Bally’s Corporation, one of the world’s leading entertainment companies, announced a new deal with a leading Chicago real estate private equity firm. As agreed by the two parties, the investor paid $200 million to acquire the 30-acre Tribune Publishing Center site.
Bally’s Corporation Reached an Agreement with a Notable Investor
The property in question is the site where Bally’s plans to build its upcoming Chicago property. Under the agreement, the investor will lease back the land to Bally’s after the sale. The ground lease has an initial 99-year term. Following the deal’s expiration, it can be renewed by ten separate 20-year renewals, potentially allowing Bally’s to use the property for 200 more years.
The initial rental rate will provide the investor with a capitalization rate of 8.5% a year, adjusting to a 7% capitalization rate upon the receipt by Bally’s of certain developments and approvals. Furthermore, the rent may be periodically increased.
The investor also agreed to provide additional funding for the development of Bally’s Chicago venture once certain construction milestones are met. The investor will fund $300 million through the ground lease once the operator fulfills the specified objectives.
Lastly, the agreement allows Bally’s to repurchase the land from the investor. This potential deal has a fixed capitalization rate throughout years four through eight of the lease term. Bally’s may also be forced to repurchase the land at a fixed price if it fails to achieve certain milestones discussed in the terms of the deal.
The Deal Will Provide Bally’s with the Funding It Needs
Bally’s chief financial officer, Bobby Lavan, spoke about the agreement. He called the current transaction “an important step” in the company’s development plans for the Chicago property. Lavan added that the company hopes to open the $1.7 billion casino in mid-2023 if everything goes as planned. He concluded that the new agreement will provide the operator with the money needed to fund the venue without cutting corners.
With this new real estate partnership, Bally’s has ample liquidity on hand to fund Bally’s Chicago without needing to access the capital markets.Bobby Lavan, CFO, Bally’s Corporation
Soo Kim, Bally’s chairman, said that his team is excited to shake hands with one of the biggest real estate private equity firms in the city. He believes that this agreement shows how committed Bally’s is when working on world-class facilities.
We continue to demonstrate our commitment to delivering a world-class entertainment facility that supports Chicago’s economy and community.Soo Kim, chair, Bally’s Corporation
Bally’s Chicago is a huge venue that the company hopes to open in 2023. It will be a huge entertainment center featuring food corners, art and culture exhibitions and premium gambling experiences. The venue will offer a vast variety of gaming options for visitors, including a plethora of slots and table games.
In other news, Bally’s recently acquired a property on the Las Vegas Strip.