Land and Buildings: Boyd Should Do A REIT IPO

Land and Buildings: Boyd Should Do A REIT IPO

Land and Buildings founder Jon Lit comments on its Boyd Gaming (NYSE: BYD) stake. It owns 0.6% and thinks the company should follow in MGM’s footsteps with a REIT IPO. Here is Lits’ comments:

“The successful IPO of MGM Growth Properties (NYSE: MGP) last week and strong valuation of both MGP and Gaming and Leisure Properties (NASDAQ: GLPI), at 14x and 13x 2017 EBITDA, respectively, paves the way for a Boyd REIT. Boyd closed Friday, April 22, 2016 at $20.03 per share, or an 8x 2017 EBITDA multiple, suggesting 60% upside in the shares should they pursue a REIT IPO similar to MGP at valuations consistent with gaming operator Penn National Gaming (NASDAQ: PENN) and REITs GLPI and MGP.

On the Company’s last earnings call in February management addressed the formation of a REIT, stating, “We’re continuing to think through the issue and monitor developments in our space.” We look forward to management providing an update on its REIT evaluation on tomorrow’s earnings call.

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Boyd’s underlying fundamentals are robust and we expect will prove better than anticipated in 2016. The Company reported double-digit EBITDA growth in the fourth quarter, driven by a combination of revenue growth and margin expansion. In addition, nearly half of the Company’s EBITDA is generated by its Las Vegas locals, Las Vegas downtown and premier Atlantic City assets – all markets enjoying fundamental tailwinds. Against this backdrop, we believe the time is right for a Boyd REIT.”

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