Gaming and Leisure Properties, Inc. (GLPI) has just announced a series of significant transactions with Bally's Corporation, with a total value of approximately $1.585 billion and a blended 8.3% initial cash yield. This multi-faceted deal includes the acquisition of real property assets, development funding, and sale-leaseback transactions.
The Chicago flagship casino development will see GLPI funding construction hard costs of up to $940 million at an 8.5% initial cash yield, with the remainder to be funded by Bally's through sale leaseback proceeds and other funding sources. The total project's costs are expected to be approximately $1.8 billion, inclusive of construction, land, and rent. GLPI also intends to acquire the Chicago land for approximately $250 million before development begins.
Furthermore, GLPI will purchase the real property assets of both Bally's Kansas City and Bally's Shreveport for a total consideration of $395 million, with an initial cash capitalization rate of 8.2%. The company expects to close these transactions as early as Q4 2024, subject to regulatory approvals.
In addition, GLPI and Bally's have adjusted the existing contingent purchase option for Bally's Lincoln, with the purchase price reduced to $735 million and an initial cash yield of 8.0%.
These transactions are expected to be funded on a staggered basis with cash on hand, retained operational cash flow, availability on GLPI’s revolving credit facility, and proceeds from potential capital markets activity.
Peter Carlino, Chairman and CEO of GLPI, stated that the transactions will be accretive to the company's financial results, delivering an 8.3% blended initial cash yield and are structured with conservative rent coverage. He emphasized that GLPI is ideally positioned for these transactions given its strong balance sheet, visible recurring cash flows, low leverage, and extensive casino development and construction experience.
Soo Kim, Chairman of Bally's, expressed excitement about expanding their relationship with GLPI, leveraging their development and financing expertise to grow Bally's with the world-class Chicago casino development. He highlighted that Chicago is a vitally important market for the company, and the permanent downtown facility will become Bally's flagship property when it opens in late 2026.
The transactions are subject to several conditions, including but not limited to regulatory approvals and the completion of due diligence. Wells Fargo acted as financial advisor to GLPI, and Goodwin Procter LLP acted as legal advisor to the company.
Bally's Chicago, the centerpiece of these transactions, will be a nearly 1 million square-foot casino resort featuring approximately 3,300 slot machines, 173 table games, a 500-room hotel, various dining and entertainment options, event and meeting space, and public green space along the Chicago River. Bally's Kansas City, Bally's Shreveport, and Bally's Lincoln also form part of the transactions, each offering unique amenities and experiences.
GLPI is engaged in acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements, while Bally's Corporation is a global casino-entertainment company with a growing omni-channel presence, owning and managing numerous casinos across multiple states, with additional online gaming and sports betting platforms.
These transactions mark a significant development in the gaming and leisure properties sector, with GLPI and Bally's positioning themselves for further growth and expansion in key markets across the United States. As a result of these announcements, the company's shares have moved 3.3% on the market, and are now trading at a price of $48.35. For the full picture, make sure to review Gaming and Leisure Properties's 8-K report.
