Tropicana land owner exploring Strip purchase

Admitting he was wrong about the resiliency of the Strip after the pandemic, the CEO of Gaming and Leisure Properties Inc. said he’s interested in possibly acquiring more Strip properties in the future.

Peter Carlino, in the company’s Friday earnings call with investors, said the real estate investment trust affiliated primarily with Penn Entertainment Inc. and Bally’s Corp., said if the price is right, he’d be interested in another resort.

GLP already owns the real estate beneath Tropicana Las Vegas and negotiated a new master lease to acquire the land for $145 million and lease it back to Bally’s for $10.5 million a year over 50 years, resulting in a pretax gain of $67.4 million.

“We’ve never had any ill feelings toward Strip assets, it’s just a matter of cost,” Carlino said in response to an investor’s question. “We’ve found more value in the regional markets. I’ve been chastened a little bit following this latest downturn and recognizing after COVID that the Strip proved to be a lot more resilient than I would have ever have guessed. We knew what would happen in the regional markets with people the first minute they could go out of their door would head over to our properties and did so with great enthusiasm. But Vegas, I was a little bit more cautious about it and I was wrong, frankly.”

To Carlino, it’s all a matter of price. For two years, Caesars Entertainment Inc. has publicly stated it intends to sell one of its Strip assets, but there have been no reports of GLPI negotiating to buy.

“It’s only about money,” Carlino said. “There’s nothing that we won’t own, I go both directions. We’d love to have Strip properties. I’ve often said to many of you that I’d own a shack on the beach with no windows and doors if the cash flow was rock solid. We’re in the cash flow business. It’s kind of what we do, big or small. It’s simply, can we get a proper return, a proper spread to our cost of capital and manage our balance sheet effectively at the same time? So there’s no prejudice. We look at Vegas assets, frankly, all the time.”

Carlino provided no new details about whether Bally’s is negotiating further with the Oakland A’s to potentially turn the Tropicana into an MLB stadium site. The A’s have negotiated with both Bally’s and with billionaire Phil Ruffin, owner of Treasure Island and Circus Circus, to use the Las Vegas Festival Grounds at Las Vegas Boulevard and Sahara Avenue as a potential stadium site.

The A’s in recent weeks have been silent on the status of its Las Vegas stadium negotiations.

Carlino also expressed his enthusiasm for Penn Entertainment to build a new 384-room, $206 million project that will be part of a four-property $850 million expansion for Penn in Illinois, Ohio and Nevada.

No timeline has been announced for the proposed new M tower.

“The M has long needed a tower,” Carlino said. “That property is doing extraordinarily well and desperately needs more capacity. These are all good things that are going to unfold over the next couple of years and we’re quite excited about that.”

GLPI reported strong third-quarter earnings Thursday night before Friday’s call.

The Wyomissing, Pennsylvania-based company reported net income of $220 million, 85 cents a share, on revenue of $333.8 million for the quarter that ended Sept. 30. In the same quarter a year earlier, the company posted net income of $149.1 million, 63 cents a share, on revenue of $298.7 million.

“We continue to like the stability of GLPI’s triple-net lease REIT business model, especially in the uncertain macro backdrop,” gaming analyst Joe Greff of J.P. Morgan said in a Friday note to investors. “We highlight its attractive and likely growing dividend stream given rent escalators and (merger-and-acquisition)-related growth, supported by its strong balance sheet.”

GLPI shares, traded on the Nasdaq exchange, closed up $2.08, 4.3 percent to $49.95 a share in average trading. After hours, the stock went higher by $1.21, 2.4 percent, to finish near $51.16 a share.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.