Gaming and Leisure Properties Feb. 6 announced the acquisition of the real estate assets of Tioga Downs Casino Resort in Nichols, New York, from American Racing & Entertainment for $175 million
GLPI and American Racing simultaneously entered into a triple-net master- lease agreement for an initial 30-year term. The initial rent for the new master lease is $14.5 million per year and represents an 8.3% capitalization rate. The initial annualized rent-coverage ratio for the lease is expected to be over 2.3x. Rent associated with the lease is subject to a fixed 1.75% annual escalation beginning with the first anniversary and a fixed annual escalation of 2% starting in year 15 of the lease that carries forward through the balance of its term.
“Tioga Downs further diversifies our portfolio, expanding it to 62 properties across 19 states with 8 tenants. American Racing has 20 years of gaming, horse racing, and hotel experience, marking another addition to our portfolio of gaming-operator tenants,” said GLPI Chairman and CEO Peter Carlino in a statement.
Tioga Downs features a 32,600-square-foot gaming floor with 895 slots and 29 table games and a 2,500-square-foot FanDuel sportsbook. The property also has a 160-room hotel, a 5/8-mile harness horse track, seven food and beverage locations, and an 18-hole golf course. The property underwent a $130 million expansion that began in 2016 after being awarded a Class III casino license by the state of New York.
“Tioga Downs is a high-quality, recently expanded asset with significant geographic protection from competition,” Carlino said. “Our initiatives to further expand our portfolio remain active in the current environment as our reputation as the gaming landlord of choice is strengthened.”
The transaction was funded with cash on hand and the issuance of $20 million in operating partnership units.
Since the end of the third quarter 2023, GLPI has issued 4.06 million shares through its At-the-Market program that raised net proceeds of $188.9 million, in part toward the funding of this transaction, as well as its overall potential acquisition pipeline.
“Our locals-oriented property has a well-protected feeder market with no competition within 85 miles and a very loyal following. Its location largely insulates it from gaming expansion in the downstate New York region. GLPI is a great steward of regional casino assets and I’m also personally looking forward to becoming a GLPI unit-holder,” said American Racing Founder and CEO Jeff Gural.
In a note, Truist Securities analyst Barry Jonas wrote that the GLPI/Tioga Downs is “solid, though the deal is small, adding around $0.01 to 2024 AFFO (<1% accretion). More important, the transaction could be a sign of more gaming REIT mergers and acquisitions to come, following our Year Ahead thesis on GLPI and VICI. We’re tweaking our GLPI estimates for the deal and adjust our VICI model for recent non-gaming deals and financing assumptions. We maintain our $59/$40 PTs on GLPI/VICI and remain Buy-rated.”
