Bally’s Corporation will become the latest casino operator to expand operation of properties under a triple-net lease from top gaming real estate investment trust (REIT) Gaming and Leisure Properties, Inc. (GLPI), as the operator announced it has entered into a binding agreement to sell its two Rhode Island properties to GLPI.
According to the operator, GLPI has agreed to acquire the real property assets of Bally’s Twin River Lincoln Casino Resort and Bally’s Tiverton Casino & Hotel, subject to customary regulatory approvals, with Lincoln also subject to lender consent. Pursuant to the terms of the transaction, Bally’s will immediately lease back both properties and continue to own, control and manage all the gaming operations of the facilities on an uninterrupted basis. Total consideration for the acquisition is $1 billion.
“Bally’s is excited to enter into this transaction with GLPI, further strengthening our growing relationship,” said Bobby Lavan, chief financial officer of Bally’s.
“The transaction will provide the company with significant, long-term liquidity, ensuring that Bally’s is best positioned to continue executing its capital and strategic plan, as well as to capitalize on future opportunities presented in the market.”
Both properties are expected to be added to the existing master lease between GLPI and Bally’s, with incremental rent of $76.3 million. The master lease has an initial term of 15 years (with 14 years remaining), followed by four five-year renewals at the tenant’s option.
Normalized rent coverage on the master lease—which includes Bally’s Dover Casino Resort, Bally’s Evansville Casino & Hotel, Bally’s Quad Cities Casino & Hotel and Bally’s Black Hawk Casinos—is expected to be doubled in the first calendar year following the completion of the acquisition of the real property assets of the Bally’s Rhode Island properties.
In connection with GLPI’s commitment to consummate the Bally’s acquisitions, it also agreed to pre-fund, at Bally’s election, a deposit of up to $200 million, which will be credited or repaid to GLPI at the earlier of closing and December 31, 2023. In addition, Bally’s will pay a $9 million transaction fee at closing.
If all third-party consents and approvals for the acquisition of Lincoln are not timely received, GLPI will instead acquire the real property assets of the Hard Rock Hotel & Casino Biloxi in Mississippi along with Tiverton for total consideration of $635 million and a combined annual rent for Tiverton and Biloxi of $48.5 million. In that event, GLPI will also have the option, subject to receipt of required consents, to acquire the real property assets of Lincoln prior to December 31, 2024 for a purchase price of $771 million and additional rent of $58.8 million.
GLPI, meanwhile, continues to expand its ownership of properties to keep pace with VICI, the other major gaming REIT, which is in the process of acquiring the other major Las Vegas gaming REIT, MGM Growth Properties. GLPI’s recent expansion moves include a planned deal with Bally’s to buy the real estate of the Tropicana Las Vegas and establish a 50-year lease and a unique deal signed with Baltimore’s Cordish Companies to buy and lease back three Cordish Live!-branded properties in Maryland and Pennsylvania.
Currently, GLPI owns a total of 55 casino properties.
