Gaming and Leisure Properties: A Gaming REIT

When Penn National Gaming, Inc. spun off some of its properties in 2013, it led to the creation of Gaming and Leisure Properties, Inc. (GLPI) a real estate investment trust (REIT) that specializes in operating casino properties. Though registered as a REIT, the company elected to be subject to federal income tax.

Currently, there are 21 casino properties that the business owns. Of these assets, 19 are leased back to Penn National. The spin-off sprouted from Penn National’s move to increase investor returns by taking advantage of the lack of federal income taxes on REITs. This, however, proved to be a moot point as GLPI opted to be subjected to taxes for federal income tax purposes starting January 2014. The primary business of the company revolves around the acquisition, development and financing of real estate properties. These properties are in turn leased to gaming operators like Penn National on a “triple net” lease agreement. Under this set-up the tenant will be held responsible for all the expenses in maintaining the property, which includes all the applicable taxes and insurances. Any services that the property needs are also handled by its tenants.

By electing to become a real estate investment trust firm, GLPI will become the first gaming-focused REIT in the country. Their product portfolio includes the brand names Hollywood Casino, Argosy, Boomtown, M Resort, Casino Queen and 6 other Racinos (a combination of race tracks and casinos). The latter’s portfolio includes names Mahoning Valley Race Course, Dayton Raceway, Charles Town Races, Bangor Raceway, Zia Park and Penn National Race Course.

GLPI projected that they would eventually venture outside the confines of the gaming industry. The growth of the business relies strongly on the acquisition of different properties that they intend to lease to third parties, mostly under “triple net” lease agreements.