Gaming and Leisure Properties, Inc. Reports Second Quarter 2022 Results and Initiates 2022 Full Year AFFO Guidance
Gaming and Leisure Properties (GLPI) reported strong Q2 2022 financial results, with total revenue rising to $326.5 million from $317.8 million year-over-year. Notable metrics include net income of $155.8 million, FFO of $215.3 million, and AFFO of $231.6 million. Significant transactions include the $1 billion acquisition of Bally's Rhode Island casinos, contributing $76.3 million in annual rent. GLPI plans to enhance shareholder returns and maintain a robust capital structure despite rising interest rates. The company estimates AFFO guidance for 2022 between $908 million and $920 million.
- Total revenue increased to $326.5 million, up from $317.8 million year-over-year.
- Net income rose to $155.8 million compared to $138.2 million in Q2 2021.
- Completed acquisition of Bally's Rhode Island casinos for $1 billion, with an additional annual rent stream of $76.3 million.
- Full-year AFFO guidance set between $908 million and $920 million, or $3.50 to $3.54 per diluted share.
- Potential impact of increasing interest rates on the company's cost of capital.
- Need for third-party consents and approvals for ongoing transactions, which might delay acquisitions.
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
“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
“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 a1% floor and a2% ceiling, subject to the CPI meeting a0.5% 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 of1.75% 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 of1.75% 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
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
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 | 3.9 | 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
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 (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 | 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 | (3) | (4) | (5) | ||||
| 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
(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
(4) If the CPI increase is at least
(5) Rent increases by
(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 (5x5 years) | 19 (3x5years, 1x4 years) | 20 (4x5 years) | 30 (6x5 years) | 15 (3x5 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 | ||||||
| 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
(2) For the second through fifth lease years, after which time the annual escalation becomes
(3) Increases by
(4) Building base rent increases for the second through fourth lease years, after which time the annual escalation becomes
(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 |
| investorinquiries@glpropinc.com | glpi@jcir.com |
FAQ
What were the financial results of GLPI for Q2 2022?
What acquisitions did GLPI announce in July 2022?
How much is GLPI's estimated AFFO guidance for 2022?
What is the significance of the Bally's acquisitions for GLPI?
