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PEN Entertainment, Inc. today announced plans to relocate Riverboat casinos in Aurora and Joliet, Illinois, to new land facilities, a new hotel at Hollywood Casino in Columbus, Ohio, and a second hotel tower at Resort M in Henderson, Nevada.
Jay Snowden, CEO and President of PEN Entertainment, said, "We are excited to announce an exciting new growth project that we expect will generate strong free cash flow returns and create long-term value for our shareholders. Our casino properties remain at the heart of our omnichannel approach to entertainment, combining best-in-class retail operations with a database of more than 26 million myChoice members.
"Since the change in the law to allow land casino transfers in Illinois, we have been exploring the possibility of relocating aging riverboats in Aurora and Joliet. Thanks to the visionary leadership of community leaders, especially Mayor Richard Irvin and his staff in Aurora, we are very excited to move forward with these projects," said Mr Snowden.
Mr Snowden said: "Our plan for Aurora is to build a modern, best-in-class casino and hotel in an ideal location to serve millions of visitors on the Simon Premium Outlet Mall adjacent to I-88. Aurora Development involves the transfer of certain parcels of land from the city, and up to $50 million of the projects will be funded by the city through the issuance of new bonds, all subject to final approval by the Aurora City Council. Mr Snowden said: "Our planned casino in Joliet will be located in the Rock Run Crossings development and mixed use project, close to the I-80 and I-55 interchange, which offers exceptional visibility and accessibility. These two projects will greatly improve our services in the highly attractive Chicago Land market, while creating hundreds of new full-time jobs for the community."
Mr. Snowden said, "We are also pleased to announce the expansion of our services at two city-approved Hollywood Casino Columbus in Ohio and M Resort in Henderson, Nevada." "Since opening in 2012, Columbus Real Estate has experienced tremendous growth, and adding a hotel to this hotel will create a true regional destination. The addition of a second tower at Resort M will benefit from the strong demand in the Henderson regional market and provide additional capabilities to group businesses that are attracted to our market-leading resorts and amenities, including our highly successful partnership with the Las Vegas Raiders," Mr Snowden said.
In connection with these projects, PEN signed a contract with Gaming and Leisure Properties Inc. to establish a new Master Lease that includes two new facilities in Aurora and Joliet, in addition to Hollywood Columbus, Hollywood Toledo, M Resort, Meadows, and Hollywood Ferryville. Under this agreement, GLPI will provide up to $225 million for Aurora Project at a cap rate of 7.75%. In connection with the Columbus, Joliet and M Resort projects, PEN may decide to receive a total of $350 million in funding from GLPI to improve its properties at current market rates, which would include a spread on GLPI's cost of capital. Additional details of the new Master Lease effective January 1, 2023 are contained in the Company's 8K file available online.
"The overall estimated budget for these new growth projects is about $850 million," Mr. Snowden said. "With GLPI's ability to access attractive financing, which includes up to $575 million of estimated costs and up to $50 million in Aurora City, subject to final approval, we have the opportunity to pursue these high-growth projects while maintaining our cash position and leverage profile," concluded Mr Snowden.
Thursday, November 9, 2023