Golden Entertainment (NASDAQ: GDEN) is contemplating the possibility of selling and leasing back one of its casinos as a strategy to raise cash. Deutsche Bank analyst Carlo Santarelli highlighted this potential move in a recent report to clients, suggesting there’s a “rising probability” that Golden will pursue such a sale-leaseback deal. However, the analyst did not specify which casino might be sold.
Golden Entertainment currently owns the real estate of all its eight casino hotels, three of which are located in Las Vegas, with another three in Pahrump, Nevada, and two in Laughlin. Among these, The Strat in Las Vegas stands out as the property that would likely attract the highest offer. Although The Strat is not officially on the Las Vegas Strip, its proximity to the area makes it highly appealing to potential buyers.TRUSTED PARTNER ✅ Santarelli refrained from speculating on the timing of any potential deal or its details, such as who Golden’s real estate partner might be. However, given that Golden is scheduled to report its third-quarter earnings on November 7, the topic might be addressed soon.
Investors have been concerned about the impact of persistent inflation and high interest rates on Golden’s lower-end casino clientele and tavern business. These worries have caused the company’s stock to drop nearly 23% this year, in contrast to the 12.43% gain in the Russell 2000 Index.
Analysts have generally been lowering their earnings and revenue forecasts for Golden, further pressuring the stock and fueling speculation around a potential transaction to rekindle bullish sentiment. Santarelli noted that their updated forecasts account for relatively stable trends in key segments, adjusted for seasonality, including a moderation in same-store top-line declines moving into the fourth quarter. Despite the lowered forecasts, he maintained a “buy” rating on the stock, suggesting that the depressed valuation could make a value-creating transaction more likely.
Santarelli also attempted to model the financial impact of a potential sale-leaseback, although many variables remain uncertain. He estimated that such a deal could result in Golden incurring $87 million in annual rent costs while securing $130 million in cash, including deal proceeds, by the end of next year. These figures suggest that The Strat might be the property in question, or that multiple properties could be involved in sale-leaseback arrangements.
Another property Golden might consider is the Colorado Belle in Laughlin, which has been closed since 2020. Despite numerous rumors, the company has not publicly disclosed any plans for this property.
