Bally’s Completes Previously Announced Sale Lease-Back of Bally’s Kansas City and Bally’s Shreveport to Gaming and Leisure Properties

Rhea-AI Summary

Bally's (NYSE: BALY) has completed the sale lease-back of real property interests for Bally's Kansas City and Bally's Shreveport to Gaming and Leisure Properties (GLPI) in a transaction valued at $395 million. The deal includes $7 million in LP units and $388 million in cash, with $56 million reimbursement for prior capital expenditures.

The proceeds will be used to reduce the company's $620 million revolving credit facility (of which $350 million was drawn as of September 30, 2024) and fund capital expenditures. The properties have been added to a new Master Lease with an initial annual cash rent of $32.2 million, including customary escalators.

Positive

• Received $395 million from sale lease-back transaction
• Reduces debt by paying down revolving credit facility
• Gains additional liquidity for Chicago casino project
• $56 million reimbursement for prior capital expenditures

Negative

• New annual rent obligation of $32.2 million
• Reduction in owned real estate assets

Insights

Financial Analyst

This $395 million sale-leaseback transaction significantly improves Bally's balance sheet flexibility. The deal provides immediate cash relief, allowing them to pay down their revolving credit facility from $350 million to potentially zero, while maintaining operational control of the properties. The new lease structure, with annual rent of $32.2 million, represents about an 8.2% cap rate - fairly typical for gaming properties. The $56 million reimbursement for capital expenditures is particularly beneficial, essentially providing retroactive financing for past improvements. This transaction strengthens Bally's liquidity position for their Chicago casino project, though investors should note the long-term lease obligations now added to their financial commitments.

Real Estate Analyst

The addition of Kansas City and Shreveport properties to a new Master Lease with GLPI demonstrates the growing trend of gaming companies separating their real estate from operations. The cross-default provision with the existing Master Lease provides GLPI with enhanced security while allowing Bally's to potentially secure better lease terms. The $7 million in LP units component shows GLPI's commitment to maintaining alignment with Bally's success. The annual escalators in the lease structure provide built-in growth for GLPI while helping Bally's hedge against inflation. This transaction represents a win-win scenario, allowing Bally's to unlock real estate value while maintaining operational control.

Aggregate Transaction Valued at $395 Million

PROVIDENCE, R.I.--(BUSINESS WIRE)-- Bally’s Corporation (NYSE: BALY and BALY.T) ("Bally’s”) today announced that it has completed the previously announced sale lease-back of certain real property interests underlying Bally’s Kansas City and Bally’s Shreveport to Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) (“GLPI”) in a transaction valued at $395 million in the aggregate, inclusive of $7 million in LP units and $388 million in cash. The sale lease-back consideration includes approximately $56 million reimbursement of prior capital expenditures at the properties, with the balance as gross sale proceeds. Bally’s will use the proceeds from the sale lease-back transaction to pay down amounts drawn against its $620 million revolving credit facility, of which $350 million was drawn as of September 30, 2024, with the balance to be allocated for capital expenditures and general corporate purposes.

The leases for Bally’s Kansas City and Bally’s Shreveport have been added to a new Master Lease (“MLA#2”) that is cross-defaulted with Bally's existing Master Lease with GLPI. Initial cash rent for MLA#2 is $32.2 million on an annual basis, including customary annual escalators.

Marcus Glover, Executive Vice President and Chief Financial Officer of Bally’s, commented, “We are pleased to complete this transaction as it further solidifies Bally’s financial position and enhances Bally’s strong strategic partnership with GLPI. The proceeds from the monetization of the real estate underlying our Kansas City and Shreveport properties provide us with additional liquidity and flexibility to deploy capital towards our permanent casino project in Chicago and other exciting growth opportunities.”

About Bally’s Corporation

Bally’s Corporation is a global casino-entertainment company with a growing omni-channel presence, currently owning and managing 15 casinos across 10 states, a golf course in New York, a horse racetrack in Colorado, and having access to OSB licenses in 18 states. The recent acquisition of Aspers Casino in Newcastle, UK, further expands its international footprint and enhances its diverse entertainment offerings. It also owns Bally’s Interactive International, formerly Gamesys Group, a leading, global, interactive gaming operator, Bally Bet, a first-in-class sports betting platform, and Bally Casino, a growing iCasino platform.

With 10,600 employees, the Company’s casino operations include approximately 15,300 slot machines, 580 table games, and 3,800 hotel rooms. Bally’s also has rights to developable land in Las Vegas post the closure of the Tropicana.

Upon completion of the announced merger with The Queen Casino & Entertainment Inc. (“Queen”), the above portfolio is expected to be supplemented with four additional casinos across three states, one of which will be an additional state that expands Bally’s jurisdiction of operations to include the state of Iowa. Queen will also add over 900 employees, and operations that currently include approximately 2,400 slot machines, 50 table games, and 150 hotel rooms to the Bally’s portfolio. Bally’s will also become the successor of Queen’s significant economic stake in a global lottery management and services business through its investment in Intralot S.A. (ATSE: INLOT).

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may generally be identified by the use of words such as “anticipate,” “believe,” “expect,” “intend,” “plan” and “will” or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. As a result, these statements are not guarantees of future performance and actual events may differ materially from those expressed in or suggested by the forward-looking statements. Any forward-looking statement made by Bally’s in this press release, its reports filed with the Securities and Exchange Commission (“SEC”) and other public statements made from time-to-time speak only as of the date made. New risks and uncertainties come up from time to time, and it is impossible for Bally’s to predict or identify all such events or how they may affect it. Bally’s has no obligation, and does not intend, to update any forward-looking statements after the date hereof, except as required by federal securities laws. Factors that could cause these differences include those included in Bally’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other reports filed by Bally’s with the SEC. These statements constitute Bally’s cautionary statements under the Private Securities Litigation Reform Act of 1995.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241217433694/en/

Investor Contacts

Marcus Glover

Executive Vice President and Chief Financial Officer

401-475-8564

IR@ballys.com

JCIR

Joseph Jaffoni

James Leahy

Richard Land

212-835-8500

baly@jcir.com

Source: Bally’s Corporation

FAQ

How much did Bally's (BALY) receive from the Kansas City and Shreveport sale lease-back?

Bally's received $395 million in total, consisting of $388 million in cash and $7 million in LP units.

What will Bally's (BALY) use the sale lease-back proceeds for?

The proceeds will be used to pay down their revolving credit facility, fund capital expenditures, and support general corporate purposes, including the Chicago casino project.

What is the annual rent for Bally's (BALY) new Master Lease with GLPI?

The initial annual cash rent for the new Master Lease (MLA#2) is $32.2 million, with customary annual escalators.

How much of Bally's (BALY) revolving credit facility was drawn as of September 2024?

$350 million of the $620 million revolving credit facility was drawn as of September 30, 2024.

How much capital expenditure reimbursement did Bally's (BALY) receive in the sale lease-back deal?

Bally's received approximately $56 million in reimbursement for prior capital expenditures at the properties.