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What’s the next best thing to owning a casino? Owning the land under it.
Gaming Leisure and Properties, Inc. (GLPI) announced this week it purchased for $100 million the land on which Hard Rock Casino Rockford is being built and where the property’s temporary casino operates. With rights to the land, GLPI agreed to a 99-year lease with 815 Entertainment, the company operates the present and future Hard Rock in Rockford.
GLPI CEO Peter Carlino said in a Globe Newswire press release:
“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.”
The purchase includes GLPI giving 815 Entertainment access to $150 million for the ongoing construction project.
Details of the GLPI Hard Rock deal
Simply put, now that GLPI has the lease on the land, it will charge 815 Entertainment $8 million a year for rent. Also, the rent will go up 2% per year starting at the lease’s first anniversary.
GLPI also committed to giving 815 up to $150 million in a term loan that needs to undergo final regulatory approval.
If 815 needs to use part or all of that loan to help pay for construction costs, the interest rate will be 10%. 815 has one year to use the loan. Once that year is up, 815 will be on the hook for payments for five years.
However, GLPI noted that 815 can pay off their loan balance early without any penalty after the Hard Rock’s permanent casino opens. Hard Rock International COO Jon Lucas said:
“Hard Rock’s incredible financial strength and development trajectory is only made stronger with great partners like GLPI and 815 Entertainment. We are really looking forward to opening another world-class entertainment property with Hard Rock Casino Rockford.”
Updates on Rockford’s Hard Rock Casino construction
Hard Rock’s temporary casino opened in November 2021 and, in the first six months it opened, it generated more than $34 million in adjusted gross revenue and had more than 280,000 customers.
Construction on the permanent Hard Rock Casino broke ground in September 2022. At the time, we thought that the permanent property would open in the fall of 2023. However, delays pushed that target date back a whole year.
The opening date target is now sometime in September 2024, according to GLPI’s statement. The new Hard Rock property will be home to a 60,000-square-foot gaming floor with 1,250 slot machines, 50 table games, and a sportsbook.
