Gaming and Leisure Properties (NASDAQ:GLPI) stock is among Wednesday’s best-performing real estate names. That’s after an analyst upgraded the shares and as consolidation comes to its peer group.
In a note to clients earlier today, UBS analyst Robyn Farley lifts her rating on the gaming real estate investment trust (REIT) to “buy” from “neutral,” while placing a $54 price target on the stock. That implies upside of 17.4 percent from the Aug. 3 close.
Additionally, the resilience of regional gaming tenants and the strength of lease terms have been proven in the last year, with GLPI unexpectedly reaching the benchmark for its May 2021 escalators,” said Farley.
Her GLPI call comes a day after Deutsche Bank analyst Carlo Santarelli reiterated a “buy” rating on the gaming REIT with a $56 price target. The Wall Street consensus price forecast on GLPI stock is $52.
GLPI Stock ‘Wild Card’ with Tropicana Las Vegas
Farley notes GLPI has a potential “wild card” with the Tropicana Las Vegas, which could present the gaming REIT with a compelling redevelopment operator.
In an April transaction, Bally’s (NYSE:BALY) paid $150 million for the non-real estate assets of the Strip venue, and signed a 50-year lease with GLPI valued at $10.5 million annually. Because of its preference for venues in regional markets, it was believed the REIT would ultimately part with Tropicana. But that wasn’t the case. Now, it’s working with Bally’s on plans to enhance the 35-acre property.
On the company’s second-quarter earnings conference call last week, CEO Peter Carlino said there’s a possibility of more assets being added to the property. But things are still up in the air.
“I don’t think we or even Bally’s knows what more is right now,” said Carlino. “Frankly, we’re working cooperatively with them to figure out how we can maximize whatever occurs there. And I’m just here to say that we are considering the maximization of every inch of that property.”
Geographic, Tenant Diversity
In addition to highlighting GLPI’s project pipeline and debt reduction efforts, Farley also pointed to the company’s status as one of the most diverse triple net lease REITs when it comes to geographic and tenant diversification.
That position is being enhanced by consolidation in the gaming REIT space. Earlier today, VICI Properties (NYSE:VICI) said it’s acquiring MGM Growth Properties (NYSE:MGP) for $17.2 billion in stock. The combined company will depend on Las Vegas for 45 percent of its rental base, with Caesars Entertainment and MGM Resorts being its marquee tenants.
Conversely, the Tropicana is GLPI’s only Sin City asset, and its tenant roster, which includes Bally’s, Caesars, and Penn National Gaming, is larger than its rivals.