Nevada gaming regulators approved two corporate restructurings last month.
Penn National Gaming’s plan to split the regional casino company into two publicly traded companies got the regulatory OK. The plan is to take 10 of Penn’s 29 casinos and racetracks and fold them into a real estate investment trust, or REIT. The trust would be known as Gaming and Leisure Properties, Inc.
On July 10, Penn National Chief Financial Officer Bill Clifford told the Nevada Gaming Control Board that, pending final approvals, the company hopes to complete the transition by the end of this year. But customers will be unaffected, Clifford said; in fact, they may not even notice a difference.
Splitting the company, a plan that was first announced in November 2012, means Penn investors would receive a dividend of about $5.35 per share plus stock in the REIT, the Las Vegas Review-Journal reported. The casino operation arm will pay the REIT an estimated $450 million a year in rent for the casinos. Because REITs don’t pay federal income taxes, they are required to distribute at least 90 percent of taxable earnings to shareholders.
Clifford says the switch would mean new expansion possibilities for Penn National. The plan also must pass muster with the Securities and Exchange Commission and other gaming regulators.
Later in July, Caesars Entertainment set in motion its plan to restructure its company in order to place its Planet Hollywood Resort, interactive gaming business and planned Baltimore casino into a separate company that will be majority-owned by the parent company.
The company is shuffling its assets to finance potential new investments and boost Caesars’ balance sheet. Caesars told commissioners that it would fold Planet Hollywood, Caesars Interactive Gaming and the upcoming Horseshoe Casino in Baltimore into a subsidiary called Caesars Growth Partners. The company expects to raise $1.18 billion from selling stock for the new public entity.
Private equity groups could invest up to $500 million in the venture. The triumvirate of Caesars Entertainment, TPG Global and Apollo Global Management will own 70 percent of the subsidiary. Caesars can bring the businesses back into the company after five years.