Pennsylvania and Maryland

Cordish enters sale and leaseback deal for three Live! casinos with real estate trust GLPI

United States
Reading time 2:18 min

Maryland-based The Cordish Companies will sell its three casino properties, Live! Casino & Hotel Maryland, Live! Casino & Hotel Philadelphia, and Live! Casino Pittsburgh, to a Pennsylvania-based real estate investment trust that specializes in gaming sites, Gaming and Leisure Properties (GLPI), in a deal valued at $1.8 billion.

Cordish will lease back the properties and “continue uninterrupted to own, control and manage all the gaming operations of the facilities,” according to GLPI's release Monday. This sale-and-lease-back transaction could provide Cordish with cash to finance new projects or expand current ones, experts in the gaming and real estate industries said, as reported by Baltimore Sun.

The transaction for the three properties includes not only the existing real estate assets, but also a binding partnership on future Cordish casino developments, as well as potential financing partnerships between GLPI and Cordish in other areas of Cordish's portfolio of real estate and operating businesses. Gaming and Leisure Properties also will have a right of first offer or refusal for any future sale-lease-back deals, or similarly structured deals, that Cordish pursues in the next five years, according to the release.

“We look forward to continue delivering quality entertainment experiences in the markets we serve now, and collaborating and partnering with [Gaming and Leisure Properties] on opportunities to grow the Live! brand in the future,” said David Cordish, chairman of the Cordish Cos., in a statement.

GLPI will enter into a new triple-net master lease with Cordish for Live! Casino & Hotel Philadelphia, and Live! Casino Pittsburgh, as well a single asset lease for Live! Casino & Hotel Maryland. The master lease and single asset lease will have an initial term of 39 years, with a maximum term of 60 years inclusive of tenant renewal options. The initial annual cash rent for all three properties will be $125.0 million, with a 1.75% fixed yearly escalator on the entirety of the rent starting upon the leases’ second anniversary, representing an implied capitalization rate of 6.9%

The sale of the Maryland property is expected to close by the end of this year, while the Pennsylvania transaction is set to finalize in early 2022, according to the companies. The sales are subject to necessary approvals by state gambling regulators.

In taking over the casino real estate, GLPI will assume some of the debt associated with the properties and pay Cordish an undisclosed amount of cash as well as grant the Baltimore development firm $323 million of newly issued operating partnership units in the real estate investment trust.

“We are excited to establish a relationship with The Cordish Companies, one of the country’s preeminent developers of large-scale experiential real estate projects, casinos, hospitality and entertainment districts,” said Peter Carlino, Gaming and Leisure Properties’ chairman and CEO.

Other Cordish's casino properties are located in Tampa and Hollywood, Florida, and it runs a Bally Sports Live entertainment complex in St. Louis. The company was attempting to develop a casino in Richmond, Virginia, but voters there just voted down a referendum to allow a casino in the city.

The company's portfolio also includes hotels, shopping centers, apartment buildings and office space. Its work includes Johns Hopkins University’s Hopkins Square, Towson Square, the Ocean City outlets and Spark Baltimore, a co-working space adjacent to Power Plant Live! near the Inner Harbor. It has similar entertainment developments in Atlanta; Kansas City, Missouri; Philadelphia; Arlington, Texas; and elsewhere.