Questions surround a lawsuit filed last month against Cannery Casino Resorts by Pennsylvania-based Gaming and Leisure Properties (GLPI), the real estate investment trust created by operator Penn National Gaming—an action that could derail the REIT’s planned purchase of Cannery’s Meadows Racetrack and Casino outside of Pittsburgh.
Gaming and Leisure Properties had entered into a $465 million agreement last May to buy Meadows, a popular harness racetrack and casino in the suburbs around 20 miles south of Pittsburgh, with an agreed-upon final closing date of November 13, 2015. Last month, GLPI announced in its third quarter report that it had filed a lawsuit against Cannery “alleging, among other things, fraud, breach of the membership interest purchase agreement and breach of a related consulting agreement.”
The complaint, filed in U.S. District Court for the Southern District of New York, is seeking a declaration that Cannery breached the terms of the April purchase agreement because “Cannery did not truthfully disclose the Meadows’ declining performance.”
The lawsuit attacks the earnings projections for the Meadows put forth by Cannery in the purchase agreement as “fantasy,” noting that Cannery’s latest 2014 earnings projection, made in September, was $44.1 million, down 23 percent from the original projection of $57.7 million, and 18 percent below 2013 earnings, the lawsuit said.