Gaming and Leisure Properties Inc. recently expanded its portfolio when it bought the real estate assets of American Racing & Entertainment, owned by Jeff Gural. The price was $175 million for the Nichols, New York property.
Tioga Downs is a stand-alone casino hotel property in a rural part of upstate New York, insulated from competitive forces.
American Racing signed a 30-year triple-net master lease for $14.5 million annually. The terms mark an 8.3 percent capitalization rate The rent is subject to a fixed 1.75 percent annual increase starting with the first anniversary. The rate rises to 2 percent in year 15 where it remains for the duration of the lease.
“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.
Among its other features, Tioga Downs boasts a 32,600-square-foot casino floor with 895 slots and 29 table games and a 2,500-square-foot FanDuel sportsbook, a 160-room hotel, a harness horse track, seven food and beverage locations, and an 18-hole golf course. The property went through a $130 million expansion starting in 2016.
“Our initiatives to further expand our portfolio remain active in the current environment as our reputation as the gaming landlord of choice is strengthened,” Carlino told CDC Gaming Reports.
GLPI financed the deal with $155 million cash along with $20 million in operating partnership units. The company raised $189 million of net proceeds from the issuance of 4.1 million shares through its ATM program since the end of 3Q23. Of this, two million new shares contributed to the purchase.
“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 unitholder,” Gural said.
Gural also owns Vernon Downs Casino Hotel near Syracuse and serves as managing partner of Meadowlands Racing & Entertainment, a New Jersey racetrack in a popular sports tourism area serviced by major public transportation and anchored by MetLife Stadium and the American Dream Mall, which includes a Nickelodeon theme park and DreamWorks water park. The site is considered a potential casino location if Garden State voters ever approve casinos outside Atlantic City.
In a note, Truist Securities analyst Barry Jonas wrote that the sale could indicate the growth of gaming REIT mergers and acquisitions in the year ahead.
