Gaming and Leisure Properties (NASDAQ:GLPI) announced on Tuesday a $225 million financing commitment as the lead real estate finance partner for the development of the Caesars Republic Sonoma County resort. The commitment is in partnership with Caesars Entertainment (NASDAQ:CZR) and the Dry Creek Rancheria Band of Pomo Indians.
The financing package consists of a $180 million delayed draw term loan at a 12.50% fixed rate and a $45 million term loan B yielding 13.95%, with a blended interest rate of 12.79%. Once the six-year term loans mature, the financing arrangement transitions into a 45-year lease agreement with a minimum annual rent of $112.5 million at a 9.75% cap rate, which is expected to provide long-term, stable income for Gaming and Leisure Properties (NASDAQ:GLPI).
Construction on the resort began in August, with completion targeted for summer 2027. The project located in Sonoma wine country will feature 1,000 slot machines, 28 table games, a 100-room hotel, four restaurants, three bars, a luxury spa, a pool, and a fitness center. The existing River Rock Casino will remain operational during construction.
Gaming and Leisure Properties (GLPI) highlighted that the innovative financing model being utilized not only delivers high-yield returns during the development phase but also secures consistent lease income long-term. The deal is also seen as deepening Gaming and Leisure Properties (GLPI) strategic alliance with Caesars (NASDAQ:CZR), while marking a significant expansion into tribal casino financing.
Shares of Gaming and Leisure Properties (GLPI) are down 0.3% on a year-to-date basis, while Caesars Entertainment (CZR) is off just under 20%.