Bally’s, which exercised its option last month to buy the Freedom Center printing plant site to build its Chicago casino, is expected to close the deal with owner Nexstar Media Group this month for $200 million.
After buying the property, Bally’s plans to sell the 30-acre site in River West and lease it back to raise funds for the proposed $1.74 billion casino complex, the Rhode Island-based company said during its third quarter earnings call last week.
“We’re close and focused on a land sale-leaseback in Chicago, because we think that that’s a core part of the capital structure,” Bally’s CFO Robert Lavan said during the call.
Dallas-based Nexstar Media Group, the nation’s largest TV station owner, acquired the Freedom Center site in 2019 as part of its $4.1 billion purchase of Tribune Media — the former broadcast parent of Tribune Publishing. In 2018, Tribune Media got approval for a planned multiuse development at the site including offices, a hotel and thousands of residential units.
Though she did not reference the Freedom Center by name, Lee Ann Gliha, Nexstar’s CFO, touted an after-tax windfall from the imminent sale of a Chicago property during an earnings call Tuesday.
“Also expected to positively impact our fourth quarter is the anticipated sale of one of our remaining real estate properties in Chicago for net cash proceeds of approximately $155 million,” Gliha said. “The transaction is expected to close later this month.”
Nexstar spokesperson Gary Weitman declined to comment Wednesday.
Bally’s Chair Soo Kim confirmed the sale price of $200 million Wednesday and said the deal was expected to close by Thanksgiving.
In May, Bally’s won a heated competition to build the Chicago casino, which is expected to generate $200 million in annual tax revenue for the city, transform the industrial site into a bustling entertainment destination and force the Chicago Tribune to vacate its printing plant along the Chicago River.
The proposed casino complex would include an exhibition hall, 500-room hotel, a 3,000-seat theater, an outdoor music venue, six restaurants and, for gambling, 3,400 slots and 170 game tables, making it the largest in the state.
Bally’s filed its Chicago casino license application with the Illinois Gaming Board in August, with plans to open a temporary facility at Medinah Temple by June 2023. The permanent casino is not expected to open before 2026.
To help finance the Chicago development, Bally’s entered into a sale-leaseback agreement in July with Gaming and Leisure Properties for its Bally’s Tiverton Casino & Hotel in Rhode Island and the Hard Rock Hotel & Casino in Biloxi, Mississippi, that will net the company $635 million. That deal is expected to close in January, Lavan said.
Kim told the Tribune that entering into a similar sale-leaseback for the Chicago property would provide another source of funding for the development of what would be the casino chain’s largest property.
“It’s one of the ways that we were planning to fund the rest of the construction process,” Kim said.
The Chicago casino deal may end up looking like Bally’s recent foray into Las Vegas, where it owns the casino complex but leases the land beneath.
In September, Bally’s completed the previously announced acquisition of the “nonland assets” of the Tropicana Las Vegas for $148 million, payable to Gaming and Leisure Properties, a casino real estate investment trust that acquired the property in 2020. Bally’s will lease the land under the casino from Gaming and Leisure Properties for an initial term of 50 years at annual rent of $10.5 million.
Bally’s owns and manages 15 casinos across 10 states. It made its entree into Illinois in June 2021 with the $120 million acquisition of Jumer’s Casino & Hotel in Rock Island, which it renamed Bally’s Quad Cities.
While its Chicago casino application wends its way through the state’s regulatory process, Bally’s submitted an application to the city’s Plan Commission Sept. 21 to amend the multiuse planned development previously approved for the site. It is not on the Plan Commission agenda for Nov 17.
The 41-year-old Freedom Center, which prints the Chicago Tribune, Wall Street Journal, New York Times, Chicago Sun-Times and other newspapers, is slated for demolition as part of the casino development. But Kim said he is open to the possibility of Tribune’s printing plant remaining on the expansive River West site with the casino, when Bally’s takes over as landlord.
Chicago-based Tribune Publishing has exercised an option to extend its printing plant lease at Freedom Center, which is set to expire in June 2023, for another 10 years. Tribune and Nexstar are in arbitration over the terms of the extension.
If the printing plant is closed, there may be an option north of the border. Tribune Publishing’s parent company, hedge fund Alden Global Capital, has purchased the Milwaukee Journal Sentinel’s idled printing plant in West Milwaukee from Gannett for $26 million.