Penn National Gaming is assessing a number of offers it has received unsolicited in relation to its property on the Las Vegas Strip, the Tropicana. However, the management of the company has reiterated that there is no imminent sale of the property planned.
The news of these unsolicited offers was publicized during an investor call on Thursday. The company’s executives were discussing the company’s recently released third-quarter earnings.
The Tropicana has 1,400 hotel rooms and is the company’s premier property in Las Vegas. There have also been offers for Prairie State Gaming, which is the video gaming terminal company that Penn National owns in Illinois.
If Penn National changes its mind, the resulting funds from the selling of one or both of these interests could be used to quickly pay down its existing debt obligations.
A valuable portfolio of assets
Penn’s Chief Financial Officer B.J. Fair believes that the company currently has some very valuable assets in its portfolio currently. He believes that the market has not properly valued these investments.
However, the company has seen the lucrative deals negotiated for Strip properties by other casino companies and are tempted to get into the action.
He is not ruling out a sale of the Tropicana, saying that it is going to continue to engage in conversations relating to a potential sale of its main Strip asset.
The company currently has forty different properties across nineteen states. They also have a number of online gambling platforms in states where it is legal, which is going to become a bigger focus for the company as more states legalize online gambling.
The third-quarter revenues rose a massive 71.6% year-on-year. This is mainly due to the opening of retail sportsbooks in Pennsylvania, Indiana and Iowa, as well as launching an online sportsbook in West Virginia. The revenue for the period hit $1.35bn, with net income rising by 21% to $43.7m.
Other Las Vegas Strip properties being sold
Two other properties on the Las Vegas Strip have been sold in recent weeks. Both of these properties were under the ownership of MGM Resorts International. The Bellagio was sold to the New York-based real estate investment company Blackstone. This deal was worth $4.2bn. MGM Resorts retain a 5% stake in the property and it will also be renting out the casino space for an annual rent of $245m.
MGM Resorts International also sold the Circus Circus Casino to the owner of the Treasure Island, Phil Ruffin. This is a deal that is worth $775m in total. The company is also looking at potentially selling the MGM Grand, which is also on the Strip, as well as other assets such as the MGM Springfield.
This is being done to lighten the loads on the company’s balance sheet. It will be using the funds raised from these sales to invest in other opportunities, including an integrated resort in Japan and to expand its sports betting interests across the United States.