Penn REIT Has Agreement to Buy The Meadows

Company would pay $465 million to buy Pennsylvania harness track and casino.

Gaming and Leisure Properties, a real estate investment trust spinoff of Penn National Gaming Inc., said May 14 it has an agreement to purchase The Meadows Racetrack and Casino in western Pennsylvania for $465 million.

The Meadows, which has a year-round harness racing operation and full casino gambling, is owned by Cannery Casino Resorts, which purchased the track about 10 years ago and rebuilt it to accommodate slot machines under a 2004 Pennsylvania law.

William Paulos, co-chief executive officer of Cannery, said all net proceeds from the sale of The Meadows would be used to reduce the company's debt.

If the sale receives regulatory approval, GLP said it will own the land and buildings but will have to hire a third-party operator for gaming and racing. The company does not operate casinos as does PNGI.

"The acquisition of The Meadows represents another step in the execution of our strategy to grow our company into the leading owner of high-quality assets in key regional gaming markets," said Peter Carlino, chairman and CEO of GLP. "This acquisition is a prime example of how we are uniquely able to tailor transactions to suit the specific needs of sellers. We look forward to partnering with one of the many quality operators in the gaming industry and believe that this acquisition creates meaningful additional value for our shareholders."

In Pennsylvania, PNGI already owns and operates Hollywood Casino at Penn National Race Course and is involved in the proposed development of a harness racetrack casino in Lawrence County about one hour northwest of The Meadows.

GLP said the purchase price represents about nine times 2013 earnings before interest, taxes, depreciation, and amortization, and that it "reflects the foreseeable stability of market competition and the robust local economy resulting from Marcellus Shale-related industry."

The Meadows, also open year-round for full-card simulcasts, has an 180,000-square-foot casino with 3,317 slots, 61 table games, and 14 poker tables. It also has 11 casual and fine dining restaurants, bars, and lounges; a 24-lane bowling alley; and a 500-seat grandstand for harness racing.

A 154-room hotel is under construction adjacent the casino. There also are plans for retail development and perhaps an indoor event facility.