Penn Entertainment to relocate riverboat casinos in Illinois to land-based facilities, open new hotels

Penn Entertainment Inc. PENN, -2.56% said Monday it’s planning to relocate riverboat casinos in Aurora and Joliet, Illinois, to land-based facilities and to build a new hotel at Hollywood Columbus in Ohio, and a second hotel tower at the M Resort in Henderson, Nevada. Chief Executive Jay Snowden said he expects the properties to generate strong free cash flow returns, cementing its casino properties at the core of tis omni-channel approach to entertainment. Penn has also entered an agreement with Gaming & Leisure Properties Inc . GLPI, +0.58% to create a new master lease that would include the two new facilities in Aurora and Joliet, as well as Hollywood Columbus (OH), Hollywood Toledo (OH), the M Resort (NV), the Meadows (PA) and Hollywood Perryville (MD). Gaming and Leisure will provide up to $225 million at a 7.75% cap rate for the Aurora project. Penn may elect to receive up to $350 million of funding from Gaming & Leisure for real property improvements. That brings the total to $575 million of a total budget of about $850 million, said Snowden. Penn shares were down 0.9% premarket and have fallen 41% in the year to date, while the S&P 500 SPX, +0.14% has fallen 24%.