Bally’s could sell Tropicana land, analyst says

A Las Vegas-based analyst believes Bally’s Corp. may try to sell the land the shuttered Tropicana is on to help finance the company’s project in Chicago.

Colin Mansfield, vice president of credit research for CBRE Credit Research in Las Vegas, said in a Monday report to investors that he also doesn’t expect the bid of the Standard General hedge fund to take over Bally’s would be successful. Standard General is Bally’s largest shareholder, and it is managed by Soo Kim, who also is chairman of Bally’s board of directors. Other investors have asked Bally’s to reject the bid.

Kim on March 11 offered Bally’s $15 a share to buy all remaining shares and to take the company private. Bally’s formed a special committee to evaluate the officer.

“The offer is round two for SG attempting to take Bally’s private, with the first attempt at $38 a share in 2022,” Mansfield said in his report. “There are still several unknowns, but we assign a less than 50 percent chance the deal is accepted.”

Bally’s has said it has an $800 million shortfall in the financing of its Chicago project, which is expected to break ground later this year after a temporary Chicago casino was opened by the company in the fall.

“The SG offer adds to the overhang on the credit, which comes at a critical time as Bally’s seeks financing to fund its large-scale Chicago development, weighs its options for the recently closed Tropicana Las Vegas and works to improve the equity and credit narrative,” Mansfield said. “At the surface, we believe the SG offer creates more noise and may distract from Bally’s Chicago financing efforts.”

Three credit-rating companies have recently downgraded Bally’s rating.

The company has not responded to requests for comment about the downgrades or on its plans to finance the Chicago project.

Nine acres of the Tropicana site have been committed by the landowner, Bally’s landlord real estate investment trust Gaming &Leisure Properties Inc. for construction of a $1.5 billion, 33,000-seat Major League Baseball stadium for the relocating Oakland Athletics.

The Athletics ultimately are responsible for building the stadium and have received $380 million in public funding from the Nevada Legislature, but a private group, Schools Over Stadiums, is fighting to overturn the Legislature by putting the stadium question on November’s ballot. A Nevada Supreme Court ruling is expected on that legal fight soon.

Mansfield said Bally’s role remains unclear, but in the interim, it is paying $10.5 million in annual rent to GLPI and weighing available options. GLPI is committed to funding up to $175 million, which includes the Tropicana demolition and site prep, and additional rent owed by Bally’s will be 8.5 percent of what is funded by GLPI.

“It is a net-negative carrying asset for Bally’s, but the attractiveness and potential value of the site has gone up since the time of purchase, in our opinion,” Mansfield said.

His report noted that Bally’s said it would consider selling the Tropicana site.

“In its (third-quarter 2023) earnings call, management expressed its willingness to sell, stating ‘at the right price they would unload anything,’ when speaking to the option of the Tropicana site,” he said.

Mansfield said Strip land valuations are wide-ranging.

The Genting Group purchased the Resorts World Las Vegas site for $7 million an acre in 2013, but Tilman Fertitta purchased 6 acres at the corner of Las Vegas Boulevard and Harmon Avenue across from the Aria and The Cosmopolitan of Las Vegas for $45 million.

Mansfield said in the third-quarter earnings call, Bally’s “called out a price of $9 million per acre as a reasonable price to offload the Tropicana site, which could bring in over $300 million of proceeds.”

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.