On Monday, Citi reaffirmed its Buy rating and a $59.00 price target for Gaming and Leisure (NASDAQ:GLPI) Properties Inc (NASDAQ:GLPI). The firm's statement followed Gaming and Leisure's announcement of a sale leaseback transaction involving three casinos owned by Strategic Gaming Management.
The deal is valued at $105 million, with initial annual rents set at $9.2 million. Additionally, Gaming and Leisure will invest $5 million in capital expenditures, bringing the total investment to $110 million, which represents an 8.4% capitalization rate.
The acquisition is financed through Gaming and Leisure's available cash, which totaled $555 million at the end of the first quarter, including $212 million in cash and $343 million in securities. The transaction is expected to result in a modest earnings accretion of $0.01 to $0.02, thereby supporting the company's full-year and 2025 earnings estimates. The initial rent coverage is projected to be 2 times, with the potential to increase following additional capital expenditure investments.
The lease agreement spans 25 years and includes options for two 10-year renewals. Citi noted that Gaming and Leisure has effectively pre-funded the deal through prior equity and debt fundraising, positioning the company with sufficient capacity for future acquisitions.
This strategic move comes after Gaming and Leisure's acquisition of the Tioga Downs Casino facility on February 6, 2024, at an 8.3% capitalization rate. The company continues to focus on smaller, regional acquisition opportunities.
InvestingPro Insights
In light of Gaming and Leisure Properties Inc's (NASDAQ:GLPI) recent sale leaseback transaction and strategic acquisitions, current InvestingPro data suggests a robust financial outlook for the company. With a market capitalization of $12.87 billion and an attractive P/E ratio of 16.96, GLPI demonstrates a stable investment profile. The company's gross profit margin impressively stands at 94.3% for the last twelve months as of Q1 2024, underlining its efficiency in generating revenue relative to costs.
InvestingPro Tips indicate that GLPI's liquid assets comfortably exceed its short-term obligations, providing a solid liquidity position. Moreover, analysts predict the company will maintain profitability this year, a sentiment supported by the company's performance over the last twelve months. For investors seeking more in-depth analysis, there are additional InvestingPro Tips available, which can be accessed with a special offer: use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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