Penn Natl Gaming (PENN 33.37, +0.12,
+0.4%) is poised to extend its winning streak to four days following the
announcement that the company has entered into a definitive agreement to
acquire the operations of Margaritaville Resort Casino in Bossier City,
Louisiana for around $115 mln cash in a transaction that is expected to close
in the second half of 2018 and be immediately accretive to operating results
Penn will also enter into a triple net lease agreement with VICI Properties (VICI 20.65, +0.05, +0.2%) for the Margaritaville facility. The lease will have an initial annual rent of about $23 mln and an initial term of 15 years, with four 5-year renewal options. The rent coverage ratio in the first year after closing is expected to be 1.9x and the Tenant’s obligations under the lease will be guaranteed by Penn.
Parsing out the deal a bit more, VICI Properties entered into definitive agreements pursuant to which VICI will acquire the land and real estate assets of the Margaritaville Resort Casino, located in Bossier City, Louisiana, for about $261 mln in cash, and Penn will acquire the operating assets of the Margaritaville Resort Casino for around $115 mln in cash. The aggregate purchase price payable in connection with the acquisition of the real property and operations of the Margaritaville Resort Casino is around $376 mln in cash.
Penn’s regional gaming platform would be expanded by gaining a property that is complementary to its pro-forma operating base following the completion of the company’s pending acquisition of Pinnacle Entertainment (PNK 33.71, +0.11+0.3%). With the results of both of these acquisitions, Penn’s portfolio of regional gaming facilities will increase to 40 properties in 18 jurisdictions.
Penn does not anticipate that this transaction will alter the company’s expectation that it will end the year with net rent-adjusted leverage in the mid-5x range, pro forma for the completion of the Pinnacle acquisition.
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