Posted on: January 6, 2025, 02:00h.
Last updated on: January 6, 2025, 02:00h.
Shares of Golden Entertainment (NASDAQ: GDEN) could be galvanized this year if the casino operator decides to sell some or all of its real estate holdings.
That’s the view of Deutsche Bank analyst Carlo Santarelli who in a recent report noted that if Golden were to monetize its property assets, based on current prices, such transactions could drive the stock to $40. It currently trades around $32, below Deustche Bank’s price target of $36. The analyst acknowledged that gaming real estate investment trusts (REITs) want to acquire Las Vegas assets, but executing deals is easier said than done at the moment.
Should this change, we believe Golden would be open to a real estate sale in conjunction with something further and strategic in nature related to the remaining OpCo,” observed Santarelli. “In the absence of a real estate transaction, we believe something is likely to give in 2025, as the current structure of Golden is hard to rationalize, given the lack of growth in the portfolio, shrinking public float, and elevated corporate expense relative to the portfolio earnings before interest taxes, depreciation, and amortization (EBITDA).”
In terms of something else that’s “likely to give” in 2025 for Golden, it’s not clear what that could be, but the company has shown it’s willing to take action to increase value for shareholders. Recent moves to that effect include the 2023 sale of its distributed gaming operations, share buybacks, and the initiation of a quarterly dividend.
“We believe the capital-return story, while it hasn’t proven fruitful for peers, could be unique here, given the smaller float and the strategic alternative perceptions of GDEN,” added Santarelli.
Golden Entertainment Real Estate Sale Rumor Has Momentum
Santarelli was among the first sell-side analysts to mention the possibility of Golden potentially selling some real estate to unlock value for investors. The analyst mentioned as much last October.
On the company’s third-quarter earnings conference call the following month, executives hinted that they could consider strategic moves to generate more value for shareholders. Whether or not that includes property sales remains to be seen, but there would likely be significant interest in The Strat among gaming REITs.
In terms of property value, The Strat is the crown jewel in the Golden portfolio. Located near the Las Vegas Strip, that venue could fetch a significant percentage of Golden’s $861.27 million market capitalization in a potential sale.
Currently, the Las Vegas-based gaming company owns all of the real estate on which its eight casino hotels reside. Three of those venues are located in Las Vegas with another trio in Pahrump, Nevada and two more in Laughlin.
Golden Real Estate Speculation
The off-Strip Strat would likely be the primary source of allure in the Golden real estate portfolio to prospective buyers, but some casino landlords have preferences for gaming properties in markets outside of Las Vegas.
Golden has previously executed such deals and it could consider selling the currently shuttered Colorado Belle in Laughlin, Nevada. Speculation about the fate of that venue has been swirling for more than two years and as of yet, the operator hasn’t overtly said the casino is up for sale.
Golden could discuss plans for asset sales when it delivers fourth-quarter results, but a date for that event hasn’t been released.
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