Bally’s Corporation, a prominent player in the gaming industry, has recently finalized a substantial sale-leaseback arrangement worth $500 million for its upcoming Bally’s Chicago casino complex. This strategic move involves a confidential real estate private equity firm, which has procured the 30-acre Tribune Publishing Center in Chicago for $200 million. Bally’s, in turn, has established a long-term ground lease for the property, reflecting its commitment to Chicago’s economic growth and community welfare.
Innovative Ground Lease Structure:
Under the innovative ground lease structure, Bally’s and the private equity investor have embarked on a long-term collaboration. The ground lease spans an initial 99-year term, supplemented by options for up to ten 20-year renewals. This arrangement provides a robust foundation for Bally’s Chicago’s development. As construction milestones are reached, the investor is set to invest an additional $300 million into the project. This innovative financing model emphasizes strategic progress and ensures a symbiotic growth trajectory.
Rent and Capitalization Rate:
The initial rental rate set within the ground lease demonstrates financial prudence, offering the investor an 8.5 percent annual capitalization rate. This rate will then adjust to 7 percent once Bally’s secures specific development entitlements and gaming approvals. To ensure the investor’s interests are maintained, the rent is subject to periodic increases tied to the Consumer Price Index (CPI). This dynamic approach reflects the parties’ anticipation of Chicago’s evolving economic landscape.
Steadfast Leadership and Vision:
Soo Kim, the Chairman of Bally’s board, underscores the significance of partnering with a renowned real estate private equity firm in Chicago. This collaboration resonates with Bally’s commitment to crafting a $1.7 billion flagship property that not only enriches the entertainment landscape but also bolsters the local economy and community. This visionary approach underscores the intersection of commerce and community upliftment.
Financial Clarity and Autonomy:
Bobby Lavan, the Chief Financial Officer of Bally’s, highlights the strategic importance of this transaction in propelling Bally’s Chicago’s development timeline. This groundbreaking agreement empowers Bally’s with ample liquidity, eliminating the need to access the capital markets. By securing a reliable real estate partnership, Bally’s reaffirms its financial stability and autonomy, which in turn propels the casino’s ambitious construction timeline.
Flexibility in Land Ownership:
The innovative lease structure grants Bally’s the option to repurchase the land from the investor, aligning with the company’s future growth aspirations. This flexibility, encompassing years four through eight of the lease term, showcases Bally’s long-term perspective and strategic adaptability. In cases where milestones aren’t met or contractual obligations are unfulfilled, the investor maintains the prerogative to prompt Bally’s to reacquire the land at a pre-specified price, further strengthening the collaborative dynamics.
Visionary Casino Complex:
Bally’s Chicago casino project encompasses an array of offerings designed to elevate the city’s entertainment landscape. The proposal outlines a grand vision, including 3,400 slot machines, 170 table games, 500 hotel rooms, six restaurants, three bars, a 3,000-seat theater, an expansive outdoor park, and a variety of additional amenities. This comprehensive approach underscores Bally’s commitment to providing a holistic and captivating experience for visitors.
Milestones and Future Prospects:
Bally’s strategic timeline envisions a two-phase launch for the Chicago casino. A temporary casino is set to open its doors in the summer of 2023, setting the stage for the grand unveiling of the permanent site in late 2025 or early 2026. The City Council’s resounding approval, reflected in a 41-7 vote in May, underscores the alignment between Bally’s visionary aspirations and Chicago’s collective growth goals.
Bally’s Corporation’s strategic sale-leaseback agreement marks a pivotal moment in the gaming industry’s evolution, seamlessly blending financial ingenuity, community collaboration, and visionary architecture. The partnership with an undisclosed real estate private equity firm underscores Bally’s commitment to creating a flagship casino that transcends mere entertainment and actively contributes to Chicago’s economic and cultural enrichment. Through innovative lease structures, judicious financial planning, and a steadfast commitment to milestones, Bally’s Chicago emerges as a symbol of progressive collaboration and boundless possibilities in the heart of the Windy City.