Penn National spinoff GLPI to acquire real estate assets of two Bally casinos in Rhode Island for $1 billion
Gaming and Leisure Properties Inc., a spin-off of Penn National Gaming Inc., acquires two Rhode Island casino properties – Bally’s Twin River Lincoln Casino Resort and Bally’s Tiverton Casino & Hotel – of Bally’s Corp. for 1 billion dollarsthe parties announced on Tuesday.
The Wyomissing-based real estate investment trust (REIT) has entered into a binding term sheet with Bally’s to acquire the real estate assets, subject to customary regulatory approvals, with the Lincoln also subject to lender consent. Under the terms of the transaction, Bally’s will immediately lease both properties and will continue to own, control and manage all gaming operations at the facilities..
The total consideration for the acquisition is $1.0 billion and GLPI expects the transaction to close by the end of 2022, according to a press release. The company intends to finance the transaction through a combination of debt, equity and PO units. The transaction is expected to close at a capitalization rate of 7.6%.
Both properties are expected to be added to Bally’s existing head lease between the Penn National spin-off and Bally’s, with an additional rent of $76.3 million. The lease has an initial term of 15 years (with 14 years remaining), followed by four five-year renewals at the tenant’s option.
Interior picture of Bally's Tiverton venue
Coverage of normalized rents 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 – expected to be 2.0x in the first calendar year following the acquisition of the real estate assets of Bally’s Rhode Island Properties.
“GLPI is delighted to extend our relationship with Bally’s,” commented Peter Carlino, President and CEO of GLPI. “Bally’s assets in Rhode Island have provided exceptionally strong performance throughout their lifetime thanks to their attractive location near Providence, while planned capital investments in Lincoln offer healthy upside potential. »
The REIT sees an opportunity in this transaction given that the Bally properties are “currently the only two gambling facilities in Rhode Island” and the deal would diversify GLPI’s portfolio as the state becomes the company’s 18th U.S. jurisdiction.
” Above all, this transaction comes with a conservative rent and a head lease structure that provides GLPI with material downside protection while providing our business with an opportunity for additional long-term growth,” said Carlino.
Bally’s Twin River Lincoln Casino Resort
“Bally’s is delighted to complete this transaction with GLPI, further strengthening our growing relationship,” added Bobby Lavan, Bally’s Chief Financial Officer. “The transaction will provide the company with significant long-term liquidity.ensuring that Bally’s is best placed to continue to execute its investment and strategic plan, as well as to capitalize on future opportunities presented to the market. »
As part of the company’s commitment to complete the acquisitions, GLPI announced that it has also agreed to pre-fund, upon election of Bally, a deposit of up to $200 millionwhich will be credited or refunded to the REIT at the earliest between closing and December 31, 2023, “in either case, with transaction fees of $9 million payable at closing”.
If all third party approvals for the acquisition of the Lincoln property are not received in a timely manner, GLPI has stated that it will then acquire the real estate assets of the Hard Rock Hotel & Casino Biloxi in Mississippi, as well as Bally’s Tiverton Casino. & Hotel.for a total rent of $48.5 million, at the same combined capitalization rate of 7.6% with a total payment of $635 million.
Hard Rock Hotel & Casino Biloxi in Mississippi
“In this case, GLPI will also have the option, subject to obtaining the required consents, to acquire the real estate assets of Lincoln before December 31, 2024, for a purchase price of $771 million and an additional rent of $58.8 million,” a press release explains.
Gaming and Leisure Properties was formed in 2013 as a spin-off from Penn National Gaming and bills itself as the nation’s first gaming REIT. The company owns more than 50 casino properties, all of which are leased to other companies. Tenants include Penn National Gaming, Caesars Entertainment, Boyd Gaming Corp., Casino Queen and Cordish Cos.
In March of this year, GLPI completed the acquisition of both Pennsylvania Live! Cordish Casino Properties in deal valued at around $674 million. The Penn National spin-off acquired the land and real estate assets of Live! Casino & Hotel Philadelphia and Live! Casino Pittsburgh.