Gaming and Leisure Properties Expands Portfolio with Tioga Downs Acquisition

Gaming and Leisure Properties, Inc. (GLPI) announced the acquisition of the real estate assets of Tioga Downs Casino Resort in Nichols, New York, from American Racing & Entertainment, LLC, for a sum of $175 million. 

GLPI Seals Tioga Downs Acquisition with $14.5 Million Annual Rent Agreement

The agreement stipulates an initial annual rent of $14.5 million, representing an 8.3% capitalization rate. Moreover, the lease provides for an annual escalation of 1.75% after the first year of the contract ends and a fixed 2.0% escalation starting in year fifteen. GLPI financed the transaction through a combination of cash reserves and $20 million in equity.

Tioga Downs Casino Resort, sprawling over approximately 162 acres, boasts a diverse array of amenities, including a 32,600-square-foot gaming floor featuring 895 slots and 29 table games. The property also encompasses a 2,500-square-foot FanDuel sportsbook, a 160-room hotel, a 5/8-mile harness horse track, seven food and beverage outlets, and an 18-hole championship golf course.

Commenting on the acquisition, Peter Carlino, chairman and CEO of GLPI, expressed enthusiasm about the addition of Tioga Downs to their portfolio, emphasizing the strategic value of the property and the prospective partnership with American Racing. 

Carlino further added: “Tioga Downs is a high-quality, recently expanded asset with significant geographic protection from competition. We look forward to the start of a fruitful partnership with American Racing. Our initiatives to further expand our portfolio remain active in the current environment as our reputation as the gaming landlord of choice is strengthened.”

Jeff Gural, founder and CEO of American Racing, echoed Carlino’s sentiments, highlighting Tioga Downs’ strong market position and its resilience against potential gaming expansion in the downstate New York region.

GLPI Continues Strategic Expansion, Targets Stable Markets and Diversifies Assets

This transaction aligns with GLPI’s overarching strategy of targeting stable markets with limited competition. Prior to the Tioga Downs acquisition, GLPI owned the real estate assets of 61 gaming venues across 18 states, emphasizing its status as a prominent real estate investment trust (REIT) in the gaming industry.

Sale-leaseback arrangements like this one are commonplace in the gaming sector, offering benefits for both parties involved. For operators like American Racing, such deals provide an opportunity to unlock the value of real estate assets while retaining operational control. Meanwhile, for real estate companies like GLPI, these agreements offer a steady income stream and diversification of assets.

Analyst Barry Jonas from Truist Securities recently indicated that GLPI is optimistic about potential mergers and acquisitions in 2024, citing management’s positive outlook and balance sheet flexibility. 

GLPI aims to prioritize tax-motivated transactions domestically while cautiously exploring international opportunities, with interest in the tribal gaming market. Additionally, GLPI is open to restructuring leases and maximizing property values, with ongoing interest in properties like Bally’s and Queen Baton Rouge.