During the Indian Gaming Tradeshow and Convention on April 1, a panel discussion delved into a significant financing agreement that marks a first between a tribe and a real estate investment trust (REIT). Moderated by Colin Mansfield, the head of credit research at CBRE, the panel featured Sarah Dutschke, chair of the Ione Band; Brandon Moore, president and COO of GLPI; and William Newby, president of TFA Capital Partners.
Last September, GLPI entered into a delayed draw term loan worth $110 million (£85.1 million/€101.9 million) with the Ione Band to support the construction of the Acorn Ridge Casino near Sacramento. This landmark agreement necessitated modifications to standard REIT financing terms in order to respect tribal sovereignty. According to GLPI’s statement, the Ione Band has the option at the end of the loan term to convert the outstanding principal into a long-term lease lasting an initial 25 years, extendable up to a maximum of 45 years.
The National Indian Gaming Commission (NIGC) approved the loan, which spans five years and carries an interest rate of 11%. TFA Capital Partners served as an advisor throughout this process. Mansfield characterized the financing deal as a 'monumental' achievement for the tribal gaming sector.
Moore shared insights on the discussions leading to the deal, noting that GLPI had pursued such an agreement for nearly ten years, searching for the right partner and project. He indicated that GLPI remains open to further tribal finance opportunities, confirming discussions with several tribes about similar concepts. ‘Would we do several hundred million [more]? Sure, absolutely,’ he remarked, emphasizing that GLPI would pursue these transactions if they meet appropriate underwriting and project standards.
Traditionally viewed as conservative business models, REITs are adapting to the evolving market dynamics, as conventional casino assets become rarer. Moore asserted GLPI’s readiness to facilitate tribal projects, stating, 'We have the capital, we have the balance sheet. Tell us what you need it for and how you plan to use it.'
The successful arrangement with the Ione Band could pave the way for more tribes to seek similar financing avenues. The NIGC’s approval is pivotal, given that past REIT deals were hindered by the Indian Gaming Regulatory Act (IGRA), which mandates tribes maintain proprietary interest in any gaming operation. The Ione Band's agreement complied with IGRA’s requirements, allowing for the freedoms that satisfied the NIGC.
Dutschke highlighted the intricate nature of the agreement, noting that it extended the process to around a year, unlike the typical three to six months. The NIGC was primarily concerned with the deal’s length and the relationship with GLPI, but the collaboration between the stakeholders addressed these worries effectively. Dutschke remarked, ‘GLPI was great about letting the tribe take the lead there. That was really important to demonstrate to NIGC that these were the tribe’s decisions supported and backed by GLPI.’
This financing model holds potential benefits for smaller tribes that may lack resources compared to wealthier counterparts. Newby explained that, unlike commercial operators, tribes cannot issue stock to generate capital. The approved lease structure serves as an alternative means of raising equity, providing tribes with a tool for growth and diversification.
Dutschke pointed out that the Ione Band, which faces challenges in providing resources for its citizens, can now access capital for revenue-generating projects while retaining control over their lands. She stated, 'We found a way to monetize our trust land in a way that hasn’t been done before, and we found a way to do that without actually having someone come and utilize that land.'
