Bally’s signs $1bn sale leaseback deal for Rhode Island casinos

Bally’s Corporation has agreed to sell two more casino properties to Gaming and Leisure Properties (GLPI) in a sale-leaseback agreement worth $1bn.

The Bally’s Twin River Lincoln Casino Resort and Bally’s Tiverton Casino & Hotel properties in Rhode Island are being acquired by GLP Capital, the operating partnership of the gaming real estate investment trust.

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. It said the deal is subject to customary regulatory approvals, with Lincoln also subject to lender consent.

Bobby Lavan, chief financial officer of Bally’s, said: “Bally’s is excited to enter into this transaction with GLPI, further strengthening our growing relationship. 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 Bally’s master lease between GLPI and Bally’s, with incremental rent of $76.3m. The master lease – signed last year – has an initial term of 15 years followed by four five-year renewals at the tenant’s option.

Bally’s said 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 2.0x in the first calendar year following the completion of the acquisition of the real property assets of Bally’s Rhode Island properties.

In connection with GLP’s commitment to consummate the Bally’s acquisitions, it also agreed to pre-fund, at Bally’s election, a deposit of up to $200m, which will be credited or repaid to GLP at the earlier of closing and the end of 2023. In addition, Bally’s will pay a $9m transaction fee at closing.

The partners said that if all third-party consents and approvals for the acquisition of Lincoln are not timely received, then GLP will instead acquire the real property assets of the Hard Rock Hotel & Casino Biloxi in Mississippi along with Tiverton for total consideration of $635m and a combined annual rent for Tiverton and Biloxi of $48.5m. In that event, GLP will also have the option, subject to receipt of required consents, to acquire the real property assets of Lincoln prior to the end of 2024 for a purchase price of $771m and additional rent of $58.8m.

GLPI, which was founded in 2013, currently has a portfolio consisting of 55 gaming and related facilities and amenities across 17 states.

Author: Raymond Fleming