The Nevada Gaming Control Board finally unanimously approved the $308 million transaction. The Tropicana currently sits on a lot situated on the southeast corner of Tropicana Avenue and Las Vegas Boulevard. The casino property boasts 1,470 guest rooms and offers more than 50,000 square feet of casino space.
Bally’s corporation agreed to purchase Tropicana Las Vegas last year from Gaming and Leisure Properties. At the time, the transaction was estimated to cost approximately $308 million with the purchase price for Tropicana’s non-land property being set at $150 million.
In addition to the purchase agreement, Bally’s also agreed to lease the land underlying the casino property from Gaming and Leisure Properties for an initial period of 50 years. At present, Penn Entertainment is in charge of the massive casino property.
During the 50 years, the annual rent will be $10.5 million subject to upsurges over the next few years. Bally’s and Gaming and Leisure Properties have also entered into a sale and leaseback transaction which will impact various properties that belong to Bally’s including its Black Hawk, CO, and Rock Island casino properties.
This will be a cash purchase worth an estimated $150 million payable by Gaming and Leisure Properties. The lease will also have an initial fixed rent of approximately $12 million. This transaction is expected to benefit Bally’s shareholders greatly as it is accretive in nature.
The transaction will also give Bally’s Corporation a preeminent spot on the Las Vegas Strip, which will only help the Tropicana brand grow further. Indeed, more than 40 million punters and visitors go to the Strip every year, which will help Bally’s brand to attract a much larger customer and player base. This recent expansion will also go a long way in helping Bally’s online and interactive gambling business.
To ensure that Bally’s stands out in the competitive Vegas gambling market, the brand will do its best to explore considerable re-development of the newly acquired property, which should help to further enhance the casino property’s profile.
With the transaction approved by the Nevada Gaming Board, Bally views the Tropicana as its flagship casino property on the West Coast region. According to the President of Bally’s George Papanier, the brand will spend 90-180 days coming up with a marketing strategy aimed at enhancing the brand’s presence and performance on the Strip.
Bally’s is one of the biggest and most recognizable casino brands in the country with more than 17 casino properties distributed across at least 11 states. Bally’s already operates a profitable online casino brand in New Jersey in conjunction with Sinclair Media. As such, the Bally’s brand will finally introduce its first-class interactive technology to punters on the Strip.
When Bally’s takes over all the operations at Tropicana, the initial changes that will be made will be minimal. The most recognizable change will be the signage, as well as the rewards loyalty program, which currently utilizes the MyChoice Program by Penn. With the acquisition now complete, all the executives and employees at Tropicana will be retained with their pay unaffected.
Penn National’s Gaming and Leisure Properties also acquire 2 real property assets of Bally’s in Rhode Island
Gaming and Leisure Properties also acquired 2 properties in Rhode Island this June. The casino properties in question namely, Bally’s Tiverton Casino & Hotel and Bally’s Twin River Lincoln Casino for approximately $1 billion. A REIT firm based in Wyoming entered into a term sheet with Bally’s to acquire the real property assets.
Once the transaction was completed, Bally’s immediately leased back both properties. Bally’s now owns, controls, and managed all the gambling operations at the 2 casino properties. GLPI was expected to finalize this deal before the year comes to an end.
This transaction will be beneficial to both GLPI and Bally’s as it will further strengthen the relationship that already exists between the two brands. This deal will also supply Bally’s with considerable long-term liquidity that will make certain that the Bally’s brand is well positioned in the burgeoning market while still allowing it to capitalize on more opportunities that might present itself in the future.
Both these properties are now part of Bally’s existing Master Lease, which has an initial term of 15 years. So far, the lease still has 14 years before it expires, which will be followed by four 5-year renewals based on the tenant’s needs.
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In other Strip news
It has been common knowledge for a while now that the Caesars Entertainment brand has been looking to offload its property on the Strip in a bid to reduce its debt. At the conclusion of the first quarter, Caesars Entertainment’s debt stood at $13.5 billion. When Eldorado Resorts acquired Caesars in 2020, it made it clear that the brand would sell one of its properties on the Strip to deal with its rising debt.
Since then, there has been a lot of speculation as to which resort will be shut down. But many anticipate that the Flamingo, which has been around since it was launched in 1964 by Bugsy Siegel, is the one the axe. Unidentified sources have also claimed that Caesars initially wanted to sell Planet Hollywood but changed tunes owing to the venue’s massive cash-generating venues and conference halls.
Caesars has allegedly been seeking a buyer for its Flamingo casino at a price exceeding $1 billion. However, sources say that private equity firms and other operators have been reluctant to invest in the property owing to the casino’s aged state, which will require a lot of updates and maintenance.
Caesars and MGM brands are the two top brands that dominate the Strip. Caesars alone controls some of the busiest casino resorts in the state including Flamingo, Planet Hollywood, The Linq, Caesars Palace, The Cromwell, Harrah’s, Ballys, Paris Las Vegas, which is soon going to be rebranded as Horseshoe, as well as the off-Strip Rio.
Final Thoughts
Gambling companies and operators including Caesars Entertainment and fellow competitors MGM Resorts International, Wynn Resorts, and newcomers such as Hard Rock International all want a piece of the action on the Strip. That’s because the Strip is easily the most profitable (and competitive) stretch of road in the entire country.
