Gaming and Leisure Properties acquires three Nevada and South Dakota casinos for $105 million

Gaming and Leisure Properties has acquired the property assets of three casinos from Strategic Gaming Management for $105 million. The properties involved in the deal are Baldini’s Casino in Sparks, Nevada, and the Silverado Franklin Hotel & Gaming Complex and Deadwood Mountain Grand in South Dakota.

"Simultaneous with the acquisition, GLPI and affiliates of Strategic Gaming Management, LLC will enter into two cross-defaulted triple-net lease agreements, each for an initial 25-year term with two ten-year renewal periods. GLPI also provided $5 million in capital improvement proceeds at the closing of the transactions for a total investment of $110 million,” according to a statement issued by GLPI.

This marks the second deal announced by the Pennsylvania-based casino landlord this year, following its announcement in February that it was paying $175 million for the property assets of Tioga Downs Casino Resort in Nichols, NY.

Prior to this announcement, GLPI was the owner of the real estate assets of 62 gaming venues across 19 states. The new transactions align with GLPI's strategy of focusing on stable gaming markets and expanding its footprint in underrepresented regions.

With the acquisition of Baldini’s Casino, GLPI will increase its holdings in Nevada to four properties, marking its initial entry into the Reno-Sparks market. In South Dakota, the acquisition of the Silverado Franklin Hotel & Gaming Complex and Deadwood Mountain Grand will be GLPI's first properties in the state. Previously, the closest GLPI-owned properties to the Dakotas were in Illinois and Iowa.

Baldini’s Casino in Sparks, Nevada

"Silverado has completed over $32 million of capital projects since its inception to maintain and enhance its offerings, including buffet renovations, new restaurant openings, and casino remodels. Silverado is expected to begin construction on a hotel renovation in 2024, using a portion of the $5 million in capital improvement proceeds funded by GLPI at the closing of the transactions," the statement added.

The new lease agreements between GLPI and Strategic Gaming Management are structured with an initial aggregate annual cash rent of $9.2 million, representing a cap rate of 8.4%. A fixed 2% annual rent escalation will begin in the third year of the lease, with a CPI-based escalation starting in year 11, capped at 2.5%.

As part of the agreement, GLPI secured rights of first refusal on future gaming property sales by Strategic until the EBITDAR related to GLPI-owned assets reaches $40 million annualized. 

Peter Carlino, Chairman and CEO of GLPI, commented: “The addition of Strategic’s properties expands our portfolio to 65 properties across 20 states with 9 tenants and is expected to be immediately accretive to GLPI’s operating results. Strategic is led by CEO J. Grant Lincoln who formed the company in 2009. Under Grant’s stewardship, Strategic operates three properties with solid leadership positions in their respective markets, while generating growth in patronage and cash flows.

"With the initial transaction and our right of first refusal on growth opportunities, we look forward to the start of a long-term mutually beneficial relationship with Grant and Strategic. Our initiatives to expand our portfolio remain active in the current environment as our reputation as the gaming landlord of choice is further strengthened and reinforced by this transaction.”

Deadwood Mountain Grand in Deadwood, South Dakota

J. Grant Lincoln, Strategic’s CEO, added: “We are pleased to begin our partnership with GLPI. Our operating approach, informed by decades of successful experience in competitive gaming markets, is laser-focused on bottom-line results. Our platform is well positioned for thoughtful, ongoing growth.

"As we explored the options for a sale-leaseback partner, GLPI rose above the rest given their unique approach and true emphasis on partnership as well as their deep experience as gaming operators. We look forward to collaborating with GLPI to prudently grow our operations over the coming years.”

The Silverado Franklin Hotel & Gaming Complex, located in Deadwood, South Dakota, opened in 1990 and is one of the largest gaming facilities in the state. It features 245 slot machines, 16 table games, two restaurants, four bars, and a 68-room hotel. The property has undergone over $32 million in capital projects to maintain and enhance its offerings, and a hotel renovation is planned for 2024.

Baldini’s Casino in Sparks, Nevada, is a 9-acre gaming property with approximately 492 slot machines across a 43,000-square-foot gaming floor. The casino, which opened in 1988, offers a range of amenities including restaurants, bars, a 2,000-square-foot sportsbook, and 37,000 square feet of additional office and support space.

The Deadwood Mountain Grand in Deadwood, South Dakota, is an 11-acre gaming property with 141 slots and 8 table games. It features two food and beverage locations, a 208-space parking garage, a 67-seat sportsbook, and a 13,500 square foot event center. The property opened in 2011 and has seen over $10 million in capital expenditures, including a $5 million renovation to its Holiday Inn Resort Hotel.