Document
false0001575965 0001575965 2019-10-31 2019-10-31


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 8-K
 

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 31, 2019
 
Gaming and Leisure Properties, Inc.
(Exact name of registrant as specified in its charter)
 
Pennsylvania
 
001-36124
 
46-2116489
(State or Other Jurisdiction of
Incorporation or Organization)
 
(Commission File Number)
 
(IRS Employer Identification No.)

845 Berkshire Blvd., Suite 200
Wyomissing, PA 19610
(Address of principal executive offices)

610-401-2900
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
     
   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, par value $.01 per share
 
GLPI
 
Nasdaq

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   





 

Item 2.02.  Results of Operations and Financial Condition.
 
On October 31, 2019, Gaming and Leisure Properties, Inc. issued a press release announcing its financial results for the three and nine months ended September 30, 2019.  A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

The information in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits
 
Exhibit
Number
 
Description
 
 
 
99.1
 
 
 
 
104
 
The cover page from the Company's Current Report on Form 8-K, dated October 31, 2019, formatted in Inline XBRL.
 
* * *

2



SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
Dated: November 1, 2019
GAMING AND LEISURE PROPERTIES, INC.
 
 
 
 
 
By:
/s/ Steven T. Snyder
 
Name:
Steven T. Snyder
 
Title:
Chief Financial Officer



3
Exhibit


Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13176475&doc=8
 
GAMING AND LEISURE PROPERTIES, INC. REPORTS THIRD QUARTER 2019 RESULTS

- Completed Accretive Refinancing Transaction During the Quarter -
- Establishes 2019 Fourth Quarter Guidance and Increases Full Year Guidance -

WYOMISSING, PA — October 31, 2019 — 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 September 30, 2019. On a year-over-year basis, third quarter total revenue grew 13.2%, income from operations grew 13.8%, net income decreased 13.6%, Adjusted EBITDA increased 17.2% and funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) rose 12.6% and 13.6%, 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”). The year-over-year decrease in net income was primarily attributable to the non-recurring losses on debt extinguishment of $21.0 million in connection with our cash tender offer to purchase our 4.875% senior unsecured notes due 2020 during the 2019 third quarter, partially offset by the acquisitions.
 
Chief Executive Officer, Peter M. Carlino, commented “GLPI delivered another quarter of solid financial results reflecting our initiatives and strategies to drive cash flow growth from accretive transactions while actively managing our capital structure and cost of capital. Our diversified portfolio of regional gaming assets, managed by the industry’s leading operators, continues to generate one of the most stable cash flow streams in the triple-net REIT sector. During the third quarter, we further strengthened our balance sheet through an opportunistic refinancing that reduced our borrowing costs and extended our average debt maturities. Our talented team remains focused on identifying and pursuing portfolio enhancing accretive transactions to position GLPI to extend its long-term record of dividend growth and value creation for shareholders.”

During the 2019 third quarter, shareholders received a quarterly cash dividend of $0.68 per share, marking a 7.9% increase over the comparable period in 2018. GLPI's current $2.72 annualized dividend represents 5.0% compound annual growth since the Company's formation. The annual cash dividend represents a yield of 6.7% based on the $40.36 per share closing price of the Company's stock on October 31, 2019.

Financial Highlights
 
 
 
Three Months Ended 
 September 30,
(in millions, except per share data)
 
2019 Actual
 
2018 Actual
Total Revenue
 
$
287.6

 
$
254.1

Income From Operations
 
$
187.6

 
$
164.8

Net Income
 
$
90.5

 
$
104.8

FFO (1)
 
$
145.6

 
$
129.4

AFFO (2)
 
$
186.5

 
$
164.1

Adjusted EBITDA (3)
 
$
260.5

 
$
222.2

 
 
 
 
 
Net income, per diluted common share
 
$
0.42

 
$
0.49

FFO, per diluted common share
 
$
0.68

 
$
0.60

AFFO, per diluted common share
 
$
0.87

 
$
0.76

 
 
(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, 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.

1




(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 September 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 fourth quarter and full year, based on the following assumptions:

Includes the full year benefit of the transaction closed on October 1, 2018, with ERI and contributions from the transactions closed on October 15, 2018 with PENN, Pinnacle Entertainment, Inc. (“PNK”) and BYD;

Reported revenue from real estate of approximately $1,025.1 million for the year and $258.5 million for the fourth quarter consisting of:
(in millions)
 
Three Months Ended December 31, 2019
 
Full Year Ended December 31, 2019
Cash Revenue from Real Estate
 
 
 
 
PENN
 
$
204.7

 
$
811.9

ERI
 
27.9

 
110.4

BYD
 
26.3

 
104.2

Casino Queen
 
3.6

 
14.5

PENN non-assigned land lease
 
(0.7
)
 
(2.8
)
Total Cash Revenue from Real Estate
 
$
261.8

 
$
1,038.2

 
 
 
 
 
Non-Cash Adjustments
 
 
 
 
Straight-line rent
 
$
(8.6
)
 
$
(34.6
)
Land leases paid by tenants
 
5.3

 
21.5

Total Revenue from Real Estate as Reported
 
$
258.5

 
$
1,025.1


Cash rent includes 2019 escalators of $0.7 million related to the PNK master lease, $0.9 million relating to the PENN master lease, $0.2 million related to the Meadows lease and $0.3 million related to the ERI master lease for the year;

Adjusted EBITDA from the TRS Properties of approximately $30.2 million for the year and $5.9 million for the fourth quarter;

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 214.7 million shares for the year and the fourth quarter and the fully diluted share count is approximately 215.4 million shares for the year and 215.3 million shares for the fourth quarter.


2



 
 
Three Months Ended December 31,
 
Full Year Ended December 31,
(in millions, except per share data)
 
2019 Guidance
 
2018  Actual
 
2019 Revised Guidance
 
2018   Actual
Total Revenue
 
$
288.2

 
$
303.3

 
$
1,152.7

 
$
1,055.7

 
 
 
 
 
 
 
 
 
Net Income
 
$
113.1

 
$
45.9

 
$
389.7

 
$
339.5

Losses from dispositions of property
 

 

 

 
0.3

Real estate depreciation
 
54.5

 
51.5

 
230.8

 
125.6

Funds From Operations (1)
 
$
167.6

 
$
97.4

 
$
620.5

 
$
465.4

Straight-line rent adjustments
 
8.6

 
12.7

 
34.6

 
61.9

Direct financing lease adjustments
 

 
1.2

 

 
38.4

Other depreciation
 
2.3

 
2.9

 
9.8

 
11.4

Amortization of land rights
 
3.0

 
3.0

 
18.6

 
11.3

Amortization of debt issuance costs, bond premiums and original issuance discounts
 
2.9

 
2.9

 
11.4

 
12.2

Stock based compensation
 
3.9

 
3.3

 
16.2

 
11.2

Losses on debt extinguishment
 

 

 
21.0

 
3.5

Retirement costs
 

 

 

 
13.1

Goodwill impairment charges
 

 
59.5

 

 
59.5

Loan impairment charges
 

 

 
13.0

 

Capital maintenance expenditures
 
(1.4
)
 
(1.3
)
 
(3.6
)
 
(4.3
)
Adjusted Funds From Operations (2)
 
$
186.9

 
$
181.6

 
$
741.5

 
$
683.6

Interest, net
 
73.6

 
77.2

 
301.3

 
245.9

Income tax expense
 
0.9

 
0.8

 
4.6

 
5.0

Capital maintenance expenditures
 
1.4

 
1.3

 
3.6

 
4.3

Amortization of debt issuance costs, bond premiums and original issuance discounts
 
(2.9
)
 
(2.9
)
 
(11.4
)
 
(12.2
)
Adjusted EBITDA (3)
 
$
259.9

 
$
258.0

 
$
1,039.6

 
$
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, 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.

3




Conference Call Details
 
The Company will hold a conference call on November 1, 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: 13695540
The playback can be accessed through November 8, 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.


4



GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data) (unaudited)

        
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Revenues
 

 
 

 
 

 
 

Rental income
$
248,789

 
$
170,276

 
$
745,030

 
$
509,546

Income from direct financing lease

 
30,843

 

 
76,448

Interest income from mortgaged real estate
7,206

 

 
21,600

 

Real estate taxes paid by tenants

 
21,270

 

 
64,031

Total income from real estate
255,995

 
222,389

 
766,630

 
650,025

Gaming, food, beverage and other
31,617

 
31,750

 
97,859

 
102,385

Total revenues
287,612

 
254,139

 
864,489

 
752,410

Operating expenses
 

 
 

 
 

 
 

Gaming, food, beverage and other
18,549

 
18,962

 
56,739

 
59,027

Real estate taxes

 
21,586

 

 
64,981

Land rights and ground lease expense
9,094

 
6,484

 
33,572

 
19,460

General and administrative
15,042

 
15,006

 
48,266

 
56,272

Depreciation
57,302

 
27,267

 
183,745

 
82,744

Loan impairment charges

 

 
13,000

 

Total operating expenses
99,987

 
89,305

 
335,322

 
282,484

Income from operations
187,625

 
164,834

 
529,167

 
469,926

 
 
 
 
 
 
 
 
Other income (expenses)
 

 
 

 
 

 
 

Interest expense
(75,111
)
 
(60,341
)
 
(228,362
)
 
(171,464
)
Interest income
235

 
1,418

 
572

 
2,790

  Losses on debt extinguishment
(21,014
)
 

 
(21,014
)
 
(3,473
)
Total other expenses
(95,890
)
 
(58,923
)
 
(248,804
)
 
(172,147
)
 
 
 
 
 
 
 
 
Income from operations before income taxes
91,735

 
105,911

 
280,363

 
297,779

  Income tax expense
1,188

 
1,096

 
3,773

 
4,194

Net income
$
90,547

 
$
104,815

 
$
276,590

 
$
293,585

 
 
 
 
 
 
 
 
Earnings per common share:
 

 
 

 
 

 
 

Basic earnings per common share
$
0.42

 
$
0.49

 
$
1.29

 
$
1.37

Diluted earnings per common share
$
0.42

 
$
0.49

 
$
1.29

 
$
1.37

 
  



5



GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Operations
(in thousands) (unaudited)
 
 
TOTAL REVENUES
 
ADJUSTED EBITDA
 
Three Months Ended 
 September 30,
 
Three Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Real estate
$
255,995

 
$
222,389

 
$
252,999

 
$
214,656

GLP Holdings, LLC (TRS)
31,617

 
31,750

 
7,473

 
7,495

Total
$
287,612

 
$
254,139

 
$
260,472

 
$
222,151

 
 
 
 
 
 
 
 
 
TOTAL REVENUES
 
ADJUSTED EBITDA
 
Nine Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Real Estate
$
766,630

 
$
650,025

 
$
755,477

 
$
642,120

GLP Holdings, LLC (TRS)
97,859

 
102,385

 
24,284

 
26,504

Total
$
864,489

 
$
752,410

 
$
779,761

 
$
668,624


GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Current Year Revenue Detail
(in thousands) (unaudited)
Three Months Ended September 30, 2019
 
PENN Master Lease
 
PENN 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

 
$
56,555

 
$
15,230

 
$
18,911

 
$
3,283

 
$
2,275

 
$
164,736

Land base rent
 
23,493

 
17,813

 
3,340

 
2,946

 

 

 
47,592

Percentage rent
 
21,370

 
7,942

 
3,340

 
2,808

 
2,792

 
1,356

 
39,608

Total cash rental income
 
$
113,345

 
$
82,310

 
$
21,910

 
$
24,665

 
$
6,075

 
$
3,631

 
$
251,936

Straight-line rent adjustments
 
2,232

 
(6,318
)
 
(2,895
)
 
(2,234
)
 
572

 

 
(8,643
)
Ground rent in revenue
 
950

 
1,828

 
2,245

 
383

 

 

 
5,406

Other rental revenue
 

 

 

 

 
90

 

 
90

Total rental income
 
$
116,527

 
$
77,820

 
$
21,260

 
$
22,814

 
$
6,737

 
$
3,631

 
$
248,789

Interest income from mortgaged real estate
 

 

 
5,590

 
1,616

 

 

 
7,206

Total income from real estate
 
$
116,527

 
$
77,820

 
$
26,850

 
$
24,430

 
$
6,737

 
$
3,631

 
$
255,995

Nine Months Ended September 30, 2019
 
PENN Master Lease
 
PENN Amended Pinnacle Master Lease
 
ERI Master Lease and Mortgage
 
BYD Master Lease and Mortgage
 
PENN - Meadows Lease
 
Casino Queen Lease
 
Total
Building base rent
 
$
205,446

 
$
168,633

 
$
45,689

 
$
55,899

 
$
9,850

 
$
6,826

 
$
492,343

Land base rent
 
70,477

 
53,294

 
10,020

 
8,785

 

 

 
142,576

Percentage rent
 
64,928

 
23,680

 
10,020

 
8,374

 
8,376

 
4,068

 
119,446

Total cash rental income
 
$
340,851

 
$
245,607

 
$
65,729

 
$
73,058

 
$
18,226

 
$
10,894

 
$
754,365

Straight-line rent adjustments
 
6,695

 
(18,955
)
 
(8,684
)
 
(6,703
)
 
1,717

 

 
(25,930
)
Ground rent in revenue
 
2,838

 
5,338

 
6,746

 
1,235

 

 

 
16,157

Other rental revenue
 

 

 

 

 
438

 

 
438

Total rental income
 
$
350,384

 
$
231,990

 
$
63,791

 
$
67,590

 
$
20,381

 
$
10,894

 
$
745,030

Interest income from mortgaged real estate
 

 

 
16,771

 
4,829

 

 

 
21,600

Total income from real estate
 
$
350,384

 
$
231,990

 
$
80,562

 
$
72,419

 
$
20,381

 
$
10,894

 
$
766,630


6



GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
General and Administrative Expense
(in thousands) (unaudited)
 
        
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Real estate general and administrative expenses
$
9,410

 
$
10,009

 
$
31,388

 
$
40,077

GLP Holdings, LLC (TRS) general and administrative expenses
5,632

 
4,997

 
16,878

 
16,195

Total reported general and administrative expenses (1)
$
15,042

 
$
15,006

 
$
48,266

 
$
56,272

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




7



Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA
Gaming and Leisure Properties, Inc. and Subsidiaries
CONSOLIDATED
(in thousands, except per share and share data) (unaudited)
 
 
        
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
90,547

 
$
104,815

 
$
276,590

 
$
293,585

Losses from dispositions of property
37

 
129

 
50

 
354

Real estate depreciation
55,047

 
24,406

 
176,290

 
74,155

Funds from operations
$
145,631

 
$
129,350

 
$
452,930

 
$
368,094

Straight-line rent adjustments
8,643

 
15,917

 
25,930

 
49,150

Direct financing lease adjustments

 
8,002

 

 
37,241

Other depreciation (1)
2,255

 
2,861

 
7,455

 
8,589

Amortization of land rights
3,020

 
2,727

 
15,516

 
8,182

Amortization of debt issuance costs, bond premiums and original issuance discounts
2,807

 
2,982

 
8,597

 
9,278

Stock based compensation
3,845

 
3,275

 
12,353

 
7,878

Losses on debt extinguishment
21,014

 

 
21,014

 
3,473

Retirement costs

 

 

 
13,149

Loan impairment charges

 

 
13,000

 

Capital maintenance expenditures (2)
(709
)
 
(970
)
 
(2,256
)
 
(2,954
)
Adjusted funds from operations
$
186,506

 
$
164,144

 
$
554,539

 
$
502,080

Interest, net
74,876

 
58,923

 
227,790

 
168,674

Income tax expense
1,188

 
1,096

 
3,773

 
4,194

Capital maintenance expenditures (2)
709

 
970

 
2,256

 
2,954

Amortization of debt issuance costs, bond premiums and original issuance discounts
(2,807
)
 
(2,982
)
 
(8,597
)
 
(9,278
)
Adjusted EBITDA
$
260,472

 
$
222,151

 
$
779,761

 
$
668,624

 
 
 
 
 
 
 
 
Net income, per diluted common share
$
0.42

 
$
0.49

 
$
1.29

 
$
1.37

FFO, per diluted common share
$
0.68

 
$
0.60

 
$
2.10

 
$
1.71

AFFO, per diluted common share
$
0.87

 
$
0.76

 
$
2.58

 
$
2.34

 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding
 
 
 
 
 
 
 
   Diluted
215,325,154

 
214,872,707

 
215,217,574

 
214,717,803

 
 
(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.

8



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 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
88,461

 
$
103,126

 
$
269,421

 
$
285,712

Losses from dispositions of property

 
129

 
8

 
120

Real estate depreciation
55,047

 
24,406

 
176,290

 
74,155

Funds from operations
$
143,508

 
$
127,661

 
$
445,719

 
$
359,987

Straight-line rent adjustments
8,643

 
15,917

 
25,930

 
49,150

Direct financing lease adjustments

 
8,002

 

 
37,241

Other depreciation (1)
497

 
522

 
1,496

 
1,560

Amortization of land rights
3,020

 
2,727

 
15,516

 
8,182

Amortization of debt issuance costs, bond premiums and original issuance discounts
2,807

 
2,982

 
8,597

 
9,278

Stock based compensation
3,845

 
3,275

 
12,353

 
7,878

Losses on debt extinguishment
21,014

 

 
21,014

 
3,473

Retirement costs

 

 

 
13,149

Loan impairment charges

 

 
13,000

 

Capital maintenance expenditures (2)

 

 
(4
)
 
(51
)
Adjusted funds from operations
$
183,334

 
$
161,086

 
$
543,621

 
$
489,847

Interest, net (3)
72,276

 
56,323

 
219,988

 
160,872

Income tax expense
196

 
229

 
461

 
628

Capital maintenance expenditures (2)

 

 
4

 
51

Amortization of debt issuance costs, bond premiums and original issuance discounts
(2,807
)
 
(2,982
)
 
(8,597
)
 
(9,278
)
Adjusted EBITDA
$
252,999

 
$
214,656

 
$
755,477

 
$
642,120


 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2019
Adjusted EBITDA
$
252,999

 
$
755,477

Real estate general and administrative expenses
9,410

 
31,388

Stock based compensation
(3,845
)
 
(12,353
)
Losses from dispositions of property

 
(8
)
Cash net operating income (4)
$
258,564

 
$
774,504

 
 

(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 $7.8 million for the three and nine months ended September 30, 2019 and 2018, respectively.

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

9



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 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
2,086

 
$
1,689

 
$
7,169

 
$
7,873

Losses from dispositions of property
37

 

 
42

 
234

Real estate depreciation

 

 

 

Funds from operations
$
2,123

 
$
1,689

 
$
7,211

 
$
8,107

Straight-line rent adjustments

 

 

 

Direct financing lease adjustments

 

 

 

Other depreciation (1)
1,758

 
2,339

 
5,959

 
7,029

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)
(709
)
 
(970
)
 
(2,252
)
 
(2,903
)
Adjusted funds from operations
$
3,172

 
$
3,058

 
$
10,918

 
$
12,233

Interest, net
2,600

 
2,600

 
7,802

 
7,802

Income tax expense
992

 
867

 
3,312

 
3,566

Capital maintenance expenditures (2)
709

 
970

 
2,252

 
2,903

Amortization of debt issuance costs, bond premiums and original issuance discounts

 

 

 

Adjusted EBITDA
$
7,473

 
$
7,495

 
$
24,284

 
$
26,504

 
 
(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.


10



Gaming and Leisure Properties, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
 
September 30, 2019
 
December 31, 2018
 
(unaudited)
 
 
Assets
 
 
 
Real estate investments, net
$
7,154,980

 
$
7,331,460

Property and equipment, used in operations, net
95,617

 
100,884

Mortgage loans receivable
303,684

 
303,684

Right-of-use assets and land rights, net
859,293

 
673,207

Cash and cash equivalents
25,556

 
25,783

Prepaid expenses
2,665

 
30,967

Goodwill
16,067

 
16,067

Other intangible assets
9,577

 
9,577

Loan receivable

 
13,000

Deferred tax assets
5,812

 
5,178

Other assets
31,501

 
67,486

Total assets
$
8,504,752

 
$
8,577,293

 
 
 
 
Liabilities
 
 
 
Accounts payable
$
166

 
$
2,511

Accrued expenses
6,716

 
30,297

Accrued interest
84,456

 
45,261

Accrued salaries and wages
10,215

 
17,010

Gaming, property, and other taxes
1,111

 
42,879

Lease liabilities
201,497

 

Long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts
5,749,136

 
5,853,497

Deferred rental revenue
319,841

 
293,911

Deferred tax liabilities
262

 
261

Other liabilities
24,720

 
26,059

Total liabilities
6,398,120

 
6,311,686

 
 
 
 
Shareholders’ equity
 
 
 
Preferred stock ($.01 par value, 50,000,000 shares authorized, no shares issued or outstanding at September 30, 2019 and December 31, 2018)

 

Common stock ($.01 par value, 500,000,000 shares authorized, 214,682,856 and 214,211,932 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively)
2,147

 
2,142

Additional paid-in capital
3,955,555

 
3,952,503

Accumulated deficit
(1,851,070
)
 
(1,689,038
)
Total shareholders’ equity
2,106,632

 
2,265,607

Total liabilities and shareholders’ equity
$
8,504,752

 
$
8,577,293



11



Debt Capitalization
 
The Company had $25.6 million of unrestricted cash and $5.7 billion in total debt at September 30, 2019.  The Company’s debt structure as of September 30, 2019 was as follows:
 
 
 
As of September 30, 2019
 
 
Years to Maturity
Interest Rate
 
Balance
 
 
 
 
 
(in thousands)
Unsecured $1,175 Million Revolver Due May 2023 (1)
 
3.6
3.557%
 
$
60,000

Unsecured Term Loan A-1 Due April 2021 (1)
 
1.6
3.544%
 
449,000

Senior Unsecured Notes Due November 2020
 
1.1
4.875%
 
215,174

Senior Unsecured Notes Due April 2021
 
1.5
4.375%
 
400,000

Senior Unsecured Notes Due November 2023
 
4.1
5.375%
 
500,000

Senior Unsecured Notes Due September 2024
 
4.9
3.350%
 
400,000

Senior Unsecured Notes Due June 2025
 
5.7
5.250%
 
850,000

Senior Unsecured Notes Due April 2026
 
6.5
5.375%
 
975,000

Senior Unsecured Notes Due June 2028
 
8.7
5.750%
 
500,000

Senior Unsecured Notes Due January 2029
 
9.3
5.300%
 
750,000

Senior Unsecured Notes Due January 2030
 
10.3
4.000%
 
700,000

Finance lease liability
 
6.9
4.780%
 
1,021

Total long-term debt
 
 
 
 
$
5,800,195

Less: unamortized debt issuance costs, bond premiums and original issuance discounts
 
 
 
 
(51,059
)
Total long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts
 
 
 
 
$
5,749,136

Weighted average
 
6.1
4.826%
 
 
 
(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


12



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 (1)
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
(1) The Company entered into an agreement to terminate the long-term ground lease at this property, which will be effective in February 2020.


13



Dividends
 
On August 20, 2019, the Company’s Board of Directors declared the third quarter 2019 dividend.  Shareholders of record on September 6, 2019 received $0.68 per common share, which was paid on September 20, 2019.  The Company anticipates the following schedule regarding 2019 dividend payments:
Payment Dates
March 22, 2019
(paid)
June 28, 2019
(paid)
September 20, 2019
 (paid)
December 27, 2019
 

14



Lease and Mortgage 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
20
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 (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 (3)
1.91
1.75
1.98
1.90
 
2.06
1.33
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 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
 
Mortgages
 
BYD (Belterra) (5) 
ERI (Lumière Place) (6)
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) 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) Information with respect to our tenants' rent coverage is derived from the public statements and filings of PENN, BYD and ERI as of September 30, 2019 and from certifications provided by Casino Queen, Inc. Casino Queen is not a public reporting entity. Its information was certified by the tenant as of September 30, 2019. GLPI has not independently verified the accuracy of the tenants' information and therefore makes no representation as to the accuracy of such information.
(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.
(6) The Lumière loan bears interest at a rate equal to (i) 9.09% until the one-year anniversary of the closing, and (ii) 9.27% until its maturity.



15



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 fourth 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

16



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 pay dividends in the future; 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.

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


17