A significant transaction
Bally’s Corporation has revealed that it is in the process of selling the real estate assets of its two casinos in Rhode Island for $1bn. The company announced the news on Tuesday after it signed a binding term sheet with GLP Capital, which is the operating partnership for the Gaming and Leisure Properties Incorporated (GLPI) real estate investment trust (REIT).
Bally’s Tiverton Casino & Hotel and Bally’s Twin River Lincoln Casino Resort
The two properties are Bally’s Tiverton Casino & Hotel and Bally’s Twin River Lincoln Casino Resort. The relevant regulatory approvals will be necessary before the deal proceeds, with the Lincoln side of the deal also being subject to lender consent.
Following the completion of the transaction, Bally’s will enter into a lease back agreement with GLP Capital and continue to own, manage, and operate all of the casinos’ gaming operations.
An existing relationship
Speaking about the decision to sell the real estate assets, Bally’s chief financial officer Bobby Lavan said that it will “provide the Company with significant, long-term liquidity, ensuring that Bally’s is best positioned to continue executing its capital and strategic plan.” The funds resulting from the sale will also provide capital for potential investment opportunities in the future.
There is already an existing master lease agreement in place between Bally’s and GLPI to cover other properties. Following the deal with the Rhode Island casinos, incremental rent will be $76.3m with 14 of the 15 years of the initial master lease contract term remaining. Other Bally’s properties that are already on the master lease with GLPI include Bally’s Black Hawk Casinos, Bally’s Quad Cities Casino, Bally’s Evansville Casino & Hotel, and Bally’s Dover Casino Resort.
An alternative option
If there is no progress made in getting the relevant third-party approvals and consent for the purchase of the Lincoln real estate assets, GLPI will instead buy the real estate assets in Mississippi of the Hard Rock Hotel & Casino Biloxi, another Bally’s Corporation property.
The value of the deal involving the Biloxi and Tiverton casinos would be $635m and the total rent for Bally’s would be $48.5m. There would also then be the option for GLPI to subsequently buy the Tiverton’s real estate assets before 2025 for $771m, with rent of $58.8m initially.