Penn National spinoff acquiring Live! Casino Philadelphia real estate as part of $1.81 billion transaction

Wyomissing-based Gaming and Leisure Properties Inc. is purchasing the real estate assets associated with Live! Casino & Hotel Maryland, Live! Casino & Hotel Philadelphia and Live! Casino Pittsburgh, including applicable long-term leases. Cordish will immediately lease back all the properties and continue to own and oversee all gaming operations at the facilities. 

The transactions for the Philadelphia and Pittsburgh properties are expected to close in early 2022. The Maryland transaction is anticipated to close by the end of the month. All are subject to regulatory approval.

The transaction includes a binding partnership between Gaming and Leisure Properties Inc. and The Cordish Cos. on future Cordish casino developments, as well as potential financing partnerships between the entities on other real estate and operating businesses in Cordish’s portfolio. 

The $700 million Live! Casino and Hotel Philadelphia opened in January at 900 Packer Ave. near the Stadium Complex. It includes a 15,000-square-foot event center and culinary standouts like Baltimore-born steakhouse The Prime Rib. 

Live! Casino Philadelphia generated more than $18.7 million in revenue October. More than $6.6 million in total sports wagering handle was placed with the South Philadelphia property, generating upward of $400,000 in revenue for the facility.

Gaming and Leisure Properties, which was formed in 2013 and touts itself as the nation's first gaming real estate investment trust, is financing the acquisition with a mix of qualified debt assumption, cash and $323 million of newly issued operating partnership units that the groups say align the two entities for future collaboration and partnership.  

When the transactions close, Gaming and Leisure Properties will enter into a new triple-net master lease with Cordish for Live! Casino & Hotel Philadelphia and Live! Casino Pittsburgh, as well as a single asset lease for Live! Casino & Hotel Maryland. The leases will have an initial 39-year term, with a maximum 60-year term contingent upon tenant renewal options. 

Initial annual cash rent for all three properties will be $125 million with a 1.75% fixed yearly escalator starting the second year, representing an implied capitalization rate of 6.9%, according to the companies.

Gaming and Leisure Properties' portfolio includes 50 gaming and hospitality facilities across 17 states, such as the 150-room Boomtown New Orleans; 390-room M Resort in Henderson, Nevada; and the nearly 418,000-square-foot Meadows Racetrack and Casino in Washington, Pennsylvania. 

David Cordish, chairman at The Cordish Cos., said in a statement that the company is looking forward to collaborating with Gaming and Leisure Properties on “opportunities to grow the Live! brand” moving forward. 

“Our election to receive a significant portion of our consideration in GLPI [operating partnership] units stands testament to our recognition of GLPI’s significant underlying value and quality as a company, and the synergies we see between the two companies,” he added. 

“These new leases are expected to have strong rent coverage at an accretive cap rate while further expanding and diversifying our portfolio and marking a continuation of our strategy to build an industry leading, high quality tenant roster,” Peter Carlino, CEO at Gaming and Leisure Properties Inc., noted in a statement. “In addition to the real estate transaction for the three properties, we are excited to partner with Cordish on a range of future strategic opportunities that can leverage the financial and real estate development strengths and resources of both companies.”

For seven years after the closing of the Pennsylvania property transactions, Gaming and Leisure Properties will co-invest with Cordish any new gaming development projects, barring those involving currently owned Cordish properties or existing gaming licensed facilities. The Wyomissing company will invest in 20% of Cordish’s portion of the equity in the project throughout its lifespan. 

For five years after the Pennsylvania closings, Gaming and Leisure Properties will have a right of first offer and right of first refusal on any sale-leaseback transaction that Cordish pursues on a Live! property.