Penn National Gaming and Gaming and Leisure Properties Inc. have entered into agreements to acquire Bally’s Casino Tunica and Resorts Casino Tunica in Robinsonville, Mississippi for million. GLPI will acquire the underlying real estate assets for .6 million and then lease the properties to Penn National for million annually. Following regulatory approvals, the deal is expected to close in the second quarter of 2017.
The Tunica casino located closest to downtown Memphis, Bally’s features a 40,000 square foot casino with 947 slot machines and 16 table games, plus a steakhouse, buffet, 24-hour café and live entertainment venue.
Resorts Casino Tunica, located adjacent to Hollywood Casino Tunica, offers a 35,000 square foot casino with 800 slot machines and nine table games, plus a steakhouse, buffet, 24-hour café, a 201-room hotel and 18,000 square feet of meeting and event space.
GLPI Chief Executive Officer Peter Carlino said, “The acquisition of Bally’s and Resorts in Tunica reflects the company’s focus on creating shareholder value by completing accretive transactions at attractive multiples. The transaction demonstrates our ability to work with our existing partners to create opportunities that are mutually beneficial.” He added, “Penn has extensive experience operating in the Tunica market and has the ability to effectively maximize the operating potential of the properties. Inclusion of these assets in the master lease is an important benefit of this transaction as it will increase asset diversification, improve aggregate rent coverage and further enhance the benefit of cross-collateralization.”
Penn National President and Chief Executive Officer Timothy J. Wilmott stated, “We are pleased to partner with Gaming and Leisure Properties to structure this tuck-in transaction which will be immediately accretive to our operating results upon closing. The acquisition will add two complementary casinos to our existing Hollywood Casino Tunica operations, thereby presenting Penn National with the opportunity to benefit from a centralized local management structure.”
Telsey Group analyst David Katz observed, “Although Tunica is not growing, it is a generally stable market where Penn currently has a presence and can leverage an existing infrastructure. Given the relatively small size of the deal and that GLPI is buying the real estate, we consider it a tuck-in acquisition that does not transform the strategic direction of the company but is positive nonetheless.”
Wells Fargo analyst Cameron McKnight added, “We estimate Tunica area gaming revenues were down 2 percent in 2016. The market has stabilized, in our view, with some competition coming out of the market in recent years and competition from neighboring dog tracks has moderated.” Harrah’s Casino Tunica closed in mid-2014.
Upon closing, Penn National’s Mississippi portfolio will grow to five casinos, including Hollywood Casino Tunica, Boomtown Casino in Biloxi and Hollywood Casino Gulf Coast in St. Louis, Mississippi.
