Tropicana kind of sold

https://vegas.eater.com/2020/3/30/21199285/penn-national-gaming-sells-tropicana-real-estate-assets-las-vegas-strip

Quote: onenickelmiracle

https://vegas.eater.com/2020/3/30/21199285/penn-national-gaming-sells-tropicana-real-estate-assets-las-vegas-strip

Penn National Gaming Inc., the parent company of the Tropicana, sold the real estate assets of the resort on the Strip to Gaming & Leisure Properties for $337.5 million in rent credits on Friday. Penn National will continue to run the resort, one of 41 it owns in 19 states.

Howard Stutz at CDC Gaming says the payment essentially eliminates “five months of rent payments to the REIT [real estate investment trust], roughly $68 million per month under the two master lease agreements between the companies.”


so im guessing this is a tax dodge thing and Penn owns Gaming & Leisure Properties?
and/or milk value out of Tropicana at the expense of the shareholders?
ie: $68M/month in rent?!

A different article I saw said they'll also get 75% of the selling price over 308m(?), if they find a buyer in the next two years, so it's not just the five months of rent... but that number still seems off to me. In comparison, according to a different article*, the Bellagio did a rentback for 4.25b/245m=17.3months.

* https://www.bloomberg.com/news/articles/2019-10-15/mgm-sells-bellagio-to-blackstone-for-4-25-billion-in-lease-back

Quote: 100xOdds

Penn National Gaming Inc., the parent company of the Tropicana, sold the real estate assets of the resort on the Strip to Gaming & Leisure Properties for $337.5 million in rent credits on Friday. Penn National will continue to run the resort, one of 41 it owns in 19 states.

Howard Stutz at CDC Gaming says the payment essentially eliminates “five months of rent payments to the REIT [real estate investment trust], roughly $68 million per month under the two master lease agreements between the companies.”


so im guessing this is a tax dodge thing and Penn owns Gaming & Leisure Properties?
and/or milk value out of Tropicana at the expense of the shareholders?
ie: $68M/month in rent?!

Yes, thank you for commenting. It doesn't seem clean to me either. I'm not sure what kind of relationship the 2 companies have, it that is crazy rent. The other comment about profits from a sale seem to make up for it some. Not being in control of your own real estate doesn't seem wise to me unless you feel the location isn't stable long term. Everyone knows this Tropicana is where Penn National converts all midwest gambers to Vegas gamblers besides the other one off-strip I can't think of at the moment.

Selling your property and leasing it back has all sorts of tax advantages and I imagine is very beneficial from a liability standpoint, as well.

Gaming&Leisure counts as one of its tenants Penn National, and purchased the land-assets of five Trop properties. Penn National as an investment tanked -9% on a day when the market was up 2% in general. Deferring the REIT divi to shareholders is probably a good idea for PENN, not so good for Joe Investor.

Suited89

Quote: onenickelmiracle

Yes, thank you for commenting. It doesn't seem clean to me either. I'm not sure what kind of relationship the 2 companies have, it that is crazy rent. The other comment about profits from a sale seem to make up for it some. Not being in control of your own real estate doesn't seem wise to me unless you feel the location isn't stable long term. Everyone knows this Tropicana is where Penn National converts all midwest gambers to Vegas gamblers besides the other one off-strip I can't think of at the moment.

Even as a tax dodge, it sounds questionable given the timelines involved. I read it as an asset transfer to cover up bankruptcy, but, far as I recall, the companies aren't that tightly tied (unlike some of CET's shenanigans).

There was another interesting leaseback deal, around the same time as the Bellagio that involved the Suncoast, but that was like 90m with 500k/yr and a 30-year lease, which can be mostly taken at face value, I thought at the time.

My hospital is a county hospital. I don't fully understand it, but there were some shenanigans of the county 'selling' it to a sham corporation. (Sham is my word....) So the county then had a bunch of money but didn't own the hospital; the corporation did. But the county is still responsible for covering the losses of the hospital every year.