Gaming and Leisure Properties, Inc., and Bally’s Corporation on Tuesday said they have entered into several agreements involving casino properties in multiple states.
The first is the signing of a binding term sheet for GLPI to acquire the real estate assets of Bally’s casino property in Black Hawk, Colorado, and the property Bally’s plans to acquire in Rock Island, Illinois.
Total consideration for the acquisition is $150 million, GLPI said.
The two parties noted the transaction is subject to regulatory approval and is expected to close in early 2022.
GLPI and Bally’s said they expect to add the Black Hawk and Rock Island properties to the master lease they are entering into in connection with Bally’s previously announced acquisitions of Tropicana Evansville (pictured) and Dover Downs Hotel & Casino, which will generate incremental rent of $12m.
They expect normalized rent coverage on the assets to be 2.25 times in the first calendar year post-acquisition.
In addition, Bally’s has granted GLPI a right of first refusal to fund the real property acquisition or development project costs associated with any potential future transactions in Michigan, Maryland, New York and Virginia, through one or more sale-leaseback or similar transactions, for a term of seven years.
Bally’s also plans to acquire both GLPI’s non-land real estate assets and Penn National Gaming, Inc.’s outstanding equity interests in Tropicana Las Vegas Hotel and Casino, Inc. for an aggregate cash acquisition price of $150 million.
GLPI will retain ownership of the land and will enter into a 50-year ground lease with initial annual rent of $10.5m. The ground lease will be supported by a Bally’s corporate guarantee and cross-defaulted with the GLPI-BALY master lease. This transaction is expected to close in early 2022.
GLPI and Bally’s said they have committed to a structure in which GLPI has the potential to acquire additional assets in sale-leaseback transactions if Bally’s elects to tap GLPI’s capital as a funding source for the proposed acquisition of Gamesys Group plc.
Officials said the $500m commitment provides Bally’s an alternative financing source.
Peter Carlino, chairman and CEO of GLPI, said in a statement, “We are delighted to expand our relationship with Bally’s through a complex transaction that is a win-win for both companies. With strong rent coverage and an accretive cap rate, the transaction again expands and diversifies our master lease. We also are excited to have secured rights of first refusal on potential future assets. Furthermore, our conversion of the Tropicana into an income producing ground lease solidifies the value creation that we hoped for in originally structuring the transaction with Penn National.”
