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Las Vegas Strip Casino Sold In Response To Coronavirus Shutdown

Penn National Gaming Sells Tropicana Las Vegas Casino To Real Estate Investment Trust, Will Lease Property Back


Penn National Gaming sold one of its two Las Vegas casino properties last Friday to help mitigate the economic pain of the coronavirus-induced casino shutdown in Nevada.

The company sold the Tropicana Las Vegas casino, its only Strip property, to Gaming & Leisure Properties, a real estate investment trust that was created as a spinoff from Penn National in 2013. Penn National Gaming will no longer own the real estate but will still run the day-to-day operations of the business.

The move came straight from MGM’s playbook. In what was dubbed its “asset-light strategy,” MGM Resorts sold the real estate of its properties in late 2019 and early 2020 and leased it back from the group it sold to.

During its most recent deal last January, MGM sold a majority stake of the MGM Grand and Mandalay Bay to its own REIT, MGM Growth Properties, while selling 49.9 percent of the real estate to Blackstone Group. Blackstone also purchased Bellagio from MGM Resorts last October.

GLPI bought Tropicana for $337.5 million in non-cash rent payments. Essentially, Penn National will have nine figures worth of rent already paid and will not have to come out of pocket until those credits expire.

The deal also includes a ground lease for planned casino development in Pennsylvania and includes the option for Penn National to acquire a GLPI-owned casino in Maryland.

The sale brought the announcement that Penn National will furlough 26,000 workers. The company will continue to pay employees through the end of March and those receiving medical benefits through the company will get them through the end of June.

Penn National purchased Tropicana Las Vegas in 2015 for $360 million. It’s other Nevada property is the M Resort, located 15 minutes south of the Las Vegas Strip in Henderson.