Bally’s Corp. has closed on a $200-million deal to purchase a 30-acre former Chicago Tribune newspaper printing plant as the site of Chicago’s first-ever casino.
Under terms of the deal announced on Nov. 21, a Chicago-based real estate private equity firm will purchase the Tribune Publishing Center site at Chicago Avenue and Halsted Street in the River West neighborhood. Then, to raise funds for the $1.7-billion casino project, the casino developer will lease back the land in a ground lease with the investor whose name was not released.
Bally's has named the project's general contractor, which includes a management team of minority-led firms called the Chicago Community Builders Collective consisting of Brown & Momen, Inc., d’Escoto, Inc., LiveWire Construction, Inc., Milhouse Engineering & Construction, Powers & Sons Construction, UJAMAA Construction, Inc., Riteway-Huggins Construction Services, Inc., SQN Associates, LLC, and Gilbane Building Company.
"This transaction is an important step in our development plan for Bally's Chicago as we continue to work toward opening the temporary casino in mid-2023,” said Bobby Lavan, chief financial officer of Bally's in a news release. “With this new real estate partnership, Bally's has ample liquidity on hand to fund Bally's Chicago without needing to access the capital markets."
The project, located along the Chicago River, is envisioned to be a casino, entertainment and hotel destination, with 3,400 slots, 170 table games, 10 food and beverage venues and a 500-room hotel tower with rooftop bar. It also features a 65,000-sq-ft entertainment center with 3,000 seats, a 20,000-sq-ft exhibition space, outdoor music venue and green space. including a public riverwalk with a water taxi stop.
The ground lease includes an initial 99-year term, followed by 10 separate 20-year renewals at option for Bally's. The investor will provide an additional $300 million through the ground lease for the casino’s development as specified construction milestones are met and at Bally’s request.
A ground lease is an agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner.
The project also provides Bally's with the exclusive right to operate a temporary casino at the Medinah Temple at 600 N. Wabash Ave. for up to three years while the permanent casino-resort is constructed. The project would require retrofitting the historic building.
The Bally's team did not comment on how it plans to move ahead with construction of the temporary casino.
The initial rental rate under the ground lease is calculated to yield the investor an 8.5% annual capitalization rate, adjusting to a 7% annual capitalization rate upon receipt by Bally's of certain development entitlements and gaming approvals from the city and the State of Illinois. The rent is also subject to periodic CPI increases.
The Chicago city council approved the city's first and only casino license for Bally’s in May. Bally’s filed an application in August with the Illinois Gaming Board seeking approval of its plan for a casino-resort. No decision has yet been made on the application.
Mayor Lori Lightfoot said in May in a news release that “a city casino signals to the world that our economy is on a strong path toward recovery and helps to ensure our structurally-sound, fiscal future.”
Rhode Island-based Bally's has estimated that the casino project will generate $400 million a year for the city and state.
Upon completing the construction of a temporary casino facility in Chicago and a land-based casino near the Nittany Mall in State College, Pa., Bally's will own and manage 17 casinos across 11 states.