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Aug 07, 2019

Gaming and Leisure Properties, Inc. Reports Record Second Quarter 2019 Results

- Establishes 2019 Third Quarter Guidance and Updates Full Year Guidance -

WYOMISSING, Pa., Aug. 07, 2019 (GLOBE NEWSWIRE) --  Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) (“GLPI” or the “Company”), North America's first gaming-focused real estate investment trust (“REIT”), today announced results for the quarter ended June 30, 2019. Second quarter total revenue grew 13.7%, net income grew by 1.1%, Adjusted EBITDA increased 15.9% and FFO and AFFO rose 35.7% and 9.3%, respectively.  The year-over-year financial growth primarily reflects GLPI’s October 2018 acquisitions of real property assets operated by Boyd Gaming Corporation (“BYD”), Eldorado Resorts, Inc. (“ERI”) and Penn National Gaming, Inc. (“PENN”).

Chief Executive Officer, Peter M. Carlino, commented “Our solid second quarter results reflect the stability and durability of GLPI’s diversified rental stream as the leading owner of regional gaming real estate. As the M&A and transaction environment remains active across the gaming industry, we continue to invest in existing and new tenant relationships with a dedication to sourcing portfolio enhancing accretive growth opportunities. The GLPI team remains deeply focused on delivering results, prudently managing the balance sheet, and positioning the Company to extend its long track record of value creation for shareholders.”

The second quarter operating results include the acceleration of depreciation and land rights amortization of $16.6 million due to the previously announced closure of the Resorts Casino Tunica property by our tenant, which does not alter the amount of rent due from the tenant under its master lease. During the 2019 second quarter, shareholders received a quarterly cash dividend of $0.68 per share, which marks a 7.9% increase over the comparable period in 2018. This $2.72 annualized dividend amount represents a 5.24% increase on a compound annual basis since the Company's formation.

Financial Highlights

    Three Months Ended
 June 30,
(in millions, except per share data)   2019 Actual   2018 Actual
Total Revenue   $ 289.0     $ 254.2  
Net Income   $ 93.0     $ 92.0  
Funds From Operations (1)   $ 158.6     $ 116.9  
Adjusted Funds From Operations (2)   $ 185.0     $ 169.2  
Adjusted EBITDA (3)   $ 260.9     $ 225.1  
         
Net income, per diluted common share   $ 0.43     $ 0.43  
FFO, per diluted common share   $ 0.74     $ 0.54  
AFFO, per diluted common share   $ 0.86     $ 0.79  
                 

 


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

(2) Adjusted funds from operations (“AFFO”) is 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.

(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, the 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 June 30, 2019, GLPI's portfolio consisted of interests in 46 gaming and related facilities, including Hollywood Casino Baton Rouge and Hollywood Casino Perryville, which are referred to as the "TRS Properties", the real property associated with 33 gaming and related facilities operated by PENN, the real property associated with 6 gaming and related facilities operated by ERI (including one mortgaged facility), the real property associated with 4 gaming and related facilities operated by 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 23.5 million square feet.

Guidance

The table below sets forth current guidance targets for financial results for the 2019 third quarter and full year, based on the following assumptions:

  • Includes the full year impact of the transaction closed on October 1, 2018, with ERI and the impact of the transactions closed on October 15, 2018 with PENN, Pinnacle Entertainment, Inc. (“PNK”) and BYD;
  • Reported range of revenue from real estate of approximately $1,024.0 to $1,024.9 million for the year and $256.3 million for the third quarter consisting of:
    Three Months Ended September 30, 2019   Full Year Ending December 31, 2019
(in millions)   Third Quarter   Full Year Range
         
Cash Revenue from Real Estate            
PENN   $ 202.5     $ 810.2     $ 811.1  
ERI   27.5     110.3     110.3  
BYD   26.3     104.2     104.2  
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   $ 259.2     $ 1,036.4     $ 1,037.3  
             
Non-Cash Adjustments            
Straight-line rent   $ (8.6 )   $ (34.6 )   $ (34.6 )
Land leases paid by tenants   5.7     22.2     22.2  
Total Revenue from Real Estate as Reported   $ 256.3     $ 1,024.0     $ 1,024.9  
  • Cash rent from PENN excludes the 2019 escalation related to the PNK master lease, as PENN has reported coverage on this lease of 1.75 times for the trailing twelve months ended June 30, 2019, the calculation as of the anniversary date of this lease is currently under review by GLPI;
  • Adjusted EBITDA from the TRS Properties of approximately $29.0 million for the year and $6.7 million for the third quarter and reflects the impact of the Maryland state budget process which revoked the previously approved tax relief granted by the Maryland Lottery Commission;
  • Blended income tax rate at the TRS Properties of 33%;
  • LIBOR is based on the forward yield curve; and
  • The basic share count is approximately 214.6 million shares for the year and the third quarter and the fully diluted share count is approximately 215.5 million shares for the year and for the third quarter.
    Three Months Ended September 30,   Full Year Ending December 31,
(in millions, except per share data)   2019 Guidance   2018 Actual   2019 Guidance Range   2018 Actual
Total Revenue   $ 288.0     $ 254.1     $ 1,151.5     $ 1,152.4     $ 1,055.7  
                     
Net Income   $ 107.6     $ 104.8     $ 401.4     $ 404.3     $ 339.5  
Losses from dispositions of property       0.2             0.3  
Real estate depreciation   55.1     24.4     230.9     230.9     125.6  
Funds From Operations (1)   $ 162.7     $ 129.4     $ 632.3     $ 635.2     $ 465.4  
Straight-line rent adjustments   8.6     15.9     34.6     34.6     61.9  
Direct financing lease adjustments       8.0             38.4  
Other depreciation   2.3     2.8     9.8     9.8     11.4  
Amortization of land rights   3.1     2.7     18.7     18.7     11.3  
Amortization of debt issuance costs, bond premiums and original issuance discounts   2.9     3.0     11.6     11.6     12.2  
Stock based compensation   4.0     3.3     16.4     16.4     11.2  
Losses on debt extinguishment                   3.5  
Retirement costs                   13.1  
Goodwill impairment charges                   59.5  
Loan impairment charges           13.0     13.0      
Capital maintenance expenditures   (1.0 )   (1.0 )   (3.5 )   (3.5 )   (4.3 )
Adjusted Funds From Operations (2)   $ 182.6     $ 164.1     $ 732.9     $ 735.8     $ 683.6  
Interest, net   76.4     58.9     305.9     305.9     245.9  
Income tax expense   1.0     1.1     4.3     4.3     5.0  
Capital maintenance expenditures   1.0     1.0     3.5     3.5     4.3  
Amortization of debt issuance costs, bond premiums and original issuance discounts   (2.9 )   (2.9 )   (11.6 )   (11.6 )   (12.2 )
Adjusted EBITDA (3)   $ 258.1     $ 222.2     $ 1,035.0     $ 1,037.9     $ 926.6  
                     
Net income, per diluted common share   $ 0.50     $ 0.49     $ 1.86     $ 1.88     $ 1.58  
FFO, per diluted common share   $ 0.75     $ 0.60     $ 2.93     $ 2.95     $ 2.17  
AFFO, per diluted common share   $ 0.85     $ 0.76     $ 3.40     $ 3.41     $ 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, 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, 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, the amortization of land rights, losses on debt extinguishment, retirement costs, goodwill impairment charges and loan impairment charges.

Conference Call Details

The Company will hold a conference call on August 8, 2019 at 9:00 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: 13692174
The playback can be accessed through August 15, 2019.

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,
  2019   2018   2019   2018
Revenues              
Rental income $ 248,563     $ 169,865     $ 496,241     $ 339,270  
Income from direct financing lease     26,984         45,605  
Interest income from mortgaged real estate 7,201         14,394      
Real estate taxes paid by tenants     21,483         42,761  
Total income from real estate 255,764     218,332     510,635     427,636  
Gaming, food, beverage and other 33,249     35,889     66,242     70,635  
Total revenues 289,013     254,221     576,877     498,271  
Operating expenses              
Gaming, food, beverage and other 19,168     20,407     38,190     40,065  
Real estate taxes     21,800         43,395  
Land rights and ground lease expense 15,229     6,444     24,478     12,976  
General and administrative 15,984     24,806     33,224     41,266  
Depreciation 67,865     27,523     126,443     55,477  
Loan impairment charges         13,000      
Total operating expenses 118,246     100,980     235,335     193,179  
Income from operations 170,767     153,241     341,542     305,092  
               
Other income (expenses)              
Interest expense (76,523 )   (57,055 )   (153,251 )   (111,123 )
Interest income 248     891     337     1,372  
  Losses on debt extinguishment     (3,473 )       (3,473 )
Total other expenses (76,275 )   (59,637 )   (152,914 )   (113,224 )
               
Income from operations before income taxes 94,492     93,604     188,628     191,868  
  Income tax expense 1,459     1,606     2,585     3,098  
Net income $ 93,033     $ 91,998     $ 186,043     $ 188,770  
               
Earnings per common share:              
Basic earnings per common share $ 0.43     $ 0.43     $ 0.87     $ 0.88  
Diluted earnings per common share $ 0.43     $ 0.43     $ 0.86     $ 0.88  


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

  TOTAL REVENUES   ADJUSTED EBITDA
  Three Months Ended
 June 30,
  Three Months Ended
 June 30,
  2019   2018   2019   2018
Real estate $ 255,764     $ 218,332     $ 252,368     $ 215,435  
GLP Holdings, LLC (TRS) 33,249     35,889     8,502     9,693  
Total $ 289,013     $ 254,221     $ 260,870     $ 225,128  
               
  TOTAL REVENUES   ADJUSTED EBITDA
  Six Months Ended
 June 30,
  Six Months Ended
 June 30,
  2019   2018   2019   2018
Real Estate $ 510,635     $ 427,636     $ 502,478     $ 427,464  
GLP Holdings, LLC (TRS) 66,242     70,635     16,811     19,009  
Total $ 576,877     $ 498,271     $ 519,289     $ 446,473  


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

Three Months Ended June 30, 2019   PENN Master Lease   Amended Pinnacle Master Lease   ERI Master Lease and Mortgage   BYD Master Lease and Mortgage   PENN - Meadows Lease   Casino Queen  Lease   Total
Building base rent   $ 68,482     $ 56,297     $ 15,229     $ 18,702     $ 3,284     $ 2,276     $ 164,270  
Land base rent   23,492     17,778     3,340     2,933             47,543  
Percentage rent   21,873     7,905     3,340     2,796     2,792     1,356     40,062  
Total cash rental income   $ 113,847     $ 81,980     $ 21,909     $ 24,431     $ 6,076     $ 3,632     $ 251,875  
Straight-line rent adjustments   2,232     (6,319 )   (2,894 )   (2,235 )   573         (8,643 )
Ground rent in revenue   926     1,729     2,115     418             5,188  
Other rental revenue                   143         143  
Total rental income   $ 117,005     $ 77,390     $ 21,130     $ 22,614     $ 6,792     $ 3,632     $ 248,563  
Interest income from mortgaged real estate           5,590     1,611             7,201  
Total income from real estate   $ 117,005     $ 77,390     $ 26,720     $ 24,225     $ 6,792     $ 3,632     $ 255,764  


Six Months Ended June 30, 2019   PENN Master Lease   Amended Pinnacle Master Lease   ERI Master Lease and Mortgage   BYD Master Lease and Mortgage   PENN - Meadows Lease   Casino Queen  Lease   Total
Building base rent   $ 136,964     $ 112,078     $ 30,459     $ 36,988     $ 6,567     $ 4,551     $ 327,607  
Land base rent   46,984     35,481     6,680     5,839             94,984  
Percentage rent   43,558     15,738     6,680     5,566     5,584     2,712     79,838  
Total cash rental income   $ 227,506     $ 163,297     $ 43,819     $ 48,393     $ 12,151     $ 7,263     $ 502,429  
Straight-line rent adjustments   4,463     (12,637 )   (5,789 )   (4,469 )   1,145         (17,287 )
Ground rent in revenue   1,888     3,510     4,501     852             10,751  
Other rental revenue                   348         348  
Total rental income   $ 233,857     $ 154,170     $ 42,531     $ 44,776     $ 13,644     $ 7,263     $ 496,241  
Interest income from mortgaged real estate           11,181     3,213             14,394  
Total income from real estate   $ 233,857     $ 154,170     $ 53,712     $ 47,989     $ 13,644     $ 7,263     $ 510,635  


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

  Three Months Ended
 June 30,
  Six Months Ended
 June 30,
  2019   2018   2019   2018
Real estate general and administrative expenses (1) $ 10,400     $ 19,082     $ 21,978     $ 30,068  
GLP Holdings, LLC (TRS) general and administrative expenses (1) 5,584     5,724     11,246     11,198  
Total reported general and administrative expenses $ 15,984     $ 24,806     $ 33,224     $ 41,266  
                               

 


(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) (unaudited)

  Three Months Ended
 June 30,
  Six Months Ended
 June 30,
  2019   2018   2019   2018
Net income $ 93,033     $ 91,998     $ 186,043     $ 188,770  
Losses from dispositions of property 6     225     13     225  
Real estate depreciation 65,568     24,651     121,243     49,749  
Funds from operations $ 158,607     $ 116,874     $ 307,299     $ 238,744  
Straight-line rent adjustments 8,643     16,616     17,287     33,233  
Direct financing lease adjustments     11,030         29,239  
Other depreciation (1) 2,297     2,872     5,200     5,728  
Amortization of land rights 9,406     2,728     12,496     5,455  
Amortization of debt issuance costs, bond premiums and original issuance discounts 2,899     3,039     5,790     6,296  
Stock based compensation 4,183     616     8,508     4,603  
Losses on debt extinguishment     3,473         3,473  
Retirement costs     13,149         13,149  
Loan impairment charges         13,000      
Capital maintenance expenditures (2) (1,017 )   (1,162 )   (1,547 )   (1,984 )
Adjusted funds from operations $ 185,018     $ 169,235     $ 368,033     $ 337,936  
Interest, net 76,275     56,164     152,914     109,751  
Income tax expense 1,459     1,606     2,585     3,098  
Capital maintenance expenditures (2) 1,017     1,162     1,547     1,984  
Amortization of debt issuance costs, bond premiums and original issuance discounts (2,899 )   (3,039 )   (5,790 )   (6,296 )
Adjusted EBITDA $ 260,870     $ 225,128     $ 519,289     $ 446,473  
               
Net income, per diluted common share $ 0.43     $ 0.43     $ 0.86     $ 0.88  
FFO, per diluted common share $ 0.74     $ 0.54     $ 1.43     $ 1.11  
AFFO, per diluted common share $ 0.86     $ 0.79     $ 1.71     $ 1.58  
               
Weighted average number of common shares outstanding              
  Diluted 215,604,907     214,560,099     215,520,316     214,506,117  
                       


(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
 June 30,
  Six Months Ended
 June 30,
  2019   2018   2019   2018
Net income $ 90,197     $ 88,870     $ 180,960     $ 182,586  
Losses (gains) from dispositions of property 1     (9 )   8     (9 )
Real estate depreciation 65,568     24,651     121,243     49,749  
Funds from operations $ 155,766     $ 113,512     $ 302,211     $ 232,326  
Straight-line rent adjustments 8,643     16,616     17,287     33,233  
Direct financing lease adjustments     11,030         29,239  
Other depreciation (1) 499     521     999     1,038  
Amortization of land rights 9,406     2,728     12,496     5,455  
Amortization of debt issuance costs, bond premiums and original issuance discounts 2,899     3,039     5,790     6,296  
Stock based compensation 4,183     616     8,508     4,603  
Losses on debt extinguishment     3,473         3,473  
Retirement costs     13,149         13,149  
Loan impairment charges         13,000      
Capital maintenance expenditures (2) (2 )   (3 )   (4 )   (51 )
Adjusted funds from operations $ 181,394     $ 164,681     $ 360,287     $ 328,761  
Interest, net (3) 73,674     53,562     147,712     104,549  
Income tax expense 197     228     265     399  
Capital maintenance expenditures (2) 2     3     4     51  
Amortization of debt issuance costs, bond premiums and original issuance discounts (2,899 )   (3,039 )   (5,790 )   (6,296 )
Adjusted EBITDA $ 252,368     $ 215,435     $ 502,478     $ 427,464  


  Three Months Ended
 June 30,
  Six Months Ended
 June 30,
  2019   2019
Adjusted EBITDA $ 252,368     $ 502,478  
Real estate general and administrative expenses 10,400     21,978  
Stock based compensation (4,183 )   (8,508 )
Losses from dispositions of property (1 )   (8 )
Cash net operating income(4) $ 258,584     $ 515,940  
               


(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 expense, net is net of intercompany interest eliminations of $2.6 million and $5.2 million for the three and six months ended June 30, 2019 and 2018, respectively.

(4) Cash net operating income (“Cash NOI”) 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
 June 30,
  Six Months Ended
 June 30,
  2019   2018   2019   2018
Net income $ 2,836     $ 3,128     $ 5,083     $ 6,184  
Losses from dispositions of property 5     234     5     234  
Real estate depreciation              
Funds from operations $ 2,841     $ 3,362     $ 5,088     $ 6,418  
Straight-line rent adjustments              
Direct financing lease adjustments              
Other depreciation (1) 1,798     2,351     4,201     4,690  
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              
Capital maintenance expenditures (2) (1,015 )   (1,159 )   (1,543 )   (1,933 )
Adjusted funds from operations $ 3,624     $ 4,554     $ 7,746     $ 9,175  
Interest, net 2,601     2,602     5,202     5,202  
Income tax expense 1,262     1,378     2,320     2,699  
Capital maintenance expenditures (2) 1,015     1,159     1,543     1,933  
Amortization of debt issuance costs, bond premiums and original issuance discounts              
Adjusted EBITDA $ 8,502     $ 9,693     $ 16,811     $ 19,009  
                               


(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
(amounts in thousands, except share and per share data) (unaudited)

  June 30, 2019   December 31, 2018
       
Assets      
Real estate investments, net $ 7,210,028     $ 7,331,460  
Property and equipment, used in operations, net 97,219     100,884  
Mortgage loans receivable 303,684     303,684  
Right-of-use assets and land rights, net 862,927     673,207  
Cash and cash equivalents 24,739     25,783  
Prepaid expenses 2,943     30,967  
Goodwill 16,067     16,067  
Other intangible assets 9,577     9,577  
Loan receivable     13,000  
Deferred tax assets 5,721     5,178  
Other assets 30,959     67,486  
Total assets $ 8,563,864     $ 8,577,293  
       
Liabilities      
Accounts payable $ 171     $ 2,511  
Accrued expenses 6,778     30,297  
Accrued interest 53,340     45,261  
Accrued salaries and wages 8,120     17,010  
Gaming, property, and other taxes 966     42,879  
Lease liabilities 202,098      
Long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts 5,796,990     5,853,497  
Deferred rental revenue 311,198     293,911  
Deferred tax liabilities 233     261  
Other liabilities 25,283     26,059  
Total liabilities 6,405,177     6,311,686  
       
Shareholders’ equity      
Preferred stock ($.01 par value, 50,000,000 shares authorized, no shares issued or outstanding at June 30, 2019 and December 31, 2018)      
Common stock ($.01 par value, 500,000,000 shares authorized, 214,673,135 and 214,211,932 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively) 2,147     2,142  
Additional paid-in capital 3,951,949     3,952,503  
Accumulated deficit (1,795,409 )   (1,689,038 )
Total shareholders’ equity 2,158,687     2,265,607  
Total liabilities and shareholders’ equity $ 8,563,864     $ 8,577,293  


Debt Capitalization

The Company had $24.7 million of unrestricted cash and $5.8 billion in total debt at June 30, 2019.  The Company’s debt structure as of June 30, 2019 was as follows:

      As of June 30, 2019
    Years to Maturity Interest Rate   Balance
          (in thousands)
Unsecured $1,175 Million Revolver Due May 2023 (1)   3.9 3.917 %   $ 340,000  
Unsecured Term Loan A-1 Due April 2021 (1)   1.8 3.902 %   525,000  
Senior Unsecured Notes Due November 2020   1.3 4.875 %   1,000,000  
Senior Unsecured Notes Due April 2021   1.8 4.375 %   400,000  
Senior Unsecured Notes Due November 2023   4.3 5.375 %   500,000  
Senior Unsecured Notes Due June 2025   5.9 5.250 %   850,000  
Senior Unsecured Notes Due April 2026   6.8 5.375 %   975,000  
Senior Unsecured Notes Due June 2028   8.9 5.750 %   500,000  
Senior Unsecured Notes Due January 2029   9.6 5.300 %   750,000  
Finance lease liability   7.2 4.780 %   1,052  
Total long-term debt         $ 5,841,052  
Less: unamortized debt issuance costs, bond premiums and original issuance discounts         (44,062 )
Total long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts         $ 5,796,990  
Weighted average   5.1 5.008 %    
             


(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


Dividends

On May 28, 2019, the Company’s Board of Directors declared the second quarter 2019 dividend.  Shareholders of record on June 14, 2019 received $0.68 per common share, which was paid on June 28, 2019.  The Company anticipates the following schedule regarding dividends to be paid in 2019:

Payment Dates
March 22, 2019 (paid)
June 28, 2019 (paid)
September 20, 2019  
December 27, 2019  


Properties

Description Location Date Acquired Tenant/Operator
PENN Master Lease (20 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
Resorts Casino Tunica Tunica, MS 5/1/2017 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
Mortgaged Properties      
Belterra Park Gaming & Entertainment Center Cincinnati, OH N/A BYD
Lumière Place St. Louis, MO N/A ERI
TRS Properties      
Hollywood Casino Baton Rouge Baton Rouge, LA 11/1/2013 GLPI
Hollywood Casino Perryville Perryville, MD 11/1/2013 GLPI


Lease and Mortgage Information

  Master Leases   Single Asset Leases
  PENN Master Lease Amended Pinnacle Master Lease ERI Master Lease BYD Master Lease   PENN-Meadows Lease Casino Queen Lease
Property Count 20  12    1
Number of States Represented 10    1
Commencement Date 11/1/2013 4/28/2016 10/1/2018 10/15/2018 (1)   9/9/2016 1/23/2014
Initial Term 15  10  15  10 (1)   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% (2) 2%
Coverage as of Tenants' latest Earnings Report 1.89  1.75  1.93  1.92    1.92 1.20 (3)
Minimum Escalator Coverage Governor 1.8  1.8  1.2 (4) 1.8    2.0 1.8 
Yearly Anniversary for Realization November 2019 May 2020 October 2019 May 2020   October 2019 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


  Mortgages
  BYD  (Belterra) (5) ERI (Lumière Place)
Property Count
Commencement Date 10/15/2018 10/1/2018
Current Interest Rate 11.20% 9.09%
Credit Enhancement Guarantee from Master Lease Entity Corporate Guarantee

(1) Boyd assumed Pinnacle's legacy lease initial term, which will end on April 30, 2026.
(2) Meadows yearly escalator is 5% until a breakpoint when it resets to 2%.
(3) Not a public reporting entity, number certified by tenant as of March 31, 2019.
(4) Eldorado escalator governor is 1.2x for the initial 5 years and then 1.8x in subsequent years.
(5)The Belterra Park mortgage is supported by the BYD Master Lease subsidiaries and its terms are consistent with the BYD Master Lease.

Disclosure Regarding Non-GAAP Financial Measures

Funds From Operations (“FFO”), Adjusted Funds From Operations (“AFFO”), 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, AFFO, 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. In addition, in order for the Company to qualify as a REIT, it must distribute 90% of its REIT taxable income annually.  The Company adjusts AFFO accordingly to provide our investors an estimate of taxable income for this distribution requirement. Direct financing lease adjustments represent the portion of cash rent we received from tenants that was applied against our lease receivable and thus not recorded as revenue and the amortization of land rights represents the non-cash amortization of the value assigned to the Company's assumed ground leases. 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, AFFO, 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, AFFO, 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 is 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 and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our financial outlook for the third quarter of 2019 and the full 2019 fiscal year; our expectations regarding future acquisitions and expected 2019 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; 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, 2018, 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.

Tenant Information

Information with respect to our tenants' rent coverage is derived from the public statements and filings of PENN, BYD and ERI and from certifications provided by Casino Queen, Inc. GLPI has not independently verified the accuracy of this information and therefore makes no representation as to the accuracy of such information.

Contact

Investor Relations – Gaming and Leisure Properties, Inc. 
Steven T. Snyder  Joseph Jaffoni, Richard Land, James Leahy at JCIR
T: 610/378-8215 T: 212/835-8500
Email: investorinquiries@glpropinc.com Email: glpi@jcir.com

 

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Source: Gaming and Leisure Properties, Inc.