Las Vegas reshuffle: Out with the Tropicana and in with the Oakland A's
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The historic Tropicana Las Vegas casino and hotel property closed last week after 67 years in operation. The Tropicana was the most expensive Las Vegas resort built to date when it opened in April 1957. The closing of the Tropicana means that the only surviving property on the Las Vegas Strip from the 1950s is the Sahara.
The land beneath the site is owned by Gaming and Leisure Properties (NASDAQ:GLPI) and leased by Bally's Interactive (NYSE:BALY). Part of the land is slated to be used to build a $1.5B baseball stadium for the Oakland A's. The major league baseball team has been given nine acres of the 35-acre site to build the new ballpark.
For its part, Bally’s Interactive (BALY) has not confirmed exactly when the hotel and casino would be imploded. "Our team felt that this was the right time, post the peak season, to prepare to close the Trop. It’s been in the works for some time. This gives plenty of time to ready the place for the redevelopment and the start of construction to prepare for the demolition in October," read a recent statement from Chairman Soo Kim.
Bally's Interactive (BALY), Gaming and Leisure Properties (GLPI), PENN Entertainment (PENN) completed the transaction relating to the acquisition of the non-land assets of the Tropicana Las Vegas in 2022 for a cash purchase price of $1488M, payable to GLPI. Bally's (BALY) lease of the land underlying the Tropicana property from GLPI is for an initial term of 50 years at an annual rent of $10.5M.
Recently, shareholder K&F Growth Capital has been pushing Bally's (BALY) to sell its interest in the Tropicana Las Vegas because the company has no ability to fund any new development on the Strip. Of note, Bally's (BALY) is carrying more than $3.6B in long-term debt and is facing a sizable shortfall in its agreement to build a $1.7B casino resort in downtown Chicago. The other wildcard in the mix is that Bally's (BALY) received a buyout offer from Standard General in March at $15 per share.
BALY) are down 3.2% on a year-to-date basis, while Gaming and Leisure Properties (GLPI) is 8.5% lower.
