Both Jefferies Equity Research analyst David Katz and Truist Securities stock-cruncher Barry Jonas were full of praise for the transaction between Bally’s Corp. and Gaming & Leisure Properties (GLPI) announced Friday. Katz, in a Monday investor note, lauded it as “constructive.”

Katz also liked that GLPI captured incremental revenue growth, before noting that the real estate investment trust’s $940 million investment in Bally’s Chicago “is a new avenue for GLPI.” The REIT takes control of Bally’s Chicago in return for construction financing of the $1.8 billion project.

GLPI is also obtaining the underlying Chicago land for $250 million. Bally’s will pay $20 million in initial annual rent and operate the property.

Should GLPI exercise a 2026 option on flagship Bally’s Twin River in Rhode Island, the casino operator will continue to rent the casino for $58.8 million a year. In return, Bally’s knocked $36 million off the purchase price, bringing GLPI’s potential outlay to $735 million.

Expecting that Bally’s will pay down its debt burden with the GLPI proceeds, Katz predicted a near-term reduction in Bally’s leverage ratio. However, he anticipated that cash flow would take a hit as rental payments ramped up.

“In our view, although concerns surrounding funding have been alleviated at the moment, the increase in overall rent, coupled with the annual escalators, will have an outsized impact on the bottom line,” he added.

Katz put a Hold rating on Bally’s and a Buy on GLPI. At the time, Bally’s was trading at $13.44 a share, compared to Katz’s price target of $13, while GLPI was going for $48.14 per share, below Katz’s $61 price goal.

Jonas added that the Bally’s/GLPI accord “supports our view of an improving REIT deal environment,” one that would be further aided if interest rates were lowered. He wrote that the Twin River option pointed to “a visible pipeline” and that GLPI’s acquisition of Bally’s Chicago, plus casinos in Kansas City and Shreveport, showed that the REIT can continue to grow inorganically.

“We recently cited GLPI’s underlevered balance sheet … and they should have some funding flexibility for these transactions, benefiting from an improving capital market environment,” Jonas said. He warned that Bally’s leverage coverage in Chicago “could ultimately trigger a default.”

The analyst continued, “In a downside case where BALY has to exit Chicago, we believe there would be demand from other well-established operators to take over at comparable terms.” Should it succeed, he added, Bally’s and GLPI could use the partnership template to develop the Tropicana site in Las Vegas, as well as a potential casino on the former Trump Links in New York City.

“In our view, the deal strengthens BALY’s existing relationship with GLPI and benefits from GLPI’s expertise for the Chicago project construction plans,” Jonas summarized. He explained that GLPI’s deep pockets made the project less risky and remove a cause of worry for Bally’s stock.

Although Jonas queried the future of Bally’s Chairman Soo Kim’s buyout offer, he saw scenarios under which it could continue. “Bally’s could benefit as a private entity, while it pushes Chicago and other projects through the development/ramping phases, and … subsequently reenters the public market following deleverage.”

Noting that Bally’s has one of the highest leverages in his coverage universe, Jonas opined that it would be likely to stay in the seven-times-cash flow stratosphere, should Las Vegas and New York developments go ahead.

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