Bally's Corp. Acquires Tropicana Las Vegas For $308 Million

Bally's Corp BALY has acquired the iconic Tropicana Las Vegas from the real estate investment trust Gaming and Leisure Properties Inc GLPI for $308 million.

What Happened: As part of the transaction, the Providence, Rhode Island-headquartered Bally's has entered into a sale-and-leaseback transaction with GLPI relating to Bally's Black Hawk in Colorado and its Rock Island, Illinois, casino properties for a cash purchase price of $150 million payable by GLPI.

According to the companies, the lease will have initial annual fixed rent of $12 million, subject to increase over time.

The Tropicana first opened in 1957 and is based on a 35-acre parcel. The property encompasses 1,470 guest rooms, 50,000 square feet of casino space with 1,000 gaming positions, a 1,200-seat theater and a 100,000-square-foot convention and meeting space.

"Landing a preeminent spot on the Las Vegas Strip is a key step for us," said Bally's President and CEO George Papanier. "The Strip is visited by over 40 million players and guests per year, which we believe will significantly enhance Bally's customer base and player database, as well as unlock marketing opportunities to leverage the iconic Bally's brand."

The Tropicana is Bally's second property acquisition in Nevada. Last week, the company closed its purchase of the Lake Tahoe-area MontBleu Resort Casino & Spa from Caesars Entertainment Inc CZR. Despite having its name, Bally's does not own Bally's Las Vegas, which is a Caesars property.

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Why It Matters: The sale of the Tropicana marks the second time in a month that a major Las Vegas Strip property changed hands. Last month, Las Vegas Sands Corp. LVS sold its Venetian Resort Las Vegas and the Sands Expo and Convention Center for approximately $6.25 billion, with VICI Properties acquiring the property and all associated assets for $4 billion and Apollo Global Management Inc APO purchasing the operations of the Venetian for $2.25 billion.

Las Vegas' tourism industry is finding its way back to the gambling mecca after the disruptions created by the COVID-19 pandemic. According to the Las Vegas Convention and Visitors Authority, visitors to the city during February were just over 1.5 million people, up 19% from January but 54% below the pre-pandemic February 2020 figure. Occupancy rates for the Strip's hotels were 42% in February, up 10% from the previous month but 88% below the prior year's level.

What Else Happened: Bally's also announced its preliminary financial results for the first quarter ending March 31, stating the company generated consolidated revenue greater than $185 million and Adjusted EBITDA greater than $50.0 million, compared to revenue and Adjusted EBITDA of $109.1 million and $22.1 million, respectively, for the same period in 2020, with the quarter ended March 31, 2020.

"We are extremely encouraged by our trends and March numbers," said Papanier. "Increased demand assisted by a relaxation of COVID-19 restrictions contributed to outstanding performance toward the end of the quarter, which, based on early indications, has continued into April. We believe this combination of factors will set us up for a strong 2021 as we continue to welcome more and more Bally's customers back to our casinos, as well as enhance our iGaming platform."

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Photo by Ellie / Flickr Creative Commons.