Bally’s secures funding from Gaming and Leisure Properties

Bally’s (BALY) announced it has entered into a binding term sheet for a strategic construction and financing arrangement with Gaming and Leisure Properties (GLPI) including funding to complete the construction of Bally’s permanent casino development in the City of Chicago. An affiliate of Gaming and Leisure Properties has reached an agreement to acquire the real estate underlying the project and has agreed to amend the existing land lease via a new master lease agreement with Bally’s Chicago as tenant, where the rent will be amended to $20M per annum, subject to annual escalators, reflecting the purchase price paid by GLPI for the land. The Chicago MLA can provide up to additional $940M of construction financing funding for the project’s “hard costs” through monthly draws, subject to certain conditions and requisite approvals. The Chicago MLA will have an initial term of 15 years, with a specified number of successive options for renewal. Amounts funded by GLPI under the construction funding facility will result in additional rent based upon an 8.5% cap rate for the incremental amounts funded. The binding term sheet also provides for Gaming and Leisure Properties to acquire and lease back certain real property interests underlying Bally’s Kansas City and Bally’s Shreveport for $395M in total consideration, in exchange for $32.2M in initial annual rent with annual escalators consistent with Bally’s existing master lease agreement with GLPI. Bally’s expects to use all the proceeds from the sale leaseback transactions to repay amounts currently drawn under its $620M revolving credit facility and for general corporate purposes. Bally’s also expects to amend its contribution agreement with Gaming and Leisure Properties and has reiterated its intention to sell and lease back its Twin River Lincoln property to GLPI prior to the end of 2026 for $735M, with related initial annual rent of $58.8M. As a part of the amendment, GLPI will be granted a right to call the Lincoln transaction beginning in October 2026, coinciding with the scheduled maturity of Bally’s revolving credit facility. All such transactions are subject to required regulatory approvals. The Chicago MLA and construction funding arrangement will be obligations of Bally’s Chicago, as tenant. The arrangement is expected to contain customary representations by Bally’s Chicago and is expected to contain funding conditions, in each case, which are customary and reasonable for large scale casino resort developments of this type. Reflecting these transactions, GLPI will provide in aggregate up to $2.07B of financing to Bally’s, thereby further cementing the companies’ long-term strategic alliance. GLPI has a strong history of successful development experience and construction oversight of casino resort projects, and Bally’s looks forward to benefitting from their experience and expertise as a strategic stakeholder for the project. Bally’s expects the new funding and development agreements with Gaming and Leisure Properties, combined with certain proceeds from the expected sale leaseback transactions, the planned, previously announced, initial public offering of Bally’s Chicago and Bally’s financial resources including cash flows from operations, will fully fund the development expenditures necessary to complete the project. Bally’s Chicago announced its intention to build the 500-unit hotel tower concurrent with its casino entertainment complex by locating the hotel tower on the southern end of the development site. Originally intended for the northern end, the plan was revised due to potential risks of damage to portions of Chicago’s underground infrastructure. The new plans resolve those concerns, and Bally’s Chicago has re-imagined the new integrated complex across a single phase of construction.