US-based casino operator Penn National Gaming is to split its business into two distinct companies – a property owning company and a gaming operating entity.
The company announced that it is planning to separate its business into an operating entity known as Penn National Gaming and, through a tax-free spin-off of its real estate assets to holders of common stock, a newly formed real estate investment trust, or REIT.
CEO Peter Carlino said the move would be “transformational” for the company and will enable it to unlock the value of its real estate asset portfolio.
“Our plan is to create two well capitalised companies with strong free cash flow that are positioned for growth in the gaming and REIT sectors,” he said. “The transaction and new ownership structure would permit both companies to best address market and growth opportunities in their respective industries through access to a lower blended cost of capital, fewer regulatory licence ownership restrictions, a new capital funding source for the gaming industry by creating an industry specific REIT and potential opportunities to diversify in the future beyond the gaming industry.”
The process of working with gaming regulators has already begun, he said, adding that the transaction is expected to be completed next year.
