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Gaming And Leisure Properties Reports Record Third Quarter 2023 Results And Updates 2023 Full Year Guidance
Source: Nasdaq GlobeNewswire / 26 Oct 2023 16:15:01 America/New_York
WYOMISSING, Pa., Oct. 26, 2023 (GLOBE NEWSWIRE) -- 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: 1-877/407-0784
International: 1-201/689-8560Conference Call Playback:
Domestic: 1-844/512-2921
International: 1-412/317-6671
Passcode: 13742175
The playback can be accessed through Friday, November 3, 2023.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 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 SUBSIDIARIES
Current Year Revenue Detail
(in thousands) (unaudited)Three Months Ended September 30, 2023 Building
base rentLand base
rentPercentage
rent and
other
rental
revenueInterest
income on
real estate
loansTotal cash
incomeStraight-line
rent
adjustmentsGround
rent in
revenueAccretion
on
financing
leasesTotal
income
from real
estateAmended 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 rentLand base
rentPercentage
rent and
other
rental
revenueInterest
income on
real estate
loansTotal cash
incomeStraight-line
rent
adjustmentsGround
rent in
revenueAccretion
on
financing
leasesTotal
income
from real
estateAmended 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 EBITDA
Gaming and Leisure Properties, Inc. and Subsidiaries
CONSOLIDATED
(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 Income
Gaming and Leisure Properties, Inc. and Subsidiaries
CONSOLIDATED
(in thousands, except per share and share data) (unaudited)Three Months Ended
September 30, 2023Nine Months Ended
September 30, 2023Adjusted 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 Subsidiaries
Consolidated 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
MaturityInterest 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 LeaseAmended
PENN Master
LeasePENN
Amended
Pinnacle
Master LeaseCaesars
Amended and
Restated
Master LeaseBYD Master
LeaseBally's Master
LeaseCasino Queen
Master LeasePennsylvania
Live! Master
Lease operated
by CordishProperty 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 Park
Lease operated
by BYDHorseshoe St.
Louis Lease
operated by
CZRMorgantown
Ground Lease
operated by
PENNLive! Casino &
Hotel
Maryland
operated by
CordishTropicana Las
Vegas Ground
Lease operated
by BALYHard Rock
Rockford
Ground Lease
managed by
Hard RockCommencement 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 
- 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.