Casino Queen Grabs Second Baton Rouge Casino in GLPI Hollywood Deal
Posted on: December 16, 2020, 11:42h.
Last updated on: December 16, 2020, 02:35h.
For the second time this month, Casino Queen Holding Company Inc. is acquiring a gaming venue in Baton Rouge, La. On Tuesday, it announced the purchasing of the operating rights for the Hollywood Casino Baton Rouge.
The buyer is paying $28.2 million for the operating rights to the riverboat casino and entering into a sale-leaseback agreement with Gaming and Leisure Properties (GLPI). GLPI will retain ownership of the real estate assets. The news arrives just days after GLPI said the venue will be renamed Casino Rouge when it comes ashore in early 2022.
GLPI made the announcement in conjunction with a broader series of corporate moves, including the $31.3 million sale of the operating rights for the Hollywood Casino Perryville in Maryland to Penn National Gaming.
GLPI is one of three publicly traded gaming real estate investment trusts (REITs) in the US. It typically acts as a landlord, but it also owns and operates a small number of casinos, including the aforementioned Hollywood venues. With the announced deals, the company’s operational exposure shrinks, allowing it to focus on its core competency of property management.
Digging Deeper Into the Deal
As part of the agreement to offload operating rights for the soon-to-be Casino Rouge to Casino Queen, GLPI is becoming the gaming company’s landlord in another location.
“GLPI will retain ownership of all real estate assets at Hollywood Casino Baton Rouge (HCBR) and will simultaneously enter into a master lease with Casino Queen, which will include both the DraftKings at Casino Queen (“DKCQ”) property in East St. Louis, Ill. and the HCBR facility, for initial annual cash rent of approximately $21.4 million. The lease will have an initial term of 15 years, with four 5-year extensions,” according to a statement.
As part of the accord between the two companies, GLPI gets rights of first refusal on other Casino Queen sale-leaseback deals up to $50 million that could pop up over the next two years.
The REIT will proceed with previously announced construction spending on the Baton Rouge casino associated with bringing it ashore. That effort is expected to cost $21 million to $25 million.
Growing in Baton Rouge
Earlier this month, Caesars Entertainment said it’s selling operating rights to the Belle of Baton Rouge riverboat casino to Casino Queen for an undisclosed sum. GLPI also owns those real estate assets.
When that pair of transactions finalize, Casino Queen will own two of the three gaming venues in the Louisiana capitol. Because of the operator’s Illinois relationship with DraftKings, there’s speculation that one asset could eventually bear the name of the daily fantasy sports (DFS) and sportsbook company. Louisiana’s recent appointment of DFS and sports betting further supports this idea.
Casino Queen is controlled by Standard General, the hedge fund that’s the largest shareholder in Bally’s, the thriving regional gaming firm previously known as Twin River Worldwide Holdings.
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