Gaming and Leisure Properties Inc. (GLPI) announced on Tuesday, Feb. 6 that it acquired the real estate assets of Tioga Downs Casino Resort in Nichols, New York from American Racing & Entertainment LLC for $175 million USD.
Simultaneous with the acquisition, GLPI and American Racing entered into a triple-net master lease agreement for an initial 30-year term. The initial annual rent for the new master lease is $14.5 million USD and represents an 8.3 per cent capitalization rate. The initial annualized rent coverage ratio for the lease is expected to be over 2.3x. Rent associated with the lease is subject to a fixed 1.75 per cent annual escalation beginning with the first anniversary and a fixed annual escalation of two per cent beginning in year 15 of the lease and carrying forward through the balance of its term.
Located in Nichols, New York, Tioga Downs Casino Resort is a roughly 162-acre property that features a 32,600 sq. ft. gaming floor with 895 slots and 29 table games, a 2,500 sq. ft. FanDuel sports book, a 160-room hotel, five-eighths-mile harness horse track, seven food and beverage locations, and a separate 18-hole championship golf course. The property underwent a $130 million expansion beginning in 2016 after it was awarded a Class III casino license by the State of New York.
Peter Carlino, GLPI’s Chairman and CEO, commented, “We are pleased to add Tioga Downs to our portfolio and the new relationship with American Racing to our tenant roster. Tioga Downs further diversifies our portfolio, expanding it to 62 properties across 19 states with eight tenants. American Racing has 20 years of gaming, horse racing and hotel experience, marking another addition to our portfolio of leading gaming operator tenants. 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 Chief Executive Officer of American Racing, added, “We are excited to partner with the team at GLPI as we continue to grow our business at Tioga Downs. 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 we are excited to begin this new relationship. I’m also personally looking forward to becoming a GLPI unitholder.”
The transaction was funded with cash on hand and the issuance of $20 million in OP units. Since the end of the third quarter 2023, GLPI has issued 4.06 million shares through its ATM (At-The-Market) program which raised net proceeds of $188.9 million, in part towards the funding of this transaction, as well as its overall potential acquisition pipeline.
Citizens JMP Securities acted as financial advisor to Gaming and Leisure Properties. Innovation Capital served as the financial advisor to American Racing.
(Gaming and Leisure Properties Inc.)