties. With a portfolio of 55 premier gaming assets geographically diversified across 17 states across the U.S., it is engaged in acquiring, financing, and owning real estate property to be leased to gaming operators in triple net lease arrangements.

Details of the Deal

The deal is anticipated to be accretive to GLPI’s earnings upon completion near the end of 2022 and will generate an incremental rent of $76.3 million.

The acquisition will be funded via a combination of debt, equity, and operating partnership (OP) units. Both properties, Bally’s Twin River Lincoln Casino Resort and Bally’s Tiverton Casino & Hotel, are expected to be added to the existing Bally’s Master Lease between GLPI and Bally’s.

Further, GLPI agreed to pre-fund, at Bally’s election, a deposit of up to $200 million, which will be credited or repaid to GLPI at closing or December 31, 2023, whichever is earlier, along with a $9.0 million transaction fee payable at closing.

If the required approvals for the Bally’s Twin River Lincoln Casino Resort are not received duly in time, GLPI will instead acquire the real property assets of the Hard Rock Hotel & Casino Biloxi in Mississippi and Bally’s Tiverton Casino & Hotel for a total rent of $48.5 million. Further, GLPI will also have the option to acquire the real property assets of Lincoln before December 31, 2024, at a price of $771 million and additional rent of $58.8 million.

CEO’s Comments

Gaming and Leisure Properties CEO Peter Carlino commented, “Bally’s properties are currently the only two gaming facilities in Rhode Island, and the transaction again diversifies our portfolio as the state becomes our 18th U.S. jurisdiction.”

He further added, “Importantly, this transaction comes with a conservative rent and Master Lease structure that offers GLPI material downside protection while offering our Company with an opportunity for additional long-term growth.”

Wall Street’s Take

Following the news, Deutsche Bank (DB) analyst Carlo Santarelli reiterated a Buy rating with a price target of $57 (23.9% upside potential from current levels).

Overall, the stock has a Strong Buy consensus rating based on five unanimous Buys. The average Gaming and Leisure price target of $53.40 implies 16.1% upside potential from current levels.

TipRanks’ Smart Score Rating

GLPI scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

Conclusion

The deal is a positive for GLPI, as it will further diversify its geographical footprint as well as boost its earnings and profitability.

Disclosure

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