Activist shareholder Land & Buildings Investment Management LLC is pushing for a merger between casino real estate investment trusts Gaming and Leisure Properties Inc. and VICI Properties Inc.
In a Dec. 18 tweet, Land & Buildings founder and Chief Investment Officer Jonathan Litt said the hedge fund manager has been in talks with Gaming and Leisure about the possible combination, calling it a "win-win" for both REITs.
Gaming and Leisure is the largest position for the hedge fund manager and is "the most attractive/undervalued" in the gaming REIT space, at "12x cash flow, 6.8% dividend yield and strong rent coverage," Litt said.
Litt added that his firm considers the gaming REIT segment "mispriced," given its growth potential and highly predictable cash flows.
Based on Land & Buildings' analysis, Gaming and Leisure could see a 20% to 25% upside and both REITs could materially cut their tenant concentration if they decide to merge, Litt said.
The news was first reported by The Wall Street Journal.