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Tropicana landlord reports surprising amount of buyer interest

Updated October 28, 2020 - 12:57 pm

The Tropicana’s landlord says it is garnering plenty of interest for a potential sale of the Strip hotel-casino, though it’s “under no pressure” to make a deal.

The company that owns the 35 acres of real estate beneath the Tropicana, real estate investment trust Gaming and Leisure Properties Inc., has drawn surprising interest, mostly in the form of “wing-and-a-prayer offers,” company Chairman and CEO Peter Carlino told investors Wednesday morning. He added that the company has upwards of 18 non-disclosure agreements pertaining to a potential sale.

“There’s a lot of tire kickers, not necessarily a lot of check writers, but we’re surprised by the activity,” Carlino said in a call discussing third-quarter earnings.

GLPI bought the real estate beneath the Tropicana from Penn National Gaming in April for $307.5 million worth of rent credits and is leasing it back to Penn, which operates the Tropicana. The hotel-casino reopened to the public Sept. 17 following coronavirus-related closures in March.

Carlino said Penn’s commitment to keeping the property open and “covering every expense” alleviates pressure to close a deal. Still, he said, “our focus is to reach a transaction as early as we plausibly can.”

The Tropicana, like many other resorts and gaming companies in the Las Vegas Valley, has furloughed or laid off hundreds of workers since March. Most recently, the property laid off 702 employees Oct. 15 and plans to lay off an additional 132 over a two-week stretch starting Dec. 23, according to a government notice required for mass layoffs.

“I think Las Vegas will come back, but it’s gonna be long and painful,” Carlino said.

In contrast with many other gaming-related companies, GLPI reported a higher revenue total in the third quarter this year than the same period last year: $307.6 million, compared with $287.6 million in 2019’s third quarter. The company reported a record quarter based on strong openings from the properties across the country that lease real estate from GLPI.

Company executives suggested the company isn’t keen on expanding its Strip presence through buying other properties.

He responded to an investor question about GLPI’s interest in two Strip convention properties that may be up for sale — Las Vegas Sands is exploring the possibility of selling The Venetian, Palazzo and Sands Expo and Convention Center.

Carlino said the company’s preference for properties is “out in the hinterlands.”

“The Strip is much too volatile for our tastes,” he said, adding “we never say never.”

Shares of GLPI, sold on the Nasdaq, were down 1.53 percent to $36.74 per share in afternoon trading.

The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson. Las Vegas Sands operates The Venetian and Palazzo and Sands Expo and Convention Center.

Contact Mike Shoro at mshoro@reviewjournal.com or 702-387-5290. Follow @mike_shoro on Twitter.

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