Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) (“GLPI” or
the “Company”) today announced financial results for
the quarter ended September 30, 2023.
Financial Highlights
| |
|
Three Months Ended September 30, |
|
(in millions, except per share data) |
|
|
2023 |
|
|
2022 |
|
Total Revenue |
|
$ |
359.6 |
|
$ |
333.8 |
| Income from
Operations |
|
$ |
268.3 |
|
$ |
317.6 |
| Net
Income |
|
$ |
189.3 |
|
$ |
226.2 |
|
FFO(1) (4) |
|
$ |
254.4 |
|
$ |
232.8 |
|
AFFO(2) (4) |
|
$ |
251.2 |
|
$ |
235.0 |
| Adjusted
EBITDA(3) (4) |
|
$ |
327.1 |
|
$ |
308.8 |
| Net income, per
diluted common share and OP units(4) |
|
$ |
0.70 |
|
$ |
0.85 |
| FFO, per diluted
common share and OP units(4) |
|
$ |
0.94 |
|
$ |
0.88 |
| AFFO, per diluted
common share and OP units(4) |
|
$ |
0.92 |
|
$ |
0.89 |
(1) Funds from Operations ("FFO") is net income,
excluding (gains) or losses from dispositions of property, net of
tax and real estate depreciation as defined by NAREIT.
(2) Adjusted Funds From Operations ("AFFO") is
FFO, excluding, as applicable to the particular period, stock based
compensation expense; the amortization of debt issuance costs, bond
premiums and original issuance discounts; other depreciation;
amortization of land rights; accretion on investment in leases,
financing receivables; non-cash adjustments to financing lease
liabilities; property transfer tax recoveries; impairment charges;
straight-line rent adjustments; losses on debt extinguishment; and
provision (benefit) for credit losses, net, reduced by capital
maintenance expenditures.
(3) Adjusted EBITDA is net income, excluding, as
applicable to the particular period, interest, net; income tax
expense; real estate depreciation; other depreciation; (gains) or
losses from dispositions of property, net of tax; stock based
compensation expense, straight-line rent adjustments, amortization
of land rights, accretion on investment in leases, financing
receivables; non-cash adjustments to financing lease liabilities;
property transfer tax recoveries; impairment charges; losses on
debt extinguishment and provision (benefit) for credit losses,
net.
(4) Metrics are presented assuming full
conversion of limited partnership units to common shares and
therefore before the income statement impact of non-controlling
interests.
Peter Carlino, Chairman and Chief Executive
Officer of GLPI, commented, "The merits of our strategy to work
with the industry’s leading operators and support their current and
future initiatives, while expanding and diversifying our tenant
roster in an accretive manner, was evident again in our record
third quarter results. On an operating basis, third quarter total
revenue rose 7.7% year over year to $359.6 million and AFFO grew
6.9% on a comparable basis. Our third quarter and year-to-date
financial growth reflects GLPI’s stable base of gaming operator
tenants and benefited from ten properties added in 2022 and in the
nine-month period ended September 30, 2023, which we expect will
continue to benefit comparisons in the balance of 2023 and
beyond. With our opportunistic approach to portfolio
expansion, the proven long-term resiliency of our tenants’ revenue
streams, and comfortable rent coverage ratios across our portfolio,
we expect to continue to deliver strong capital returns and yields
for our shareholders which is highlighted by our third quarter 2023
dividend of $0.73 per share, up from $0.705 per share in the
year-ago period.
“Our pipeline of growth opportunities remains
robust and in the third quarter we expanded our footprint with the
acquisition of the land associated with the Hard Rock Casino
development project in Rockford, IL for $100 million and entered
into a 99-year ground lease with 815 Entertainment with initial
annual rent of $8 million. The strong initial results at 815
Entertainment’s temporary facility demonstrate the attractiveness
of the property’s location and the depth of the market. Hard Rock
is the property manager of and an equity investor in 815
Entertainment, bringing its world-class management team to the
project and we expect that the world-renowned Hard Rock brand would
support and solidify the new casino’s position as a tourist
destination and entertainment venue. The overall transaction
structure reflects our creativity in crafting a comprehensive
construction financing solution.
“We further expanded our footprint through the
acquisition of the land and certain improvements at Casino Queen
Marquette for $32.72 million resulting in an annual rent increase
on the Casino Queen Master Lease of $2.7 million. We
continue to believe there are near- and longer-term cases for GLPI
to further support tenants with innovative financing, capital and
development structures in an accretive, prudent manner.
This operating strategy has driven stable, visible growth of our
rental cash flows and AFFO for ten years, enabling GLPI to
consistently increase capital returns to shareholders.
“After undergoing an $85 million transformation,
The Queen Baton Rouge, formerly known as Hollywood Casino Baton
Rouge, opened to the public on August 24, marking Louisiana’s
freshest casino gaming, sports wagering, entertainment, and dining
location. The rebranded and completely new property, now situated
on dry land near downtown along the Mississippi River, is poised to
become a premier dining and entertainment destination, boasting an
expanded footprint of over 100,000 square feet. Rent under the
Casino Queen Master Lease was adjusted to reflect a yield of 8.25%
on GLPI's project costs of $77 million.
“We remain excited about the agreement we
entered into earlier this year with our tenant Bally’s and Major
League Baseball’s Oakland Athletics, to develop an integrated
casino within a new 30,000-seat Las Vegas stadium for the team at
our 35-acre Tropicana site. GLPI intends to commit to up to $175
million of funding for construction costs and may have the
opportunity to provide additional construction financing under
certain circumstances. In June, the Nevada legislature
approved public funding for the A’s Las Vegas stadium paving the
way for the stadium project at the site and the ultimate
re-development of the Tropicana Las Vegas. The letter
of intent provides that the transaction will be subject to
customary approvals and other conditions, including the approval of
the MLB owners to relocate the team on or before December 1, 2023,
and certain approvals by the Nevada Gaming Control Board and Nevada
Gaming Commission.
“With recent portfolio additions and completed
transactions combined with contractual rent escalators, we see
continued financial growth in the balance of 2023 and beyond. Our
disciplined capital investment approach, combined with our focus on
stable and resilient regional gaming markets, supports our
confidence that the Company is well positioned to further grow our
cash dividend and drive long-term shareholder value.”
Recent Developments
- On September 6, 2023, the Company
acquired the land and certain improvements at Casino Queen
Marquette for $32.72 million. The annual rent on the Casino Queen
Master Lease was increased by $2.7 million for this acquisition.
Additionally, the Company anticipates funding up to $12.5 million
of certain construction costs of a landside development project at
Casino Queen Marquette that is expected to be completed by December
31, 2024.
- In September 2023, the Company sold
4.4 million shares through a sales agent in at the market offerings
which raised net proceeds of $210.8 million.
- On August 29, 2023, the Company
acquired the land associated with the Hard Rock Casino development
project in Rockford, IL from an affiliate of 815 Entertainment, LLC
(together, "815 Entertainment") for $100 million. Simultaneously
with the land acquisition, GLPI entered into a ground lease with
815 Entertainment for a 99- year term. The initial annual rent for
the ground lease is $8 million, subject to fixed 2% annual
escalation beginning with the lease's first anniversary and for the
entirety of its term. (the "Rockford Lease")
- In addition to the Rockford Lease,
GLPI has also committed to providing up to $150 million of
development funding (of which $40 million was funded as of
September 30, 2023) via a senior secured delayed draw term loan
(the "Rockford Loan"). Any borrowings under the Rockford Loan will
be subject to an interest rate of 10%. The Rockford Loan has a draw
period of up to one year and a maximum outstanding period of up to
six years (five-year initial term with a one-year extension). The
Rockford Loan is prepayable without penalty following the opening
of the Hard Rock Casino in Rockford, IL, which is expected in
September 2024. The Rockford Loan advances are subject to typical
construction lending terms and conditions. The Company also
received a right of first refusal on the building improvements of
the Hard Rock Casino in Rockford, IL if there is a future decision
to sell them once completed.
- On August 24, 2023, the Company's
landside development project at Casino Queen Baton Rouge opened to
the public. Rent under the Casino Queen Master Lease was adjusted
to reflect a yield of 8.25% on GLPI's project costs of $77
million.
- On May 13, 2023, the Company,
Tropicana Las Vegas, Inc., a Nevada corporation and wholly owned
subsidiary of Bally’s Corporation (NYSE: BALY) (“Bally’s”), and
Athletics Holdings LLC (“Athletics”), which owns the Major League
Baseball (“MLB”) team currently known as the Oakland Athletics (the
“Team”), entered into a binding letter of intent (the "LOI")
setting forth the terms for developing a stadium that would serve
as the home venue for the Team (the “Stadium”). The Stadium is
expected to complement the potential resort redevelopment
envisioned at our 35-acre property in Clark County, Nevada (the
“Tropicana Site”), owned indirectly by GLPI through its indirect
subsidiary Tropicana Land LLC, a Nevada limited liability company,
and leased by GLPI to Bally’s pursuant to that certain Ground Lease
dated as of September 26, 2022 (the “Original Ground Lease”). The
LOI allows for Athletics to be granted fee ownership by GLPI of
approximately 9 acres of the Tropicana Site for construction of the
Stadium. The LOI provides that following the Stadium site transfer,
there will be no reduction in the rent obligations of Bally’s on
the remaining portion of the Tropicana Site or other modifications
to the Original Ground Lease, and that to the extent GLPI has any
consent or approval rights under the Original Ground Lease, such
rights shall remain enforceable unless expressly modified in
writing in the definitive documents. Bally's and GLPI are agreeing
to provide the Stadium site transfer in exchange for the benefits
that the Stadium is expected to bring to the Tropicana Site. The
LOI provides that the Athletics shall pay all the costs associated
with the design, development, and construction of the Stadium and
Bally’s shall pay all costs for the redevelopment of the casino and
hotel resort amenities. GLPI is expected to commit to up to $175
million of funding for hard construction costs, such as demolition
and site preparation and build out of minimum public spaces needed
for utilization of the Stadium (including, without limitation, a
food, beverage and retail entrance plaza and structured parking).
The LOI provides that during the development period, rent will be
due at 8.5% of what has been funded, provided that the first $15.0
million advanced for the costs of construction of the food,
beverage and retail entrance plaza shall not be subject to
increased rent. GLPI may have the opportunity to fund additional
amounts of the construction under certain circumstances. In
addition, the LOI provides that the transaction will be subject to
customary approvals and other conditions, including, without
limitation, the approval of the MLB owners to relocate the Team on
or before December 1, 2023, and certain approvals by the Nevada
Gaming Control Board and Nevada Gaming Commission.
- On January 13, 2023, the Company
called for redemption of all of its $500 million, 5.375% Senior
Notes (the "Notes") due in 2023. GLPI redeemed all of the Notes on
February 12, 2023 (the "Redemption Date") for $507.5 million which
represented 100% of the principal amount of the Notes plus accrued
interest through the Redemption Date. GLPI funded the redemption of
the Notes primarily from cash on hand as well as through the
settlement of the Company's forward sale agreement which resulted
in net proceeds of $64.6 million through the issuance of 1,284,556
shares.
- On January 3, 2023, the Company
completed its previously announced acquisition from Bally's of the
real property assets of Bally's Tiverton and Hard Rock Hotel &
Casino Biloxi for total consideration of $635 million, inclusive of
approximately $15 million in the form of OP units. These properties
were added to the Company's existing Master Lease with Bally's. The
initial rent for the lease was increased by $48.5 million on an
annualized basis, subject to contractual escalations based on the
Consumer Price Index ("CPI"), with a 1% floor and a 2% ceiling,
subject to CPI meeting a 0.5% threshold. In connection with the
closing, a $200 million deposit funded by GLPI in September 2022
was returned to the Company along with a $9.0 million transaction
fee that was accounted for as a reduction of the purchase price of
the assets acquired with no earnings impact. Concurrent with the
closing, GLPI borrowed $600 million under its previously structured
delayed draw term loan. GLPI continues to have the option, subject
to receipt by Bally's of required consents to acquire the real
property assets of Bally's Twin River Lincoln Casino Resort in
Lincoln, RI prior to December 31, 2026, for a purchase price of
$771 million which, if consummated, would result in additional
initial rent of $58.8 million.
- Effective January 1, 2023, the
Company completed the creation of a new master lease (the "PENN
2023 Master Lease") with PENN Entertainment, Inc. (NASDAQ: PENN)
("PENN") for seven of PENN's current properties. The Company and
PENN also agreed to a funding mechanism to support PENN's
relocation and development opportunities at several properties
included in the PENN 2023 Master Lease. The original PENN Master
Lease was amended (the "Amended PENN Master Lease") to remove
PENN's properties in Aurora and Joliet, Illinois, Columbus and
Toledo, Ohio, and Henderson, Nevada. Those properties were added to
the PENN 2023 Master Lease. In addition, the existing leases for
the Hollywood Casino at The Meadows in Pennsylvania and Hollywood
Casino Perryville in Maryland were terminated and these properties
were transferred to the PENN 2023 Master Lease. GLPI agreed to fund
up to $225 million for the relocation of PENN's riverboat casino in
Aurora at a 7.75% cap rate. GLPI also agreed to fund, at PENN's
election, up to an additional $350 million for the relocation of
Hollywood Casino Joliet as well as the construction of a hotel at
Hollywood Casino Columbus and a second hotel tower at the M Resort
Spa Casino in Henderson, Nevada, at the then current market rates.
The terms of the PENN 2023 Master Lease and the Amended PENN Master
Lease are substantially similar to the original PENN Master Lease
with the following key differences;
- The PENN 2023 Master Lease is
cross-defaulted and co-terminus with the Amended PENN Master
Lease;
- The annual rent for the PENN 2023
Master Lease is $232.2 million in base rent which is fixed with
annual escalation of 1.50%, with the first escalation occurring for
the lease year beginning on November 1, 2023; and,
- The annual rent for the Amended
PENN Master Lease is $284.1 million, consisting of $208.2 million
of building base rent, $43.0 million of land base rent, and $32.9
million of percentage rent.
Dividends
On August 30, 2023, the Company's Board of
Directors declared the third quarter dividend of $0.73 per share on
the Company's common stock. The dividend was paid on September 29,
2023 to shareholders of record on September 15, 2023. The third
quarter 2022 dividend was $0.705 per share on the Company's common
stock.
2023 Guidance
Reflecting the current operating and competitive
environment, the Company is updating its AFFO guidance for the full
year 2023 based on the following assumptions and other factors:
- The guidance does not include the
impact on operating results from any pending or possible future
acquisitions or dispositions, future capital markets activity, or
other future non-recurring transactions.
- The guidance assumes there will be
no material changes in applicable legislation, regulatory
environment, world events, including a new pandemic outbreak,
weather, recent consumer trends, economic conditions, oil prices,
competitive landscape or other circumstances beyond our control
that may adversely affect the Company's results of operations.
- We anticipate that annual
percentage rent will decline by approximately $5.0 million to $6.0
million and annual building base rent will increase by $4.2 million
on the Amended Penn Master Lease effective November 1, 2023,
resulting in an overall reduction to the Company's 2023 rental
income of between $0.1 million and $0.3 million.
The Company estimates AFFO for the year ending
December 31, 2023 will be between $1,003 million and $1,006
million, or between $3.68 and $3.69 per diluted share and OP units.
GLPI's prior guidance contemplated AFFO for the year ending
December 31, 2023 of between $994 million and $999 million, or
between $3.66 and $3.68 per diluted share and OP units.
The Company does not provide a reconciliation
for non-GAAP estimates on a forward-looking basis, including the
information above, where it is unable to provide a meaningful or
accurate calculation or estimation of reconciling items and the
information is not available without unreasonable
effort. This is due to the inherent difficulty of
forecasting the timing and/or amounts of various items that would
impact net income, which is the most directly comparable
forward-looking GAAP financial measure. This includes, for example,
provision for credit losses, net, acquisition costs and other
non-core items that have not yet occurred, are out of the Company’s
control and/or cannot be reasonably predicted. For the
same reasons, the Company is unable to address the probable
significance of the unavailable information. In
particular, the Company is unable to predict with reasonable
certainty the amount of the change in the provision for credit
losses, net, under ASU No. 2016-13 - Financial Instruments - Credit
Losses ("ASC 326") in future periods. The non-cash change in the
provision for credit losses under ASC 326 with respect to future
periods is dependent upon future events that are entirely outside
of the Company's control and may not be reliably predicted,
including the performance and future outlook of our tenant's
operations for our leases that are accounted for as investment in
leases, financing receivables, as well as broader macroeconomic
factors and future predictions of such factors. As a result,
forward-looking non-GAAP financial measures provided without the
most directly comparable GAAP financial measures may vary
materially from the corresponding GAAP financial measures.
Portfolio Update
GLPI's primary business consists of acquiring,
financing, and owning real estate property to be leased to gaming
operators in triple-net lease arrangements. As of
September 30, 2023, GLPI's portfolio consisted of interests in
61 gaming and related facilities, including, the real property
associated with 34 gaming and related facilities operated by PENN,
the real property associated with 7 gaming and related facilities
operated by Caesars Entertainment, Inc. (NASDAQ: CZR) ("Caesars"),
the real property associated with 4 gaming and related facilities
operated by Boyd Gaming Corporation (NYSE: BYD) ("Boyd"), the real
property associated with 9 gaming and related facilities operated
by Bally's, the real property associated with 3 gaming and related
facilities operated by The Cordish Companies, the real property
associated with 3 gaming and related facilities operated by Casino
Queen and 1 facility under development that is intended to be
managed by Hard Rock. These facilities are geographically
diversified across 18 states and contain approximately 28.7 million
square feet of improvements.
Conference Call Details
The Company will hold a conference call on
October 27, 2023, at 10:00 a.m. (Eastern Time) to discuss
its financial results, current business trends and market
conditions.
To Participate in the Telephone Conference
Call:Dial in at least five minutes prior to start time.Domestic:
1-877/407-0784International: 1-201/689-8560
Conference Call Playback:Domestic:
1-844/512-2921International: 1-412/317-6671Passcode: 13742175The
playback can be accessed through Friday, November 3, 2023.
WebcastThe conference call will
be available in the Investor Relations section of the Company's
website at www.glpropinc.com. To listen to a live broadcast, go to
the site at least 15 minutes prior to the scheduled start time in
order to register, download and install any necessary software. A
replay of the call will also be available for 90 days thereafter on
the Company’s website.
|
GAMING AND LEISURE PROPERTIES, INC. AND
SUBSIDIARIESConsolidated Statements of
Operations(in thousands, except per share data)
(unaudited) |
| |
|
|
|
| |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Revenues |
|
|
|
|
|
|
|
|
Rental income |
$ |
321,206 |
|
|
$ |
296,779 |
|
|
$ |
958,410 |
|
|
$ |
874,130 |
|
|
Interest income from investment in leases, financing
receivables |
|
38,332 |
|
|
|
37,039 |
|
|
|
112,931 |
|
|
|
101,167 |
|
|
Interest income from real estate loans |
|
22 |
|
|
|
— |
|
|
|
22 |
|
|
|
— |
|
| Total income from real
estate |
|
359,560 |
|
|
|
333,818 |
|
|
|
1,071,363 |
|
|
|
975,297 |
|
| |
|
|
|
|
|
|
|
| Operating
expenses |
|
|
|
|
|
|
|
|
Land rights and ground lease expense |
|
12,406 |
|
|
|
11,754 |
|
|
|
36,312 |
|
|
|
37,178 |
|
|
General and administrative |
|
13,600 |
|
|
|
12,060 |
|
|
|
42,689 |
|
|
|
40,004 |
|
|
Gains from dispositions of property |
|
(22 |
) |
|
|
(67,430 |
) |
|
|
(22 |
) |
|
|
(67,481 |
) |
|
Property transfer tax recovery and impairment charge |
|
(2,187 |
) |
|
|
— |
|
|
|
(2,187 |
) |
|
|
3,298 |
|
|
Depreciation |
|
65,846 |
|
|
|
59,887 |
|
|
|
197,131 |
|
|
|
178,980 |
|
| Provision (benefit) for credit
losses, net |
|
1,613 |
|
|
|
(19 |
) |
|
|
24,012 |
|
|
|
28,859 |
|
| Total operating expenses |
|
91,256 |
|
|
|
16,252 |
|
|
|
297,935 |
|
|
|
220,838 |
|
| Income from operations |
|
268,304 |
|
|
|
317,566 |
|
|
|
773,428 |
|
|
|
754,459 |
|
| |
|
|
|
|
|
|
|
| Other income
(expenses) |
|
|
|
|
|
|
|
|
Interest expense |
|
(79,788 |
) |
|
|
(76,574 |
) |
|
|
(240,519 |
) |
|
|
(232,753 |
) |
|
Interest income |
|
1,273 |
|
|
|
488 |
|
|
|
6,801 |
|
|
|
612 |
|
| Losses on debt
extinguishment |
|
— |
|
|
|
— |
|
|
|
(556 |
) |
|
|
(2,189 |
) |
| Total other expenses |
|
(78,515 |
) |
|
|
(76,086 |
) |
|
|
(234,274 |
) |
|
|
(234,330 |
) |
| |
|
|
|
|
|
|
|
| Income before income
taxes |
|
189,789 |
|
|
|
241,480 |
|
|
|
539,154 |
|
|
|
520,129 |
|
| Income tax expense |
|
482 |
|
|
|
15,261 |
|
|
|
1,040 |
|
|
|
16,431 |
|
| Net
income |
$ |
189,307 |
|
|
$ |
226,219 |
|
|
$ |
538,114 |
|
|
$ |
503,698 |
|
| Net income attributable to
non-controlling interest in the Operating Partnership |
|
(5,297 |
) |
|
|
(6,265 |
) |
|
$ |
(15,123 |
) |
|
|
(13,162 |
) |
| Net income
attributable to common shareholders |
$ |
184,010 |
|
|
$ |
219,954 |
|
|
$ |
522,991 |
|
|
$ |
490,536 |
|
| |
|
|
|
|
|
|
|
| Earnings per common
share: |
|
|
|
|
|
|
|
| Basic earnings attributable to
common shareholders |
$ |
0.70 |
|
|
$ |
0.86 |
|
|
$ |
1.99 |
|
|
$ |
1.96 |
|
| Diluted earnings attributable
to common shareholders |
$ |
0.70 |
|
|
$ |
0.85 |
|
|
$ |
1.99 |
|
|
$ |
1.95 |
|
|
GAMING AND LEISURE PROPERTIES, INC. AND
SUBSIDIARIESCurrent Year Revenue
Detail(in thousands) (unaudited) |
|
|
|
Three Months Ended September 30, 2023 |
Buildingbase rent |
Land baserent |
Percentagerent andotherrentalrevenue |
Interestincome onreal estateloans |
Total cashincome |
Straight-linerentadjustments |
Groundrent inrevenue |
Accretiononfinancingleases |
Totalincomefrom realestate |
|
Amended PENN Master Lease |
$ |
52,049 |
$ |
10,758 |
$ |
7,705 |
|
$ |
— |
$ |
70,512 |
$ |
(3,273 |
) |
$ |
557 |
$ |
— |
$ |
67,796 |
| PENN 2023 Master Lease |
|
58,042 |
|
— |
|
(118 |
) |
|
— |
|
57,924 |
|
6,492 |
|
|
— |
|
— |
|
64,416 |
| Amended Pinnacle Master
Lease |
|
60,277 |
|
17,814 |
|
7,164 |
|
|
— |
|
85,255 |
|
1,858 |
|
|
2,061 |
|
— |
|
89,174 |
| PENN Morgantown Lease |
|
— |
|
773 |
|
— |
|
|
— |
|
773 |
|
— |
|
|
— |
|
— |
|
773 |
| Caesars Master Lease |
|
15,824 |
|
5,932 |
|
— |
|
|
— |
|
21,756 |
|
2,394 |
|
|
362 |
|
— |
|
24,512 |
| Horseshoe St. Louis Lease |
|
5,844 |
|
— |
|
— |
|
|
— |
|
5,844 |
|
472 |
|
|
— |
|
— |
|
6,316 |
| Boyd Master Lease |
|
20,068 |
|
2,946 |
|
2,566 |
|
|
— |
|
25,580 |
|
574 |
|
|
516 |
|
— |
|
26,670 |
| Boyd Belterra Lease |
|
710 |
|
473 |
|
473 |
|
|
— |
|
1,656 |
|
151 |
|
|
— |
|
— |
|
1,807 |
| Bally's Master Lease |
|
25,893 |
|
— |
|
— |
|
|
— |
|
25,893 |
|
— |
|
|
2,723 |
|
— |
|
28,616 |
| Maryland Live! Lease |
|
18,750 |
|
— |
|
— |
|
|
— |
|
18,750 |
|
— |
|
|
2,067 |
|
3,404 |
|
24,221 |
| Pennsylvania Live! Master
Lease |
|
12,500 |
|
— |
|
— |
|
|
— |
|
12,500 |
|
— |
|
|
298 |
|
2,250 |
|
15,048 |
| Casino Queen Master Lease |
|
6,417 |
|
— |
|
— |
|
|
— |
|
6,417 |
|
274 |
|
|
— |
|
— |
|
6,691 |
| Tropicana Las Vegas Lease |
|
— |
|
2,628 |
|
— |
|
|
— |
|
2,628 |
|
— |
|
|
— |
|
— |
|
2,628 |
| Rockford Lease |
|
— |
|
711 |
|
— |
|
|
— |
|
711 |
|
— |
|
|
— |
|
159 |
|
870 |
| Rockford Loan |
|
— |
|
— |
|
— |
|
|
22 |
|
22 |
|
— |
|
|
— |
|
— |
|
22 |
| Total |
$ |
276,374 |
$ |
42,035 |
$ |
17,790 |
|
$ |
22 |
$ |
336,221 |
$ |
8,942 |
|
$ |
8,584 |
$ |
5,813 |
$ |
359,560 |
|
Nine Months Ended September 30, 2023 |
Building base rent |
Land base rent |
Percentage rent and other rental revenue |
Interest income on real estate loans |
Total cash income |
Straight-line rent adjustments |
Ground rent in revenue |
Accretion on financing leases |
Total income from real estate |
|
Amended PENN Master Lease |
$ |
156,146 |
$ |
32,276 |
$ |
23,041 |
|
$ |
— |
$ |
211,463 |
$ |
(9,820 |
) |
$ |
1,735 |
$ |
— |
$ |
203,378 |
| PENN 2023 Master Lease |
|
174,127 |
|
— |
|
(198 |
) |
|
— |
|
173,929 |
|
19,476 |
|
|
— |
|
— |
|
193,405 |
| Amended Pinnacle Master
Lease |
|
179,255 |
|
53,442 |
|
21,492 |
|
|
— |
|
254,189 |
|
5,574 |
|
|
6,086 |
|
— |
|
265,849 |
| PENN Morgantown Lease |
|
— |
|
2,318 |
|
— |
|
|
— |
|
2,318 |
|
— |
|
|
— |
|
— |
|
2,318 |
| Caesars Master Lease |
|
47,472 |
|
17,796 |
|
— |
|
|
— |
|
65,268 |
|
7,182 |
|
|
1,118 |
|
— |
|
73,568 |
| Horseshoe St. Louis Lease |
|
17,533 |
|
— |
|
— |
|
|
— |
|
17,533 |
|
1,415 |
|
|
— |
|
— |
|
18,948 |
| Boyd Master Lease |
|
59,680 |
|
8,839 |
|
7,697 |
|
|
— |
|
76,216 |
|
1,722 |
|
|
1,297 |
|
— |
|
79,235 |
| Boyd Belterra Lease |
|
2,110 |
|
1,420 |
|
1,417 |
|
|
— |
|
4,947 |
|
454 |
|
|
— |
|
— |
|
5,401 |
| Bally's Master Lease |
|
76,546 |
|
— |
|
— |
|
|
— |
|
76,546 |
|
— |
|
|
8,337 |
|
— |
|
84,883 |
| Maryland Live! Lease |
|
56,250 |
|
— |
|
— |
|
|
— |
|
56,250 |
|
— |
|
|
6,307 |
|
10,036 |
|
72,593 |
| Pennsylvania Live! Master
Lease |
|
37,500 |
|
— |
|
— |
|
|
— |
|
37,500 |
|
— |
|
|
931 |
|
6,611 |
|
45,042 |
| Casino Queen Master Lease |
|
17,531 |
|
— |
|
— |
|
|
— |
|
17,531 |
|
442 |
|
|
— |
|
— |
|
17,973 |
| Tropicana Las Vegas Lease |
|
— |
|
7,878 |
|
— |
|
|
— |
|
7,878 |
|
— |
|
|
— |
|
— |
|
7,878 |
| Rockford Lease |
|
— |
|
711 |
|
— |
|
|
— |
|
711 |
|
— |
|
|
— |
|
159 |
|
870 |
| Rockford Loan |
|
— |
|
— |
|
— |
|
|
22 |
|
22 |
|
— |
|
|
— |
|
— |
|
22 |
| Total |
$ |
824,150 |
$ |
124,680 |
$ |
53,449 |
|
$ |
22 |
$ |
1,002,301 |
$ |
26,445 |
|
$ |
25,811 |
$ |
16,806 |
$ |
1,071,363 |
|
Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO
to Adjusted EBITDAGaming and Leisure Properties, Inc. and
SubsidiariesCONSOLIDATED(in thousands, except per
share and share data) (unaudited) |
|
|
| |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Net
income |
$ |
189,307 |
|
|
$ |
226,219 |
|
|
$ |
538,114 |
|
|
$ |
503,698 |
|
| Gains from dispositions of
property, net of tax |
|
(22 |
) |
|
|
(52,793 |
) |
|
|
(22 |
) |
|
|
(52,844 |
) |
| Real estate depreciation |
|
65,155 |
|
|
|
59,416 |
|
|
|
195,494 |
|
|
|
177,569 |
|
| Funds from
operations |
$ |
254,440 |
|
|
$ |
232,842 |
|
|
$ |
733,586 |
|
|
$ |
628,423 |
|
| Straight-line rent
adjustments |
|
(8,942 |
) |
|
|
(3,045 |
) |
|
|
(26,445 |
) |
|
|
(1,522 |
) |
| Other depreciation |
|
691 |
|
|
|
471 |
|
|
|
1,637 |
|
|
|
1,411 |
|
| Provision (benefit) for credit
losses, net |
|
1,613 |
|
|
|
(19 |
) |
|
|
24,012 |
|
|
|
28,859 |
|
| Amortization of land
rights |
|
3,699 |
|
|
|
3,290 |
|
|
|
10,278 |
|
|
|
12,570 |
|
|
Amortization of debt issuance costs, bond premiums and original
issuance discounts |
|
2,406 |
|
|
|
2,348 |
|
|
|
7,312 |
|
|
|
7,598 |
|
| Stock based compensation |
|
5,139 |
|
|
|
4,336 |
|
|
|
17,959 |
|
|
|
16,244 |
|
| Property transfer tax recovery
and impairment charge |
|
(2,187 |
) |
|
|
— |
|
|
|
(2,187 |
) |
|
|
3,298 |
|
| Losses on debt
extinguishment |
|
— |
|
|
|
— |
|
|
|
556 |
|
|
|
2,189 |
|
| Accretion on investment in
leases, financing receivables |
|
(5,813 |
) |
|
|
(5,238 |
) |
|
|
(16,806 |
) |
|
|
(14,103 |
) |
| Non-cash adjustment to
financing lease liabilities |
|
122 |
|
|
|
121 |
|
|
|
347 |
|
|
|
360 |
|
| Capital maintenance
expenditures(1) |
|
(17 |
) |
|
|
(66 |
) |
|
|
(25 |
) |
|
|
(102 |
) |
| Adjusted funds from
operations |
$ |
251,151 |
|
|
$ |
235,040 |
|
|
$ |
750,224 |
|
|
$ |
685,225 |
|
| Interest, net(2) |
|
77,835 |
|
|
|
75,413 |
|
|
|
231,707 |
|
|
|
230,133 |
|
| Income tax expense |
|
482 |
|
|
|
624 |
|
|
|
1,040 |
|
|
|
1,794 |
|
| Capital maintenance
expenditures(1) |
|
17 |
|
|
|
66 |
|
|
|
25 |
|
|
|
102 |
|
|
Amortization of debt issuance costs, bond premiums and original
issuance discounts |
|
(2,406 |
) |
|
|
(2,348 |
) |
|
|
(7,312 |
) |
|
|
(7,598 |
) |
| Adjusted
EBITDA |
$ |
327,079 |
|
|
$ |
308,795 |
|
|
$ |
975,684 |
|
|
$ |
909,656 |
|
| |
|
|
|
|
|
|
|
| Net income, per
diluted common share and OP units |
$ |
0.70 |
|
|
$ |
0.85 |
|
|
$ |
1.99 |
|
|
$ |
1.95 |
|
| FFO, per diluted
common share and OP units |
$ |
0.94 |
|
|
$ |
0.88 |
|
|
$ |
2.71 |
|
|
$ |
2.43 |
|
| AFFO, per diluted
common share and OP units |
$ |
0.92 |
|
|
$ |
0.89 |
|
|
$ |
2.77 |
|
|
$ |
2.65 |
|
| |
|
|
|
|
|
|
|
| Weighted average
number of common shares and OP units outstanding |
|
|
|
|
|
|
|
|
Diluted common shares |
|
264,207,465 |
|
|
|
257,529,993 |
|
|
|
263,425,023 |
|
|
|
251,453,105 |
|
|
OP units |
|
7,653,326 |
|
|
|
7,366,683 |
|
|
|
7,651,226 |
|
|
|
6,714,461 |
|
|
Diluted common shares and OP units |
|
271,860,791 |
|
|
|
264,896,676 |
|
|
|
271,076,249 |
|
|
|
258,167,566 |
|
(1) Capital maintenance expenditures are
expenditures to replace existing fixed assets with a useful life
greater than one year that are obsolete, worn out or no longer cost
effective to repair.
(2) Excludes a non-cash interest expense gross
up related to the ground lease for the Live! Maryland property.
|
Reconciliation of Cash Net Operating IncomeGaming and Leisure
Properties, Inc. and SubsidiariesCONSOLIDATED(in
thousands, except per share and share data) (unaudited) |
| |
| |
Three Months EndedSeptember 30, 2023 |
|
Nine Months EndedSeptember 30, 2023 |
|
Adjusted EBITDA |
$ |
327,079 |
|
|
$ |
975,684 |
|
| General and administrative
expenses |
|
13,600 |
|
|
|
42,689 |
|
| Stock based compensation |
|
(5,139 |
) |
|
|
(17,959 |
) |
| Cash net operating
income(1) |
$ |
335,540 |
|
|
$ |
1,000,414 |
|
(1) Cash net operating income is rental and
other property income less cash property level expenses.
|
Gaming and Leisure Properties, Inc. and
SubsidiariesConsolidated Balance Sheets(in thousands,
except share and per share data) |
| |
September 30, 2023 |
|
December 31, 2022 |
| Assets |
|
|
|
|
Real estate investments, net |
$ |
8,226,303 |
|
|
$ |
7,707,935 |
|
|
Investment in leases, financing receivables, net |
|
1,998,551 |
|
|
|
1,903,195 |
|
|
Real estate loans, net |
|
39,291 |
|
|
|
— |
|
|
Right-of-use assets and land rights, net |
|
839,295 |
|
|
|
834,067 |
|
|
Cash and cash equivalents |
|
81,149 |
|
|
|
239,083 |
|
|
Other assets |
|
51,032 |
|
|
|
246,106 |
|
| Total
assets |
$ |
11,235,621 |
|
|
$ |
10,930,386 |
|
| |
|
|
|
|
Liabilities |
|
|
|
|
Accounts payable and accrued expenses |
$ |
14,433 |
|
|
$ |
6,561 |
|
|
Accrued interest |
|
78,203 |
|
|
|
82,297 |
|
|
Accrued salaries and wages |
|
5,525 |
|
|
|
6,742 |
|
|
Operating lease liabilities |
|
197,373 |
|
|
|
181,965 |
|
|
Financing lease liabilities |
|
54,139 |
|
|
|
53,792 |
|
|
Long-term debt, net of unamortized debt issuance costs, bond
premiums and original issuance discounts |
|
6,246,206 |
|
|
|
6,128,468 |
|
|
Deferred rental revenue |
|
298,329 |
|
|
|
324,774 |
|
|
Other liabilities |
|
31,203 |
|
|
|
27,691 |
|
|
Total liabilities |
|
6,925,411 |
|
|
|
6,812,290 |
|
| |
|
|
|
| Equity |
|
|
|
|
Preferred stock ($.01 par value, 50,000,000 shares authorized, no
shares issued or outstanding at September 30, 2023 and December 31,
2022) |
|
— |
|
|
|
— |
|
|
Common stock ($.01 par value, 500,000,000 shares authorized,
267,015,730 and 260,727,030 shares issued and outstanding at
September 30, 2023 and December 31, 2022, respectively) |
|
2,670 |
|
|
|
2,607 |
|
|
Additional paid-in capital |
|
5,867,491 |
|
|
|
5,573,567 |
|
|
Accumulated deficit |
|
(1,911,623 |
) |
|
|
(1,798,216 |
) |
|
Total equity attributable to Gaming and Leisure Properties |
|
3,958,538 |
|
|
|
3,777,958 |
|
| Noncontrolling interests in
GLPI's Operating Partnership (7,653,326 units and 7,366,683 units
outstanding at September 30, 2023 and December 31, 2022,
respectively) |
|
351,672 |
|
|
|
340,138 |
|
|
Total equity |
|
4,310,210 |
|
|
|
4,118,096 |
|
| Total liabilities and
equity |
$ |
11,235,621 |
|
|
$ |
10,930,386 |
|
Debt Capitalization
The Company’s debt structure as of September 30, 2023 was
as follows:
| |
|
|
|
| |
|
Years to Maturity |
Interest Rate |
|
Balance |
| |
|
|
|
|
(in thousands) |
|
Unsecured $1,750 Million Revolver Due May 2026 |
|
2.6 |
6.73 |
% |
|
10,000 |
|
| Term Loan Credit Facility due
September 2027 |
|
3.9 |
6.73 |
% |
|
600,000 |
|
| Senior Unsecured Notes Due
September 2024 |
|
0.9 |
3.35 |
% |
|
400,000 |
|
| Senior Unsecured Notes Due
June 2025 |
|
1.7 |
5.25 |
% |
|
850,000 |
|
| Senior Unsecured Notes Due
April 2026 |
|
2.5 |
5.38 |
% |
|
975,000 |
|
| Senior Unsecured Notes Due
June 2028 |
|
4.7 |
5.75 |
% |
|
500,000 |
|
| Senior Unsecured Notes Due
January 2029 |
|
5.3 |
5.30 |
% |
|
750,000 |
|
| Senior Unsecured Notes Due
January 2030 |
|
6.3 |
4.00 |
% |
|
700,000 |
|
| Senior Unsecured Notes Due
January 2031 |
|
7.3 |
4.00 |
% |
|
700,000 |
|
| Senior Unsecured Notes Due
January 2032 |
|
8.3 |
3.25 |
% |
|
800,000 |
|
| Other |
|
2.9 |
4.78 |
% |
|
472 |
|
| Total long-term
debt |
|
|
|
|
6,285,472 |
|
| Less: unamortized debt
issuance costs, bond premiums and original issuance discounts |
|
|
|
|
(39,266 |
) |
| Total long-term debt,
net of unamortized debt issuance costs, bond premiums and original
issuance discounts |
|
|
|
|
6,246,206 |
|
| Weighted
average |
|
4.6 |
4.80 |
% |
|
|
| |
|
|
|
|
|
Rating Agency - Issue Rating
|
|
Rating Agency |
|
Rating |
|
| |
Standard & Poor's |
|
BBB- |
|
| |
Fitch |
|
BBB- |
|
| |
Moody's |
|
Ba1 |
|
Properties
|
Description |
Location |
Date Acquired |
Tenant/Operator |
|
Amended PENN Master Lease (14 Properties) |
|
|
|
| Hollywood Casino
Lawrenceburg |
Lawrenceburg, IN |
11/1/2013 |
PENN |
| Argosy Casino Alton |
Alton, IL |
11/1/2013 |
PENN |
| Hollywood Casino at Charles
Town Races |
Charles Town, WV |
11/1/2013 |
PENN |
| Hollywood Casino at Penn
National Race Course |
Grantville, PA |
11/1/2013 |
PENN |
| Hollywood Casino Bangor |
Bangor, ME |
11/1/2013 |
PENN |
| Zia Park Casino |
Hobbs, NM |
11/1/2013 |
PENN |
| Hollywood Casino Gulf
Coast |
Bay St. Louis, MS |
11/1/2013 |
PENN |
| Argosy Casino Riverside |
Riverside, MO |
11/1/2013 |
PENN |
| Hollywood Casino Tunica |
Tunica, MS |
11/1/2013 |
PENN |
| Boomtown Biloxi |
Biloxi, MS |
11/1/2013 |
PENN |
| Hollywood Casino St.
Louis |
Maryland Heights, MO |
11/1/2013 |
PENN |
| Hollywood Gaming Casino at
Dayton Raceway |
Dayton, OH |
11/1/2013 |
PENN |
| Hollywood Gaming Casino at
Mahoning Valley Race Track |
Youngstown, OH |
11/1/2013 |
PENN |
| 1st Jackpot Casino |
Tunica, MS |
5/1/2017 |
PENN |
| PENN 2023 Master Lease
(7 Properties) |
|
|
|
| Hollywood Casino Aurora |
Aurora, IL |
11/1/2013 |
PENN |
| Hollywood Casino Joliet |
Joliet, IL |
11/1/2013 |
PENN |
| Hollywood Casino Toledo |
Toledo, OH |
11/1/2013 |
PENN |
| Hollywood Casino Columbus |
Columbus, OH |
11/1/2013 |
PENN |
| M Resort |
Henderson, NV |
11/1/2013 |
PENN |
| Hollywood Casino at the
Meadows |
Washington, PA |
9/9/2016 |
PENN |
| Hollywood Casino
Perryville |
Perryville, MD |
7/1/2021 |
PENN |
| Amended Pinnacle
Master Lease (12 Properties) |
|
|
|
| Ameristar Black Hawk |
Black Hawk, CO |
4/28/2016 |
PENN |
| Ameristar East Chicago |
East Chicago, IN |
4/28/2016 |
PENN |
| Ameristar Council Bluffs |
Council Bluffs, IA |
4/28/2016 |
PENN |
| L'Auberge Baton Rouge |
Baton Rouge, LA |
4/28/2016 |
PENN |
| Boomtown Bossier City |
Bossier City, LA |
4/28/2016 |
PENN |
| L'Auberge Lake Charles |
Lake Charles, LA |
4/28/2016 |
PENN |
| Boomtown New Orleans |
New Orleans, LA |
4/28/2016 |
PENN |
| Ameristar Vicksburg |
Vicksburg, MS |
4/28/2016 |
PENN |
| River City Casino &
Hotel |
St. Louis, MO |
4/28/2016 |
PENN |
| Jackpot Properties (Cactus
Petes and Horseshu) |
Jackpot, NV |
4/28/2016 |
PENN |
| Plainridge Park Casino |
Plainridge, MA |
10/15/2018 |
PENN |
| Caesars Master Lease
(6 Properties) |
|
|
|
| Tropicana Atlantic City |
Atlantic City, NJ |
10/1/2018 |
CZR |
| Tropicana Laughlin |
Laughlin, NV |
10/1/2018 |
CZR |
| Trop Casino Greenville |
Greenville, MS |
10/1/2018 |
CZR |
| Belle of Baton Rouge |
Baton Rouge, LA |
10/1/2018 |
CZR |
| Isle Casino Hotel
Bettendorf |
Bettendorf, IA |
12/18/2020 |
CZR |
| Isle Casino Hotel
Waterloo |
Waterloo, IA |
12/18/2020 |
CZR |
| Boyd Master Lease (3
Properties) |
|
|
|
| Belterra Casino Resort |
Florence, IN |
4/28/2016 |
BYD |
| Ameristar Kansas City |
Kansas City, MO |
4/28/2016 |
BYD |
| Ameristar St. Charles |
St. Charles, MO |
4/28/2016 |
BYD |
| Bally's Master Lease
(8 Properties) |
|
|
|
| Tropicana Evansville |
Evansville, IN |
06/03/2021 |
BALY |
| Dover Downs |
Dover, DE |
06/03/2021 |
BALY |
| Black Hawk (Black Hawk North,
West and East casinos) |
Black Hawk, CO |
04/01/2022 |
BALY |
| Quad Cities Casino &
Hotel |
Rock Island, IL |
04/01/2022 |
BALY |
| Bally's Tiverton Hotel &
Casino |
Tiverton, RI |
01/03/2023 |
BALY |
| Hard Rock Casino and Hotel
Biloxi |
Biloxi, MS |
01/03/2023 |
BALY |
| Casino Queen Master
Lease (3 Properties) |
|
|
|
| Casino Queen |
East St. Louis, IL |
1/23/2014 |
Casino Queen |
| The Queen Baton Rouge |
Baton Rouge, LA |
12/17/2021 |
Casino Queen |
| Casino Queen Marquette |
Marquette, IA |
09/06/2023 |
Casino Queen |
| Pennsylvania Live!
Master Lease (2 Properties) |
|
|
|
| Live! Casino & Hotel
Philadelphia |
Philadelphia, PA |
3/1/2022 |
Cordish |
| Live! Casino Pittsburgh |
Greensburg, PA |
3/1/2022 |
Cordish |
| |
|
|
|
| Single Asset
Leases |
|
|
|
| Belterra Park Gaming &
Entertainment Center |
Cincinnati, OH |
10/15/2018 |
BYD |
| Horseshoe St Louis |
St. Louis, MO |
10/1/2018 |
CZR |
| Hollywood Casino
Morgantown |
Morgantown, PA |
10/1/2020 |
PENN |
| Live! Casino & Hotel
Maryland |
Hanover, MD |
12/29/2021 |
Cordish |
| Tropicana Las Vegas |
Las Vegas, NV |
4/16/2020 |
BALY |
| Rockford |
Rockford, IL |
8/29/2023 |
815 ENT Lessee(1) |
| (1) Managed by Hard Rock |
|
|
|
Lease Information
| |
|
Master Leases |
|
|
|
|
|
PENN 2023 Master Lease |
Amended PENN Master Lease |
PENN Amended Pinnacle Master Lease |
Caesars Amended and Restated Master Lease |
BYD Master Lease |
Bally's Master Lease |
Casino Queen Master Lease |
Pennsylvania Live! Master Lease operated by
Cordish |
| Property Count |
7 |
14 |
12 |
6 |
3 |
8 |
3 |
2 |
| Number of States
Represented |
5 |
9 |
8 |
5 |
2 |
6 |
3 |
1 |
| Commencement Date |
1/1/2023 |
11/1/2013 |
4/28/2016 |
10/1/2018 |
10/15/2018 |
6/3/2021 |
12/17/2021 |
3/1/2022 |
| Lease Expiration Date |
10/31/2033 |
10/31/2033 |
4/30/2031 |
9/30/2038 |
04/30/2026 |
06/02/2036 |
12/31/2036 |
2/28/2061 |
| Remaining Renewal Terms |
15 (3x5 years) |
15 (3x5 years) |
20 (4x5 years) |
20 (4x5 years) |
25 (5x5 years) |
20 (4x5 years) |
20 (4X5 years) |
21 (1 x 11 years, 1 x 10 years) |
| Corporate Guarantee |
Yes |
Yes |
Yes |
Yes |
No |
Yes |
Yes |
No |
| Master Lease with Cross
Collateralization |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
| Technical Default Landlord
Protection |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
| Default Adjusted Revenue to
Rent Coverage |
1.1 |
1.1 |
1.2 |
1.2 |
1.4 |
1.2 |
1.4 |
1.4 |
| Competitive Radius Landlord
Protection |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
| Escalator
Details |
|
|
|
|
|
|
|
|
| Yearly Base Rent Escalator
Maximum |
1.5%(1) |
2% |
2% |
(2) |
2% |
(3) |
(4) |
1.75%(5) |
| Coverage ratio at June 30,
2023(6) |
1.96 |
2.31 |
2.03 |
2.25 |
2.78 |
2.35 |
2.37 |
2.20 |
| Minimum Escalator Coverage
Governor |
N/A |
1.8 |
1.8 |
N/A |
1.8 |
N/A |
N/A |
N/A |
| Yearly Anniversary for
Realization |
November |
November |
May |
October |
May |
June |
December |
March 2024 |
| Percentage Rent Reset
Details |
|
|
|
|
|
|
|
|
| Reset Frequency |
N/A |
5 years |
2 years |
N/A |
2 years |
N/A |
N/A |
N/A |
| Next Reset |
N/A |
November 2023 |
May 2024 |
N/A |
May 2024 |
N/A |
N/A |
N/A |
(1) In addition to the annual escalation, a one-time annualized
increase of $1.4 million occurs on November 1, 2027.
(2) Building base rent will be increased by
1.25% annually in the 5th and 6th lease year, 1.75% in the 7th and
8th lease year, and 2% in the 9th lease year and each year
thereafter.
(3) If the CPI increase is at least 0.5% for any
lease year, then the rent shall increase by the greater of 1% of
the rent as of the immediately preceding lease year and the CPI
increase capped at 2%. If the CPI is less than 0.5% for such lease
year, then the rent shall not increase for such lease year.
(4) Rent increases by 0.5% for the first six
years. Beginning in the seventh lease year through the remainder of
the lease term, if the CPI increases by at least 0.25% for any
lease year then annual rent shall be increased by 1.25%, and if the
CPI is less than 0.25% then rent will remain unchanged for such
lease year.
(5) Effective on the second anniversary of the
commencement date of the lease.
(6) Information with respect to our tenants'
rent coverage over the trailing twelve months was provided by our
tenants as of June 30, 2023. The PENN 2023 Master Lease and Amended
Penn Master Lease were calculated on a proforma basis. GLPI has not
independently verified the accuracy of the tenants' information and
therefore makes no representation as to its accuracy.
Lease Information
| |
Single Property Leases |
|
|
|
Belterra ParkLease operatedby BYD |
Horseshoe St.Louis Leaseoperated byCZR |
MorgantownGround Leaseoperated byPENN |
Live! Casino &HotelMarylandoperated
byCordish |
Tropicana LasVegas GroundLease operatedby
BALY |
Hard RockRockfordGround Leasemanaged byHard
Rock |
| Commencement Date |
10/15/2018 |
9/29/2020 |
10/1/2020 |
12/29/2021 |
9/26/2022 |
8/29/2023 |
| Lease Expiration Date |
04/30/2026 |
10/31/2033 |
10/31/2040 |
12/31/2060 |
9/25/2072 |
8/31/2122 |
| Remaining Renewal Terms |
25 (5x5 years) |
20 (4x5 years) |
30 (6x5 years) |
21 (1 x 11 years, 1 x 10 years) |
49 (1 x 24 years, 1 x 25 years) |
None |
| Corporate Guarantee |
No |
Yes |
Yes |
No |
Yes |
No |
| Technical Default Landlord
Protection |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
| Default Adjusted Revenue to
Rent Coverage |
1.4 |
1.2 |
N/A |
1.4 |
1.4 |
1.4 |
| Competitive Radius Landlord
Protection |
Yes |
Yes |
N/A |
Yes |
Yes |
Yes |
| Escalator
Details |
|
|
|
|
|
|
| Yearly Base Rent Escalator
Maximum |
2% |
1.25%(1) |
1.5%(2) |
1.75%(3) |
(4) |
2% |
| Coverage ratio at June 30,
2023(5) |
3.71 |
2.27 |
N/A |
3.63 |
N/A |
N/A |
| Minimum Escalator Coverage
Governor |
1.8 |
N/A |
N/A |
N/A |
N/A |
N/A |
| Yearly Anniversary for
Realization |
May |
October |
December |
January 2024 |
October |
September |
| Percentage Rent Reset
Details |
|
|
|
|
|
|
| Reset Frequency |
2 years |
N/A |
N/A |
N/A |
N/A |
N/A |
| Next Reset |
May 2024 |
N/A |
N/A |
N/A |
N/A |
N/A |
(1) For the second through fifth lease years, after which time
the annual escalation becomes 1.75% for the 6th and 7th lease years
and then 2% for the remaining term of the lease.
(2) Increases by 1.5% on the opening date (which
occurred on December 22, 2021) and for the first three lease years.
Commencing on the fourth anniversary of the opening date and for
each anniversary thereafter, if the CPI increase is at least 0.5%
for any lease year, the rent for such lease year shall increase by
1.25% of rent as of the immediately preceding lease year, and if
the CPI increase is less than 0.5% for such lease year, then the
rent shall not increase for such lease year.
(3) Effective on the second anniversary of the
commencement date of the lease.
(4) If the CPI increase is at least 0.5% for any
lease year, then the rent shall increase by the greater of 1% of
the rent as of the immediately preceding lease year and the CPI
increase capped at 2%. If the CPI is less than 0.5% for such lease
year, then the rent shall not increase for such lease year.
(5) Information with respect to our tenants'
rent coverage over the trailing twelve months was provided by our
tenants as of June 30, 2023. GLPI has not independently verified
the accuracy of the tenants' information and therefore makes no
representation as to its accuracy.
Disclosure Regarding Non-GAAP Financial
Measures
FFO, FFO per diluted common share and OP units,
AFFO, AFFO per diluted common share and OP units, Adjusted EBITDA
and Cash Net Operating Income ("Cash NOI"), which are detailed in
the reconciliation tables that accompany this release, are used by
the Company as performance measures for benchmarking against the
Company’s peers and as internal measures of business operating
performance, which is used for a bonus metric. These metrics
are presented assuming full conversion of limited partnership units
to common shares and therefore before the income statement impact
of non-controlling interests. The Company believes FFO, FFO per
diluted common share and OP units, AFFO, AFFO per diluted common
share and OP units, Adjusted EBITDA and Cash NOI provide a
meaningful perspective of the underlying operating performance of
the Company’s current business. This is especially true since
these measures exclude real estate depreciation and we believe that
real estate values fluctuate based on market conditions rather than
depreciating in value ratably on a straight-line basis over time.
Cash NOI is rental and other property income, less cash property
level expenses. Cash NOI excludes depreciation, the amortization of
land rights, real estate general and administrative expenses, other
non-routine costs and the impact of certain generally accepted
accounting principles (“GAAP”) adjustments to rental revenue, such
as straight-line rent adjustments and non-cash ground lease income
and expense. It is management's view that Cash NOI is a performance
measure used to evaluate the operating performance of the Company’s
real estate operations and provides investors relevant and useful
information because it reflects only income and operating expense
items that are incurred at the property level and presents them on
an unleveraged basis.
FFO, FFO per diluted common share and OP units,
AFFO, AFFO per diluted common share and OP units, Adjusted EBITDA
and Cash NOI are non-GAAP financial measures that are considered
supplemental measures for the real estate industry and a supplement
to GAAP measures. NAREIT defines FFO as net income (computed
in accordance with GAAP), excluding (gains) or losses from
dispositions of property, net of tax and real estate
depreciation. We have defined AFFO as FFO excluding, as
applicable to the particular period, stock based compensation
expense, the amortization of debt issuance costs, bond premiums and
original issuance discounts, other depreciation, the amortization
of land rights, accretion on investment in leases, financing
receivables, non-cash adjustments to financing lease liabilities,
property transfer tax recoveries, impairment charges, straight-line
rent adjustments, losses on debt extinguishment, and provision
(benefit) for credit losses, net, reduced by capital maintenance
expenditures. We have defined Adjusted EBITDA as net income
excluding, as applicable to the particular period, interest, net,
income tax expense, real estate depreciation, other depreciation,
(gains) or losses from dispositions of property, net of tax, stock
based compensation expense, straight-line rent adjustments, the
amortization of land rights, accretion on investment in leases,
financing receivables, non-cash adjustments to financing lease
liabilities, property transfer tax recoveries, impairment charges,
losses on debt extinguishment, and provision (benefit) for credit
losses, net. Finally, we have defined Cash NOI as Adjusted EBITDA
excluding general and administrative expenses and including, as
applicable to the particular period, stock based compensation
expense and (gains) or losses from dispositions of property.
FFO, FFO per diluted common share and OP units,
AFFO, AFFO per diluted common share and OP units, Adjusted EBITDA
and Cash NOI are not recognized terms under GAAP. These
non-GAAP financial measures: (i) do not represent cash flow from
operations as defined by GAAP; (ii) should not be considered as an
alternative to net income as a measure of operating performance or
to cash flows from operating, investing and financing activities;
and (iii) are not alternatives to cash flow as a measure of
liquidity. In addition, these measures should not be viewed as an
indication of our ability to fund all of our cash needs, including
to make cash distributions to our shareholders, to fund capital
improvements, or to make interest payments on our indebtedness.
Investors are also cautioned that FFO, FFO per diluted common share
and OP units, AFFO, AFFO per diluted common share and OP units,
Adjusted EBITDA and Cash NOI, as presented, may not be comparable
to similarly titled measures reported by other real estate
companies, including REITs, due to the fact that not all real
estate companies use the same definitions. Our presentation of
these measures does not replace the presentation of our financial
results in accordance with GAAP.
About Gaming and Leisure
Properties
GLPI is engaged in the business of acquiring,
financing, and owning real estate property to be leased to gaming
operators in triple-net lease arrangements, pursuant to which the
tenant is responsible for all facility maintenance, insurance
required in connection with the leased properties and the business
conducted on the leased properties, taxes levied on or with respect
to the leased properties and all utilities and other services
necessary or appropriate for the leased properties and the business
conducted on the leased properties.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including our expectations regarding our 2023 AFFO
guidance and the Company benefiting from recently completed
transactions. Forward-looking statements can be identified by the
use of forward-looking terminology such as “expects,” “believes,”
“estimates,” “intends,” “may,” “will,” “should” or “anticipates” or
the negative or other variation of these or similar words, or by
discussions of future events, strategies or risks and
uncertainties. Such forward-looking statements are inherently
subject to risks, uncertainties and assumptions about GLPI and its
subsidiaries, including risks related to the following: GLPI’s
belief that there are near- and longer-term cases for GLPI to
further support tenants with innovative financing, capital and
development structures in an accretive, prudent manner; our
expectation to see continued financial growth over the balance of
2023 and beyond, reflecting our recent portfolio expansions,
recently completed transactions and contractual rent escalators;
our expectation that our disciplined capital investment approach,
combined with our focus on stable and resilient regional gaming
markets, supports our confidence that the Company is well
positioned to further grow our cash dividend and drive long-term
shareholder value; GLPI’s ability to successfully consummate the
transactions contemplated by the May 2023 LOI with Bally’s and
Athletics, including the ability of the parties to satisfy the
various conditions and approvals, including receipt of approvals
from the MLB owners, Nevada Gaming Control Board and Nevada Gaming
Commission; the effect of pandemics, such as COVID-19, on GLPI as a
result of the impact such pandemics may have on the business
operations of GLPI’s tenants and their continued ability to pay
rent in a timely manner or at all; the potential negative impact of
ongoing high levels of inflation (which have been exacerbated by
the armed conflict between Russia and Ukraine and may be further
impacted by recent events in the Middle East) on our tenants'
operations, the availability of and the ability to identify
suitable and attractive acquisition and development opportunities
and the ability to acquire and lease those properties on favorable
terms; the ability to receive, or delays in obtaining, the
regulatory approvals required to own and/or operate its properties,
or other delays or impediments to completing acquisitions or
projects; GLPI's ability to maintain its status as a REIT; our
ability to access capital through debt and equity markets in
amounts and at rates and costs acceptable to GLPI; the impact of
our substantial indebtedness on our future operations; changes in
the U.S. tax law and other state, federal or local laws, whether or
not specific to REITs or to the gaming or lodging industries; and
other factors described in GLPI’s Annual Report on Form 10-K for
the year ended December 31, 2022, Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K, each as filed with the Securities
and Exchange Commission. All subsequent written and oral
forward-looking statements attributable to GLPI or persons acting
on GLPI’s behalf are expressly qualified in their entirety by the
cautionary statements included in this press release. GLPI
undertakes no obligation to publicly update or revise any
forward-looking statements contained or incorporated by reference
herein, whether as a result of new information, future events or
otherwise, except as required by law. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed
in this press release may not occur as presented or at all.
| Contact |
| Gaming
and Leisure Properties, Inc. |
Investor Relations |
| Matthew Demchyk, Chief Investment Officer |
Joseph Jaffoni, Richard Land, James Leahy at JCIR |
| 610/401-2900 |
212/835-8500 |
| investorinquiries@glpropinc.com |
glpi@jcir.com |
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