Gaming & Leisure Properties (NASDAQ: GLPI) is interested in funding Bally's $4 billion casino project in the Bronx, New York; nevertheless, the landlord acknowledges that the gaming operator has other options and won't overextend itself to engage in that process.

On Friday, February 20, during the company's fourth-quarter earnings conference, representatives of the real estate investment trust (REIT) made remarks to that effect. Bally's main landlord is already Gaming and Leisure, and the REIT has given the regional casino operator vital funding, particularly for its Chicago casino hotel.

"I think the ability to raise capital unique to the New York project will result in a very competitive field of suitors for capital, and we won’t do anything dilutive,” said GLPI COO and President Brandon Moore on the call. “So what I think you won’t see us do is compete down to a cap rate that’s not accretive to GLPI. That won’t be of interest to us.”

In December, Bally's received one of three gaming licenses for the New York City region.

The majority of financing for Bronx Casino is unlikely to come from GLPI

The REIT is "in constant discussion with" Bally's and is "monitoring the process," according to GLPI Chief Development Officer Stephen Ladany. However, he stated that he is unsure whether the casino operator will require GLPI funding.

“I guess to put it frank, I think to dispel any notions that may exist, we view it very unlikely that we would end up providing the majority of the capital for a $4 billion project there,” he said on the call. “We’re going to continue to evaluate the process and the project, and we’ll look to try to be as strategic as possible with respect to any involvement.”

Other creditors and real estate firms would be keen to assist Bally's, probably since the Bronx location was one of the first typical casinos in the five boroughs. It is undeniable that the company's bad credit ratings will result in a high cost of finance for the New York project. The financial possibilities that Bally's is pursuing have not been made public.

Additionally, the Rhode Island-based casino business must pay the Trump Organization $115 million. Bally's acquired the leasing rights to Trump Golf Links at Ferry Point, the property where the casino will be constructed, as part of the agreement.

It's likely that GLPI wants to own a portion of Bronx Casino Land

Financing partners and tenants is a common practice for REITs, including those in the gaming sector. However, this capital extension is frequently linked to assets that the landlord already owns or provides a way for the REIT to acquire all or part of the real estate. Ladany stated that GLPI would prefer to use that model.

“I would think that any discussions we have with any of the other parties involved would be under the same type of guise that we have to have a path to owning real estate or a piece of ownership of real estate to start with,” he said on the call.

Bally's does not own the Bronx casino land, so that would be challenging. New York City does.