Gaming & Leisure Properties Inc. has entered into an agreement with its landlord, Penn National Gaming Inc., to acquire the real estate assets of Tropicana Las Vegas Casino Hotel Resort in return for an aggregate non-cash rent payment of $337.5 million. Penn National purchased the property in 2015 for $360 million and will continue to operate it.
The deal also includes a ground lease for a planned casino development in Morgantown, Pa., which is expected to generate $3 million of initial annual cash rent for the REIT. The agreement also provides Penn the option to acquire the operations of GLPI’s Hollywood Casino in Perryville, Md., at a future date.
Located at 3801 S. Las Vegas Blvd. on 35 acres, Tropicana is roughly 2.5 miles from McCarran International Airport, on the southern end of the Las Vegas Strip. Tropicana Las Vegas includes a 1,467-key hotel, 100,000 square feet of convention and exhibit space, as well as 50,000 square feet of gaming space.
The parties plan to consummate the transaction by the end of April, subject to negotiation of definitive agreements in the coming weeks and receipt of necessary approvals. The leaseback deal is meant to provide Penn National Gaming with more liquidity as all its properties across the country remain closed due to the coronavirus pandemic.
The hotel industry in the U.S. supported approximately 8.3 million direct and indirect jobs prior to the coronavirus crisis, according to the American Hotel and Lodging Association.
Experts expect the hospitality industry to be among the hardest hit by the ongoing COVID-19 spread. In mid-March, Nevada Governor Steve Sisolak ordered the closure of all non-essential businesses in the state for 30 days, which includes casinos. In this context, Penn National Gaming also announced last week it would furlough 26,000 employees beginning April 1.