Bally’s New York Casino Vital in Removing Financial Doubt

Bally’s (NYSE: BALY) investors are concerned about the company’s financial state. Procuring financing to advance a casino project in the Bronx, NY could go a long way toward allaying those fears.

In a recent regulatory filing, the regional casino operator said there is “substantial doubt” about its ability to continue as a going concern, sparking a sell-off in the stock that has analysts and investors pointing to the importance of securing financing for the $4 billion New York casino hotel project. Truist Securities analyst Barry Jonas highlights the crucial nature of Bally’s Big Apple efforts in a new report.

Rhode Island-based Bally’s has already allocated $800 million to the Bronx project on which construction hasn’t started, but the word on Wall Street is that the company needs at least another $500 million to move things forward in the Bronx.

Bally’s Exploring Financing Options

Analysts frequently express concern about Bally’s acquisitive ways and its frequent financing needs. Although the company is junk-rated, it’s largely been successful in raising capital when needed. The operator is back at it in the hopes of fortifying its Bronx plans.

In recent days, analysts have opined about the gaming company’s financing options, including equity and asset sales or debt financing.

Earlier this year, Gaming and Leisure Properties (NASDAQ: GLPI) — Bally’s’ primary landlord — said it has some interest in the Bronx integrated resort, but it’s unlikely to act as the majority financier for what is the operator’s priciest project to date.

Speaking of GLPI…

Bally’s accounts for 19% of Gaming and Leisure’s cash rent, but as is the case with some of his colleagues, Jonas takes a sanguine view of the real estate investment trust (REIT), noting that even if the gaming company abandons its $1.7 billion Chicago plan, other companies may be waiting in the wings to take it over.

“Four wall rent coverage is over 2x for the two master leases suggesting the properties can sustain GLPI’s current rent in the event of property sales or parent bankruptcy,” notes the analyst. “If BALY’s Chicago project ultimately fails, we continue to believe there are other reputable operators willing to step in to manage the property.”

For its part, Bally’s has reiterated its commitment to Chicago, telling the city and investors that the project is safe despite the going concern language in the aforementioned regulatory filing.