Gaming & Leisure Properties, Inc. announced that it agreed to create a new master lease with PENN Entertainment, Inc. (“PENN”) for seven of PENN's current properties. The companies have also agreed to a funding mechanism to support PENN's pursuit of relocation and development opportunities at several of the properties included in the new master lease. The transaction, including the creation of the new master lease, is subject to customary regulatory approvals and is expected to be effective January 1, 2023.

Pursuant to the terms agreed upon by the parties, the current PENN master lease will be amended to remove PENN's properties in Aurora and Joliet, Illinois; Columbus and Toledo, Ohio; and Henderson, Nevada and those properties will be added to the new master lease. In addition, the existing leases for the Hollywood Casino at The Meadows in Pennsylvania and Hollywood Casino Perryville in Maryland will terminate and these properties will be transferred into the new master lease. GLPI has agreed to fund up to $225 million for the relocation of PENN's riverboat casino in Aurora at a 7.75% cap rate and to fund up to $350 million for the relocation of the Hollywood Casino Joliet as well as the construction of hotels at Hollywood Casino Columbus and a second hotel tower at M Resort Spa Casino at then current market rates.

The new master lease and GLPI's funding commitment will allow PENN to pursue several growth projects including the planned projects in Aurora and Joliet, Illinois; Columbus, Ohio; and Henderson, Nevada. The terms of the new master lease and the amended PENN master lease are expected to be substantially similar to the current PENN master lease with the following key differences: The new master lease will be cross-defaulted, cross-collateralized and co-terminus with the existing PENN master lease. The initial term of the new master lease will expire on 10/31/2033, with three 5-year extensions at PENN's option (consistent with the term remaining on the current Penn master lease).

All rent in the new master lease will be fixed with annual escalation of 1.50%, with the first escalation occurring for the lease year beginning on November 1, 2023. The rent for the new lease will be $232.2 million in base rent. The rent for the original PENN master lease will be $284.1 million, consisting of $208.2 million of Building Base Rent, $43.0 million of land base rent, and $32.9 million of percentage rent.