Bally’s Chicago secures grounding as $200m Tribune purchase finalised
Bally’s has purchased the Tribune Publishing Center for $200m to become the location of Bally’s Chicago.
Closing the transaction, and pursuant to terms of the parties’ agreement, Bally’s entered into a ground lease with the Chicago-based private equity firm to lease back the land.
The lease will include an initial 99-year term, followed by 10 separate 20-year renewals at Bally’s option.
“We are excited to be partnering with one of Chicago’s leading real estate private equity firms as we progress with building our $1.7bn flagship property in the Chicago market,” stated Soo Kim, Chairman of the Board of Bally’s.
“We continue to demonstrate our commitment to delivering a world class entertainment facility that supports Chicago’s economy and community.”
As part of the transaction, as specified construction milestones are completed at Bally’s request, the investor will fund up to an additional $300m 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 per cent annual capitalisation rate, adjusting to a seven per cent annual capitalisation rate upon the receipt by Bally’s of certain development entitlements and gaming approvals.
In addition to the above, the rent is also subject to periodic CPI increases.
Bobby Lavan, Chief Financial Officer of Bally’s, added: “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.”
Finally, Bally’s has the option to repurchase the land from the investor at a fixed capitalisation rate during the fourth year through to the eighth.
However, if certain milestones are now achieved, or Bally’s defaults on the lease, the investor may require Bally’s to reacquire the land at a specified price.