REITs meet the Street; Martinez wins in New Mexico

REITs Gaming & Leisure Properties and MGM Growth Properties both checked in with Wall Street yesterday, and further acquisitions were on the mind of both. In the case of MGM, its next target of opportunity is MGM National Harbor (“on track relative to pre-opening projections”). According to Deutsche Bank analyst Carlo Santarelli, “management hinted they would have a use for their cash in the relative near term,” which spells “Sands Bethlehem,” a transaction that Santarelli characterized as “rumor” — a rumor that no one has been able to dispel. As for GLPI, “stronger variable rent streams from strength at the Ohio properties also added to upside relative to guidance.” GLPI also expects to close its big Tunica purchase on May 1. Asset sales were categorically ruled out.

Penn National Gaming reported that March had been its best month yet at Hollywood Casino Jamul — a very relative compliment, as things could hardly have gotten worse. Penn, tellingly, still projects no management fees from the property. According the JP Morgan analyst Joseph Greff, “management noted that macro indicators are stable, with consumer confidence, employment, wages, and home values still trending positively. Across its database, it saw solid performance across most geographies and work groups, with particular strength in the VIP segment.” The latter is a trend that is likely to become more pronounced going forward.

Penn’s ardor for the Tropicana Las Vegas has cooled. Wrote Greff, “it will evaluate the impact of its existing property improvements before committing to spend further capital at the property.” March was “strong” but February only “okay.” As for Penn and GLPI’s foray into Tunica, Greff called it a “good, albeit little, accretive deal for both companies” and added that “while Tunica is not a great/growing market, we view the purchase price as relatively attractive.”

* There’s going to be some serious cornholing going on at The Linq this summer and, no, I’m not making that up. By the way, some uncredited genius at MGM Resorts International has finally found a good use for LAX — an e-sports arena, the first on the Strip. Given the casino’s follow-the-leader propensity, expect imitators sooner rather than later.

* New Mexico Gov. Susana Martinez (R) just won a major battle with the Pojoaque Pueblo tribe. A federal appeals court ordered the tribe to negotiate its next compact with Martinez, not (as it hoped) the Interior Department. With the Trump administration’s clemency toward tribes still very much in doubt, the Pojoaque might be better off dealing with Martinez. The tribe isn’t in a good bargaining position, because the Martinez administration already holds its gambling activities to be illegal. The tribe was the lone holdout against a Martinez tax increase from 8% to 10.5%.

Tribal Gov. Joseph Talachy said, “After hundreds of years of poverty, abuse and oppression, and the loss of land and water rights, we cannot continue to be taken advantage of by a state administration bent on wringing out more from our tribe.” Well, I guess they’ll have to continue after all. The tribe tried to argue that New Mexico was negotiating in bad faith but the appellate court held that the state had invoked sovereign immunity and there was nothing the federal government could do. “At 10%, we will have to fire employees. Social programs would have to be cut and our capital improvement money would take a hit,” said Talachy at the time. It looks like the Pojoaque Pueblo band had better start tightening its belts sooner rather than later.

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