Gaming and Leisure Properties Paying $184 Million for New Mexico Racino Real Estate

• Casino REIT is acquiring the real estate of Sunland Park Racetrack & Casino
• Gaming and Leisure is paying $183.75 million at a cap rate of 8.2%

Gaming and Leisure Properties (NASDAQ: GLPI) announced Wednesday that it’s buying the real estate assets of Sunland Park Racetrack & Casino in southern New Mexico.

The gaming real estate investment trust (REIT) is paying $183.75 million at an initial cap rate of 8.2% for the property assets of the racino, which is located near the New Mexico/Texas border. GLPI said the deal, which includes a 2% annual rent escalator, will be “immediately accretive” to adjusted funds from operations (AFFO). AFFO is the metric investors use to gauge a REIT’s financial health, including its ability to sustain dividend obligations.

Opened in 1959, Sunland Park sits on approximately 157 acres and offers 738 slots and 12 electronic gaming tables across a 25,000 square foot gaming floor,” according to a statement issued by GLPI. “The property includes a 1-mile Thoroughbred and Quarter Horse racetrack with a 733-seat stadium. It hosts a 600-person ballroom, a simulcast wagering area, and a 78-room third-party hotel. The property also has underutilized acreage that provides significant expansion and performance uplift opportunities.”

The initial lease term is for 25 years with two 10-year renewal options.

GLPI Expands Relationship with Strategic Gaming

Gaming and Leisure’s acquisition of the Sunland Park Racetrack & Casino real estate also represents an expansion of the REIT’s relationship with Strategic Gaming Management, the operator of the venue.

Sunland Park becomes GLPI’s second New Mexico property, with the other being Zia Park Casino Hotel & Racetrack in Hobbs. The newly acquired property has some geographic advantages.

“Sunland Park is located in the Borderplex Region consisting of El Paso, Texas, and Las Cruces, NM, which has a large adult population (~2M) and rising median household income,” wrote Truist Securities analyst Barry Jonas in a note published Wednesday. “The property also faces limited competition with the closest competitor ~20+ miles away (Speaking Rock) and no proposed commercial casinos within ~550 miles.”

Deal Fits Gaming and Leisure Properties’ DNA

The Sunland Park acquisition is in line with the type of deal GLPI shops for and executes. Pennsylvania-based Gaming & Leisure owns the real estate of dozens of casinos across, but it often eschews exposure to markets like Las Vegas in favor of properties in “hinterland” regions.

Later in the month, the landlord struck a $735 million sale-leaseback deal with Bally’s in connection with the Twin River Lincoln Casino Resort in Lincoln, RI.