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Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) shares were trading more than 3% lower after-hours after announcing it has entered into a binding term sheet with Bally’s Corp (NYSE:BALY) to acquire the real property assets of Bally’s Twin River Lincoln Casino Resort and Bally’s Tiverton Casino & Hotel for $1 billion. Bally’s Corporation shares were up more than 4% after-hours following the announcement.
Gaming and Leisure Properties, Inc. plans to fund the transaction through a mix of debt, equity, and OP units, and expects the transaction to be accretive to earnings upon closing in late 2022.
According to the terms of the transaction, Bally’s Corporation will immediately lease back the properties and continue to own, control, and manage all the gaming operations of the facilities on an uninterrupted basis. Both properties will be added to the existing Bally’s Master Lease (14 years remaining, followed by four five-year renewals at the tenant’s option) between the two companies, with incremental rent of $76.3 million.
In case all third-party consents and approvals for the acquisition of Bally’s Twin River Lincoln Casino Resort are not timely received, Gaming and Leisure Properties, Inc. will instead acquire the real property assets of the Hard Rock Hotel & Casino Biloxi in Mississippi along with Bally’s Tiverton Casino & Hotel, for a total rent of $48.5 million, at the same combined 7.6% capitalization rate with total payment of $635 million. Furthermore, Gaming and Leisure Properties, Inc. have the option, subject to receipt of required consents, to acquire the real property assets of Lincoln prior to December 31, 2024, for a purchase price of $771 million and additional rent of $58.8 million in case the above-mentioned event takes place.
