Gaming & Leisure Providing $225 Million in Financing for Caesars California Tribal Casino

Gaming & Leisure Providing $225 Million in Financing for Caesars California Tribal Casino

On Tuesday, the Dry Creek Rancheria Band of Pomo Indians and Caesars Entertainment (NASDAQ: CZR) struck a deal with Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) to extend $225 million in financing for Caesars Republic Sonoma County.

That project is situated in Sonoma County, California, on the location of the current River Rock Casino. In Healdsburg, California, Caesars and the Dry Creek Rancheria started building a new tribal casino hotel this month. It will be called Caesars Republic when it is finished in the summer of 2027. With more than 100 accommodations, four restaurants, 1,000 slot machines, and 28 table games, Caesars Republic Sonoma County will be situated in wine country in California.

“GLPI will initially act as a lender to the project, with a delayed draw term loan of $180 million, priced at a fixed rate of 12.50%, and a term loan B of $45 million, with a current yield to maturity of 13.95%,” according to a statement issued by the real estate investment trust (REIT).

With a cap rate of 9.75%, the financing provided by Pennsylvania-based Gaming & Leisure has a blended interest rate of 12.79%. The 45-year contract between Dry Creek Rancheria and the REIT is for "no less than $112.5 million."

Expanding Tribal Casino Footprint through Gaming & Recreation

Gaming & Leisure's footprint in the tribal casino real estate market is increased by the agreement with Caesars and Dry Creek Rancheria.

The Ione Band of Miwok Indians received a $110 million delayed draw term credit facility from the REIT last October to build a new tribal casino close to Sacramento, California. It was the first time an Indian Country gambling venue has used outside funding.

"GLPI remains active in identifying additional opportunities in tribal gaming where partnerships can benefit from our unique funding structures, similar to the value our leading regional gaming operator tenants derive from our relationships,” said the REIT when it delivered second-quarter results in June.

Bally's, Boyd Gaming, Caesars, and Penn Entertainment are among the commercial gaming tenants of the landlord. The property assets of 68 casinos spread across 20 states are owned by the REIT.

Caesars is also extending its reach to tribal casinos

Caesars is also increasing the scope of its tribal casino administration with the agreement with Dry Creek Rancheria. At the moment, the gaming corporation operates a number of tribal casinos under the Harrah's name. Two of those locations are in California, two more are in North Carolina, and one is in Arizona.

In accordance with commercial/tribal agreements, the tribes pay their commercial counterparts annual management fees to operate their casinos and, occasionally, licensing fees to employ well-known brands like Caesars Republic and Harrah's.

In relation to Caesars Republic, it is the most recent brand in the parent company's assortment. The proprietor of a nongaming establishment with the same name in Scottsdale, Arizona, is investing $160 million to convert Harveys Lake Tahoe into Caesars Republic Lake Tahoe.