Litt says a GLPI-Vici deal will create a significant upside for GLPI shareholders.

Well-known real estate activist Jonathan Litt has gone to town on his firm’s position in Gaming and Leisure Properties (NASDAQ: GLPI).

Litt’s firm, Land & Buildings (L&B), has accumulated a “significant” position in GLPI, Litt revealed on Twitter on Wednesday. Besides, GLPI is now also L&B’s “largest position,” he tweeted.

Litt is pushing for a deal between GLPI and VICI, as reported by Casino.org.

Investor interest has been growing in gaming REITs, a sector that has only three players, as shown below.

A common feature is their high dividend yield, attractive in today’s low-interest regime.

In terms of share gains, VICI’s is the best showing year-to-date, while GLPI has the best yield. The aggregate market cap of GLPI and VICI is $21B.

GLPI is up nearly by a third this year, perhaps due to sustained hedge fund interest. Holders of the REIT include Renaissance Technologies, Covalent Capital Partners and now Litt’s Land & Buildings.

Litt’s rationale for a deal

The Wall Street Journal picked up on Litt’s interest and said he had been “speaking with Gaming & Leisure (GLPI) executives about a tie-up between the firm and a fellow gambling real-estate investment trust.”

According to Litt’s tweet: “A merger between $GLPI and $VICI could see $GLPI have 20-25% upside and materially reduce tenant concentration for both companies based on our analysis.”

Litt is also of the view that the gaming EIT sector as a whole is undervalued – given the predictable cash flows and growth expectations. Within the sector, a marriage between GLPI and VICI would be a win-win for both companies.

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