Gaming and Leisure Properties announced Wednesday that it completed a $250 million acquisition of the land on which Bally’s permanent Chicago Casino will be constructed.

The land purchase from Blue Owl Capital was one component of GLPI’s broader agreement with Bally’s announced in July. GLPI is in the business of acquiring, financing, and owning real estate to be leased to gaming operators in triple-net arrangements.

In March, Bally’s informed Nevada regulators that it was seeking financing for its downtown Chicago project as it operates a temporary casino. At the time, Bally’s was facing a shortfall of $800 million of the $1.1 billion balance left on the project. The $800 million funding gap was filled by GLPI.

Demolition started the last week of August at the future home of Bally’s permanent Chicago casino on the site of the former Chicago Tribune publishing center at Chicago Avenue and Halsted Street. That facility closed in May.
Demolition is expected to take three to four months, with groundbreaking on the new casino by the end of 2024.

With the completion of GLPI’s purchase of the land, the current lease in place with Blue Owl Capital will be assumed by an affiliate of GLPI and amended to reflect the negotiated annual rent of $20 million, representing an initial cash yield of 8%, the company announced.

GLPI will own all of the real estate and improvements related to the Chicago casino and hotel for a total investment of $1.19 billion, resulting in a blended initial cash investment yield of 8.4%. Stabilized rent coverage for the lease is expected to be in the range of 2.0x to 2.4x.

“The completion of the Chicago land purchase is a significant milestone toward the development of Bally’s Chicago,” said Peter Carlino, GLPI’s chairman and CEO. “Our transactions with Bally’s related to Chicago and our real estate acquisitions at Bally’s Kansas City Casino and Bally’s Shreveport Casino & Hotel will be accretive to our financial results, resulting in an 8.3% blended initial cash yield and conservative rent coverage.”

Carlino said they’re pleased to be working with the Bally’s team, the host community, and various stakeholders in Chicago “to deliver a world-class entertainment center in the nation’s third largest metropolitan area.”

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