Gaming and Leisure Properties has announced the $100m purchase of the land associated with the ongoing Hard Rock Casino development project in Rockford, Illinois.
The real estate investment trust has made the acquisition from an affiliate of 815 Entertainment, which has also entered into an initial lease that carries a 99-year term that begins at $8m and is subject to fixed annual escalators of two per cent.
Furthermore, GLPI will also receive a right of first refusal on the building improvements of the Hard Rock Casino, if there is a future decision to sell them once completed.
The venue was the first to open following the state’s 2019 legislation to enact gaming expansion across the state. The $45bn ‘Rebuild Illinois’ action plan comprised the delivery of six new casinos complemented by a sports wagering introduction.
The November 2021 debut of the temporary facility included a space of over 37,000 square feet of gaming that offered more than 625 slots and Interblock electronic table games.
“Hard Rock’s incredible financial strength and development trajectory is only made stronger with great partners like GLPI and 815 Entertainment,” said Jon Lucas, Chief Operating Officer for Hard Rock International.
“We are really looking forward to opening another world-class entertainment property with Hard Rock Casino Rockford.”
In addition to the ground lease, GLPI has also committed to providing up to $150m of development funding via a senior secured delayed draw term loan, with any borrowings subject to a ten per cent interest rate.
The term loan has a draw period of up to one year and a maximum outstanding period of up to six years (five year initial term with a one year extension).
The Hard Rock Casino is expected to open in September 2024 and will consist of approximately 177,000 square feet featuring an approximate 60,000 square foot gaming floor.
This will initially feature 1,250 slot machines, 50 table games, and in-person and online sportsbooks. The project is currently under construction and features a total projected budget of approximately $358m, with approximately $120m spent to date.
“Our agreements with 815 Entertainment will allow GLPI to expand its footprint with the addition of a new ground lease, a new tenant, and a commitment to provide potential funding,” commented Peter Carlino, GLPI’s Chairman and CEO.
“We believe this is an attractive ground lease transaction for our shareholders as the strong initial results at 815 Entertainment’s temporary facility demonstrate the strength of the location and the depth of the market.
“The Hard Rock brand is world renown and will support and solidify the new casino’s position as a tourist destination and entertainment venue. Hard Rock is the property manager and an equity investor in 815 Entertainment, bringing its world-class management team to the project.
“The overall transaction structure makes $250m available to 815 Entertainment to invest in the project and reflects GLPI’s creativity in crafting a comprehensive construction financing solution. We look forward to our relationship with 815 Entertainment.”