Friday, October 08, 2010

Penn National Buying M Resort

Penn National has bought the M Resort's debt, paving the way for the company to take ownership control of the casino. The Pennsylvania based company paid $230.5 million for about $860 million of total outstanding debt.

Penn National has been looking to get into the Las Vegas market for a few years now. They own 23 casinos around the country, so they have a pretty big customer base to lure to a Vegas property. M Resort is probably a good place to get their feet wet in Las Vegas, especially considering they are getting a brand new property for a fraction of the building cost.

Penn was a player in the auction to buy the stalled Fontainebleau project, but backed off in the later stages giving the property to Carl Ichan. They have also been long rumored to buy the Rio, but nothing ever came of that either.

While the M Resort is a good start, there is little doubt that Penn National would like to have a property on the Strip. Perhaps they will look to expand further into Las Vegas after they fully acquire M Resort. Who knows, maybe they will end up with Fontainebleau after all in a few years when Ichan decides to unload it. M Resort and a finished Fontainebleau would be a really nice foundation for Penn National to build on in the Las Vegas market.

Source: Bloomberg.