Gaming and Leisure Properties Approved for St. Louis Casino Real Estate Monopoly
Posted on: June 25, 2020, 09:46h.
Last updated on: June 26, 2020, 09:36h.
The Missouri Gaming Commission (MGC) is reversing its stance from two years ago, making Gaming and Leisure Properties, Inc. (GLPI) the lone landlord for the six casinos in the St. Louis area.
On Wednesday, the commission voted 4-1 in favor of allowing Eldorado Resorts (ERI) to sell the property assets of Lumière Place to an entity controlled by GLPI. ERI maintains operational control of the gaming venue. But with approval of that transaction, the real estate investment trust (REIT) now owns the property assets of all six casinos around the city known as the Gateway to the West.
Eldorado added that venue as part of its $1.85 billion acquisition of Tropicana Entertainment in 2018. At that time, ERI planned to sell the real estate of the purchased venues to GLPI for $1.21 billion and lease back the properties. But Missouri regulators objected, raising concerns about a Gaming and Leisure monopoly.
A document published by the MGC indicates ERI is agreeing to put at least $12.5 million into enhancing Lumière Place by the fifth anniversary of the effective date of the GLPI transaction.
How the ‘Monopoly’ was Born
Prior to 2018, GLPI owned the Casino Queen in East St. Louis and the Ameristar St. Charles, which is operated by Boyd Gaming. In that year, Penn National Gaming, the company from which GLPI was spun out in 2013, acquired Pinnacle Entertainment, bringing the River City Casino in Lemay into its portfolio.
Penn already operated the Hollywood Casino in Maryland Heights and Casino Argosy Alton. The company is GLPI’s largest tenant and the landlord owns nearly all of the gaming firm’s property assets.
GLPI’s St. Louis land monopoly isn’t anti-competitive, because gaming REITs aren’t involved in the day-to-day operations of the casino business. Additionally, the six properties in question are managed by four different entities: Boyd, Eldorado, and Penn, with Casino Queen being an employee-controlled venue. Still, one commissioner didn’t favor allowing the ERI/GLPI transaction.
The commission I was with before, all the commissioners were concerned about giving GLPI a monopoly,” said Gaming Commissioner Dan Finney, the lone dissenting vote.
The four commissioners approving the deal were all appointed after it was rejected in 2018, reports the St. Louis Post-Dispatch.
Eldorado, GLPI Have History
GLPI owns the real estate of 44 gaming venues, and while Penn is its biggest tenant, the REIT has a long relationship with ERI, too.
Earlier this month, the companies struck an agreement whereby GLPI won’t raise rent on any ERI venues this year or in 2021. Standard operator/REIT pacts feature gradual, annual lease increases. The landlord will boost ERI’s rent by 1.25 percent in 2022 and 2023 before bumping to a 1.75 percent hike in the following two years.
ERI can also pull one of two Tropicana properties from its previously existing accord with the real estate firm as long as the removed venue is replaced with another of equal or higher value.
The new agreement also features a clause whereby ERI can divest control of the Belle of Baton Rouge Casino & Hotel in Louisiana, while GLPI can keep the real estate or opt to sell it.