Gaming and Leisure Properties, Inc. Reports Second Quarter 2022 Results and Initiates 2022 Full Year AFFO Guidance

By | July 28, 2022

WYOMISSING, Pa., July 28, 2022 (GLOBE NEWSWIRE) — Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) (“GLPI” or the “Company”) today announced financial results for the quarter ended June 30, 2022.

Financial Highlights

      Three Months Ended June 30,
(in millions, except per share data)     2022   2021
Total Revenue     $ 326.5   $ 317.8
Income from Operations     $ 237.1   $ 212.1
Net Income     $ 155.8   $ 138.2
FFO (1) (4)     $ 215.3   $ 195.1
AFFO (2) (4)     $ 231.6   $ 203.8
Adjusted EBITDA (3) (4)     $ 307.6   $ 276.2
Net income, per diluted common share and OP units(4)     $ 0.61   $ 0.59
FFO, per diluted common share and OP units (4)     $ 0.84   $ 0.83
AFFO, per diluted common share and OP units (4)     $ 0.91   $ 0.87
               

(1)   Funds from Operations (“FFO”) is net income, excluding (gains) or losses from dispositions of property 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; impairment charges; straight-line rent adjustments; gains on sales of operations, net of tax; losses on debt extinguishment; and provision 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 and gains on sale of operations 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; impairment charges; losses on debt extinguishment and provision 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, “GLPI’s record second quarter results and our ongoing momentum highlight the value of our strategic, accretive approach to the expansion and diversification of our portfolio of top-performing regional gaming assets managed by leading operators, while carefully managing our capital structure and cost of capital. We continue to benefit from new and innovative growth opportunities with existing and new tenants, while driving increased capital returns to shareholders in the form of growing dividends. Given the predictability of our rental revenue streams, we believe the resiliency of our portfolio will be highlighted in the current economic environment.

“Our second quarter growth initiatives include the completion of the acquisition of the land and real estate assets of Bally’s Corporation’s (‘Bally’s’) three casinos in Black Hawk, CO and Bally’s Quad Cities Casino & Hotel in Rock Island, IL for $150 million. With strong rent coverage and an accretive cap rate, the transaction meets our criteria for portfolio expansion while further diversifying our master lease.

“In late June, we again expanded our Bally’s relationship and agreed to acquire, in an accretive transaction, the real estate of Bally’s two Rhode Island casino properties – Bally’s Twin River Lincoln Casino Resort and Bally’s Tiverton Casino & Hotel – for $1.0 billion. Both properties are expected to be added to the existing Bally’s Master Lease with an additional annual rental stream of $76.3 million for GLPI. We believe this transaction is evidence of the strong, supportive, long-term relationships we build with our tenants and we are delighted to further our association with Bally’s. These assets generate excellent operating results as they are the only two gaming facilities in Rhode Island, and the transaction affords GLPI additional geographic diversity as the state would represent our 18th U.S. jurisdiction. Importantly, this transaction features a conservative rent and a master lease structure that offers us material downside protection while presenting GLPI with an opportunity for additional long-term growth. Reflecting our innovation and flexibility when transacting with our tenants, and as disclosed when the transaction was announced, if requisite third-party consents and approvals for our acquisition of Bally’s Twin River Lincoln are not received on a timely basis, GLPI plans to acquire the real property assets of the Hard Rock Hotel & Casino Biloxi in Mississippi and Bally’s Tiverton Casino & Hotel for $635 million. Under this alternative structure, we would have the option to acquire the real property assets of Bally’s Twin River Lincoln prior to December 31, 2024 for a purchase price of $771 million. In either instance, the transactions are expected to be accretive to GLPI’s AFFO.

“As we look to the second half of 2022, GLPI remains well positioned to deliver record results as we further expand and diversify our portfolio and benefit from recently completed transactions and rent escalators. We are delighted with our growth trajectory and intend to continue to prudently invest in existing and new tenant relationships by sourcing portfolio enhancing, accretive transactions. Our disciplined approach to investing capital, combined with our focus on stable regional gaming markets, supports our confidence that the Company is positioned to perform well and demonstrate the resiliency of our business model in the face of potential recession scenarios. Taken together, we believe these factors will support our ability to increase our cash dividends and drive long-term shareholder value.”

Recent Developments

  • On June 28, 2022, the Company announced that it entered into a binding term sheet with Bally’s to acquire the real property assets of Bally’s Twin River Lincoln Casino Resort (“Lincoln”) and Bally’s Tiverton Casino & Hotel (“Tiverton”), subject to customary regulatory approvals and, with respect to Lincoln, subject to lender consent. Pursuant to the terms of the transaction, Bally’s would immediately lease back both properties and continue to own, control, and manage all the gaming operations of the facilities on an uninterrupted basis. Total consideration for the acquisition is $1.0 billion which GLPI intends to fund through a mix of debt, equity, and OP units. Both properties are expected to be added to the existing Bally’s Master Lease between GLPI and Bally’s, with incremental rent of $76.3 million.

    In connection with GLPI’s commitment to consummate the transaction, it also agreed to pre-fund, at Bally’s election, a deposit of up to $200.0 million, which will be credited or repaid to GLPI at the earlier of closing or December 31, 2023, in either case along with a $9.0 million transaction fee payable at closing.

    If all third-party consents and approvals for the acquisition of Lincoln are not timely received, then GLPI would instead acquire the real property assets of the Hard Rock Hotel & Casino Biloxi (“Biloxi”) in Mississippi along with Tiverton, for $635 million, with total annual rent of $48.5 million. In that event, GLPI would also have the option, subject to receipt of required consents, to acquire the real property assets of Lincoln prior to December 31, 2024 for a purchase price of $771 million and additional rent of $58.8 million.

  • On July 1, 2022, the Company issued 7,935,000 shares of its common stock, generating proceeds of approximately $351.0 million. The Company intends to contribute the net proceeds to GLP Capital, L.P., the operating partnership of the Company (the “Operating Partnership”), in exchange for common units of limited partnership interests. The Operating Partnership intends to use the net proceeds to partially finance the acquisition of the real property assets of Lincoln and Tiverton as described above.
  • On May 13, 2022, the Operating Partnership terminated its credit facility that was scheduled to mature on May 21, 2023 that was guaranteed by the Company and entered into a new credit agreement that provides for a $1.75 billion revolving credit facility with a maturity of 4 years, subject to two six-month extensions at the Operating Partnership’s option, and that is guaranteed by the Company. The Company recorded a debt extinguishment charge of $2.2 million in connection with this transaction.
  • On April 1, 2022, GLPI completed its previously announced acquisition from Bally’s of the land and real estate assets of Bally’s three casinos in Black Hawk, Colorado, and Bally’s Quad Cities Casino & Hotel in Rock Island, Illinois, for total consideration of $150 million. These properties were added to the Bally’s Master Lease, with the rent for the Bally’s Master Lease increased by $12.0 million on an annual basis. The rent is subject to contractual escalations based on the Consumer Price Index (“CPI”), with a 1% floor and a 2% ceiling, subject to the CPI meeting a 0.5% threshold.
  • On April 13, 2021, Bally’s agreed to acquire both GLPI’s non-land real estate assets and Penn National Gaming, Inc.’s (“Penn”) outstanding equity interests in Tropicana Las Vegas Hotel and Casino, Inc. (“Tropicana Las Vegas”) for an aggregate cash acquisition price of $150 million. GLPI will retain ownership of the land and concurrently enter into a 50-year ground lease with Bally’s for an initial annual rent of $10.5 million. The ground lease will be supported by a Bally’s corporate guarantee and cross-defaulted with the Bally’s Master Lease. The transaction is expected to close in the second half of 2022.
  • On March 1, 2022, GLPI completed the acquisition of the land and real estate assets of Live! Casino & Hotel Philadelphia (“Live! Philadelphia”) and Live! Casino Pittsburgh (“Live! Pittsburgh”) from Cordish for total consideration of approximately $689 million (inclusive of transaction costs). The Company funded the acquisition by assuming approximately $423 million in debt (which the Company repaid) and issuing approximately $137 million of operating partnership units (approximately 3.0 million total units), with the balance paid from cash on hand, which was in part generated by its December 2021 issuance of senior unsecured notes and common stock.
  • Simultaneous with the March 1, 2022 closing of the above transaction, the Company entered into a master lease with Cordish (the “Pennsylvania Live! Master Lease”), pursuant to which Cordish will continue its ownership, control and management of the operations of Live! Philadelphia and Live! Pittsburgh. The Pennsylvania Live! Master Lease has an initial annual rent of $50.0 million and an initial term of 39 years, with a maximum term of 60 years, inclusive of tenant renewal options, as well as a fixed annual lease escalation of 1.75% on the entirety of rent commencing on the lease’s second anniversary.
  • On December 29, 2021, the Company completed the acquisition of the land and real estate assets of Live! Casino & Hotel Maryland (“Live! Maryland”) from Cordish for total consideration of $1.16 billion (inclusive of transaction costs). Cordish and the Company entered into a lease with Cordish (the “Maryland Live! Lease”), pursuant to which Cordish will continue its ownership, control and management of the operations of Live! Maryland. The Maryland Live! Lease has an initial annual rent of $75 million and an initial term of 39 years, with a maximum term of 60 years, inclusive of tenant renewal options, as well as a fixed annual lease escalation of 1.75% on the entirety of rent commencing on the leases’ second anniversary. The transaction also includes a partnership on future Cordish casino developments, as well as potential financing partnerships between GLPI and Cordish in other areas of Cordish’s portfolio of real estate and operating businesses. GLPI funded the transaction by assuming $363 million in debt, which was repaid, and issuing $205 million of operating partnership units (4.35 million total units), with the balance of the consideration from cash on hand, which in part was generated by GLPI’s December 2021 issuance of senior unsecured notes and common stock.

Dividends

On May 9, 2022, the Company’s Board of Directors declared the second quarter dividend of $0.705 per common share, which was paid on June 24, 2022 to shareholders of record on June 10, 2022. The 2021 second quarter cash dividend was $0.67 per common share.

2022 Guidance

Reflecting the current operating and competitive environment, the Company is providing AFFO guidance for the full year 2022 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 (other than Tropicana Las Vegas which is scheduled to close in the second half of 2022), future capital markets activity, or other future non-recurring transactions.
  • The weighted average shares for the guidance reflects the issuance of 7,935,000 shares of common stock that was issued on July 1, 2022.
  • The guidance takes into consideration the current interest rate environment and an anticipated rise in the Company’s weighted average cost of capital.
  • The guidance assumes there will be no material changes in applicable legislation, regulatory environment, world events, 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.

The Company estimates AFFO for the year ending December 31, 2022 will be between $908 million and $920 million, or between $3.50 and $3.54 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 June 30, 2022, GLPI’s portfolio consisted of interests in 57 gaming and related facilities, including approximately 35 acres of real estate at Tropicana Las Vegas, the real property associated with 34 gaming and related facilities operated by Penn (excluding the Tropicana Las Vegas), the real property associated with 7 gaming and related facilities operated by Caesars Entertainment, Inc. (“Caesars”), the real property associated with 4 gaming and related facilities operated by Boyd Gaming Corporation (“Boyd”), the real property associated with 6 gaming and related facilities operated by Bally’s, the real property associated with 3 gaming and related facilities operated by Cordish and the real property associated with 2 gaming and related facilities operated by Casino Queen. These facilities are geographically diversified across 17 states and contain approximately 29.0 million square feet of improvements.

Conference Call Details

The Company will hold a conference call on July 29, 2022, 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: 1-877/407-0784
International: 1-201/689-8560

Conference Call Playback:
Domestic: 1-844/512-2921
International: 1-412/317-6671
Passcode: 13731677
The playback can be accessed through Friday, August 5, 2022.

Webcast
The 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 SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data) (unaudited)

  Three Months Ended June 30,   Six Months Ended June 30,
    2022       2021       2022       2021  
Revenues              
Rental income $ 289,574     $ 274,102     $ 577,351     $ 537,944  
Interest income from investment in leases, financing receivables   36,939             64,128        
Total income from real estate   326,513       274,102       641,479       537,944  
Gaming, food, beverage and other         43,659             81,360  
Total revenues   326,513       317,761       641,479       619,304  
               
Operating expenses              
Gaming, food, beverage and other         22,382             42,308  
Land rights and ground lease expense   11,720       8,191       25,424       14,924  
General and administrative   12,212       16,821       27,944       32,903  
(Gains) or losses from dispositions of property         93       (51 )     93  
Impairment charge on land   3,298             3,298        
Depreciation   59,964       58,150       119,093       116,851  
Provision for credit losses, net   2,222             28,878        
Total operating expenses   89,416       105,637       204,586       207,079  
Income from operations   237,097       212,124       436,893       412,225  
               
Other income (expenses)              
Interest expense   (78,257 )     (70,413 )     (156,179 )     (140,826 )
Interest income   102       54       124       178  
Losses on debt extinguishment   (2,189 )           (2,189 )      
Total other expenses   (80,344 )     (70,359 )     (158,244 )     (140,648 )
               
Income before income taxes   156,753       141,765       278,649       271,577  
Income tax expense   966       3,549       1,170       6,177  
Net income $ 155,787     $ 138,216     $ 277,479     $ 265,400  
Less: Net income attributable to noncontrolling interest in Operating Partnership   (4,473 )         $ (6,897 )      
Net income attributable to common shareholders $ 151,314     $ 138,216     $ 270,582     $ 265,400  
               
Earnings per common share:              
Basic earnings attributable to common shareholders $ 0.61     $ 0.59     $ 1.09     $ 1.14  
Diluted earnings attributable to common shareholders $ 0.61     $ 0.59     $ 1.09     $ 1.14  
                               

GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Current Year Revenue Detail
(in thousands) (unaudited)

Three Months Ended June 30, 2022 Building
base rent
Land base
rent
Percentage
rent
Total cash
income
Straight-line
rent
adjustments
Ground
rent in
revenue
Accretion
on
financing
leases
Other
rental
revenue
Total
income
from real
estate
Penn Master Lease $ 71,248 $ 23,492 $ 25,102 $ 119,842 $ (7,144 ) $ 647 $ $ $ 113,345
Amended Pinnacle Master Lease   58,709   17,814   7,007   83,530   (373 )   2,012       85,169
Penn Meadows Lease   3,952     2,262   6,214   572         110   6,896
Penn Morgantown Lease     762     762             762
Penn Perryville Lease   1,457   485     1,942   60           2,002
Caesars Master Lease   15,628   5,932     21,560   2,590     378       24,528
Lumiere Place Lease   5,773       5,773   544           6,317
BYD Master Lease   19,546   2,947   2,531   25,024   574     433       26,031
BYD Belterra Lease   691   474   467   1,632             1,632
Bally’s Master Lease   13,000       13,000       2,343       15,343
Maryland Live! Lease   18,750       18,750       2,162   3,114     24,026
Pennsylvania Live! Master Lease   12,500       12,500       295   2,026     14,821
Casino Queen Master Lease   5,530       5,530   111           5,641
Total $ 226,784 $ 51,906 $ 37,369 $ 316,059 $ (3,066 ) $ 8,270 $ 5,140 $ 110 $ 326,513
Six Months Ended June 30, 2022 Building
base rent
Land base
rent
Percentage
rent
Total cash
income
Straight-line
rent
adjustments
Ground
rent in
revenue
Accretion
on
financing
leases
Other
rental
revenue
Total
income
from real
estate
Penn Master Lease $ 142,497 $ 46,984 $ 48,739 $ 238,220 $ (4,912 ) $ 1,325 $ $ $ 234,633
Amended Pinnacle Master Lease   116,645   35,628   13,702   165,975   (5,210 )   3,884       164,649
Penn Meadows Lease   7,905     4,523   12,428   1,144         244   13,816
Penn Morgantown Lease     1,524     1,524             1,524
Penn Perryville Lease   2,914   971     3,885   120           4,005
Caesars Master Lease   31,257   11,864     43,121   5,179     756       49,056
Lumiere Place Lease   11,545       11,545   1,088           12,633
BYD Master Lease   38,835   5,893   4,992   49,720   1,148     865       51,733
BYD Belterra Lease   1,373   947   921   3,241   (303 )         2,938
Bally’s Master Lease   23,000       23,000       4,521       27,521
Maryland Live! Lease   37,500       37,500       4,256   6,173     47,929
Pennsylvania Live! Master Lease   16,667       16,667       401   2,692     19,760
Casino Queen Master Lease   11,059       11,059   223           11,282
Total $ 441,197 $ 103,811 $ 72,877 $ 617,885 $ (1,523 ) $ 16,008 $ 8,865 $ 244 $ 641,479
                                       

Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA
Gaming and Leisure Properties, Inc. and Subsidiaries
CONSOLIDATED
(in thousands, except per share and share data) (unaudited)

  Three Months Ended June 30,   Six Months Ended June 30,
    2022       2021       2022       2021  
Net income $ 155,787     $ 138,216     $ 277,479     $ 265,400  
(Gains) or losses from dispositions of property         93       (51 )     93  
Real estate depreciation   59,494       56,783       118,153       113,172  
Funds from operations $ 215,281     $ 195,092     $ 395,581     $ 378,665  
Straight-line rent adjustments   3,066       (828 )     1,523       (1,656 )
Other depreciation (1)   470       1,367       940       3,679  
Provision for credit losses, net   2,222             28,878        
Amortization of land rights   3,290       3,006       9,280       5,849  
Amortization of debt issuance costs, bond premiums and original issuance discounts   2,479       2,470       5,250       4,940  
Stock based compensation   4,308       3,612       11,908       9,400  
Impairment charge on land   3,298             3,298        
Losses on debt extinguishment   2,189             2,189        
Accretion on investment in leases, financing receivables   (5,140 )           (8,865 )      
Non-cash adjustment to financing lease liabilities   115             239        
Capital maintenance expenditures (2)   (21 )     (914 )     (36 )     (1,352 )
Adjusted funds from operations $ 231,557     $ 203,805     $ 450,185     $ 399,525  
Interest, net (3)   77,490     $ 70,359       154,720       140,648  
Income tax expense   966     $ 3,549       1,170       6,177  
Capital maintenance expenditures (2)   21     $ 914       36       1,352  
Amortization of debt issuance costs, bond premiums and original issuance discounts   (2,479 )   $ (2,470 )     (5,250 )     (4,940 )
Adjusted EBITDA $ 307,555     $ 276,157     $ 600,861     $ 542,762  
               
Net income, per diluted common share and OP units $ 0.61     $ 0.59     $ 1.09     $ 1.14  
FFO, per diluted common share and OP units $ 0.84     $ 0.83     $ 1.55     $ 1.62  
AFFO, per diluted common share and OP units $ 0.91     $ 0.87     $ 1.77     $ 1.71  
               
Weighted average number of common shares OP units outstanding              
Diluted common shares   248,361,281       234,050,329       248,321,517       233,768,296  
OP units   7,366,683             6,382,945        
Diluted common shares and OP units   255,727,964       234,050,329       254,704,462       233,768,296  
                               

(1)   Other depreciation includes both real estate and equipment depreciation from the Company’s operations at Hollywood Casino Perryville and Hollywood Casino Baton Rouge which were sold in 2021, as well as equipment depreciation from the real estate investment trust (“REIT”) subsidiaries.

(2)   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.

(3)   Current year amount excludes non-cash interest expense gross up related to the ground lease for the Live! Maryland property.

Reconciliation of Cash Net Operating Income
Gaming and Leisure Properties, Inc. and Subsidiaries
CONSOLIDATED
(in thousands, except per share and share data) (unaudited)

    Three Months Ended
June 30, 2022
  Six Months Ended
June 30, 2022
Adjusted EBITDA   $ 307,555     $ 600,861  
General and administrative expenses     12,212       27,944  
Stock based compensation     (4,308 )     (11,908 )
Cash net operating income (1)   $ 315,459     $ 616,897  
                 

(1)   Cash net operating income is rental and other property income less cash property level expenses.


Gaming and Leisure Properties, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)

  June 30, 2022   December 31, 2021
Assets      
Real estate investments, net $ 7,812,645     $ 7,777,551  
Investment in leases, financing receivables, net   1,870,639       1,201,670  
Assets held for sale   81,228       77,728  
Right-of-use assets and land rights, net   841,537       851,819  
Cash and cash equivalents   6,286       724,595  
Other assets   45,399       57,086  
Total assets $ 10,657,734     $ 10,690,449  
       
Liabilities      
Accounts payable, dividend payable and accrued expenses $ 6,495     $ 63,543  
Accrued interest   85,060       71,810  
Accrued salaries and wages   3,567       6,798  
Operating lease liabilities   182,900       183,945  
Financing lease liabilities   53,548       53,309  
Long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts   6,522,306       6,552,372  
Deferred rental revenue   330,591       329,068  
Other liabilities   24,605       39,464  
Total liabilities   7,209,072       7,300,309  
       
Equity      
Preferred stock ($.01 par value, 50,000,000 shares authorized, no shares issued or outstanding at June 30, 2022 and December 31, 2021)          
Common stock ($.01 par value, 500,000,000 shares authorized, 247,544,343 and 247,206,937 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively)   2,475       2,472  
Additional paid-in capital   4,953,946       4,953,943  
Accumulated deficit   (1,846,549 )     (1,771,402 )
Total equity attributable to Gaming and Leisure Properties   3,109,872       3,185,013  
Noncontrolling interests in GLPI’s Operating Partnership (7,366,683 units and 4,348,774 units outstanding at June 30, 2022 and December 31, 2021, respectively)   338,790       205,127  
Total equity   3,448,662       3,390,140  
Total liabilities and equity $ 10,657,734     $ 10,690,449  
               


Debt Capitalization

The Company’s debt structure as of June 30, 2022 was as follows:

         
      Years to
Maturity
Interest Rate   Balance
            (in thousands)
Unsecured $1,750 Million Revolver Due May 2026     3.9 2.64% (1)   394,000  
Senior Unsecured Notes Due November 2023     1.3 5.38 %   500,000  
Senior Unsecured Notes Due September 2024     2.2 3.35 %   400,000  
Senior Unsecured Notes Due June 2025     2.9 5.25 %   850,000  
Senior Unsecured Notes Due April 2026     3.8 5.38 %   975,000  
Senior Unsecured Notes Due June 2028     5.9 5.75 %   500,000  
Senior Unsecured Notes Due January 2029     6.6 5.30 %   750,000  
Senior Unsecured Notes Due January 2030     7.6 4.00 %   700,000  
Senior Unsecured Notes Due January 2031     8.6 4.00 %   700,000  
Senior Unsecured Notes Due January 2032     9.6 3.25 %   800,000  
Other     4.2 4.78 %   655  
Total long-term debt           6,569,655  
Less: unamortized debt issuance costs, bond premiums and original issuance discounts           (47,349 )
Total long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts           6,522,306  
Weighted average     5.5 4.54 %    
             

(1)   Rate above includes the facility fee on the commitments under the Credit Agreement, which is due regardless of usage, at a rate that ranges from 0.125% to 0.3% per annum, depending on the credit rating assigned to the Credit Agreement from time to time. The current facility fee rate is 0.25%.

Rating Agency – Issue Rating

  Rating Agency   Rating  
  Standard & Poor’s   BBB-  
  Fitch   BBB-  
  Moody’s   Ba1  
         


Properties

Description Location Date Acquired Tenant/Operator
PENN Master Lease (19 Properties)      
Hollywood Casino Lawrenceburg Lawrenceburg, IN 11/1/2013 PENN
Hollywood Casino Aurora Aurora, IL 11/1/2013 PENN
Hollywood Casino Joliet Joliet, IL 11/1/2013 PENN
Argosy Casino Alton Alton, IL 11/1/2013 PENN
Hollywood Casino Toledo Toledo, OH 11/1/2013 PENN
Hollywood Casino Columbus Columbus, OH 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
M Resort Henderson, NV 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
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
CZR 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
BYD 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 (6 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
Casino Queen Master Lease (2 Properties)      
Casino Queen East St. Louis 1/23/2014 Casino Queen
Hollywood Casino Baton Rouge Baton Rouge, LA 12/17/2021 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
Lumière Place St. Louis, MO 10/1/2018 CZR
The Meadows Racetrack and Casino Washington, PA 9/9/2016 PENN
Hollywood Casino Morgantown Morgantown, PA 10/1/2020 PENN
Hollywood Casino Perryville Perryville, MD 7/1/2021 PENN
Live! Casino Maryland Hanover, MD 12/29/2021 Cordish
       
TRS Segment      
Tropicana Las Vegas Las Vegas, NV 4/16/2020 PENN
       


Lease Information

  Master Leases      
  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 19 12 6 3 6 2 2
Number of States Represented 10 8 5 2 4 2 1
Commencement Date 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 4/30/2031 9/30/2038 04/30/2026 06/02/2036 12/17/2036 3/31/2061
Remaining Renewal Terms 15 (3×5 years) 20 (4×5 years) 20 (4×5 years) 25 (5×5 years) 20 (4×5 years) 20 (4X5 years) 21 (1 x 11 years, 1 x 10 years)
Corporate Guarantee Yes Yes Yes No Yes Yes No
Master Lease with Cross Collateralization Yes Yes Yes Yes Yes Yes Yes
Technical Default Landlord Protection Yes Yes Yes Yes Yes Yes Yes
Default Adjusted Revenue to Rent Coverage 1.1 1.2 1.2 1.4 1.35 (1) 1.4 1.4
Competitive Radius Landlord Protection Yes Yes Yes Yes Yes Yes Yes
Escalator Details              
Yearly Base Rent Escalator Maximum 2% 2% (3) 2% (4) (5) 1.75% (6)
Coverage ratio at March 31, 2022 (2) 2.29 2.34 2.66 2.89 N/A 3.12 N/A
Minimum Escalator Coverage Governor 1.8 1.8 N/A 1.8 N/A N/A N/A
Yearly Anniversary for Realization November May October May June December March 2024
Percentage Rent Reset Details              
Reset Frequency 5 years 2 years N/A 2 years N/A N/A N/A
Next Reset November 2023 May 2024 N/A May 2024 N/A N/A N/A

(1)   The Bally’s Master Lease ratio declines to 1.20 once annual rent reaches $60 million.

(2)   Information with respect to our tenants’ rent coverage over the trailing twelve months was provided by our tenants as of March 31, 2022. Casino Queen Master Lease is calculated on a proforma basis for the addition of Hollywood Casino Baton Rouge. GLPI has not independently verified the accuracy of the tenants’ information and therefore makes no representation as to its accuracy.

(3)   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.

(4)   If the CPI increase is at least 0.5% for any lease year, then the rent under the Bally’s Master Lease 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)   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.

(6)   Effective on the second anniversary of the commencement date of the lease.

Lease Information

    Single Property Leases      
  Belterra Park
Lease operated
by BYD
Meadows
Lease operated
by PENN
Lumière Place
Lease operated
by CZR
Morgantown
Lease operated
by PENN
Perryville
Lease operated
by PENN
Live! Casino &
Hotel
Maryland
operated by
Cordish
Commencement Date 10/15/2018 9/9/2016 9/29/2020 10/1/2020 7/1/2021 12/29/2021
Lease Expiration Date 04/30/2026 9/30/2026 10/31/2033 10/31/2040 6/30/2041 12/31/2060
Remaining Renewal Terms 25 (5×5 years) 19 (3x5years, 1×4 years) 20 (4×5 years) 30 (6×5 years) 15 (3×5 years) 21 (1 x 11 years, 1 x 10 years)
Corporate Guarantee No Yes Yes Yes Yes No
Technical Default Landlord Protection Yes Yes Yes Yes Yes Yes
Default Adjusted Revenue to Rent Coverage 1.4 1.2 1.2 N/A 1.2 1.4
Competitive Radius Landlord Protection Yes Yes Yes N/A Yes Yes
Escalator Details            
Yearly Base Rent Escalator Maximum 2% 5% (1) 1.25% (2) 1.5% (3) 1.5% (4) 1.75% (5)
Coverage ratio at March 31, 2022 (6) 4.76 1.90 2.59 N/A N/A N/A
Minimum Escalator Coverage Governor 1.8 2.0 N/A N/A N/A N/A
Yearly Anniversary for Realization May October October December July January 2024
Percentage Rent Reset Details            
Reset Frequency 2 years 2 years N/A N/A N/A N/A
Next Reset May 2024 October 2022 N/A N/A N/A N/A

(1)   Meadows contains an annual escalator for up to 5% of the base rent, if certain rent coverage ratio thresholds are met, which remains at 5% until the earlier of 10 years or the year in which total rent is $31 million, at which point the escalator is reduced to 2%.

(2)   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.

(3)   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.

(4)   Building base rent increases for the second through fourth lease years, after which time the annual escalation becomes 1.25% to the extent CPI for the preceding lease year is at least 0.5%.

(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 March 31, 2022. 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 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 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, impairment losses, straight-line rent adjustments, (gains) or losses on sale of operations, net of tax, losses on debt extinguishment, and provision 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, income tax expense, real estate depreciation, other depreciation, gains or losses from dispositions of property and gains or losses on sales of operations, 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, impairment losses, losses on debt extinguishment, and provision for credit losses, net. For financial reporting and debt covenant purposes, the Company includes the amounts of non-cash rents earned in FFO, AFFO, and Adjusted EBITDA. 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 ability to increase AFFO and dividends through portfolio expansion and diversification and the potential impact of future transactions, if any. 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 ability to successfully consummate the announced transactions with Bally’s, including the ability of the parties to satisfy the various conditions to closing, including receipt of all required regulatory approvals (on the terms agreed upon between the parties) and the receipt of required consents, or other delays or impediments to completing the proposed transaction; 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 recent high levels of inflation (which have been exacerbated by the armed conflict between Russia and Ukraine) 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, 2021, 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
[email protected] [email protected]

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