Gaming and Leisure Properties (GLPI) is committing $225 million to serve as the lead real estate financing partner for the new Caesars Republic Sonoma County integrated resort in California.
The long-term financing agreement with Caesars Entertainment and the Dry Creek Rancheria Band of Pomo Indians will see GLPI initially act as a lender to the project, with a delayed draw term loan of $180 million and a term loan B of $45 million.
Upon maturity of the six-year term loans, Dry Creek will lease the property to an affiliate of GLPI for a 45-year term, for an amount no less than $112.5 million, with GLPI subleasing the property back to an affiliate of Dry Creek. Annual rent on the sublease will be based on a cap rate of 9.75 per cent.
Located just outside of Healdsburg, Caesars Republic Sonoma County will be developed on the site of the current River Rock Casino, which opened in 2002, with Caesars and Dry Creek Rancheria recently breaking ground on the new 4+ star resort in August.
When completed, the resort will feature a premier gaming experience, overlooking the Alexander Valley and Russian River, with 1,000 slot machines and 28 table games, a 100-room hotel, four restaurants, three bars, a luxury spa, pool, and fitness center.
The existing casino will remain open during construction, with the completion of Caesars Republic Sonoma County expected in the summer of 2027.
“We are proud to be supporting Dry Creek Rancheria and initiating a relationship with the tribe in our role as the lead real estate financing partner for Caesars Republic Sonoma County,” said GLPI chairman and CEO Peter Carlino. “Through this project, we are also extending our long-term partnership with Caesars Entertainment, which reflects our corporate focus on working collaboratively with the industry’s best gaming operators, to enable them to achieve their growth and development goals.”
Carlino said that the partnership also validates other aspects of the company’s growth strategy, importantly its belief and commitment to pursuing long-term tribal casino financing and new market opportunities.
“The unique transaction structure, that GLPI was able to provide, delivers a lower-cost financing option to Dry Creek, while ensuring a long-term lease guarantee for GLPI,” he said. “Second, it leverages our multi-property relationship with Caesars Entertainment, which shares a similar commitment to tribal casino relationships.
“This project further validates the tribal opportunity for GLPI, beyond just new greenfield developments, to include re-development and re-branding. Finally, it provides GLPI with a unique opportunity to expand our presence in the California market, in a prime location.”
Shares in Gaming and Leisure Properties Inc (NASDAQ:GLPI) closed 0.98 per cent lower at $47.54 per share in New York Tuesday.