Gaming and Leisure Properties (NASDAQ:GLPI) could be a takeover target as consolidation increases within the real estate sector.
That’s the opinion of Wide Moat Research CEO Brad Thomas, who highlights the gaming real estate investment trust (REIT) among several REITs that could be attractive to suitors.
Next up on our list of potential takeover targets is Gaming and Leisure Properties,” said Thomas. “It’s an interesting gaming REIT that’s been actively gobbling up regional casinos.”
Spun off from Penn National Gaming (NASDAQ:PENN) in 2013, GLPI pioneered gaming REITs as standalone publicly traded companies. Today, the Pennsylvania-based company owns the real estate assets of more than 50 gaming venues across 17 states.
Interesting Points for GLPI Takeover Thesis
Thomas points to Realty Income’s (NYSE:O) pending $1.7 billion purchase of Encore Boston Harbor from Wynn Resorts (NASDAQ:WYNN) — announced last month — as evidence that more REITs that currently lack casino exposure could explore the space.
“More recently, Realty Income announced it was entering the gaming space by way of a sale-leaseback for Encore Boston Harbor. The price tag of $1.7 billion represents a 5.9% cap rate, making for a great deal for O,” notes Thomas. “It also validates the gaming subsector’s appeal and opens the doors for other net-lease REITs to ‘get in the game.’”
There are examples of non-gaming REITs owning some casino real estate. In addition to Realty Income buying Encore Boston Harbor, a real estate affiliate of private equity firm Blackstone (NYSE:BX) owns the property of Bellagio on the Las Vegas Strip. That entity also holds minority interests in Mandalay Bay and MGM Grand.
GLPI’s market value is $11.2 billion, but its stock is inexpensive, and it might not lack for potential suitors, including the aforementioned Realty Income.
“GLPI trades at a cheap multiple of 13.4 P/AFFO and offers a high equity yield of 7.5 percent,” adds Thomas. “There’s plenty of meat on the bone for a REIT like Realty Income, STORE Capital, Spirit Realty, or even National Retail Properties to scoop up some really cheap casinos.”
GLPI Takeover Previously Pitched
This isn’t the first time GLPI has been mentioned as a possible takeover target.
In 2020, Jonathan Litt’s Land & Buildings Investment Management (L&B) pushed the REIT to merge with rival Vici Properties (NYSE:VICI). That deal didn’t materialize.
Today, VICI is in the midst of acquiring MGM Growth Properties (NYSE:MGP) — the other publicly traded gaming REIT — for $17.2 billion in stock.
GLPI’s major tenants include Penn National, Bally’s (NYSE:BALY), Boyd Gaming (NYSE:BYD), and Caesars Entertainment (NASDAQ:CZR).
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