Bally's Enters Into Land Deal For Chicago CasinoCasino To Come With $1.7B Price Tag |
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Bally’s Corporation announced that it has closed a transaction with one of Chicago’s leading real estate private equity firms. For $200 million, the investor acquired the approximately 30-acre Tribune Publishing Center site on which Bally’s Chicago will be built.
The investor was not named in the announcement.
Bally’s entered into a ground lease with the investor to lease back the land. The ground lease includes an initial 99-year term, followed by ten separate 20-year renewals at Bally’s option.
As part of the transaction, as specified construction milestones are completed, at Bally’s request, the investor will fund up to an additional $300 million for Bally’s Chicago’s development through the ground lease structure.
The initial rental rate under the ground lease is calculated to yield the investor an 8.5% annual capitalization rate, adjusting to a 7.0% annual capitalization rate upon the receipt by Bally’s of certain development entitlements and gaming approvals. The rent is also subject to periodic CPI increases.
Soo Kim, Chairman of the Board of Bally’s, said: “We are excited to be partnering with one of Chicago’s leading real estate private equity firms as we progress with building our $1.7 billion flagship property in the Chicago market. We continue demonstrating 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 can repurchase the land from the investor at a fixed capitalization rate during years four through eight of the lease term. In addition, 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 comes at a $1.7 billion price tag.
Bally’s Chicago will include 3,400 slots and 170 table games. The project also provides Bally’s with the exclusive right to operate a temporary casino for up to three years while the permanent casino is constructed.
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