WYOMISSING, Pa. - Gaming and Leisure (NASDAQ:GLPI) Properties, Inc. (NASDAQ:GLPI), a real estate investment trust (REIT) specializing in casino properties, has announced a series of transactions with Bally’s Corporation (NYSE: BALY) involving the acquisition of real estate assets and construction financing arrangements totaling approximately $1.585 billion. The deal includes properties in Kansas City, Shreveport, and the financing for a new flagship casino in Chicago.
GLPI will purchase the real estate assets of Bally’s Kansas City and Bally’s Shreveport for $395 million. These properties will enter into a new master lease agreement with Bally's, generating initial cash rent of $32.2 million, which is an 8.2% initial cash capitalization rate. The company anticipates the completion of these transactions by Q4 2024, subject to regulatory and other customary approvals.
Moreover, GLPI is set to fund construction costs up to $940 million for Bally's Chicago Casino Resort, with Bally’s covering the remaining expenses. The total projected cost for the Chicago project is around $1.8 billion, including construction, land, and rent.
GLPI also plans to acquire the land for Bally's permanent Chicago casino for approximately $250 million. The investment in the Chicago property is expected to yield an 8.4% initial cash investment return upon stabilization of operations.
The transactions are structured to be funded through a combination of cash on hand, operational cash flow, credit facilities, and capital market activities. They are contingent on several conditions, including regulatory approvals and the finalization of Bally's capital structure following its proposed acquisition by Standard General.
Peter Carlino, Chairman and CEO of GLPI, expressed confidence in the deal's benefits for shareholders, citing an 8.3% blended initial cash yield and conservative rent coverage. He highlighted the expansion and diversification of GLPI's property portfolio, as well as the addition of a downtown asset in Chicago.
Soo Kim, Chairman of Bally’s, emphasized the importance of the Chicago market and the anticipated flagship casino's role in the company's growth. The Chicago property, scheduled to open in late 2026, will feature a casino, a 500-room hotel, and additional amenities, including a riverwalk and public green space.
The agreement also includes an adjustment to the purchase option for Bally's Lincoln, reducing the price from $771 million to $735 million and increasing the initial cash yield from 7.6% to 8.0%. Additionally, GLPI has secured a call right for the asset starting October 1, 2026.
This news is based on a press release statement from Gaming and Leisure Properties, Inc.
In other recent news, Bally's Corporation has reported a 3% growth in its first-quarter revenues to $618 million, driven by a significant increase in its North America Interactive segment.
Despite a dip in International Interactive revenues, the company is progressing with key developments, including the establishment of a permanent casino in Chicago and the introduction of online sports betting and iGaming in several markets.
Bally's continues to maintain its 2024 revenue guidance of $2.5 billion to $2.7 billion, and anticipates an adjusted EBITDAR between $655 million and $695 million.
The Casinos & Resorts segment recorded a 4% increase, while the North America Interactive segment saw a substantial 70% growth. On the other hand, the International Interactive segment experienced a minor 4% decline, primarily due to performance outside the UK.
Bally's plans to inaugurate a permanent casino in Chicago by late September, and is set to demolish the Tropicana in Las Vegas in October.
The company is also focusing on expanding its presence in the UK and launching online sports betting. Notably, the iGaming market performed well in New Jersey, Pennsylvania, and Rhode Island. However, Bally's anticipates a 2024 adjusted EBITDA loss of approximately $30 million for the North America Interactive segment, which is expected to improve as the year progresses.
InvestingPro Insights
In light of the recent transactions between Gaming and Leisure Properties, Inc. and Bally’s Corporation, investors may find the financial metrics and market performance of Bally's particularly pertinent. Bally’s Corporation has been navigating a complex financial landscape, as evidenced by its InvestingPro Data metrics. The company's market capitalization stands at $511.32 million, reflecting the market's current valuation of the company. Despite a notable revenue growth of 7.05% over the last twelve months as of Q1 2024, Bally's is grappling with a negative P/E ratio of -1.2, which worsened to -1.85 when adjusted for the same period. This indicates that the company has been unprofitable over the last year. Additionally, the company has experienced a significant return over the last week, with a 1 Week Price Total Return of 8.51%.
InvestingPro Tips shed light on some strategic moves and challenges faced by Bally's. The company's management has been actively engaging in share buybacks, which could be a signal of confidence in the company's future or an attempt to support the stock price. However, Bally's is also dealing with a significant debt burden and a cash burn that raises concerns about its financial sustainability. Furthermore, two analysts have revised their earnings expectations downwards for the upcoming period, which may influence investor sentiment. For investors looking for more comprehensive analysis, InvestingPro offers additional insights—there are 11 more InvestingPro Tips available for Bally's Corporation at https://www.investing.com/pro/BALY.
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