Golden Entertainment real estate sale could boost stock, analyst says

Posted: January 6, 2025, 02:00 pm.

Last updated: January 6, 2025, 02:06 pm.

Shares of Golden Entertainment (NASDAQ: GDEN) could get a boost this year if the casino operator decides to sell some or all of its real estate holdings.

This is the view of Deutsche Bank analyst Carlo Santarelli, who said in a recent report that if Golden were to monetize its property assets based on current prices, such a transaction could take the stock to $40. It is currently trading around $32, below Deutsche Bank's price target of $36. Santarelli acknowledged that gaming real estate investment trusts (REITs) may want to acquire Las Vegas properties, but executing the deals is easier said than done at this time.

Should this change, we believe Golden will be open for real estate sales in conjunction with some of the remaining Opco-related real estate of a more strategic nature,” Santarelli said. “In the absence of real estate transactions, we believe some are likely to be found in 2025, as it is difficult to rationalize Golden's current structure, lack of portfolio growth, low public float, and comparatively Portfolio earnings before interest taxes, depreciation and amortization (EBITDA) given higher corporate expenses.

In terms of “the potential to deliver something more” for Golden in 2025, it's unclear what that might be, but the company has shown it is willing to take action to increase value for shareholders. Recent moves to this 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, although not as useful to peers, may be unique here, given GDN's small float and strategic alternative assumptions,” Santarelli said.

Golden Entertainment real estate sale rumor gaining momentum

Santarelli was one of the first sell-side analysts to mention the possibility of Golden potentially selling some real estate to unlock value for investors. He had also mentioned this last October.

In terms of asset value, The Strata is the most important gem in Golden's portfolio. Located near the Las Vegas Strip, that location could yield 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 are located. Three of those locations are located in Las Vegas, another trio in Pahrump, Nev., and two more in Laughlin.

golden real estate speculation

Off-Strip strata will likely be the primary source of attraction in Golden's real estate portfolio for potential buyers, but some casino landlords have preferences for gaming properties in markets outside Las Vegas.

Golden may discuss plans for an asset sale when it reports fourth-quarter results, but no date for that event has been released.