Penn National Gaming Tropicana Las Vegas Sale Could be Near, Company Mum on Speculation

Posted on: January 2, 2020, 02:10h. 

Last updated on: January 2, 2020, 03:20h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

The 2020 Las Vegas rumor mill is up and running, with speculation swirling that Penn National Gaming, Inc. (NASDAQ:PENN) is nearing a sale of the Tropicana on the Strip.

Rumor has it Penn National is close to selling Tropicana Las Vegas, but the company isn’t commenting. (Image: Eater Vegas)

In October, Casino.org, citing Stifel analyst Steven Wieczynski, reported that the regional gaming company was mulling a sale of the Tropicana, one of its two Sin City venues. On Thursday, Vital Vegas described a sale of the property as “imminent.”

Unfortunately, we are unable to comment on rumors or market speculation,” said Eric Schippers, Penn National senior vice president for public affairs, in response to a Casino.org request for reaction to the chatter.

If Penn does reveal a sale of the Tropicana in the near-term, it would likely be the first sale of a Strip asset in 2020. It would also an extend a run of increased activity involving Las Vegas gaming properties.

In the fourth quarter, Caesars Entertainment (NASDAQ:CZR) wrapped up its sale of the Rio Las Vegas, while MGM Resorts International (NYSE:MGM) put the finishing touches on a sale-leaseback of the Bellagio, while also unloading Circus Circus.

‘Unsolicited Interest’

On his company’s third-quarter earnings conference call, then-Penn National COO Jay Snowden said the operator had received “unsolicited interest” in the Tropicana, as well the company’s Prairie State Gaming unit.

At that time, Snowden, now Penn’s chief executive officer, did not reveal the source(s) of that interest. But he did say the company has some “valuable assets” that weren’t adequately reflected in its stock price. Shares of the regional gaming company surged nearly 36 percent last year.

Penn paid $360 million for the Tropicana when it acquired the property in August 2015, or just over $10 million per acre. Wieczynski previously mentioned that in a sale this time around, Tropicana could fetch around $20 million an acre, or roughly $700 million.

That’s less than the $825 million MGM was able to wring out of the Circus Circus deal. But $700 million would help Penn put a dent in long-term liabilities of about $11 billion.

Potential Buyers

While Penn National isn’t commenting on the rumors regarding Tropicana’s future, it’s likely that there would be plenty of interested suitors should the company officially put the property up for sale.

Among publicly traded operators, Boyd Gaming (NYSE:BYD), Monarch Casino & Resort, Inc. (NASDAQ:MCRI) and Rhode Island-based Twin River Worldwide Holdings, Inc. (NYSE:TRWH), among others, have been rumored to be interested in Strip assets.

Penn could also opt to sell the Tropicana to a gaming real estate investment trust (REIT) and lease the venue back, which is what MGM did with the Bellagio. Gaming and Leisure Properties, Inc. (NASDAQ:GLPI), itself the center of takeover speculation, is Penn’s primary landlord, but GLP does not currently own the Tropicana.

The real estate company does, however, own the property assets of the M Resort, Spa and Casino, Penn’s other Las Vegas venue.

Shares of Penn National surged 2.27 percent today.