Gaming & Leisure Properties Inc. is buying the real estate assets of Pinnacle Entertainment Inc. in an all-share deal that gives the holdings an enterprise value of $4.75 billion.
Pinnacle shareholders are to receive 0.85 shares of Gaming & Leisure and one share of OpCo, a new company being spun off, Gaming & Leisure said in a statement Tuesday. The deal will create a combined real estate investment trust that will own 35 casino and hotel facilities in 14 states.
The casino industry has embraced REITS since Penn National Gaming Inc. spun off its real estate into Gaming & Leisure in November 2013. The trusts can trade at higher stock market values because they don’t pay federal income tax, passing earnings directly to shareholders instead.
The Gaming & Leisure transaction will create the third largest public traded triple-net REIT and boost adjusted funds from operations in the first year after the deal closes.
“Pinnacle’s proven track record of continued improving operating performance will make GLPI even stronger as we pursue long-term growth,” said Peter Carlino, Gaming & Leisure’s chairman and chief executive officer.
Pinnacle shareholders will end up owning about 27 percent of the enlarged company and 100 percent of OpCo, which will consist of Pinnacle’s current operating business and the real estate of Belterra Park Gaming & Entertainment.
The deal will add $377 million to rent revenue in the first year after it closes, the company said.