Bally’s Corporation announced that it has closed a transaction with one of Chicago’s leading real estate private equity firms (the “Investor”), whereby such Investor acquired for $200 million, the approximately 30-acre Tribune Publishing Center site (the “Land”) on which Bally’s Chicago will be built. Pursuant to the terms of the parties’ agreement, Bally’s entered into a ground lease with the Investor to lease back the Land.

The ground lease includes an initial 99-year term, followed by ten separate 20-year renewals at Bally’s option. As part of the transaction, as specified construction milestones are completed, at Bally’s request, the Investor will fund up to an additional $300 million for Bally’s Chicago’s development through the ground lease structure.  The initial rental rate under the ground lease is calculated to yield the Investor an 8.5% annual capitalization rate, adjusting to a 7.0% annual capitalization rate upon the receipt by Bally’s of certain development entitlements and gaming approvals.  The rent is also subject to periodic CPI increases.

Soo Kim, Chairman of the Board of Bally’s, said, “We are excited to be partnering with one of Chicago’s leading real estate private equity firm as we progress with building our $1.7 billion flagship property in the Chicago market. We continue to demonstrate our commitment to delivering a world class entertainment facility that supports Chicago’s economy and community.”

Bobby Lavan, Chief Financial Officer of Bally’s, said, “This transaction is an important step in our development plan for Bally’s Chicago as we continue to work towards opening the temporary casino in mid-2023. With this new real estate partnership, Bally’s has ample liquidity on hand to fund Bally’s Chicago without needing to access the capital markets.”

Bally’s has the option to repurchase the Land from the Investor at a fixed capitalization rate during years four through eight of the lease term.  In addition, if certain milestones are not achieved or Bally’s defaults under the lease, the Investor may require Bally’s to reacquire the Land at a specified price.

Bally’s Corporation has submitted a proposal to the City of Chicago to develop and operate the $1.6 billion Bally’s Chicago, a world-class entertainment destination resort. The casino, hotel, and entertainment venue will be Bally’s flagship property and showcase the best of Chicago in its programming.

“Chicago is a dynamic, world-class city, which is why we are committing to make a $1.6 billion investment in establishing Bally’s Chicago as our flagship, and the only property in its class in the Chicagoland market. This property will be built, owned, and operated by Chicagoans, with a focus on minority and women investors, contractors, suppliers, consultants, and employees. It will generate tax revenue, create good-paying jobs, and attract international, national, and local visitors for generations to come,” Soo Kim, Chairman of Bally’s Corporation, said.

Bally’s has proposed two potential sites, both of which it views as economic sleeping giants for the City’s and the communities’ consideration: The Chicago Tribune Publishing Center, located on the corner of Chicago Avenue and Halsted Street, and the McCormick Place Truck Marshaling Yard. The Tribune site is within walking distance to shopping, restaurants, and other cultural attractions and easily accessed by public transportation. The McCormick Place Truck Marshaling Yard creates an entertainment destination that connects Chicago’s convention hub with the vibrant, predominantly African American Bronzeville community and would turn the underutilized site into a significant source of tax revenue for the City.

Chicago native and Bally’s Director Wanda Y. Wilson said: “From design and build to operations and ownership, Bally’s Chicago is committed to providing meaningful leadership roles, well-paying jobs, and investment opportunities for all Chicagoans—especially MBE/WBE/VBE/DBE-certified firms and minority and women residents. I have spent my career in gaming, and am proud to be a director and investor in Bally’s. Its commitment to innovation, culture and diverse ownership makes it a leader in the industry. Everyone knows the Bally name, and that global recognition will attract visitors to Bally’s Chicago.”