Posted on: August 29, 2023, 05:14h.
Last updated on: August 29, 2023, 05:14h.
Gaming and Leisure Properties (NASDAQ: GLPI) announced today that it is investing $100 million in the real estate associated with the development of the Hard Rock Casino in Rockford, Illinois. This move strengthens GLPI’s portfolio in the sports betting industry.
The gaming real estate investment trust (REIT) completed the acquisition of the property from an affiliate of 815 Entertainment, LLC. GLPI and 815 Entertainment have agreed on an initial lease term of 99 years at an annual rate of $8 million, with 2% inflation escalators.
GLPI will also have the right of first refusal on the building improvements of the Hard Rock Casino in Rockford if there is a future decision to sell them once completed,” according to a statement from the company.
Hard Rock Rockford is one of the six new gaming venues approved by Illinois lawmakers in 2019 to strengthen the state’s financial situation. It is the first venue in this group to begin construction and is currently operating at a temporary location.
Gaming and Leisure Expanding Tenant Diversification
Geographic and tenant diversification is a crucial aspect when evaluating gaming REITs such as GLPI and VICI Properties (NYSE: VICI).
GLPI’s largest tenant is Penn Entertainment, and it also serves other clients including Bally’s, Boyd Gaming, Caesars Entertainment, and Cordish Cos. With the acquisition of the Rockford casino’s real estate, GLPI now adds the financially strong Seminole Tribe of Florida, which controls Hard Rock International, as a tenant in the tribal gaming industry.
“The Hard Rock brand is renowned worldwide and will enhance the new casino’s appeal as a tourist destination and entertainment venue. Hard Rock, as the property manager and equity investor in 815 Entertainment, brings its world-class management team to the project,” said GLPI CEO Peter Carlino in a statement.
Currently, GLPI owns the property assets of 59 gaming venues across 18 states. The addition of the Hard Rock Casino in Rockford will make it the sixth venue in Illinois to be part of the REIT’s portfolio.
GLPI Also Provides Financing
The Hard Rock Casino Rock project is expected to cost $358 million, with $120 million already invested. GLPI is offering $150 million in financing through a senior secured delayed draw term loan. Any funds drawn from this line will carry a 10% interest rate.
“The term loan has a draw period of up to 1 year and a maximum outstanding period of up to 6 years (5-year initial term with a 1-year extension),” added the REIT.
The Hard Rock Casino, set to open in September 2024, will span 177,000 square feet, with approximately 60,000 square feet dedicated to gaming space. The casino is expected to offer 50 table games, 1,250 gaming machines, a retail sportsbook, and an online sports betting platform. Illinois is the second-largest sports wagering market in the US, right after New York.