Casino Queen to then lease back property from GLPI for approximately $14 million a year
Dec. 10–A year after the Casino Queen became an employee-owned company, its owners have signed a deal to sell its real estate assets for $140 million and lease them back to pay down debt.
Gaming and Leisure Properties Inc. (GLPI), a real-estate investment trust based in Wyomissing, Pa., announced Monday that it’s buying Casino Queen’s real estate assets in East St. Louis and will become its new landlord in the first quarter of 2014, pending approval from the Illinois Gaming Board. The initial lease is for 15 years, with an option to renew for four five-year terms.
The sale includes the property’s 38,000-square-foot casino, 157-room hotel, RV park and adjacent 78 acres. Casino Queen will lease the real estate back from the REIT for about $14 million a year.
GLPI, a gaming-focused REIT that spun off from Penn National Gaming Inc. last month, owns 19 casinos nationwide and operates two of them. The remaining 17 casinos are operated by Penn, including the Hollywood Casino in Maryland Heights and the Argosy Casino in Alton. The Casino Queen sale represents GLPI’s first acquisition after its spin-off from Penn and the first casino it will own that’s not operated by Penn.
“It’s a well-run asset in a stable market,” said GLPI’s vice president of finance Hayes Croushore. “It’s a newly constructed asset, and we felt it would fit well in our portfolio and continue to provide stable rent.”
“This transaction offers us the opportunity to reorganize our capital structure, with a long-term solution that provides stability for our employee-owners,” Casino Queen president and general manager Jeff Watson said in a statement. “Further, by unlocking the value in our real estate assets, we are able to focus on efficiently operating our business in a less restrictive, asset-light environment.”
A year ago, the Koman family and partners sold the Casino Queen, and an employee stock ownership plan (ESOP) for its 700 employees was created. Company officials said no change in management was planned.
As part of the deal, GLPI is providing Casino Queen with a $43 million term loan to refinance and retire Casino Queen’s outstanding long-term debt obligations.
The Casino Queen opened on East St. Louis’ riverfront in 1993. In 2007, it became the first casino in Illinois to move off a river onto land, when its current facility was built.
