Cordish sells three casino properties to real estate investment trust
Gaming and Leisure Properties has agreed to acquire the real estate assets of three of The Cordish Companies’ Live! casino properties for $1.81bn.
US.- Gaming and Leisure Properties Inc (GLPI) has agreed to buy the real estate assets of three of The Cordish Companies’ Live! casino properties. The deal is valued at $1.8bn.
Cordish will relinquish ownership of the real estate at Live! Casino & Hotel Maryland, Live! Casino & Hotel Philadelphia and Live! Casino Pittsburgh but will lease back the properties and “continue uninterrupted to own, control and manage all the gaming operations of the facilities,” according to a press release.
The transaction for the three properties includes not only the existing real estate assets, but also a binding partnership on future Cordish casino developments, as well as potential financing partnerships between Pennsylvania-based GLPI and Baltimore-based Cordish in other areas of Cordish’s portfolio of real estate and operating businesses.
GLPI will enter into a new triple-net master lease with Cordish for Live! Casino & Hotel Philadelphia, and Live! Casino Pittsburgh, and a single-asset lease for Live! Casino & Hotel Maryland. The leases will have an initial term of 39 years, with a maximum term of 60 years inclusive of tenant renewal options. The initial annual cash rent for all three properties will be $125m, with a 1.75 per cent fixed yearly escalator after the second year.
Peter Carlino, chairman and CEO of GLPI, said in a statement: “We are excited to establish a relationship with The Cordish Companies, one of the country’s preeminent developers of large-scale experiential real estate projects, casinos, hospitality and entertainment districts.
“We have long admired Cordish for their creation of the highly successful ‘Live!’ brand across these entertainment, gaming and hospitality districts.”
The partnership between Cordish and Gaming and Leisure Properties will extend past the closing of the deals. The two have agreed to a co-investment partnership for seven years, in which Gaming and Leisure Properties will join Cordish on “any new gaming development project” and will invest in 20 per cent of Cordish’s equity through the project’s life span.
Gaming and Leisure Properties will also have a right of first offer or refusal for any future sale-lease-back deals, or similarly structured deals, that Cordish pursues in the next five years. In taking over the casino real estate, Gaming and Leisure Properties will assume some of the debt associated with the properties and pay Cordish an undisclosed amount in cash as well as grant the Baltimore development firm $323m of newly issued operating partnership units in the Wyomissing, Pennsylvania-based real estate investment trust.