(Updated) Bally’s to acquire Tropicana Las Vegas from GLPI, enters other deals with the REIT

(Updated) Bally’s to acquire Tropicana Las Vegas from GLPI, enters other deals with the REIT

  • Howard Stutz, CDC Gaming Reports
April 13, 2021 8:06 PM
  • Howard Stutz, CDC Gaming Reports
  • Other

A week after finalizing its acquisition of a casino in Lake Tahoe, Bally’s Corp. announced plans to land on the Las Vegas Strip.

The Rhode Island-based company said Tuesday it will buy the Tropicana Las Vegas in a transaction with Gaming and Leisure Properties valued at $308 million.

Bally’s will pay GLPI $150 million to own and operate the Rat Pack-era hotel-casino at the south end of the Strip and $10.5 million annually to lease the 34-acre site. The rental agreement is for 50 years and is subject to increases.

In a statement, Bally’s CEO George Papanier said the expansion would support the company’s growth and development of its online and interactive business. He also said Bally’s would consider a “significant redevelopment” of the 1,470-room hotel-casino.

However, Bally’s Chairman Soo Kim, on a conference call Tuesday morning with analysts to discuss the company’s acquisition of online betting operator Gamesys PLC, said the company would take its time in redeveloping the site.

“The light financial burden of this transaction allows George and his team to go in and get the operations in order,” Kim said. “We’ll wait for the right time to redevelop it. We saw an opportunity (to acquire the property) that might not come again.”

Penn National Gaming currently operates the Tropicana and had sold the property to GLPI last April in exchange for rent credits.

“Landing a preeminent spot on the Las Vegas Strip is a key step for us,” Papanier said in a statement. “The Strip is visited by over 40 million players and guests per year, which we believe will significantly enhance Bally’s customer base and player database, as well as unlock marketing opportunities to leverage the iconic Bally’s brand.”

The transaction is expected to close in early 2022 but could happen sooner since Bally’s, Kim, and Papanier were licensed by Nevada gaming regulators inMarch in conjunction with the company’s purchase MontBleu Casino Resort in Lake Tahoe.

The Tropicana Las Vegas is on a 35-acre parcel on the corner of Tropicana Boulevard and the Strip. In addition to the hotel, the property has 50,000 square feet of casino space, a 1,200-seat performance theater, and 100,000 square feet of convention and meeting space.

Bally’s, formerly known as Twin River Worldwide Holdings, acquired its name and trademarks from Caesars Entertainment last year for $20 million. Caesars, however, retained the rights to the name Bally’s Las Vegas, which is attached to the company’s Strip resort adjacent to Paris Las Vegas.

Caesars also currently owns three additional Tropicana-branded properties in Laughlin, Nevada; Evansville, Indiana; and Atlantic City. Bally’s has a pending deal to purchase Tropicana Evansville.

GLPI involvement

Also on Tuesday, Bally’s said it entered into a sale-leaseback agreement with GLPI for its properties in Black Hawk, Colorado, and a casino Bally’s is in the process of acquiring in Rock Island, Illinois. The lease will have initial annual fixed rent of $12 million, subject to increase over time, and GLPI will pay $150 million to own the properties.

GLPI said in a separate statement the properties would be added to the master lease being created that will include Tropicana Evansville, and the Dover Downs in Delaware, which Bally’s already owns.

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.

GLPI and Bally’s have committed to a $500 million structure in which the REIT has the potential to acquire additional hotel-casino in sale-leaseback transactions, should Bally’s utilize the company as a funding source for its proposed acquisition of Gamesys Group plc.

GLPI said the 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.

“We are delighted to expand our relationship with Bally’s through a complex transaction that is a win-win for both companies,” GLPI Chairman and CEO Peter Carlino said in a statement. “We are also excited to have secured rights of first refusal on potential future assets.”

J.P. Morgan gaming analyst Joe Greff said in a note to investors the deal with Bally’s gives GLPI $22.5 million ” in incremental rent in exchange for the value of the Tropicana Las Vegas as well as a pipeline of acquisition-related growth.”

Q1 earnings

Separate from the Tropicana transaction, Bally’s also preannounced its first-quarter results for the period that ended March 31. The company its consolidated revenues were estimated at $185 million, compared to $109.1 million a year ago. The estimated cash flow was $50 million for the quarter, compared to $22.1 million in the 2020 first quarter.

“We are extremely encouraged by our trends and March numbers,” Papanier said in a statement. “Increased demand assisted by a relaxation of COVID-19 restrictions contributed to outstanding performance toward the end of the quarter, which, based on early indications, has continued into April.”

Shares of Bally’s closed at $54.35 on the New York Stock Exchange Tuesday, down $6.45 or 10.61% while GLPI shares closed at $44.68 on Nasdaq, up $1.34 or 3.09%.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.