Penn National Gaming and VICI Properties said Tuesday they will jointly acquire Margaritaville Resort Casino in Bossier City, La., for a total value of $376 million.
VICI, the real estate investment trust born out of the Caesars Entertainment bankruptcy reorganization, said it was buying the land and real estate assets of Margaritaville for $261 million. Penn will acquire the operations of the casino for $115 million. Penn will lease the operations from VICI for an initial annual rent of approximately $23 million and an initial term of 15 years, with four 5-year renewal options.
The deal marks the first transaction for VICI that does not involve a Caesars Entertainment-owned property. VICI currently owns the land and real estate of 20 properties, including the Louisiana Downs racetrack casino in Bossier City.
Margaritaville opened in the Northern Louisiana community in 2013. The property has a 26,500-square-foot casino with 1,215 slots and 50 table games, a 395-room hotel, six restaurants and other non-gaming amenities. The property carries the island resort theme made famous by singer-entertainer Jimmy Buffett. Penn and VICI are buying the resort from Bossier Casino Venture Inc., which is owned by Paul Alanis.
“We are pleased to partner with VICI Properties Inc. to structure this tuck-in acquisition of Bossier City’s newest casino resort,” Penn National CEO Tim Wilmott said in a statement.
He said the deal “is consistent with our criteria for transactions that are accretive to free cash flow, strategically diversify our revenue and operating base, and present well-defined paths to the realization of significant synergies.”
Penn National, one of the gaming industry’s largest regional gaming operators, currently does not have a casino-resort in Louisiana. Through its pending $2.8 billion acquisition of Pinnacle Entertainment, the company will acquire four casinos in the state – Boomtown New Orleans, Boomtown Bossier City, L’Auberge Lake Charles, and L’Auberge Baton Rouge.
In a note to investors, Deutsche Bank gaming analyst Carlo Santarelli said two Bossier City properties – Margaritaville and the Boomtown – will benefit Penn National.
VICI CEO Ed Pitoniak said in a statement the transaction represented ‘the first step in our strategy to diversify our roster” of casino properties outside of Caesars Entertainment.
Penn National spun off the first gaming industry REIT, Gaming and Leisure Properties, which owns the real estate associated with nearly 30 of Penn’s hotel-casinos and racetracks.
Santarelli noted the pace of deal activities in the gaming REIT sector has picked up significantly in the past 12 months with nine transactions totaling more than $6.2 billion. All three gaming REITs – VICI, GLPI and MGM Growth Properties – have been involved in acquisitions.
“In fact, the $6.2 billion of transactions over the last 12-month period represents roughly half of the total volume of gaming REIT deals since GLPI’s first acquisition (of Casino Queen in St. Louis) in the fourth quarter of 2013,” Santarelli said.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
