New master lease to support PENN’s growth opportunities
Driven by property transfers and additional development
WYOMISSING, Pa., Oct. 10, 2022 (GLOBE NEWSWIRE) — Gaming & Leisure Properties, Inc. (“GLPI” or the “Company”) (Nasdaq: GLPI) announced today that it has agreed to create a new master lease with PENN Entertainment, Inc. (“PENN”) (Nasdaq: PENN) for seven of PENN’s current properties. The companies have also agreed to a financing mechanism to support PENN’s pursuit of relocation and development opportunities at several of the properties included in the new master lease. The transaction, including the creation of the new master lease, is subject to customary regulatory approvals and is expected to become effective on January 1, 2023.
Pursuant to the terms agreed to by the parties, PENN’s current master lease will be amended to eliminate PENN’s properties in Aurora and Joliet, Illinois; Columbus and Toledo, Ohio; and Henderson, Nevada and these properties will be added to the new master lease. In addition, the existing leases for Hollywood Casino at The Meadows in Pennsylvania and Hollywood Casino Perryville in Maryland will terminate and these properties will be transferred to the new master lease. GLPI has agreed to finance up to $225 million for the relocation of the PENN River Casino in Aurora at a maximum rate of 7.75% and to finance up to $350 million for the relocation of Hollywood Casino Joliet, as well as the construction of hotels at Hollywood Casino Columbus. and a second hotel tower at the M Resort Spa Casino at current market rates.
The new master lease and GLPI financing commitment will allow PENN to pursue several growth projects, including planned projects in Aurora and Joliet, Illinois; Columbus, Ohio; and Henderson, Nevada.
Peter Carlino, CEO of Gaming & Leisure Properties, commented: “Our continued support of our tenant roster of leading regional gaming operators through innovative transaction structures has proven to be mutually beneficial and we are confident that this new master lease with PENN Entertainment will extend our track record of success on this front.
“Throughout its 28 years as a public company, PENN Entertainment has become the industry’s preeminent developer of regional gaming assets. GLPI is pleased to structure a new master lease with our tenant at long term that includes a financing option to allow PENN to expand its legacy of growth through development by pursuing attractive opportunities in Illinois, Ohio and Nevada We support the relocation of PENN’s riverboat casinos to land-based operations as we believe that this provides a superior guest experience, particularly as the proposed Aurora and Joliet properties are positioned to benefit from existing and long-term traffic-driving developments.Furthermore, we believe that the creation of a new hotel at the Hollywood Casino Columbus will significantly improve the performance of this property and ultimately allow PENN to transform it into a regional destination Finally , as with all of our transactions at GLPI, this new master lease structure includes attractive lease and financing terms for both parties under a proven master lease structure that provides protection against GLPI’s material write-down while provides an opportunity for us to benefit from PENN’s long-term duration. growth”.
The terms of PENN’s New Master Lease and Amended Master Lease are expected to be substantially similar to PENN’s current Master Lease with the following key differences:
- The new master lease will by default be cross-collateralized and co-terminal with the existing PENN master lease
- The initial term of the new master lease will expire on 10/31/2033, with three 5-year extensions at PENN’s option (subject to the term remaining on Penn’s current lease)
- All rent under the new master lease will be set at an annual escalation of 1.50%, with the first escalation occurring for the lease year beginning November 1, 2023.
- The rent for the new contract will be $232.2 million in base rent. PENN’s original head lease rent will be $284.1 million, consisting of $208.2 million of building base rent, $43.0 million of land base rent and $32.9 million in percentage rent.
about games i leisure properties
GLPI is engaged in the acquisition, financing and ownership of real estate to be leased to gaming operators under triple net leases, pursuant to which the lessee is responsible for all maintenance of the facilities facilities, the necessary insurances in relation to the leased properties and the business conducted on the leased properties, the taxes levied on or in relation to the leased properties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the rented properties.
looking ahead Declarations
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the successful relocation of the locations and the completion of the planned plans. projects, the anticipated benefits of the transactions at GLPI and the expected impact of anticipated capital expenditures on PENN’s results of operations. Forward-looking statements can be identified by the use of forward-looking terminology such as “expects”, “believes”, “estimates”, “intends”, “may”, “should”, “should” or “anticipates” or negative or other variations of these or similar words, or for discussions of future events, strategies or risks and uncertainties. These forward-looking statements are inherently subject to risks, uncertainties and assumptions about GLPI and its subsidiaries, including risks related to the following: GLPI’s ability to successfully consummate the announced transactions with PENN, including the ability of the parties to reach definitive agreements, the receipt of all required regulatory approvals, or other delays or impediments to completing the proposed transactions; PENN’s ability to obtain all necessary approvals and permits for announced capital projects; construction factors, including delays, unexpected repair costs, increased cost of labor and materials and other factors that could significantly increase required capital expenditure; the effect of pandemics, such as COVID-19, on GLPI as a result of the impact such pandemics may have on the business operations of GLPI’s tenants and their continued ability to pay rent in a timely manner or to investments in GLPI’s properties; the potential negative impact of recent high levels of inflation (which have been exacerbated by the armed conflict between Russia and Ukraine) on our tenants’ operations and ability to access the capital markets for necessary financing; GLPI’s ability to maintain its status as a REIT; GLPI’s ability to access capital through the debt and equity markets in amounts and at rates and costs acceptable to GLPI; the impact of our substantial indebtedness on our future operations; changes in US tax laws and other state, federal or local laws, whether or not specific to REITs or the gaming or hospitality industries; and other factors described in GLPI’s Annual Report on Form 10-K for the year ended December 31, 2021, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, each filed with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to GLPI or persons acting on GLPI’s behalf are expressly qualified in their entirety by the cautionary statements included in this press release. GLPI undertakes no obligation to publicly update or revise any forward-looking statements contained or incorporated by reference herein, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release may not occur as presented or may not occur at all.
games i leisure properties, Inc.
Matthew Demchyk, Chief Investment Officer
Joseph Jaffoni, Richard Land, James Leahy at JCIR