GLPI is set to make a cash yield of over 8% after completing the land acquisition for Bally’s new Chicago casino. [Image: Shutterstock.com]

Bally’s Chicago site

Gaming and Leisure Properties Inc (GLPI) has announced that it has completed the $250m purchase of the land where Bally’s Chicago casino is set to be built.

GLPI, a casino and leisure real estate investment trust, purchased the land from Blue Owl Capital as part of an agreement with Bally’s which was announced in July.

Ground is expected to be broken before the end of the year

The land, at Chicago Avenue and Halsted Street, is the site of the former Chicago Tribune publishing center which was closed in May this year. Ground is expected to be broken before the end of the year, with demolition works beginning last month and likely to take around four months.

GLPI investment

The agreement between Bally’s and GLPI will see the current lease renegotiated for an annual rent of $20m, which represents an 8% initial cash yield for the real estate company.

Sourcing funding for the project was one of the major obstacles faced by Bally’s in constructing the casino, but in July, GLPI agreed a major investment plan to get the project over the line.

As well as acquiring the real estate for Bally’s Shreveport and Kansas City properties, the deal also saw GLPI fill the funding gap on the Chicago project.

a blended initial cash investment yield of 8.4%

GLPI will now own all of the real estate and improvements related to the Chicago casino and hotel, which represents a total investment for the company of $1.19bn, providing a blended initial cash investment yield of 8.4%.

Carlino looks forward

Chairman and CEO of GLPI Peter Carlino said in a press release, “The completion of the Chicago land purchase is a significant milestone toward the development of Bally’s Chicago, which promises to be a must-visit destination casino resort property in the heart of Chicago.

We are 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.”

In the meantime, Bally’s has been running a temporary casino in Chicago while the permanent facility is under construction. In its first year, the Medinah Temple casino received over 1.3 million visitors and generated over $114m in adjusted gross receipts, providing the city with $12.9m in tax revenue – about half of what was projected by 2024.