Gaming and Leisure Properties acquires real estate assets of three properties

Gaming and Leisure Properties Inc. (GLPI) has acquired the real estate assets of three properties in South Dakota and Nevada from from Strategic Gaming Management LLC for $105 million.

The properties include the Silverado Franklin Hotel & Gaming Complex; the Deadwood Mountain Grand Casino — both located in South Dakota; and Baldini’s Casino in Nevada.

Simultaneous with the acquisition, the Wyomissing-based Gaming and Leisure Properties and affiliates of Strategic Gaming Management LLC entered into two cross-defaulted triple-net lease agreements, each for an initial 25-year term with two 10-year renewal periods.

Gaming and Leisure Properties also provided $5 million in capital improvement proceeds at the closing of the transactions for a total investment of $110 million, according to a press release.

“With our acquisition of the Silverado, DMG, and Baldini’s properties, we are pleased to further diversify our property portfolio while expanding our tenant roster through our new relationship with Strategic,” Peter Carlino, Gaming and Leisure Properties chairman and CEO, said in a statement. The addition of Strategic’s properties expands the company’s portfolio to 65 properties across 20 states with nine tenants and is expected to be immediately accretive to Gaming and Leisure Properties operating result, the company said.

The initial annual cash rent for the new leases is $9.2 million, inclusive of capital improvement funding, and represents an 8.4% capitalization rate, according to the release. Rent associated with the lease is subject to a fixed 2.0% annual escalation beginning in year three of the lease and a CPI based annual escalation beginning in year 11.

As part of the transaction, Gaming and Leisure Properties also secured a right of first refusal on the real estate related to future acquisitions until Strategic’s adjusted EBITDAR related to Gaming and Leisure Properties owned assets reaches $40 million annualized, the release stated.

“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,” J. Grant Lincoln, Strategic Gaming Management CEO, said in a statement.

Silverado, in Deadwood, S.D. features 245 slot machines, 16 table games, two restaurants, four bars, and a 68-room hotel. Silverado is expected to begin construction on a hotel renovation this year, using a portion of the $5 million in capital improvement proceeds funded by Gaming and Leisure Properties at the closing of the transactions.

Deadwood Mountain Grand Casino, also in Deadwood, is an 11-acre property that offers 141 slots and eight table games, two food and beverage locations, a 208-space parking garage, a 67-seat sportsbook, and a 13,500-square-foot event center.

Baldini’s, in Sparks, Nev., is an approximate 9-acre gaming property offering about 492 slot machines across a 43,000-square-foot gaming floor. Baldini’s offers restaurants, bars, and more than 600 parking spaces, a 2,000-square-foot sportsbook, and 37,000 square feet of additional office and support space.