Penn National to Split Its Businesses

The track and casino owner will split its real estate assets from gaming operations.

Penn National Gaming Inc., a prominent racetrack owner, plans to separate its gaming operating assets and real property assets into two publicly traded companies.

The two companies will include an operating entity, Penn National Gaming and, through a tax-free spin-off of its real estate assets to holders of the current company's common stock, a newly formed, publicly traded real estate investment trust called PropCo. The plans, announced Nov. 16, are subject to required gaming regulatory body approvals.

Through a tax-free dividend, current Penn National shareholders will receive PropCo common stock. PropCo will subsequently declare a taxable dividend of approximately $1.4 billion of accumulated earnings and profits equivalent to approximately $15.40 per share comprised of approximately $487 million of cash, or an approximately $5.35 cash dividend per share, with the remainder comprised of PropCo shares.

The spin-off of PropCo shares to Penn National shareholders is expected to occur in the second half of 2013.