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US regional casino operator Twin River Worldwide Holdings (TRWH) has picked up yet another of Caesars Entertainment’s castoffs but this time it isn’t costing the company a penny, at least, not yet.
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On Tuesday, TRWH announced a deal to acquire the Tropicana Evansvillecasino operations in Indiana from Caesars for $140m. However, the deal requires no cash outlay on TRWH’s behalf, thanks to the introduction of a third party, real estate investment trust Gaming and Leisure Properties Inc (GLPI).
GLPI has agreed to acquire the land underneath the Evansville casino from Caesars for $340m — after Caesars agreed to add the real estate under two Iowa casinos to the GLPI master lease — and GLPI will then lease that land back to TRWH for an initial rate of $24m per year, subject to escalation. GLPI is also acquiring the land under TRWH’s Dover Downs Hotel & Casino in Delaware casino for $144m, which will then be rented back to TRWH at $12m/year, subject to escalation.
The net effect of all this land-swapping is Caesars gets $480m in cash, TRWH gets a new casino – along with “unencumbered rights” to the casino’s sports betting and iGaming skins – without putting up any new cash, while GLPI gets two new properties that will generate combined annual revenue of $36m per year from the get-go.
The deal raises TRWH’s profile to 15 properties in 10 states, building on the flurry of acquisitions the company has made over the past few years, including the Jumer’s casino in Illinois earlier this month. It’s also the latest deal TRWH has struck involving properties that the enlarged Caesars is looking to unload following this summer’s mega-merger with Eldorado Resorts (from whom TRWH previously acquired other casinos).
TRWH CEO George Papanier said the Evansville deal was “consistent with our core strategy of acquiring strategic gaming assets at attractive valuations,” not to mention “access to an attractive Indiana gaming market,” particularly in terms of iGaming and sports betting opportunities.
The Evansville casino features a 45k-square-foot gaming floor, a race and sportsbook — powered by William Hill, with which TRWH already has a betting relationship at its Rhode Island casinos — four restaurants and 11k square-feet of convention space. The casino reported earnings of $32m in 2019, making the deal’s total consideration equal to 4.4x earnings (after factoring in the new rent payments). TRWH expects the deal to close in mid-2021, subject to the usual regulatory approvals.
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