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Feb 20, 2020

Gaming and Leisure Properties, Inc. Reports Fourth Quarter 2019 Results

- Establishes 2020 First Quarter and Full Year Guidance -

WYOMISSING, Pa., Feb. 20, 2020 (GLOBE NEWSWIRE) -- Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) (“GLPI” or the “Company”) today announced results for the quarter ended December 31, 2019. On a year-over-year basis, fourth quarter income from operations grew 52.0%, net income increased 148.8%, Adjusted EBITDA increased 1.0% and funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) rose 73.3% and 3.9%, respectively. The fourth quarter year-over-year financial growth reflects GLPI’s October 15, 2018 acquisition of the real property assets operated by Eldorado Resorts, Inc. (“ERI”) and the impact in the fourth quarter of 2018 of a non-cash $59.5 million goodwill impairment charge.

“The fourth quarter concluded what was another strong year for GLPI and our shareholders, as we generated durable income from our best-in-class regional gaming portfolio, strengthened the Company's financial position and increased our return of capital to shareholders,” said Chairman and Chief Executive Officer Peter Carlino. “In 2019, we delivered a total shareholder return of over 42%, as our leading diversified portfolio of regional gaming assets, managed by the top operators in the industry, gains growing attention and appreciation in the capital markets for generating one of the triple-net REIT sector's most stable cash flow streams.  We remain focused on opportunistically identifying and pursuing portfolio enhancing accretive transactions that meet our stringent underwriting requirements while prudently managing our balance sheet and capital structure. The GLPI team remains committed to furthering the Company's long-term record of driving attractive total shareholder returns and maximizing value in 2020 and beyond.”

During the 2019 fourth quarter, GLPI shareholders received a quarterly cash dividend of $0.70 per share, marking a 2.9% increase over the comparable period in 2018. GLPI's full year 2019 dividends of $2.74 represents growth of 6.61% compared with full year 2018 dividends and GLPI's annualized fourth quarter dividend of $2.80 marks a 5.31% compound annual growth rate since the Company's formation. The current annual cash dividend of $2.80 represents a yield of 5.7% based on the $48.92 per share closing price of the Company's stock on February 19, 2020.

Financial Highlights

    Three Months Ended
 December 31,
  Year Ended December 31,
(in millions, except per share data)   2019 Actual   2018 Actual   2019 Actual   2018 Actual
Total Revenue   $ 289.0     $ 303.3     $ 1,153.5     $ 1,055.7  
Income From Operations   $ 188.3     $ 123.9     $ 717.4     $ 593.8  
Net Income   $ 114.3     $ 45.9     $ 390.9     $ 339.5  
FFO (1)   $ 168.8     $ 97.4     $ 621.7     $ 465.4  
AFFO (2)   $ 188.6     $ 181.6     $ 743.2     $ 683.6  
Adjusted EBITDA (3)   $ 260.5     $ 258.0     $ 1,040.3     $ 926.6  
                 
Net income, per diluted common share   $ 0.53     $ 0.21     $ 1.81     $ 1.58  
FFO, per diluted common share   $ 0.78     $ 0.45     $ 2.88     $ 2.17  
AFFO, per diluted common share   $ 0.87     $ 0.84     $ 3.44     $ 3.18  

 

 

(1)   FFO is net income, excluding (gains) or losses from sales of property and real estate depreciation as defined by NAREIT.

(2)   AFFO is FFO, excluding stock based compensation expense, the amortization of debt issuance costs, bond premiums and original issuance discounts, other depreciation, amortization of land rights, straight-line rent adjustments, direct financing lease adjustments, losses on debt extinguishment, retirement costs and goodwill and loan impairment charges, reduced by capital maintenance expenditures.

(3)   Adjusted EBITDA is net income, excluding interest, taxes on income, depreciation, (gains) or losses from sales of property, stock based compensation expense, straight-line rent adjustments, direct financing lease adjustments, amortization of land rights, losses on debt extinguishment, retirement costs and goodwill and loan impairment charges.

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 December 31, 2019, GLPI's portfolio consisted of interests in 44 gaming and related facilities, including wholly-owned and operated Hollywood Casino Baton Rouge and Hollywood Casino Perryville, which are referred to as the "TRS Properties", the real property associated with 32 gaming and related facilities operated by Penn National Gaming, Inc. (“PENN”), the real property associated with 5 gaming and related facilities operated by ERI, the real property associated with 4 gaming and related facilities operated by Boyd Gaming Corporation (“BYD”) (including one mortgaged facility) and the real property associated with the Casino Queen in East St. Louis, Illinois. These facilities are geographically diversified across 16 states and contain approximately 22.1 million square feet.

Guidance

The table below sets forth current guidance targets for financial results for the 2020 first quarter and full year, based on the following assumptions:

  • Reported range of revenue from real estate of approximately $1,065.6 to $1,067.7 million for the year and $259.4 million for the first quarter (no additional escalators during the first quarter) consisting of:
(in millions)   Three Months Ending
March 31, 2020
  Full Year Ending December 31, 2020
    First Quarter   Full Year Range
Cash Revenue from Real Estate            
PENN   $ 205.5     $ 819.7     $ 820.8  
ERI   27.9     111.2     111.2  
BYD   26.3     104.6     105.6  
Casino Queen   3.6     14.5     14.5  
PENN non-assigned land lease   (0.7 )   (2.8 )   (2.8 )
Total Cash Revenue from Real Estate   $ 262.6     $ 1,047.2     $ 1,049.3  
             
Non-Cash Adjustments            
Straight-line rent   $ (8.6 )   $ (2.6 )   $ (2.6 )
Land leases paid by tenants   5.4     21.0     21.0  
Total Revenue from Real Estate as Reported   $ 259.4     $ 1,065.6     $ 1,067.7  
  • High range includes 2020 escalators for PENN, Meadows, ERI and BYD whereas low range includes only ERI;
     
  • Assumes free cash flow after dividends and borrowings on the revolver are used to pay the $215.2 million balance of the Senior Unsecured Notes Due November 2020 and no other refinancing transactions;
     
  • Adjusted EBITDA from the TRS Properties of approximately $29.1 million for the year and $8.0 million for the first quarter;
     
  • Blended income tax rate at the TRS Properties of 26%;
     
  • LIBOR is based on the forward yield curve; and
     
  • The basic share count is approximately 215.1 million shares for the year and the first quarter and the fully diluted share count is approximately 215.6 million shares for the year and 215.5 million shares for the first quarter.
    Three Months Ended March 31,   Full Year Ended December 31,
(in millions, except per share data)   2020 Guidance   2019 
Actual
  2020 Guidance Range   2019
Actual
Total Revenue   $ 292.8     $ 287.9     $ 1,193.9     $ 1,196.1     $ 1,153.5  
                     
Net Income   $ 113.9     $ 93.0     $ 489.4     $ 495.5     $ 390.9  
Losses from dispositions of property                   0.1  
Real estate depreciation   54.3     55.7     216.7     216.7     230.7  
Funds From Operations (1)   $ 168.2     $ 148.7     $ 706.1     $ 712.2     $ 621.7  
Straight-line rent adjustments   8.6     8.6     2.6     2.6     34.6  
Other depreciation   2.3     2.9     8.5     8.5     9.7  
Amortization of land rights   3.0     3.1     12.0     12.0     18.5  
Amortization of debt issuance costs, bond premiums and original issuance discounts   2.9     2.9     11.0     11.0     11.5  
Stock based compensation   4.4     4.3     17.0     17.0     16.2  
Losses on debt extinguishment                   21.0  
Loan impairment charges       13.0             13.0  
Capital maintenance expenditures   (1.1 )   (0.5 )   (3.8 )   (3.8 )   (3.0 )
Adjusted Funds From Operations (2)   $ 188.3     $ 183.0     $ 753.4     $ 759.5     $ 743.2  
Interest, net   74.0     76.7     293.3     293.3     300.8  
Income tax expense   1.3     1.1     4.5     4.5     4.8  
Capital maintenance expenditures   1.1     0.5     3.8     3.8     3.0  
Amortization of debt issuance costs, bond premiums and original issuance discounts   (2.9 )   (2.9 )   (11.0 )   (11.0 )   (11.5 )
Adjusted EBITDA (3)   $ 261.8     $ 258.4     $ 1,044.0     $ 1,050.1     $ 1,040.3  
                     
Net income, per diluted common share   $ 0.53     $ 0.43     $ 2.27     $ 2.30     $ 1.81  
FFO, per diluted common share   $ 0.78     $ 0.69     $ 3.27     $ 3.30     $ 2.88  
AFFO, per diluted common share   $ 0.87     $ 0.85     $ 3.49     $ 3.52     $ 3.44  

 

 

(1)         FFO is net income, excluding (gains) or losses from sales of property and real estate depreciation as defined by NAREIT.

(2)         AFFO is FFO, excluding stock based compensation expense, amortization of debt issuance costs, bond premiums and original issuance discounts, other depreciation, amortization of land rights, straight-line rent adjustments, direct financing lease adjustments, losses on debt extinguishment, retirement costs, and goodwill impairment charges and loan impairment charges, reduced by capital maintenance expenditures.

(3)         Adjusted EBITDA is net income, excluding interest, taxes on income, depreciation, (gains) or losses from sales of property, stock based compensation expense, straight-line rent adjustments, direct financing lease adjustments, amortization of land rights, losses on debt extinguishment, retirement costs, and goodwill impairment charges and loan impairment charges.

Conference Call Details

The Company will hold a conference call on February 21, 2020 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: 13698085
The playback can be accessed through February 28, 2020.

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
 December 31,
  Year Ended
 December 31,
  2019   2018   2019   2018
Revenues              
Rental income $ 251,136     $ 238,108     $ 996,166     $ 747,654  
Income from direct financing lease     4,671         81,119  
Interest income from real estate loans 7,316     6,943     28,916     6,943  
Real estate taxes paid by tenants     23,435         87,466  
Total income from real estate 258,452     273,157     1,025,082     923,182  
Gaming, food, beverage and other 30,532     30,160     128,391     132,545  
Total revenues 288,984     303,317     1,153,473     1,055,727  
Operating expenses              
Gaming, food, beverage and other 17,961     18,100     74,700     77,127  
Real estate taxes     23,776         88,757  
Land rights and ground lease expense 8,866     8,898     42,438     28,358  
General and administrative 17,211     14,856     65,477     71,128  
Depreciation 56,690     54,349     240,435     137,093  
  Loan impairment charges         13,000      
  Goodwill impairment charges     59,454         59,454  
Total operating expenses 100,728     179,433     436,050     461,917  
Income from operations 188,256     123,884     717,423     593,810  
               
Other income (expenses)              
Interest expense (73,158 )   (76,220 )   (301,520 )   (247,684 )
Interest income 184     (963 )   756     1,827  
  Losses on debt extinguishment         (21,014 )   (3,473 )
Total other expenses (72,974 )   (77,183 )   (321,778 )   (249,330 )
               
Income from operations before income taxes 115,282     46,701     395,645     344,480  
  Income tax expense 991     770     4,764     4,964  
Net income $ 114,291     $ 45,931     $ 390,881     $ 339,516  
               
Earnings per common share:              
Basic earnings per common share $ 0.53     $ 0.21     $ 1.82     $ 1.59  
Diluted earnings per common share $ 0.53     $ 0.21     $ 1.81     $ 1.58  


 

GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Operations
(in thousands) (unaudited)

  TOTAL REVENUES   ADJUSTED EBITDA
  Three Months Ended
 December 31,
  Three Months Ended
 December 31,
  2019   2018   2019   2018
Real estate $ 258,452     $ 273,157     $ 253,762     $ 251,694  
GLP Holdings, LLC (TRS) 30,532     30,160     6,735     6,268  
Total $ 288,984     $ 303,317     $ 260,497     $ 257,962  
               
  TOTAL REVENUES   ADJUSTED EBITDA
  Year Ended
 December 31,
  Year Ended
 December 31,
  2019   2018   2019   2018
Real Estate $ 1,025,082     $ 923,182     $ 1,009,239     $ 893,814  
GLP Holdings, LLC (TRS) 128,391     132,545     31,019     32,772  
Total $ 1,153,473     $ 1,055,727     $ 1,040,258     $ 926,586  


 

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

Three Months Ended December 31, 2019   PENN Master Lease   PENN Amended Pinnacle Master Lease   ERI Master Lease and Loan   BYD Master Lease and Mortgage   PENN - Meadows Lease   Casino Queen  Lease   Total
Building base rent   $ 69,395     $ 57,209     $ 15,534     $ 18,911     $ 3,953     $ 2,275     $ 167,277  
Land base rent   23,492     17,814     3,340     2,946             47,592  
Percentage rent   21,423     7,942     3,340     2,808     2,792     1,356     39,661  
Total cash rental income   $ 114,310     $ 82,965     $ 22,214     $ 24,665     $ 6,745     $ 3,631     $ 254,530  
Straight-line rent adjustments   2,231     (6,318 )   (2,895 )   (2,234 )   572         (8,644 )
Ground rent in revenue   823     1,879     2,122     366             5,190  
Other rental revenue                   60         60  
Total rental income   $ 117,364     $ 78,526     $ 21,441     $ 22,797     $ 7,377     $ 3,631     $ 251,136  
Interest income from real estate loans           5,700     1,616             7,316  
Total income from real estate   $ 117,364     $ 78,526     $ 27,141     $ 24,413     $ 7,377     $ 3,631     $ 258,452  

 

Year Ended December 31, 2019   PENN Master Lease   PENN Amended Pinnacle Master Lease   ERI Master Lease and Loan   BYD Master Lease and Mortgage   PENN - Meadows Lease   Casino Queen  Lease   Total
Building base rent   $ 274,841     $ 225,842     $ 61,223     $ 74,810     $ 13,803     $ 9,101     $ 659,620  
Land base rent   93,969     71,108     13,360     11,731             190,168  
Percentage rent   86,351     31,622     13,360     11,182     11,168     5,424     159,107  
Total cash rental income   $ 455,161     $ 328,572     $ 87,943     $ 97,723     $ 24,971     $ 14,525     $ 1,008,895  
Straight-line rent adjustments   8,926     (25,273 )   (11,579 )   (8,937 )   2,289         (34,574 )
Ground rent in revenue   3,661     7,217     8,868     1,601             21,347  
Other rental revenue                   498         498  
Total rental income   $ 467,748     $ 310,516     $ 85,232     $ 90,387     $ 27,758     $ 14,525     $ 996,166  
Interest income from real estate loans           22,471     6,445             28,916  
Total income from real estate   $ 467,748     $ 310,516     $ 107,703     $ 96,832     $ 27,758     $ 14,525     $ 1,025,082  

 

GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
General and Administrative Expense
(in thousands) (unaudited)

  Three Months Ended
 December 31,
  Year Ended
 December 31,
  2019   2018   2019   2018
Real estate general and administrative expenses $ 11,333     $ 9,347     $ 42,721     $ 49,424  
GLP Holdings, LLC (TRS) general and administrative expenses 5,878     5,509     22,756     21,704  
Total reported general and administrative expenses (1) $ 17,211     $ 14,856     $ 65,477     $ 71,128  

 

 

(1)  General and administrative expenses include payroll related expenses, insurance, utilities, professional fees and other administrative costs.

 

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
 December 31,
  Year Ended
 December 31,
  2019   2018   2019   2018
Net income $ 114,291     $ 45,931     $ 390,881     $ 339,516  
(Gains) losses from dispositions of property 42     (45 )   92     309  
Real estate depreciation 54,426     51,475     230,716     125,630  
Funds from operations $ 168,759     $ 97,361     $ 621,689     $ 465,455  
Straight-line rent adjustments 8,644     12,738     34,574     61,888  
Direct financing lease adjustments     1,218         38,459  
Other depreciation (1) 2,264     2,874     9,719     11,463  
Amortization of land rights 3,020     3,090     18,536     11,272  
Amortization of debt issuance costs, bond premiums and original issuance discounts 2,858     2,889     11,455     12,167  
Stock based compensation 3,845     3,274     16,198     11,152  
Losses on debt extinguishment         21,014     3,473  
Retirement costs             13,149  
Loan impairment charges         13,000      
Goodwill impairment charges     59,454         59,454  
Capital maintenance expenditures (2) (761 )   (1,330 )   (3,017 )   (4,284 )
Adjusted funds from operations $ 188,629     $ 181,568     $ 743,168     $ 683,648  
Interest, net 72,974     77,183     300,764     245,857  
Income tax expense 991     770     4,764     4,964  
Capital maintenance expenditures (2) 761     1,330     3,017     4,284  
Amortization of debt issuance costs, bond premiums and original issuance discounts (2,858 )   (2,889 )   (11,455 )   (12,167 )
Adjusted EBITDA $ 260,497     $ 257,962     $ 1,040,258     $ 926,586  
               
Net income, per diluted common share $ 0.53     $ 0.21     $ 1.81     $ 1.58  
FFO, per diluted common share $ 0.78     $ 0.45     $ 2.88     $ 2.17  
AFFO, per diluted common share $ 0.87     $ 0.84     $ 3.44     $ 3.18  
               
Weighted average number of common shares outstanding              
  Diluted 215,962,065     215,066,907     215,786,023     214,779,296  

 

 

(1)  Other depreciation includes both real estate and equipment depreciation from the Company's taxable REIT subsidiaries, as well as equipment depreciation from the 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.

 

Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, AFFO to Adjusted EBITDA and
Adjusted EBITDA to Cash Net Operating Income
Gaming and Leisure Properties, Inc. and Subsidiaries
REAL ESTATE and CORPORATE (REIT)
(in thousands) (unaudited)

  Three Months Ended
 December 31,
  Year Ended
 December 31,
  2019   2018   2019   2018
Net income $ 112,763     $ 104,629     $ 382,184     $ 390,341  
(Gains) losses from dispositions of property     (44 )   8     76  
Real estate depreciation 54,426     51,475     230,716     125,630  
Funds from operations $ 167,189     $ 156,060     $ 612,908     $ 516,047  
Straight-line rent adjustments 8,644     12,738     34,574     61,888  
Direct financing lease adjustments     1,218         38,459  
Other depreciation (1) 496     506     1,992     2,066  
Amortization of land rights 3,020     3,090     18,536     11,272  
Amortization of debt issuance costs, bond premiums and original issuance discounts 2,858     2,889     11,455     12,167  
Stock based compensation 3,845     3,274     16,198     11,152  
Losses on debt extinguishment         21,014     3,473  
Retirement costs             13,149  
Loan impairment charges         13,000      
Goodwill impairment charges              
Capital maintenance expenditures (2) (18 )   (4 )   (22 )   (55 )
Adjusted funds from operations $ 186,034     $ 179,771     $ 729,655     $ 669,618  
Interest, net (3) 70,372     74,581     290,360     235,453  
Income tax expense 196     227     657     855  
Capital maintenance expenditures (2) 18     4     22     55  
Amortization of debt issuance costs, bond premiums and original issuance discounts (2,858 )   (2,889 )   (11,455 )   (12,167 )
Adjusted EBITDA $ 253,762     $ 251,694     $ 1,009,239     $ 893,814  

                                                                                                                                                                                        

  Three Months
Ended
 December 31,
  Year
Ended
 December 31,
  2019   2019
Adjusted EBITDA $ 253,762     $ 1,009,239  
Real estate general and administrative expenses 11,333     42,721  
Stock based compensation (3,845 )   (16,198 )
Losses from dispositions of property     (8 )
Cash net operating income (4) $ 261,250     $ 1,035,754  

 

 

(1)  Other depreciation includes both real estate and equipment depreciation from the Company's taxable REIT subsidiaries, as well as equipment depreciation from the 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)   Interest, net is net of intercompany interest eliminations of $2.6 million and $10.4 million for the years ended months ended December 31, 2019 and 2018, respectively.

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

 

Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA
Gaming and Leisure Properties, Inc. and Subsidiaries
GLP HOLDINGS, LLC (TRS)
(in thousands) (unaudited)

  Three Months Ended
 December 31,
  Year Ended
 December 31,
  2019   2018   2019   2018
Net income $ 1,528     $ (58,698 )   $ 8,697     $ (50,825 )
(Gains) losses from dispositions of property 42     (1 )   84     233  
Real estate depreciation              
Funds from operations $ 1,570     $ (58,699 )   $ 8,781     $ (50,592 )
Straight-line rent adjustments              
Direct financing lease adjustments              
Other depreciation (1) 1,768     2,368     7,727     9,397  
Amortization of land rights              
Amortization of debt issuance costs, bond premiums and original issuance discounts              
Stock based compensation              
Losses on debt extinguishment              
Retirement costs              
Loan impairment charges              
Goodwill impairment charges     59,454         59,454  
Capital maintenance expenditures (2) (743 )   (1,326 )   (2,995 )   (4,229 )
Adjusted funds from operations $ 2,595     $ 1,797     $ 13,513     $ 14,030  
Interest, net 2,602     2,602     10,404     10,404  
Income tax expense 795     543     4,107     4,109  
Capital maintenance expenditures (2) 743     1,326     2,995     4,229  
Amortization of debt issuance costs, bond premiums and original issuance discounts              
Adjusted EBITDA $ 6,735     $ 6,268     $ 31,019     $ 32,772  

 

 

(1)  Other depreciation includes both real estate and equipment depreciation from the Company's taxable REIT subsidiaries, as well as equipment depreciation from the 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.

 

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

  December 31, 2019   December 31, 2018
       
Assets      
Real estate investments, net $ 7,100,555     $ 7,331,460  
Property and equipment, used in operations, net 94,080     100,884  
Real estate loans 303,684     303,684  
Right-of-use assets and land rights, net 838,734     673,207  
Cash and cash equivalents 26,823     25,783  
Prepaid expenses 4,228     30,967  
Goodwill 16,067     16,067  
Other intangible assets 9,577     9,577  
Loan receivable     13,000  
Deferred tax assets 6,056     5,178  
Other assets 34,494     67,486  
Total assets $ 8,434,298     $ 8,577,293  
       
Liabilities      
Accounts payable $ 1,006     $ 2,511  
Accrued expenses 6,239     30,297  
Accrued interest 60,695     45,261  
Accrued salaries and wages 13,821     17,010  
Gaming, property, and other taxes 944     42,879  
Lease liabilities 183,971      
Long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts 5,737,962     5,853,497  
Deferred rental revenue 328,485     293,911  
Deferred tax liabilities 279     261  
Other liabilities 26,651     26,059  
Total liabilities 6,360,053     6,311,686  
       
Shareholders’ equity      
Preferred stock ($.01 par value, 50,000,000 shares authorized, no shares issued or outstanding at December 31, 2019 and December 31, 2018)      
Common stock ($.01 par value, 500,000,000 shares authorized, 214,694,165 and 214,211,932 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively) 2,147     2,142  
Additional paid-in capital 3,959,383     3,952,503  
Accumulated deficit (1,887,285 )   (1,689,038 )
Total shareholders’ equity 2,074,245     2,265,607  
Total liabilities and shareholders’ equity $ 8,434,298     $ 8,577,293  

Debt Capitalization

The Company had $26.8 million of unrestricted cash and $5.7 billion in total debt at December 31, 2019.  The Company’s debt structure as of December 31, 2019 was as follows:

      As of December 31, 2019
    Years to Maturity Interest Rate   Balance
          (in thousands)
Unsecured $1,175 Million Revolver Due May 2023 (1)   3.4 3.280 %   $ 46,000  
Unsecured Term Loan A-1 Due April 2021 (1)   1.3 3.191 %   449,000  
Senior Unsecured Notes Due November 2020   0.8 4.875 %   215,174  
Senior Unsecured Notes Due April 2021   1.3 4.375 %   400,000  
Senior Unsecured Notes Due November 2023   3.8 5.375 %   500,000  
Senior Unsecured Notes Due September 2024   4.7 3.350 %   400,000  
Senior Unsecured Notes Due June 2025   5.4 5.250 %   850,000  
Senior Unsecured Notes Due April 2026   6.3 5.375 %   975,000  
Senior Unsecured Notes Due June 2028   8.4 5.750 %   500,000  
Senior Unsecured Notes Due January 2029   9.0 5.300 %   750,000  
Senior Unsecured Notes Due January 2030   10.0 4.000 %   700,000  
Finance lease liability   6.7 4.780 %   989  
Total long-term debt         $ 5,786,163  
Less: unamortized debt issuance costs, bond premiums and original issuance discounts         (48,201 )
Total long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts         $ 5,737,962  
Weighted average   5.9 4.799 %    

 

 

(1)   The rate on the term loan facility and revolver is LIBOR plus 1.50%.

Rating Agency Update - 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) (1)      
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
ERI Master Lease (5 Properties)      
Tropicana Atlantic City Atlantic City, NJ 10/1/2018 ERI
Tropicana Evansville Evansville, IN 10/1/2018 ERI
Tropicana Laughlin Laughlin, NV 10/1/2018 ERI
Trop Casino Greenville Greenville, MS 10/1/2018 ERI
Belle of Baton Rouge Baton Rouge, LA 10/1/2018 ERI
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
Single Asset Leases      
The Meadows Racetrack and Casino Washington, PA 9/9/2016 PENN
Casino Queen East St. Louis, IL 1/23/2014 Casino Queen
Financed Property      
Belterra Park Gaming & Entertainment Center Cincinnati, OH N/A BYD
TRS Properties      
Hollywood Casino Baton Rouge Baton Rouge, LA 11/1/2013 GLPI
Hollywood Casino Perryville Perryville, MD 11/1/2013 GLPI

(1) We currently lease 86.6 acres in Tunica, Mississippi, where the Resorts Casino Tunica is located, which has been excluded from this table. This property is leased to PENN as part of the PENN Master Lease, however, the casino and hotel were closed by PENN in June 2019. As a result of the property closure, the Company entered into an agreement to terminate the long-term ground lease for this property, which will be effective in February 2020, at which time such ground lease will be removed from the PENN Master Lease.

Dividends

On November 26, 2019, the Company’s Board of Directors declared the fourth quarter 2019 dividend.  Shareholders of record on December 13, 2019 received $0.70 per common share, which was paid on December 27, 2019.  The Company anticipates the following schedule regarding 2020 dividend payments:

Payment Dates
March 20, 2020  
June 26, 2020  
September 18, 2020  
December 24, 2020  

 

Lease and Loan Information

  Master Leases   Single Asset Leases
  PENN Master Lease PENN Amended Pinnacle Master Lease ERI Master Lease BYD Master Lease   PENN-Meadows Lease Casino Queen Lease
Property Count 19 12 5 3   1 1
Number of States Represented 10 8 5 2   1 1
Commencement Date 11/1/2013 4/28/2016 10/1/2018 10/15/2018   9/9/2016 1/23/2014
Initial Term 15 10 15 10   10 15
Renewal Terms 20 (4x5 years) 25 (5x5 years) 20 (4x5 years) 25 (5x5 years)   19 (3x5years, 1x4 years) 20 (4x5 years)
Corporate Guarantee Yes Yes Yes No   Yes No
Master Lease with Cross Collateralization Yes Yes Yes Yes   No No
Technical Default Landlord Protection Yes Yes Yes Yes   Yes Yes
Default Adjusted Rent to Revenue Coverage 1.1 1.2 1.2 1.4   1.2 1.4
Competitive Radius Landlord Protection Yes Yes Yes Yes   Yes Yes
Escalator Details              
Yearly Base Rent Escalator Maximum 2% 2% 2% 2%    5% (1) 2%
Coverage as of Tenants' latest Earnings Report (2) 1.93 1.77 1.96 1.94   1.97 1.29
Minimum Escalator Coverage Governor 1.8 1.8 1.2 (3) 1.8   2.0 1.8
Yearly Anniversary for Realization November 2020 May 2020 October 2020 May 2020   October 2020 February 2020
Percentage Rent Reset Details              
Reset Frequency 5 years 2 years 2 years 2 years   2 years 5 years
Next Reset November 2023 May 2020 October 2020 May 2020   October 2020 February 2024

 

  Loans Receivable
  BYD (Belterra) (4) ERI (Lumière Place) (5)
Property Count 1 1
Commencement Date 10/15/2018 10/1/2018
Current Interest Rate 11.20% 9.27%
Credit Enhancement Guarantee from Master
Lease Entity
Corporate Guarantee

(1) Meadows yearly escalator is 5% until a breakpoint when it resets to 2%.

(2) Information with respect to our tenants' rent coverage was provided by our tenants. GLPI has not independently verified the accuracy of the tenants' information and therefore makes no representation as to the accuracy of such information.

(3) ERI escalator governor is 1.2x for the initial 5 years and then 1.8x in subsequent years.

(4)The Belterra Park mortgage is supported by the BYD Master Lease subsidiaries and its terms are consistent with the BYD Master Lease.

(5) The ERI loan bears interest at a rate equal to (i) 9.09% until October 1, 2019 and (ii) 9.27% until its maturity. On the one-year anniversary of the ERI loan, the mortgage evidenced by a deed of trust on the Lumière Place property terminated and the loan became unsecured and will remain unsecured until its final maturity on the two-year anniversary of the closing. The parties anticipate that the ERI loan will be fully repaid on or prior to maturity by way of substitution of one or more additional ERI properties acceptable to ERI and the Company, which will be transferred to the Company and added to the ERI Master Lease.

Disclosure Regarding Non-GAAP Financial Measures

FFO, FFO per diluted common share, AFFO, AFFO per diluted common share, 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. The Company believes FFO, FFO per diluted common share, AFFO, AFFO per diluted common share, 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 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, AFFO, AFFO per diluted common share, 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 generally accepted accounting principles), excluding (gains) or losses from sales of property and real estate depreciation.  We have defined AFFO as FFO excluding stock based compensation expense, the amortization of debt issuance costs, bond premiums and original issuance discounts, other depreciation, the amortization of land rights, straight-line rent adjustments, direct financing lease adjustments, losses on debt extinguishment, retirement costs and goodwill and loan impairment charges, reduced by capital maintenance expenditures. We have defined Adjusted EBITDA as net income excluding interest, taxes on income, depreciation, (gains) or losses from sales of property, stock based compensation expense, straight-line rent adjustments, direct financing lease adjustments, the amortization of land rights, losses on debt extinguishment, retirement costs, and goodwill and loan impairment charges. Finally, we have defined Cash NOI as Adjusted EBITDA for the REIT excluding real estate general and administrative expenses and including stock based compensation expense and (gains) or losses from sales of property.

FFO, FFO per diluted common share, AFFO, AFFO per diluted common share, 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 share, AFFO, AFFO per share, 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. GLPI expects to grow its portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators. GLPI also intends to diversify its portfolio over time, including by acquiring properties outside the gaming industry to lease to third parties. GLPI elected to be taxed as a REIT for United States federal income tax purposes commencing with the 2014 taxable year and was the first gaming-focused REIT in North America.

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 statements regarding our financial outlook for the first quarter of 2020 and the full 2020 fiscal year; our expectations regarding future acquisitions and expected 2020 dividend payments. 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: 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; our ability to maintain status as a REIT; our ability to pay dividends in the future; our ability to access capital through debt and equity markets in amounts and at acceptable rates and costs; 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, 2019, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, each as filed with the Securities and Exchange Commission. In light of these risks, uncertainties and assumptions, the forward looking events discussed in this press release may not occur. 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.

Contact

Investor Relations – Gaming and Leisure Properties, Inc.
Steven T. Snyder                                                                                  
T: 610/378-8215                                                                                 
Email: investorinquiries@glpropinc.com                                      

Joseph Jaffoni, Richard Land, James Leahy at JCIR
T: 212/835-8500
Email: glpi@jcir.com

 

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Source: Gaming and Leisure Properties, Inc.