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New York’s Tioga Downs Casino the Latest Acquisition of Gaming and Leisure Properties

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On February 6, Gaming and Leisure Properties (GLPI) made a significant announcement regarding its latest acquisition. The real estate investment trust (REIT) revealed its acquisition of the real estate assets of Tioga Downs Casino Resort located in Nichols, New York, from American Racing & Entertainment. This strategic move, valued at $175 million, expands GLPI's portfolio to include 62 properties with eight tenants across 19 states.

GLPI Continues Taking Over US Gaming

As part of the transaction, GLPI and American Racing entered into a triple-net master lease agreement for an initial term of 30 years. Under this agreement, GLPI will pay an annual rent of $14.5 million, representing an 8.3% capitalization rate. The lease agreement includes provisions for fixed annual escalations in rent to ensure long-term stability and growth.

Related: Under-Construction Hard Rock Casino in Illinois Changes Ownership

Peter Carlino, the chairman and CEO of GLPI, expressed his enthusiasm for the acquisition, noting that Tioga Downs adds diversity to their portfolio and brings on board a tenant with extensive experience in gaming, horse racing, and hotel management. Tioga Downs features a range of amenities, including a large gaming floor, a sportsbook, a hotel, a harness horse track, dining options, and a golf course.

The property underwent a significant expansion worth $130 million starting in 2016, following the issuance of a Class III casino license by the state of New York. Carlino emphasized the quality and expanded facilities of Tioga Downs, which provide significant protection from competition, making it a valuable addition to GLPI's portfolio.

Cash Helps Complete the Transaction

The transaction was funded through a combination of cash on hand and the issuance of $20 million in operating partnership units. GLPI has been actively pursuing growth opportunities, having raised net proceeds of $188.9 million through its At-the-Market program since the end of the third quarter of 2023.

Jeff Gural, the founder and CEO of American Racing, highlighted Tioga Downs' appeal as a locally-focused property with a loyal customer base and minimal competition in its feeder market. Gural expressed confidence in GLPI's ability to manage regional casino assets effectively and expressed personal anticipation about becoming a GLPI unit holder.

Analysts view the deal positively, citing its potential contribution to GLPI's financial performance and signaling a broader trend of gaming REIT mergers and acquisitions. Truist Securities analyst Barry Jonas maintained a Buy rating on GLPI, noting ongoing adjustments to reflect recent transactions and financing assumptions.

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