In an effort to help the seller reduce debt, Bally's is selling the real estate holdings of its Twin River Lincoln Casino Resort in Lincoln, Rhode Island to Gaming and Leisure Properties (NASDAQ: GLPI) for $735 million.
Both of the state's land-based gaming establishments are operated by the regional casino operator. Bally's was successful in obtaining an extension of a $460 million revolving credit facility to October 1, 2028, thanks to the sale-leaseback (SLB) on the Lincoln site. The first due date for that debt was set for October 1, 2026. The gambling corporation also came to an agreement with creditors to reduce debt through the Lincoln deal.
"Bally’s has agreed with its RCF lenders, that upon completion of the SLB Transaction, Bally’s will take actions to reduce secured debt and credit facilities outstanding by an aggregate amount of $500 million, with first a permanent reduction of outstanding RCF commitments by 7.5%, to approximately $574 million,” according to a statement.
Bally's, which is owned by the hedge fund Standard General, stated that it will be able to proceed with the real estate sale if it has approval from the holders of $630 million in term loans, which represents one-third of the operator's outstanding balance.
Due to an agreement the operator made with GLPI in 2022 to sell the real estate of its two casinos in Rhode Island to the real estate investment trust (REIT), Bally's plan to sell the Twin River Lincoln property is not shocking.
That agreement gave GLPI the right to purchase Twin River Lincoln by September 30, 2026. One of the main reasons for ratings agencies' negative opinions on Bally's is the way the transaction was carried out; if there are problems that prevent the sale, the seller's financial flexibility may be limited, which could lead to a ratings fall.
Neither Bally's nor GLPI made any predictions about whether the gaming company's creditors would accept the agreement, but they might be forced to since the money infusion will significantly reduce Bally's remaining debts.
“If the SLB Transaction is consummated, based upon the agreed amendments with Bally’s RCF lenders, and if similarly ratified by Bally’s term loan lenders, the combined outstanding balances of Bally’s term loans and first lien notes is expected to be reduced from approximately $2.4 billion to approximately $1.94 billion,” according to the press release.
Although Bally's still owns some of the real estate on which some of its casinos are located, GLPI has become the former's main landlord as a result of a series of sale-leaseback agreements that the two parties have entered into in recent years.
Bally's $1.7 billion Chicago integrated resort, the operator's most expensive project to date, is primarily financed by the REIT.
Because the deals enable the sellers to profit from their real estate holdings while retaining operational control of the properties in question, sale-leasebacks are common in the gambling sector. The drawback is that in exchange for upfront money, the sellers are assuming long-term obligations in the form of drawn-out lease agreements. Bally's is expected to pay GLPI $58.8 million a year in rent for the Lincoln building, excluding escalators.
