Pinnacle shareholders got saved by Gaming and Leisure Properties (GLPI) last month. Penn’s spinoff REIT got a little aggressive in March when it went directly to Pinnacle shareholders and offered them $36 a share for Pinnacle’s real estate assets, including its debt. This, after it claimed that Pinnacle’s board has been dallying after hearing GLPI’s offer. $36 a share blasts Pinnacle out of its year-and-a-half long trading range past all time pre Great Recession highs. PNK is now trading at $36.30, at over 50 times earnings.

GLPI offered Penn’s spinoff has been working well so far, at least for the REIT itself. But why do they think they can take on even more debt when they’ve already taken on $2.61B of Penn’s? While this only puts them at 61% debt to equity, it’s still a bit high to be asking for even more. When Penn’s real estate was spun off into GLPI, its debt dropped by over 60%. If we take the same numbers assuming this hostile takeover goes through, it’s another $2.4B in debt approximately, which would take GLPI to over $5B, or 117% debt to equity?

Is that even possible to hold, and even if it is, is it wise?

The surprising answer, given my aversion to high debt levels, is actually yes on both counts. Here’s why.