Eldorado Resorts’ $1.85 Billion Acquisition of Tropicana Entertainment

Goodwin Procter LLP acted as legal counsel to GLPI in connection with the proposed transaction.

Gaming and Leisure Properties, Inc. (Nasdaq:GLPI) has entered into a definitive agreement to acquire the real estate assets of six casino properties from Tropicana Entertainment for $1.21 billion, exclusive of taxes and transaction fees of approximately $40.0 million.

The assets to be acquired are Tropicana Atlantic City, Tropicana Evansville, Lumiere Place, Tropicana Laughlin, Trop Casino Greenville and The Belle of Baton Rouge. The combined properties include 350,000 casino square feet, 7,416 slot machines, 237 table games and 4,993 hotel rooms.

Concurrent with the closing of this transaction, Eldorado Resorts, Inc. (NASDAQ:ERI) will acquire the operating assets of these properties and lease the real estate from the Company through a new master lease with a 15 year initial term and four 5 year renewal periods. Initial annual rent is $110 million and the rent coverage is expected to be not less than 1.85 times as defined by the lease. Terms of the new lease with Eldorado are similar to the Company’s existing Master Leases, except the escalator is guaranteed for the first five anniversaries of the lease so long as the escalator increase does not create an event of default. The transaction is subject to regulatory approval and is expected to close by the end of 2018.

The Company expects to fund the transaction with a combination of debt and equity, however, based on market conditions the entire transaction could be funded with debt. Upon completion of this acquisition, along with the previously announced transactions related to the acquisition of Pinnacle Entertainment, Inc. (NASDAQ:PNK) by Penn National Gaming, Inc. (NASDAQ:PENN), the Company anticipates its pro forma ratio of Total Debt to Adjusted EBITDA will increase to no more than 5.5 times. In aggregate, the two transactions are expected to result in dividend per share accretion of 8% to 10% on the first quarter annualized dividend of $2.52 per share.

Gaming and Leisure Properties, Inc. owns and leases casinos and other entertainment facilities. The company, led by Peter M Carlino, William J Clifford and Desiree A Burke in 2017 recorded $971 Million Revenues.

Goodwin advised Gaming and Leisure Properties with Yoel Kranz (Picture), Jacqueline Mercier, Tobias Schad, Jeremy Simon, Rob Intile and Stephanie Richards. Goodwin’s real estate and leasing efforts were led by counsel Michael Litchman and associates Erin Claywell and Reade Everett, with assistance from counsel Nathan Brodeur. Goodwin’s tax team included partner David Patton and of counsel Ed Glazer.

 

Involved fees earner: Yoel Kranz – Goodwin Procter; Jacqueline Mercier – Goodwin Procter; Tobias Schad – Goodwin Procter; Jeremy Simon – Goodwin Procter; Michael Litchman – Goodwin Procter; Erin Claywell – Goodwin Procter; Reade Everett – Goodwin Procter; Nathan Brodeur – Goodwin Procter; David Patton – Goodwin Procter; Edward Glazer – Goodwin Procter;

Law Firms: Goodwin Procter;

Clients: Gaming and Leisure Properties, Inc. ;

 

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Author: Ambrogio Visconti