Bally’s closes sale leaseback for Chicago casino
The company has reached a $500m sale-leaseback agreement for the future site of Bally’s Chicago.
US.- Bally’s Corporation has announced that it has closed a transaction with an unnamed real estate private equity firm for its future Bally’s Chicago casino venue. The private equity firm has bought Chicago’s 30-acre Tribune Publishing Center for $200m and Bally’s has entered into a ground lease for the property.
The ground lease has an initial 99-year term, followed by options for ten 20-year renewals. At Bally’s request, the investor will fund up to an additional $300m for Bally’s Chicago’s development through the ground lease structure as specified construction milestones are completed,
The initial rental rate under the ground lease is calculated to yield the investor an 8.5 per cent annual capitalisation rate, adjusting to 7 per cent upon Bally’s receipt of certain development entitlements and gaming approvals. The rent is also subject to periodic CPI increases.
Soo Kim, chairman of Bally’s board, said: “We are excited to be partnering with one of Chicago’s leading real estate private equity firm as we progress with building our $1.7bn flagship property in the Chicago market. We continue to demonstrate our commitment to delivering a world class entertainment facility that supports Chicago’s economy and community.”
Bobby Lavan, chief financial officer of Bally’s, said: “This transaction is an important step in our development plan for Bally’s Chicago as we continue to work towards opening the temporary casino in mid-2023. 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.”
Bally’s has the option to repurchase the land from the investor at a fixed capitalisation rate in years four through eight of the lease term. If certain milestones are not achieved or Bally’s defaults under the lease, the investor may require Bally’s to reacquire the land at a specified price.
Bally’s Chicago casino proposal includes 3,400 slots, 170 table games, 500 hotel rooms, six restaurants, three bars, a 3,000-seat theatre, an outdoor park and other amenities. Bally’s plans to launch a temporary casino in the summer of 2023 and the permanent site in late 2025 or early 2026. The City Council approved the casino in a 41-7 vote in May.
