Gaming & Leisure Properties Inc. (GLPI) recently held its third-quarter earnings call, which prominently featured a historic sale/leaseback transaction with the Ione Band of Miwok in California. This deal marks the first-ever agreement of its kind between a Native American tribe and a real estate investment trust (REIT), setting a significant precedent in the gaming and real estate sectors.
During the call, GLPI executives expressed cautious optimism about the potential for similar arrangements in the future. CEO Peter Carlino acknowledged the uncertainty surrounding the viability of such deals, stating, “The value has yet to be proven.” CFO Brandon Moore elaborated on the complexities involved, noting that the Ione pact was the result of a multi-year effort to develop a sustainable business model.
Details of the Ione Band Transaction
The lease agreement, which has received approval from the National Indian Gaming Commission, is a critical component of the deal. Moore emphasized that this arrangement provides GLPI with protections akin to those of a commercial lender, including the option to foreclose on the property while allowing the Ione tribe to retain ownership of the land after 45 years.
- Key Aspects of the Ione Band Deal:
- First-ever sale/leaseback transaction between a tribe and a REIT.
- Lease approved by the National Indian Gaming Commission.
- GLPI retains operational control over the property, excluding the casino itself.
Moore expressed hope that other tribes might pursue similar development deals, although he cautioned that this particular arrangement might not lead to a consistent revenue stream. He noted, “We have all the protections that a commercial lender would enjoy,” highlighting the unique nature of this transaction.
Future Prospects and Strategic Focus
When asked about the potential for future deals with other tribes, Moore indicated that GLPI is currently in an exploratory phase. He stated, “It’s probably to be determined how much of that market we will be interested in,” suggesting that while the company is open to opportunities, it remains cautious about the scale of future transactions.
Carlino reiterated the company’s commitment to acquiring existing assets while also exploring new developments. He remarked, “We’re still in business to buy existing assets where available,” emphasizing the importance of balancing growth with risk management. The Tropicana Las Vegas property was highlighted as a major focus, with Moore noting that preserving the site’s value is a priority as Bally’s Corp. continues to refine its design plans.
Collaborations and Market Positioning
In terms of partnerships, Chief Development Officer Steven Ladany provided updates on existing collaborations, particularly with Cordish Gaming. He mentioned that Cordish is currently pursuing its Bossier City, Louisiana, casino project independently, while GLPI retains a 20 percent equity right to co-invest in future ventures, including a potential casino in Petersburg, Virginia.
Carlino concluded the call by reaffirming GLPI’s focus on the gaming sector, stating, “We’re not looking to move away from gaming as our source of business.” He expressed confidence in the stability and reliability of the gaming industry, humorously adding, “We kiss a lot of frogs, always looking for a princess,” to illustrate the company’s ongoing search for valuable opportunities.
As GLPI navigates this unprecedented tribal pact and explores future growth avenues, the company remains committed to its core business in gaming, positioning itself strategically within a dynamic market landscape.