Pinnacle Entertainment has reached an agreement with Gaming and Leisure Properties, the real estate arm of Penn National Gaming, to acquire The Meadows Racetrack and Casino near Pittsburgh.
Publicly traded Pinnacle, which operates 15 casinos in eight states—albeit none in Pennsylvania—and is in the process of selling its real estate assets to GLPI, will pay $138 million for The Meadows gaming license and operating assets plus $25.5 million a year to lease the land under the business for 10 years, with a portion of the lease calculated as a percentage of gaming revenues.
Pinnacle is funding the acquisition with a $400 million revolving credit facility and cash on hand and expects to close on it in the third quarter pending regulatory approvals.
GLPI, a publicly traded real estate investment trust formed by publicly traded, Pennsylvania-based Penn National to maximize the value of the latter’s extensive gaming holdings, purchased The Meadows last year for $440 million from Las Vegas-based Cannery Resorts and immediately announced its intention to secure an operator for the harness track and casino.
Las Vegas-based Pinnacle is the “premier operator” GLPI has been looking for, said Peter M. Carlino, Penn National chairman and chairman and CEO of GLPI.
Tying the land lease in part to gaming revenues will enable GLPI to “participate in the long-term success of the property,” Carlino said in a statement. “This transaction allows us to unlock value in the asset while growing and diversifying our rental income.”
Along with the track, The Meadows features a 155-room hotel owned and managed by Hyatt. The 180,000-square-foot casino contains 3,170 machine games and 85 table games, including poker. The property also offers 11 restaurants, bars and lounges, banquet and meeting space and a bowling alley.
On a trailing 12-month basis through February, the operation generated EBITDAR of approximately $47.2 million on net revenues of $289 million.
Pinnacle CEO Anthony Sanfilippo said in a statement: “The Meadows will complement our existing collection of terrific properties and provide additional operational scale, geographic diversification, and another wonderful location, the greater Pittsburgh area, for the guests of Pinnacle Entertainment to visit.”
GLPI announced in July 2015 that it was buying the real estate assets of Pinnacle in an all-cash deal valued at $4.75 billion. GLPI is selling 19 million shares to finance the purchase, which is expected to close April 30 after the Louisiana Gaming Control Board votes to approve the transfer.
The Missouri Gaming Commission signaled its approval earlier this month with a 5-0 vote to allow Pinnacle’s Ameristar Kansas City, Ameristar St. Charles and River City in Lemay to be folded into the GLPI REIT, which will then lease back the gaming operations to Pinnacle.
GLPI already is the landlord of five of the St. Louis area’s six casinos.
