GLPI acquires Cannery's Pittsburgh racetrack

Gaming and Leisure Properties said Wednesday it settled its lawsuit with the owner of the Cannery casinos and acquired Las Vegas-based company's Pittsburgh-area racetrack for $440 million.

The real estate investment trust and Cannery Casino Resorts said the transaction could be finalized next year. The Meadows Racetrack and Casino in Pennsylvania has a 180,000 square-foot casino, which opened in 2007, and a 5/8 mile racetrack with a 500-seat grandstand. A 154-room hotel, which is owned and operated by a separate company, opened in April and is adjacent to the casino.

GLPI, which is based in Pennsylvania, said the $440 million purchase price includes $10 million previously paid and subject to certain adjustments.

The companies agreed on the deal in May 2014, but the sale ran into trouble when GLPI couldn't find an operator for the casino and property's results deteriorated. GLPI sued Cannery in October 2014, alleging fraud and breach of certain agreements related to the acquisition.

"While the process could have dragged on for considerably longer, it appears the two sides have found a common ground, likely helped by property fundamentals improving from 2014," Deutsche Bank gaming analyst Carlo Santarelli told investors.

GLPI was spun off from Penn National Gaming in 2013, taking ownership of more than two dozen resorts. The properties were leased back to Penn as the operator. GLPI has deal in place with Pinnacle Entertainment to acquire the company's 15 resorts, which will be leased back to the Las Vegas-based regional casino operator.

GLPI Chairman Peter Carlino said the lawsuit settlement with Cannery was "positive for both companies."

Analysts said GLPI paid nine times the resort's cash flow for the resort.

"The Meadows property has displayed a strong turnaround, providing increased confidence and visibility, which in our view warrants a higher multiple," Credit Suisse gaming analyst Joel Simkins said.

Cannery co-CEO Bill Paulos said the proceeds from the sale "will be used to reduce our debt and better position us for the future."