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Bally’s Buys Tropicana Las Vegas From GLPI for $150m

Bally’s Buys Tropicana Las Vegas From GLPI for $150m

Tropicana Las Vegas

Bally’s and GLPI have exchanged on line casino properties, highlighted by Bally’s acquisition of the Tropicana Las Vegas on the south finish of the Strip. [Image:]

GLPI nonetheless owns the land

In a deal that the corporate’s chief govt describes as “advanced,” Gaming and Leisure Properties, Inc. (GLPI) has agreed to promote the Tropicana Las Vegas Lodge and On line casino to Bally’s Company for $150m. The transaction contains simply the non-land actual property; GLPI will preserve the land on which the Tropicana is constructed. Bally’s can also be taking up Penn Nationwide’s remaining fairness curiosity within the Tropicana. Penn Nationwide is the Trop’s present operator.

With GLPI holding on to the land, Bally’s will enter right into a 50-year lease for its new property, paying GLPI $10.5m per yr. This leaseback association has been the norm in on line casino transactions over the previous couple of years, although in most different circumstances, it’s the property vendor paying hire for the on line casino with the intention to proceed working it. Right here, Bally’s will personal the on line casino, however pay hire for the land. It’s anticipated that Bally’s will even function the Tropicana.

Touchdown a preeminent spot on the Las Vegas Strip is a key step for us.”

Bally’s president and CEO George Papanier hit on one of the vital enticing components of the acquisition, saying: “Touchdown a preeminent spot on the Las Vegas Strip is a key step for us,” including that the corporate will look into “important redevelopment of the property.”

GLPO chairman and CEO Peter Carlino known as the deal a “win-win,” including: “….our conversion of the Tropicana into an earnings producing floor lease solidifies the worth creation that we hoped for in initially structuring the transaction with Penn Nationwide.”

Bally’s promoting different casinos to GLPI

However the Tropicana Las Vegas will not be the one on line casino concerned within the transaction, therefore why Carlino known as it “advanced.” Bally’s is sending casinos again the opposite route, promoting the true property belongings of its casinos in Black Hawk, Colorado and Rock Island, Illinois to GLPI. The full gross sales value for the properties is $150m, so it’s successfully an excellent swap from a {dollars} standpoint. In reality, in Tuesday’s press release, Bally’s mentioned that it’s going to not should pay any money at closing.

Bally’s will proceed to function the casinos, renting the properties from GLPI for $12m per yr, a determine which can enhance down the street.

Moreover, Bally’s has given GLPI the correct of first refusal to fund any of Bally’s efforts to purchase or develop properties in Michigan, Maryland, New York and Virginia. Any deal would concerned a seven-year leaseback association.

On prime of all that, if Bally’s makes use of any of GLPI’s cash to pay for its purchase of Gamesys Group, GPLI might probably purchase “further belongings.”

GLPI purchased Tropicana final yr

Tuesday’s announcement comes only a yr after Gaming and Leisure Properties bought the Tropicana Las Vegas from Penn National Gaming for $307.5m. Penn Nationwide continued to function the Tropicana in a leaseback association, although in a twist, the corporate accepted fee within the type of a few half a yr of hire credit.

Per the phrases of the sale, Penn Nationwide would function the Trop for 2 years or till it’s bought once more, which has clearly now occurred. As a lot as 75% of the gross sales proceeds over $308m would go to Penn Nationwide, however the gross sales value was solely about half that.

That $308m determine is attention-grabbing, as Bally’s values the whole transaction with GLPI at precisely $308m. That is virtually actually not a coincidence, probably structured in such a means, notably if no money exchanges arms, in order to profit GLPI with reference to taxes. Ultimately, it seems like GLPI’s buy of Bally’s was an extended play to achieve an income-producing property whereas buying different casinos.

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