Penn National Considers Sale of Tropicana, Illinois Slots Business
Penn executives said during the company’s third-quarter earnings call on Thursday that they have been approached with offers for the 1,400-room Tropicana as well as for Prairie State Gaming, Penn’s Illinois-based video gaming terminal operator.
Deals have been considered as those could help the Pennsylvania-headquartered casino operator reduce debt faster.
News about Penn potentially selling its Strip casino resort arrive shortly after two other major casino companies sold premium properties on or near the Strip in multi-million deals. Caesars Entertainment Corp. recently announced the sale of Rio All-Suite Hotel and Casino, while MGM Resorts International offloaded the Bellagio and Circus Circus. The latter company also said earlier this week that it was seeking buyers for its MGM Grand property and expects to sell it by the end of the year.
Commenting on Penn’s announcement, the company’s CFO B.J. Fair said Thursday that they have a couple of “very valuable assets” in their portfolio that they believe “are not appropriately valued in our share price today.” The financial executive also pointed to the recent sale of Strip casinos and of video gaming operations “at very attractive multiples” that have prompted them to consider offloading their Strip property and video gaming terminal business in Illinois.
Selling a Strip Property
Mr. Fair further explained that they have received and continue to receive unsolicited interest in Prairie State Gaming and some of the land holdings they have in Vegas at Tropicana, “so we’re continuing to engage in those conversations” and that they are encouraged by some of those ongoing conversations.
When asked a follow-up question, Penn’s Chief Financial Officer said that even though the company is evaluating offers to sell its Strip property, this does not mean that it does not recognize the value of owning a gaming resort in that particular part of Las Vegas.
However, Mr. Fair pointed out that the massive expansion of Penn around the nation has prompted them to evaluate the need for a Strip property.
He said that “given this conversation of interactive between sports betting and [online] casinos,” they think that it would be even more important for them to have “a very localized on-channel approach where you’re engaging with guests both digitally as well as in brick-and-mortar casinos.”
Mr. Fair added that this does not mean the “Las Vegas hub-and-spoke won’t work or isn’t working” and that it just means that they would focus more of their attention on moving patrons around their 40 properties in 19 states an across their online gambling activities in the states where these are legal.
Boosted by the opening of physical sportsbooks in Iowa, Indiana, and Pennsylvania and the launch of a mobile betting app in West Virginia, Penn recorded a 71.6% rise in its revenue for the third quarter of the year to $1.355 billion. Net income grew 21.1% to $43.7 million.
Source:Penn National considers sale of Tropicana after unsolicited offers, Las Vegas Review-Journal