Penn National Gaming has confirmed the completed purchase of the operations of Greektown Casino-Hotel in Detroit, Michigan, from JACK Entertainment LLC for approximately $300m in cash.
Simultaneous with the closing of the transaction, the firm has entered into a triple net lease agreement with VICI Properties for the Greektown facility. The lease has an initial annual rent of approximately $55.6m and an initial term of 15 years, with four five-year renewal options. The rent coverage ratio in the first year after closing is expected to be 1.8x.
CEO Timothy J Wilmott stated: “We are pleased to be entering one of the nation’s largest regional gaming markets, and to be operating the only casino in the heart of the revitalized downtown Detroit area. We look forward to welcoming patrons from high profile nearby attractions, such as Comerica Park, Ford Field, Little Caesars Arena, the city’s theater district, GM’s Renaissance Center and the Cobo Conference Center. We’re also excited to be adding the largest single property customer database to mychoice, our soon-to-be re-launched and enhanced player loyalty program.
“Our expanded scale will allow us to generate synergies over the first six quarters of operations, at which time we anticipate an OpCo purchase multiple of 6.3x projected annual run-rate adjusted EBITDA. With the expected increase to our free cash flow per share, we will remain well positioned to reduce lease-adjusted net leverage to 5.0x to 5.5x by the end of next year.”
Opened in 2000, Greektown Casino-Hotel features 100,000 square feet of casino space, approximately 2,700 gaming machines and 60 table games, a poker room, three restaurants, seven fast casual food outlets, four bars and a coffee shop. The property will be included in the company’s Northeast reporting segment for financial reporting purposes.