Penn National Gaming spent years shopping for a Vegas Strip property and it has finally found one.
The company announced Wednesday that it is buying the 58-year-old Tropicana Las Vegas, paying $360 million to shareholders including private equity firm Onex Corp.
Onex spent the past four years giving the Tropicana a $200 million face-lift after buying it out of bankruptcy in 2009. In five years, the property's losses have been cut more than half, dropping to $19.2 million last year, according to its annual financial report.
Penn National said it plans to spend another $20 million in improvements at the revived 1,467-room South Beach-inspired resort.
The company, based in Wyomissing, Pennsylvania, operates 26 casinos and hotels around the country. Its other Nevada property, The M Resort, is about 12 miles from the Las Vegas Strip.
"Overall it's a very good cost of entry for a prime location," said John Knott, global head of gaming for commercial real estate firm CBRE in Las Vegas.
The market for buying and selling casino-hotels and land on the Strip has been slowly climbing since hitting bottom in 2013.
"We're a long, long way from the $36 million an acre that was being paid at the top of the market," Knott said. A price of $20 million an acre for a prime corner of undeveloped land might be on the horizon, but certainly not yet.
For years, Penn National either encountered unwilling sellers or astronomical pricing on the Strip.
"We didn't want to overpay for an asset back when everyone was asking gigantic asking prices," said company spokesman Eric Schippers. The company even offered $50 million for the partially built Fontainebleau Las Vegas casino resort high-rise in 2010 but was outbid by billionaire investor Carl Icahn's.
"We've been looking for a dozen years for the right resort in the right location," he said. "Tropicana checks all the boxes for us."
The 34-acre resort sits on the corner of Tropicana Avenue and Las Vegas Boulevard across from MGM Resorts future 20,000-seat Las Vegas arena, which is expected to open next year.
Schippers said a plan already in the works to develop a two-story retail and restaurant complex on the casino-hotel's corner is being reviewed by Penn National Gaming Inc. It could have a different mix of retail and restaurants than were first envisioned depending on what the company hears from customers.
The Tropicana also has a comedy club, a theater and more than 100,000 square feet of meeting space.
The deal is expected to close later this year pending regulatory approvals including from the Nevada Gaming Commission.