Gaming And Leisure Properties Strengthens Portfolio with $1.5 Billion Deal Involving Bally’s

Gaming and Leisure Properties Inc. (GLPI), a real estate investment trust (REIT) specializing in gaming facilities, announced a huge deal with Bally’s Corporation on July 12. The pact, valued at $1.585 billion, involves a combination of sale-leaseback and development funding agreements, further solidifying GLPI’s position in the gaming industry.

The core component of the agreement involves the sale-leaseback of Bally’s Kansas City and Bally’s Shreveport to GLPI. Under this arrangement, GLPI will acquire ownership of the real estate assets associated with both casinos.

These transactions will be accretive to our financial results, delivering an 8.3% blended initial cash yield and are structured with conservative rent coverage. This multi-faceted deal is another example of our ability to be innovative in our approach to creating opportunities for our shareholders in conjunction with our best-in-class regional gaming tenants in what remains a volatile interest rate and challenging transaction environment.

GLPI Chairman and CEO Peter Carlino

Bally’s will then lease the properties back from GLPI, ensuring continued operation under the Bally’s brand. This strategy allows Bally’s to unlock capital from their existing assets for further endeavors while maintaining control over their core business.

The financial details of the sale-leaseback haven’t been disclosed publicly. However, the transaction is expected to generate a blended 8.3% initial cash yield for GLPI, demonstrating the ongoing profitability of these established casino properties.

Fueling growth with development funding

Beyond the sale-leaseback agreements, the deal also includes development funding provided by GLPI to Bally’s. The exact amount of this funding and the specific projects it will support haven’t been revealed. However, GLPI has stated that the funding will go towards construction hard costs, potentially up to $940 million, for Bally’s ongoing development initiatives.

This aspect of the deal highlights GLPI’s confidence in Bally’s future growth prospects. By providing development funding, GLPI gains a vested interest in Bally’s success and potentially benefits from the increased value of the casinos upon completion of the development projects.

The agreement offers upside for both GLPI and Bally’s. GLPI expands its portfolio of income-generating properties with the addition of established casino locations. The blended 8.3% initial cash yield indicates a strong return on investment for GLPI, further strengthening its position as a leading REIT in the gaming industry.

For Bally’s, the deal provides immediate access to capital through the sale-leaseback agreements. These funds can be used for debt reduction, strategic acquisitions, or further investments. Additionally, the development funding from GLPI allows Bally’s to continue pursuing growth initiatives without significant upfront capital expenditures.

Solidifying a strong industry presence

The properties in the deal are key targets for revenue growth. Bally’s Kansas City, located on the Missouri River, offers a vibrant entertainment experience. Following a recent $50 million renovation, the property boasts a spacious casino floor with a variety of slots, table games, and video poker options.

Bally’s Shreveport provides a one-stop shop for entertainment. The property offers a casino with slots, table games, a poker room, and a Bally Bet Sportsbook for sports fans.

Bally’s Lincoln in Rhode Island recently underwent a significant expansion. The property now features a vast casino floor with a plethora of slots and table games. Sports enthusiasts can enjoy the Sportsbook Bar & Grill or place bets at the racebook.

Bally’s Chicago is a behemoth under construction. This future destination will feature a massive casino floor, a luxurious 500-room hotel, and a variety of restaurants and bars. Bally’s currently operates a temporary casino, which hasn’t been impressing the industry with its performance. It had $62.8 million in revenue for the first six months of the year, which is just a fraction of initial projections.