Gaming and Leisure Pays $100M for Hard Rock Rockford Real Estate
Posted on: August 29, 2023, 05:14h.
Last updated on: August 30, 2023, 11:35h.
Gaming and Leisure Properties (NASDAQ: GLPI) announced Tuesday that it’s paying $100 million for the real estate associated with the Hard Rock Casino development in Rockford, Ill.
The gaming real estate investment trust (REIT) acquired the property from an affiliate of 815 Entertainment, LLC. GLPI and 815 Entertainment entered into an initial lease term of 99 years, starting at $8 million annually with 2% inflation escalators.
In conjunction with the foregoing transactions, GLPI will receive a 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.
Hard Rock Rockford is one of the six new gaming venues approved by Illinois lawmakers in 2019 in a bid to shore up the state’s ailing finances. It was the first of that group to commence construction, and is currently operating at a temporary site.
Gaming and Leisure Boosts Tenant Diversification
One of the critical elements in evaluating gaming REITs, namely GLPI and rival VICI Properties (NYSE: VICI), is geographic and tenant diversification.
Penn Entertainment is GLPI’s largest tenant, and other clients include Bally’s, Boyd Gaming, Caesars Entertainment, and The Cordish Companies. With the purchase of the Rockford casino real estate, the REIT adds a financially healthy tribal gaming tenant in the form of Florida’s Seminole Tribe, which controls Hard Rock International.
“The Hard Rock brand is world renowned and will support and solidify the new casino’s position as a tourist destination and entertainment venue. Hard Rock is the property manager and an equity investor in 815 Entertainment, bringing its world-class management team to the project,” noted GLPI CEO Peter Carlino in a statement.
Currently, GLPI owns the property assets of 59 gaming venues across 18 states. The Hard Rock will be the sixth Illinois venue in the REIT’s portfolio.
GLPI Also Providing Financing
The Hard Rock Casino Rock project is forecast to cost $358 million, of which $120 million has been spent to date. GLPI is providing $150 million in financing via a senior secured delayed draw term loan. Any draws on that 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, which is scheduled to open in September 2024, will feature 177,000 square feet, with approximately 60,000 square feet of gaming space. It’s expected that the casino will have 50 table games, 1,250 gaming machines, a retail sportsbook, as well as an online sports betting companion. Illinois is the second-largest sports wagering market in the U.S., after New York.
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