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Penn National Gaming spinoff announces first acquisition

The real estate investment trust spinoff from Penn National Gaming announced its first acquisition outside of the regional casino operator Monday, paying $140 million for a riverboat casino complex in East St. Louis, Ill.

Gaming and Leisure Properties Inc. said it will acquire the real estate assets associated with the Casino Queen, which covers roughly 78 acres and include a 157-room hotel and a 38,000 square foot floating casino. The resort, built in 2007, has a recreational vehicle park.

Gaming and Leisure Properties will provide Casino Queen with a $43 million term loan, which will completely refinance and retire the casino’s outstanding long-term debt obligations. As a condition of the purchase, the real estate investment trust will lease the property back to Casino Queen on a triple net basis for approximately $14 million per year.

Gaming and Leisure Properties CEO Peter Carlino said the purchase “is representative of the robust opportunities that exist in the gaming asset markets that our company is targeting.”

The real estate investment trust was spun off from Penn National this year. Penn separated 21 of the company’s 29 casinos, including M Resort, into the GLPI. The trust then leased the casinos back to Penn National, which is operating the properties.

Gaming analysts expect GLPI to strike other deals throughout 2014.

“This deal serves as a case study that GLPI can roll up smaller, single-asset properties as it looks to complete $500 million of deals in its first year, while also diversifying its tenant base,” Credit Suisse gaming analyst Joel Simkins told investors.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.

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