(PRESS RELEASE) -- PENN Entertainment, Inc. announced today that it intends to relocate its riverboat casinos in Aurora and Joliet, Illinois to new land-based facilities and to build a new hotel at Hollywood Casino - Columbus
in Ohio and a second hotel tower at the M Resort
in Henderson, Nevada.
Jay Snowden, Chief Executive Officer and President of PENN Entertainment, commented: “We are delighted to announce these exciting new growth projects, which we expect will generate strong free cash flow returns and create long-term value for our shareholders. Our casino properties remain at the core of our omni-channel approach to entertainment, which combines best-in-class retail operations and a database of more than 26 million myChoice members with a rapidly growing interactive and media footprint.
“Since the change in law to permit land-side casino relocation in Illinois, we have been exploring the viability of relocating our aging riverboats in Aurora and Joliet. Thanks to the support of our local community leaders, in particular the visionary leadership of Mayor Richard Irvin and his staff in Aurora, we are very excited to be moving forward with these projects,” said Mr. Snowden.
“Our plan for Aurora is to construct a modern, best-in-class casino and hotel in an ideal location off I-88 that will allow us to serve the millions of visitors to the adjacent Simon Premium Outlet Mall,” said Mr. Snowden. The Aurora development will include the transfer of certain parcels of land from the city, and up to $50 million of the project will be funded by the city through a new bond issuance, all of which is subject to final approval by the Aurora City Council. “In Joliet, our planned casino will be located in the Rock Run Crossings development mixed use project in close proximity to the I-80 and I-55 interchange, which offers exceptional visibility and accessibility. These two projects will significantly improve our offerings in the highly attractive Chicagoland market while creating hundreds of new full-time jobs for the local communities,” continued Mr. Snowden.
“We are also pleased to announce the expansion of our offerings at two of our best performing properties – Hollywood Casino Columbus in Ohio and the M Resort in Henderson, Nevada, subject to municipal approvals,” said Mr. Snowden. “Since opening in 2012, our Columbus property has experienced tremendous growth, and the addition of a hotel at the property will create a true regional destination. At the M Resort, the addition of a second tower will benefit from the strong demand in the Henderson locals market while providing additional capacity for the group business that is drawn to our market-leading resort and amenities, including our highly successful partnership with the Las Vegas Raiders,” said Mr. Snowden.
In connection with these projects, PENN has entered into an agreement with Gaming and Leisure Properties, Inc. to create a new master lease that would include the two new facilities in Aurora and Joliet, in addition to Hollywood Columbus, Hollywood Toledo, the M Resort, the Meadows and Hollywood Perryville. Pursuant to this agreement, GLPI will provide up to $225 million at a 7.75% cap rate for the Aurora project. With respect to the Columbus, Joliet and M Resort projects, PENN may elect to receive up to $350 million of funding in the aggregate from GLPI for real property improvements at then-current market rates, which will incorporate a spread to GLPI’s cost of capital. Additional details on the new master lease, which will be effective on 1 January 2023, are included in the Company’s 8-K filing which is available online.
“The overall estimated budget for these new growth projects is approximately $850 million,” said Mr. Snowden. “With the ability to access attractive financing from GLPI covering up to $575 million of the anticipated costs, along with up to $50 million from the City of Aurora, subject to final approvals, we have the opportunity to pursue these high growth projects while preserving our cash position and leverage profile,” concluded Mr. Snowden.