Illinois: Gaming and Leisure Properties acquires Hard Rock Casino Rockford's land for $100 million
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Gaming-focused real estate investment firm Gaming and Leisure Properties Inc. (GLPI) has acquired the land associated with the Hard Rock Casino development project in Rockford, Illinois from an affiliate of815 Entertainment for $100 million. 815 Entertainment is owned by Dan Fischer, the principal, along with a consortium of local investors and Hard Rock International, which is also acting as the property manager.
Simultaneous with the land acquisition, GLPI entered into aground lease with 815 Entertainment for a 99-year term, the company said in a statement. The initialannual rent for the ground lease is $8 million, subject to a fixed 2% annual escalation beginning with the lease’s first anniversary and for the entirety of its term.
In addition to the ground lease, GLPI has also committed to providing up to$150 million of development funding via a senior secured delayed draw term loan at an interest rate of 10%,subject to regulatory review.
The term loan has a draw period of up to 1 year and a maximum outstanding period of up to 6 years (5-year initial term with a 1-year extension). It is prepayable without penalty following the opening of the Hard Rock Casino in Rockford, which is expected in September 2024. The term loan advances will be subject to typical construction lending terms and conditions.
In conjunction with the foregoing transactions, GLPI will receive aright of first refusal on the building improvements of the property if there is a future decision to sell them once completed, the statement said.
Located just off Interstate 90 in Rockford, the Hard Rock Casino will consist of approximately 177,000 square feet featuring an approximate 60,000 square feet gaming floor, initially with 1,250 slot machines, 50 table games, and in-person and online sportsbooks.
The project is currently under construction, with atotal projected budget of approximately $358 million, inclusive of the temporary facility, with approximately $120 million 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. 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,” Peter Carlino, GLPI’s Chairman and CEO, said.
GLPI owns the property assets of 59 gaming venues across 18 states. Hard Rock will be the sixth Illinois venue in the REIT’s portfolio. Penn Entertainment is GLPI’s largest tenant and other clients include Bally’s, Boyd Gaming, Caesars Entertainment, and Cordish Cos.
“The Hard Rock brand is world-renowned 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 $250 million available to 815 Entertainment to invest in the project and reflects GLPI’s creativity in crafting a comprehensive construction financing solution,” he added.
In June, Hard Rock Casino Rockford officialsappeared in front of the Illinois Gaming Board to unveil new images of their planned permanent casino resort. The company also requested an extension for its temporary location, as it works on completing the full project. The temporary casino was opened in November 2021.
“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.”
