Penn National Gaming (PENN) is a gambling sin stock that owns gaming, racing, and slot machine entertainment in 19 jurisdictions.
Recently, the company announced that they are starting the process of spinning off another company (subject to approval from the appropriate regulatory organizations) so that investors will have two investment options available to them.
Early indications look like the two companies will be structured like this:
- Penn National Gaming will own the gambling assets (which may include management of the their various properties as well as any gambling income and intellectual property).
- The new company, (currently called) “PropCo”, will own the actual real estate that Penn National uses, presumably earning rental income from PENN.
As the Motley Fool reported, this makes their new company the first casino REIT in existence. (A REIT is an exchange-traded investment that invests in properties and mortgages).
According to PENN’s announcement, PENN shareholders will receive a tax-free dividend of the shares of the new company. The spin-off is expected to be completed in the second half of 2013 and “REIT election effective by January 2014”.
If this REIT is successful, Sin Stocks Report believes that investors can expect similar tactics used by other gambling sin stocks that run games and own property.