The Nevada-based Eldorado Resorts group is to acquire casino and hotel operator Tropicana Entertainment in $1.85bn cash transaction.
The agreement sees Gaming and Leisure Properties pay $1.21bn, excluding taxes and expenses, for substantially all of Tropicana’s real estate and enter into a master lease with Eldorado for the acquired real estate, with Eldorado funding the remaining $640m in cash.
GLPI will acquire the Tropicana real estate portfolio, except the MontBleu Casino Resort and Spa in South Lake Tahoe and the Tropicana Aruba Resort and Casino.
Following the acquisition of the real estate portfolio by GLPI, Eldorado will enter into a lease for the acquired properties with an initial term of 15 years, with renewal options of up to 20 years. The initial annual rent is expected to be around $110m. Tropicana intends to dispose of Tropicana Aruba Resort and Casino prior to closing.
Eldorado is acquiring the operating assets of seven casinos in six states, including two in Nevada – the Tropicana Laughlin Hotel and Casino and the MontBleu Casino Resort and Spa in South Lake Tahoe – as well as casinos in Indiana (Tropicana Evansville), Louisiana (Belle of Baton Rouge Casino and Hotel), Mississippi (Trop Casino Greenville), Missouri (Lumière Place) and New Jersey (Tropicana Casino and Resort, Atlantic City).
These properties include around 7,900 slot machines, 265 table games and approximately 5,400 hotel rooms along with a number of dining, retail and entertainment amenities. These assets will swell the Eldorado property portfolio to 26,800 slot machines and VLTs, more than 800 table games and over 12,500 hotel rooms.
Gary Carano, chairman and chief executive officer of Eldorado, said, “With our proposed acquisition of Tropicana Entertainment, Eldorado Resorts is yet again pursuing a large transaction that is expected to be accretive, further increase the scale of our regional gaming platform and drive free cash flow growth.
“Our recent initiatives to enhance shareholder value, including the Tropicana transaction and our agreement to divest two properties, reflect significant milestones in the successful ongoing execution of our long-term strategy to opportunistically expand our regional gaming platform.
“Over the last 12 months, we have created tremendous shareholder value through our ability to realise and exceed the anticipated synergies from the Isle of Capri transaction, which quickly reduced our initial purchase price multiple and we expect to achieve the same with the Tropicana transaction.
“The acquisition of seven Tropicana Entertainment properties will allow Eldorado to enter two new gaming jurisdictions and deliver additional financial and geographic diversity to our operating base.”