{"id":318263,"date":"2024-04-24T17:06:49","date_gmt":"2024-04-24T22:06:49","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=318263"},"modified":"2024-04-25T10:17:40","modified_gmt":"2024-04-25T15:17:40","slug":"high-interest-rates-damping-gaming-industry-ma-activity","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/high-interest-rates-damping-gaming-industry-ma-activity\/","title":{"rendered":"Inflation, Interest Rates Weighing on Gaming Industry M&A, Says Analyst"},"content":{"rendered":"

Entering this year, it was widely expected that the Federal Reserve would pare interest rates from 20-year highs, potentially unleashing a wave of mergers and acquisitions activity in the casino gaming industry, but that scenario hasn\u2019t materialized.<\/p>\n

\"commercial
The Las Vegas Strip. High interest rates are weighing on gaming industry mergers and acquisitions activity, says an analyst. (Image: Las Vegas Sun<\/em>)<\/figcaption><\/figure>\n

Following a string of stubbornly high readings of the Consumer Price Index (CPI) to start 2024, expectations that the Fed could lower rates anywhere from three to six times this year are all but erased and some market observers are speculating it\u2019s possible the central bank won\u2019t reduce borrowing costs until next year. That could be a drag on gaming industry consolidation, according to Truist Securities analyst Barry Jonas.<\/p>\n

Lower interest could be a catalyst for increased mergers and acquisitions and more sale-leaseback activity<\/a> — transactions in which casino operators monetize real estate holdings while maintaining operational control of the venues.<\/p>\n

This thesis is likely delayed while the Fed attempts to combat stubborn inflation,\u201d wrote Jonas in a new report to clients.<\/p><\/blockquote>\n

Year to date, there has been some consolidation in the gaming industry with the $6.2 billion<\/a> combination of International Game Technology\u2019s (NYSE: IGT) global gaming and PlayDigital units with Everi (NYSE: EVRI) ranking as one of the largest deals to date. However, there\u2019s been nothing of note in terms of casino operator marriages or those companies buying and selling individual properties.<\/p>\n

Lots of Gaming Stocks Have Value Appeal<\/h2>\n

While the higher interest rates caused by persistent inflation have prompted gaming companies to reduce and refinance debt<\/a> — moves applauded by analysts and investors — those scenarios are weighing on share prices.<\/p>\n

\n

Whether it is casino equities, shares of gaming device makers, or real estate investment trusts (REITs) that own gaming properties, those stocks in aggregate are lagging the broader market this year. Additionally, dwindling rate cut expectations are sapping a needed catalyst from the group.<\/p>\n<\/div>\n

\u201cBut absent M&A and predictable organic growth, many of our names are stuck in value land,\u201d added Jonas.<\/p>\n

On Tuesday, Jonas lowered price targets on four gaming stocks, including Caesars Entertainment (NASDAQ: CZR), but he did boost price forecasts on Bally\u2019s (NYSE: BALY) and Red Rock Resorts (NASDAQ: RRR).<\/p>\n

Higher for Longer Drag on Gaming REITs<\/h2>\n

Real estate is one of the most interest-rate sensitive sectors, a fact proven by a year-to-date decline of 8.3% by the S&P Real Estate Select Sector Index. Conversely, the S&P 500 is up 6.7% since the start of the year.<\/p>\n

\n

Expectations that \u201chigher for longer\u201d is the Fed\u2019s near-term operating procedure is plaguing shares of casino landlords. Gaming and Leisure Properties (NASDAQ: GLPI) is off 12% year to date while Caesars Palace owner VICI Properties (NYSE: VICI) is off 10.8%.<\/p>\n<\/div>\n

Jonas noted that the current environment might not be conducive to gaming REITs<\/a> executing large-scale transactions, but that scenario could change if interest rates stabilize and clarity emerges as to when the Fed will cut borrowing costs.<\/p>\n","protected":false},"excerpt":{"rendered":"

Entering this year, it was widely expected that the Federal Reserve would pare interest rates from 20-year highs, potentially unleashing a wave of mergers and acquisitions activity in the casino gaming industry, but that scenario hasn\u2019t materialized. Following a string of stubbornly high readings of the Consumer Price Index (CPI) to start 2024, expectations that […]<\/p>\n","protected":false},"author":46,"featured_media":311445,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,33810,32093],"tags":[81903,81898,81966],"acf":[],"yoast_head":"\nHigh Interest Rates Damping Gaming Industry M&A Activity<\/title>\n<meta name=\"description\" content=\"Inflation, Interest Rates Weighing on Gaming Industry M&A, Says Analyst.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/high-interest-rates-damping-gaming-industry-ma-activity\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"High Interest Rates Damping Gaming Industry M&A Activity\" \/>\n<meta property=\"og:description\" content=\"Inflation, Interest Rates Weighing on Gaming Industry M&A, Says Analyst.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/high-interest-rates-damping-gaming-industry-ma-activity\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2024-04-24T22:06:49+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-04-25T15:17:40+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2024\/02\/0428_loc_Tourism_RGB_t1200.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/high-interest-rates-damping-gaming-industry-ma-activity\/\",\"url\":\"https:\/\/www.casino.org\/news\/high-interest-rates-damping-gaming-industry-ma-activity\/\",\"name\":\"High Interest Rates Damping Gaming Industry M&A Activity\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/high-interest-rates-damping-gaming-industry-ma-activity\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/high-interest-rates-damping-gaming-industry-ma-activity\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2024\/02\/0428_loc_Tourism_RGB_t1200.jpg\",\"datePublished\":\"2024-04-24T22:06:49+00:00\",\"dateModified\":\"2024-04-25T15:17:40+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Inflation, Interest Rates Weighing on Gaming Industry M&A, Says Analyst.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/high-interest-rates-damping-gaming-industry-ma-activity\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/high-interest-rates-damping-gaming-industry-ma-activity\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/high-interest-rates-damping-gaming-industry-ma-activity\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2024\/02\/0428_loc_Tourism_RGB_t1200.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2024\/02\/0428_loc_Tourism_RGB_t1200.jpg\",\"width\":1200,\"height\":800,\"caption\":\"The Las Vegas Strip. 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