Benzinga | Apr 13, 2021 07:35AM EDT

Gaming and Leisure Properties To Acquire Real Estate Assets Of Bally's Casino Property In Black Hawk, Co And The Property It Plans To Acquire In Rock Island, IL For $150M

Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) ("GLPI" or "the Company") announced today that it entered into a binding term sheet with Bally's Corporation (NYSE:BALY) ("Bally's") to acquire the real estate assets of Bally's casino property in Black Hawk, CO and the property it plans to acquire in Rock Island, IL, in a transaction which is subject to regulatory approval and expected to close later this year. Total consideration for the acquisition is $150 million. The parties expect to add the properties to the master lease they are entering into in connection with Bally's previously announced acquisitions of Tropicana Evansville and Dover Downs Hotel & Casino ("GLPI-BALY master lease") which will generate incremental rent of $12.0 million. Normalized rent coverage on the assets is expected to be 2.25x in the first calendar year post-acquisition. The acquisitions of the real estate assets of Bally's properties in Rock Island and Black Hawk are expected to close in early 2022.

In addition, Bally's has granted GLPI a right of first refusal to fund the real property acquisition or development project costs associated with any and all potential future transactions in Michigan, Maryland, New York and Virginia through one or more sale-leaseback or similar transactions for a term of seven years.

Bally's also plans to acquire both GLPI's non-land real estate assets and Penn National Gaming, Inc.'s (NASDAQ:PENN) ("Penn National") outstanding equity interests in Tropicana Las Vegas Hotel and Casino, Inc. for an aggregate cash acquisition price of $150 million. GLPI will retain ownership of the land and will concurrently enter into a 50-year ground lease with initial annual rent of $10.5 million. The ground lease will be supported by a Bally's corporate guarantee and cross-defaulted with the GLPI-BALY master lease. This transaction is expected to close in early 2022.

Both GLPI and Bally's have committed to a structure in which GLPI has the potential to acquire additional assets in sale-leaseback transactions to the extent Bally's elects to utilize GLPI's capital as a funding source for their proposed acquisition of Gamesys Group plc. The $500 million commitment provides Bally's an alternative financing commitment which at GLPI's sole discretion may be funded in the form of equity, additional prepaid sale-leaseback transactions or secured loans.

Peter Carlino, Chairman and CEO of GLPI, commented, "We are delighted to expand our relationship with Bally's through a complex transaction that is a win-win for both companies. With strong rent coverage and an accretive cap rate, the transaction again expands and diversifies our master lease through the addition of Bally's properties in Rock Island, IL and Black Hawk, CO. We are also excited to have secured rights of first refusal on potential future assets. Furthermore, our conversion of the Tropicana into an income producing ground lease solidifies the value creation that we hoped for in originally structuring the transaction with Penn National."