Penn Entertainment announced Monday that the company is set to pursue four new projects with an overall $850 million budget, including the relocation of its riverboat casinos in Aurora and Joliet, Illinois, to new land-based facilities. Additionally, the business is set to build a new hotel at Hollywood Columbus in Ohio, and a second hotel tower at the M Resort in Henderson, Nevada.
Jay Snowden, Chief Executive Officer and President, said: “We are delighted to announce these exciting new growth projects, which we expect will generate strong free cash flow returns and create long-term value for our shareholders. Our casino properties remain at the core of our omni-channel approach to entertainment, which combines best-in-class retail operations and a database of more than 26 million myChoice members with a rapidly growing interactive and media footprint.”
The company has been exploring the viability of relocating its aging riverboats in Aurora and Joliet since the change in the law to permit land-side casino relocation in Illinois was passed. “Thanks to the support of our local community leaders, in particular the visionary leadership of Mayor Richard Irvin and his staff in Aurora, we are very excited to be moving forward with these projects,” added Snowden.
The plan for Aurora is to construct “a modern, best-in-class” casino and hotel in a location off I-88 that would allow the company to serve “the millions of visitors” to the adjacent Simon Premium Outlet Mall. The development will include the transfer of certain parcels of land from the city, and up to $50 million of the project will be funded by the city through a new bond issuance, all of which is subject to final approval by the Aurora City Council.
Penn Entertainment's Jay Snowden
In Joliet, the planned casino will be located in the Rock Run Crossings development mixed-use project in close proximity to the I-80 and I-55 interchange, which the company notes offers “exceptional visibility and accessibility.” These two projects are expected to significantly improve Penn’s offerings in the attractive Chicagoland market “while creating hundreds of new full-time jobs for the local communities.”
As for Hollywood Casino Columbus in Ohio and the M Resort in Henderson, Nevada, the projects are subject to municipal approvals and would see the expansion of the company’s offerings at two of its best-performing properties. “Since opening in 2012, our Columbus property has experienced tremendous growth, and the addition of a hotel at the property will create a true regional destination,” noted Snowden.
When it comes to the M Resort, the addition of a second tower “will benefit from the strong demand in the Henderson locals market while providing additional capacity for the group business that is drawn to our market-leading resort and amenities, including our highly successful partnership with the Las Vegas Raiders,” the executive added.
In connection with these projects, Penn has entered into an agreement with real estate investment trust (REIT) Gaming and Leisure Properties to create a new master lease that would include the two new facilities in Aurora and Joliet, in addition to Hollywood Columbus (OH), Hollywood Toledo (OH), the M Resort (NV), the Meadows (PA) and Hollywood Perryville (MD). The amended agreement will facilitate and fund up to $575 million of the approximately $850 million overall project budget.
M Resort
GLPI will provide up to $225 million at a 7.75% cap rate for the Aurora project. With respect to the Columbus, Joliet and M Resort projects, Penn may elect to receive up to $350 million of funding in the aggregate from GLPI for real property improvements at then-current market rates, which will incorporate a spread to GLPI’s cost of capital. The new master lease will be effective on January 1, 2023.
Details unveiled
The Aurora development will see Penn develop a new land-based casino and hotel adjacent to the Chicago Premium Outlets mall, near Exit 119 off I-88 in Aurora, which would replace the current Hollywood Casino Aurora riverboat property. The development, with an estimated budget of $360 million, is expected to include a modern casino and hotel with approximately 900 slots and 50 live table games (including a baccarat room and a poker room).
Additionally, the property will feature a Barstool Sportsbook “with the ability to host popular Barstool personalities” and approximately 200 hotel rooms. Moreover, the property will include a full-service spa, high-quality bars and restaurants, approximately 10,000 square feet of meeting areas and an event center. Construction of the new property is expected to begin in late 2023, subject to city and regulatory approval.
For the Joliet project, Penn intends to build a new land-based casino as part of the Rock Run Crossings development in Joliet, which is adjacent to the I-80 and I-55 interchange and several miles from the current Hollywood Casino Joliet riverboat property which it would replace. With an estimated budget of $185 million, the venue is expected to include a modern casino with approximately 800 slots and 45 live table games (including a baccarat room).
Hollywood Casino Columbus in Ohio
Similarly to the Aurora development, the Joliet project will include a Barstool Sportsbook and high-quality bars and restaurants. It will also feature approximately 10,000 square feet of meeting areas and an event center. Construction is expected to begin in late 2023.
The Hollywood Columbus development calls for a new hotel with an estimated budget of approximately $100 million, expected to include 180 rooms and new food and beverage offerings. The hotel will be attached to the existing property and will add approximately 100 permanent new jobs, “along with hundreds of temporary construction jobs.” Construction of the new property is also expected in late 2023.
Lastly, Penn is planning the addition of a second hotel tower at M Resort in Henderson, Nevada. This project, with an estimated budget of $206 million, would add approximately 384 rooms to the company’s property south of the Las Vegas Strip, bringing its total to 774 rooms and suites. Along with the rooms, there will be expanded meeting space, updated amenities and additional local partnerships “that will be announced at a later date.”
