Acquisitions & Hotel Openings

Penn National Gaming Purchases M Resort Debt

October 11, 2010 - Penn National Gaming, Inc. (Nasdaq: PENN) announced today that it has purchased all of The M Resort LLC bank debt, plus $160 million of subordinated debt formerly held by MGM Resorts International, which represents all of the outstanding debt of M Resort, from Bank of Scotland plc, a unit of Lloyds Banking Group, for $230.5 million.

Peter M. Carlino, Chief Executive Officer of Penn National commented, "This transaction represents a great opportunity for Penn National, M Resort, its customers and employees as we address the financial uncertainty and debt burden which has created an overhang on M Resort's operations. The M Resort is a beautiful, fresh, upscale locals and destination-oriented casino resort which provides an excellent customer experience. M Resort is located ten miles from the Las Vegas Strip with access to I-15 and in close proximity to several master-planned communities.

"M Resort is a unique, differentiated property that we expect will continue to improve its operating results even without the benefit of a rebound in the local Las Vegas economy. Longer-term, the core attributes which contributed to the growth of Las Vegas into one of the world's pre-eminent entertainment destinations including its favorable climate and low taxes, combined with Penn National's growing database of 12 million regional gaming customers, many of whom already visit Las Vegas, will further benefit M Resort and the local economy."

Opened in March 2009, the M Resort Spa Casino is situated on over 90 acres on the southeast corner of Las Vegas Boulevard and St. Rose Parkway. The resort features over 92,000 square feet of gaming space including 1,900 slot machines, 64 table games, 14 poker tables and a race and sports book. M Resort also offers 390 guest rooms and suites, nine restaurants and five destination bars, more than 60,000 square feet of meeting and conference space, a 4,700 space parking facility, a state-of-the-art spa and fitness center and a 100,000 square foot events piazza. M Resort's master plan includes the potential to develop up to one million square feet of retail and a multi-screen digital movie entertainment complex.

Wachtell, Lipton, Rosen & Katz acted as legal advisor, and Miller Buckfire & Co., LLC acted as financial advisor, to Penn National Gaming in connection with the transaction. Katten Muchin Rosenman LLP acted as legal advisor, and The Blackstone Group acted as financial advisor, to Bank of Scotland plc in connection with the transaction.

About Penn National Gaming
Penn National Gaming owns, operates or has ownership interests in gaming and racing facilities with a focus on slot machine entertainment. The Company presently operates twenty-three facilities in sixteen jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, Penn National's operated facilities feature over 27,500 gaming machines, over 500 table games, over 2,000 hotel rooms and over one million square feet of gaming floor space.

Penn National Gaming recently opened Maryland's first casino and added table games to its facilities in West Virginia and Pennsylvania. Through a joint venture, Penn National is developing a full casino at Kansas Speedway in Kansas City, which is anticipated to open in the first half of 2012, and is also developing casinos in Toledo and Columbus, Ohio, with openings targeted for 2012. The Company recently agreed to establish a joint venture (subject to final approval by the Texas Racing Commission and the satisfaction of certain other closing conditions) to own and operate pari-mutuel operations in Texas, including the Sam Houston Race Park in Houston, Texas, the Valley Race Park in Harlingen, Texas and a planned racetrack in Laredo, Texas.

Coming Up In The November Online Hotel Business Review

Feature Focus
Architecture & Design: Original, Authentic and Localized
Corporate hotel developers once believed that their customers appreciated a homogenous design experience; that regardless of their physical location, they would be reassured and comforted by a similar look, feel and design in all their brand properties. Inevitably this led to a sense of impersonality, predictability and boredom in their guests who ultimately rejected this notion. Today's hotel customer is expecting an experience that is far more original and authentic - an experience that features a design aesthetic that is more location-oriented, inspired by local cultures, attractions, food and art. Architects and designers are investing more time to engage the local culture, and to integrate the unique qualities of each location into their hotel design. Expression of this design principle can take many shapes and forms. One trend is the adaptive reuse of existing facilities - from factories to office buildings - as a strategic way to preserve and affirm local culture. Many of these projects are not necessarily conversions of historic properties into grand, five-star landmark hotels, but rather a complete transformation of historic structures into mixed-use, residential, and hotel projects that take full advantage of their existing location. Another trend is the addition of local art into a hotel's design scheme. From small sculptures and photography to large-scale installations, integrating local art is an effective means to elevate and enhance a guest's perception and experience of the hotel. These are just a few of the current trends in the fields of hotel architecture and design that will be examined in the November issue of the Hotel Business Review.