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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended March 31, 2014

 

OR

 

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

 

For the transition period from          to         

 

Commission file number:  001-36124

 

Gaming and Leisure Properties, Inc.

(Exact name of registrant as specified in its charter)

 

Pennsylvania

 

46-2116489

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

825 Berkshire Blvd., Suite 400

Wyomissing, PA 19610

(Address of principal executive offices) (Zip Code)

 

610-401-2900

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer o

 

Accelerated filer o

 

 

 

Non-accelerated filer x

 

Smaller reporting company o

(Do not check if a smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Title

 

Outstanding as of May 7, 2014

Common Stock, par value $.01 per share

 

112,132,334

 

 

 



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Forward-looking statements in this document are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Gaming and Leisure Properties, Inc. (“GLPI”) and subsidiaries (the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Forward-looking statements include information concerning the Company’s business strategy, plans, and goals and objectives.

 

Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts. You should understand that the following important factors could affect future results and could cause actual results to differ materially from those expressed in such forward-looking statements:

 

·                  the ability to receive, or delays in obtaining, the regulatory approvals required to own, develop and/or operate our properties, or other delays or impediments to completing our planned acquisitions or projects, including GLPI’s ability to qualify as a real estate investment trust;

 

·                  our ability to maintain our status as a real estate investment trust and there being no need for any further dividend of historical accumulated earnings and profits in order to qualify as a real estate investment trust in 2014;

 

·                  the ability and willingness of our tenants, operators and other third parties to meet and/or perform their obligations under their respective contractual arrangements with us, including, in some cases, their obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities;

 

·                  the ability of our tenants and operators to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit facilities and other indebtedness;

 

·                  the ability of our tenants and operators to comply with laws, rules and regulations in the operation of our properties, to deliver high quality services, to attract and retain qualified personnel and to attract customers;

 

·                  the availability and the ability to identify suitable and attractive acquisition and development opportunities and the ability to acquire and lease the respective properties on favorable terms;

 

·                  the degree and nature of our competition;

 

·                  the ability to generate sufficient cash flows to service our outstanding indebtedness;

 

·                  the access to debt and equity capital markets;

 

·                  fluctuating interest rates;

 

·                  the availability of qualified personnel and our ability to retain our key management personnel;

 

·                  GLPI’s duty to indemnify Penn National Gaming, Inc. and subsidiaries in certain circumstances if the spin-off transaction described in Note 1 to the condensed consolidated financial statements fails to be tax-free;

 

·                  changes in the United States tax law and other state, federal or local laws, whether or not specific to real estate, real estate investment trusts or to the gaming, lodging or hospitality industries;

 

·                  changes in accounting standards;

 

·                  the impact of weather events or conditions, natural disasters, acts of terrorism and other international hostilities, war or political instability;

 

·                  other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and

 

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·                  additional factors as discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the United States Securities and Exchange Commission.

 

Certain of these factors and other factors, risks and uncertainties are discussed in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. Other unknown or unpredictable factors may also cause actual results to differ materially from those projected by the forward-looking statements. Most of these factors are difficult to anticipate and are generally beyond the control of the Company.

 

You should consider the areas of risk described above, as well as those set forth in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, in connection with considering any forward-looking statements that may be made by the Company generally. Except for the ongoing obligations of the Company to disclose material information under the federal securities laws, the Company does not undertake any obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required to do so by law.

 

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GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

PART I.

FINANCIAL INFORMATION

4

 

 

 

ITEM 1.

FINANCIAL STATEMENTS (Unaudited)

4

 

Condensed Consolidated Balance Sheets — March 31, 2014 and December 31, 2013

4

 

Condensed Consolidated Statements of Income — Three Months Ended March 31, 2014 and 2013

5

 

Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity — Three Months Ended March 31, 2014 and 2013

6

 

Condensed Consolidated Statements of Cash Flows — Three Months Ended March 31, 2014 and 2013

7

 

Notes to the Condensed Consolidated Financial Statements

8

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

19

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

29

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

29

 

 

 

PART II.

OTHER INFORMATION

30

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

30

 

 

 

ITEM 1A.

RISK FACTORS

30

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

30

 

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

30

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

30

 

 

 

ITEM 5.

OTHER INFORMATION

30

 

 

 

ITEM 6.

EXHIBITS

30

 

 

 

SIGNATURE

 

31

 

 

 

EXHIBIT INDEX

 

32

 

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

Gaming and Leisure Properties, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(amounts in thousands, except share data)

 

 

 

March 31, 2014

 

December 31, 2013

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

Real estate investments, net

 

$

2,153,653

 

$

2,010,303

 

Property and equipment, used in operations, net

 

141,886

 

139,121

 

Cash and cash equivalents

 

48,278

 

285,221

 

Prepaid expenses

 

7,667

 

5,983

 

Deferred income taxes

 

1,927

 

2,228

 

Other current assets

 

24,240

 

17,367

 

Goodwill

 

75,521

 

75,521

 

Other intangible assets

 

9,577

 

9,577

 

Debt issuance costs, net of accumulated amortization of $3,277 and $1,270 at March 31, 2014 and December 31, 2013, respectively

 

44,862

 

46,877

 

Loan receivable

 

41,000

 

 

Other assets

 

13,275

 

17,041

 

Total assets

 

$

2,561,886

 

$

2,609,239

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Accounts payable

 

$

24,594

 

$

21,397

 

Accrued expenses

 

6,995

 

13,783

 

Accrued interest

 

42,869

 

18,055

 

Accrued salaries and wages

 

8,135

 

10,337

 

Gaming, property, and other taxes

 

23,764

 

18,789

 

Income taxes

 

5,889

 

17,256

 

Other current liabilities

 

14,585

 

12,911

 

Long-term debt

 

2,500,000

 

2,350,000

 

Deferred income taxes

 

3,083

 

4,282

 

Total liabilities

 

2,629,914

 

2,466,810

 

 

 

 

 

 

 

Shareholders’ (deficit) equity

 

 

 

 

 

Common stock ($.01 par value, 550,000,000 shares authorized, 111,771,524 and 88,659,448 shares issued at March 31, 2014 and December 31, 2013, respectively)

 

1,118

 

887

 

Additional paid-in capital

 

862,588

 

3,651

 

Retained (deficit) earnings

 

(931,734

)

137,891

 

Total shareholders’ (deficit) equity

 

(68,028

)

142,429

 

Total liabilities and shareholders’ (deficit) equity

 

$

2,561,886

 

$

2,609,239

 

 

See accompanying notes to the condensed consolidated financial statements.

 

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Gaming and Leisure Properties, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

Rental

 

$

106,114

 

$

 

Real estate taxes paid by tenants

 

11,998

 

 

Total rental revenue

 

118,112

 

 

Gaming

 

38,755

 

41,080

 

Food, beverage and other

 

2,831

 

3,215

 

Total revenues

 

159,698

 

44,295

 

Less promotional allowances

 

(1,370

)

(1,646

)

Net revenues

 

158,328

 

42,649

 

Operating expenses

 

 

 

 

 

Gaming

 

21,562

 

23,139

 

Food, beverage and other

 

2,546

 

2,767

 

Real estate taxes

 

12,423

 

406

 

General and administrative

 

20,941

 

5,939

 

Depreciation

 

26,522

 

3,588

 

Total operating expenses

 

83,994

 

35,839

 

Income from operations

 

74,334

 

6,810

 

 

 

 

 

 

 

Other income (expenses)

 

 

 

 

 

Interest expense

 

(28,974

)

 

Interest income

 

546

 

 

Management fee

 

 

(1,280

)

Total other expenses

 

(28,428

)

(1,280

)

 

 

 

 

 

 

Income from operations before income taxes

 

45,906

 

5,530

 

Income tax provision

 

1,594

 

2,316

 

Net income

 

$

44,312

 

$

3,214

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

Basic earnings per common share

 

$

0.40

 

$

0.03

 

Diluted earnings per common share

 

$

0.38

 

$

0.03

 

 

 

 

 

 

 

Dividends paid per common share

 

$

0.52

 

$

 

 

See accompanying notes to the condensed consolidated financial statements.

 

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Gaming and Leisure Properties, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Shareholders’ Equity (Deficit)

(in thousands, except share data)

(unaudited)

 

 

 

Common Stock

 

Additional
Paid-In

 

Retained
Earnings

 

Total
Shareholders’

 

 

 

Shares

 

Amount

 

Capital

 

(Deficit)

 

Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2013

 

88,659,448

 

$

887

 

$

3,651

 

$

137,891

 

$

142,429

 

Stock option activity

 

1,051,847

 

10

 

15,844

 

 

15,854

 

Restricted stock activity

 

80,408

 

1

 

(584

)

 

(583

)

Dividends paid, including purging distribution

 

21,979,821

 

220

 

843,677

 

(1,113,937

)

(270,040

)

Net income

 

 

 

 

44,312

 

44,312

 

Balance, March 31, 2014

 

111,771,524

 

$

1,118

 

$

862,588

 

$

(931,734

)

$

(68,028

)

 

See accompanying notes to the condensed consolidated financial statements.

 

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Gaming and Leisure Properties, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Three months ended March 31,

 

2014

 

2013

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

Net income

 

$

44,312

 

$

3,214

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

Depreciation

 

26,522

 

3,588

 

Amortization of debt issuance costs

 

2,007

 

 

Losses (Gains) on sales of property

 

158

 

(28

)

Deferred income taxes

 

(898

)

128

 

Charge for stock-based compensation

 

1,951

 

 

(Increase) decrease,

 

 

 

 

 

Prepaid expenses and other current assets

 

(5,201

)

(380

)

Other assets

 

(273

)

4

 

Increase (decrease),

 

 

 

 

 

Accounts payable

 

43

 

177

 

Accrued expenses

 

(6,788

)

189

 

Accrued interest

 

24,814

 

 

Accrued salaries and wages

 

(2,202

)

(510

)

Gaming, pari-mutuel, property and other taxes

 

4,975

 

337

 

Income taxes

 

(11,367

)

(10,541

)

Other current and noncurrent liabilities

 

1,674

 

63

 

Net cash provided by (used in) operating activities

 

79,727

 

(3,759

)

Investing activities

 

 

 

 

 

Capital project expenditures, net of reimbursements

 

(24,002

)

(78

)

Capital maintenance expenditures

 

(871

)

(896

)

Proceeds from sale of property and equipment

 

 

79

 

Increase in cash in escrow

 

(3,356

)

 

Funding of loan receivable

 

(43,000

)

 

Principal payments on loan receivable

 

2,000

 

 

Acquisition of real estate

 

(140,730

)

 

Net cash used in investing activities

 

(209,959

)

(895

)

Financing activities

 

 

 

 

 

Net advances to Penn National Gaming, Inc.

 

 

7,280

 

Dividends paid

 

(270,040

)

 

Proceeds from exercise of options

 

13,321

 

 

Proceeds from issuance of long-term debt

 

182,008

 

 

Payments of long-term debt

 

(32,000

)

 

Net cash (used in) provided by financing activities

 

(106,711

)

7,280

 

Net increase in cash and cash equivalents

 

(236,943

)

2,626

 

Cash and cash equivalents at beginning of year

 

285,221

 

14,562

 

Cash and cash equivalents at end of year

 

$

48,278

 

$

17,188

 

 

See accompanying notes to the condensed consolidated financial statements.

 

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Gaming and Leisure Properties, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

 

1.              Organization and Operations

 

On November 15, 2012, Penn National Gaming, Inc. (“Penn”) announced that it intended to pursue a plan to separate the majority of its operating assets and real property assets into two publicly traded companies including an operating entity, and, through a tax-free spin-off of its real estate assets to holders of its common and preferred stock, a newly formed publicly traded real estate investment trust (“REIT”), Gaming and Leisure Properties, Inc. (“GLPI”) (the “Spin-Off”).

 

GLPI and subsidiaries (the “Company”) was incorporated on February 13, 2013, as a wholly-owned subsidiary of Penn. In connection with the Spin-Off, which was completed on November 1, 2013, Penn contributed to GLPI, through a series of internal corporate restructurings, substantially all of the assets and liabilities associated with Penn’s real property interests and real estate development business, as well as the assets and liabilities of Hollywood Casino Baton Rouge and Hollywood Casino Perryville, which are referred to as the “TRS Properties,” in a tax-free distribution. The Company intends to elect on its United States (“U.S.”) federal income tax return for its taxable year beginning on January 1, 2014 to be treated as a REIT and the Company, together with an indirectly wholly-owned subsidiary of the Company, GLP Holdings, Inc., intend to jointly elect to treat each of GLP Holdings, Inc., Louisiana Casino Cruises, Inc. and Penn Cecil Maryland, Inc. as a “taxable REIT subsidiary” (a “TRS”) effective on the first day of the first taxable year of GLPI as a REIT. As a result of the Spin-Off, GLPI owns substantially all of Penn’s former real property assets and leases back most of those assets to Penn for use by its subsidiaries, under a master lease, a “triple-net” operating lease with an initial term of 15 years with no purchase option, followed by four 5 year renewal options (exercisable by Penn) on the same terms and conditions (the “Master Lease”), and GLPI also owns and operates the TRS Properties through an indirect wholly-owned subsidiary, GLP Holdings, Inc.

 

Prior to the Spin-Off, GLPI and Penn entered into a Separation and Distribution Agreement setting forth the mechanics of the Spin-Off, certain organizational matters and other ongoing obligations of Penn and GLPI. Penn and GLPI or their respective subsidiaries, as applicable, also entered into a number of other agreements prior to the Spin-Off to provide a framework for the restructuring and for the relationships between GLPI and Penn after the Spin-Off.

 

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 March 31, 2014, GLPI’s portfolio consisted of 22 gaming and related facilities, which included the TRS Properties, the real property associated with 19 gaming and related facilities of Penn (including two properties under development in Dayton, Ohio and Mahoning Valley, Ohio), and the real property associated with the Casino Queen in East St. Louis, Illinois, that was acquired in January 2014.  These facilities are geographically diversified across 13 states. GLPI expects to grow its portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators under prudent terms, which may or may not include Penn.

 

In connection with the Spin-Off, Penn allocated its accumulated earnings and profits (as determined for U.S. federal income tax purposes) for periods prior to the consummation of the Spin-Off between Penn and GLPI. In connection with its election to be taxed as a REIT for U.S. federal income tax purposes, GLPI declared a special dividend to its shareholders to distribute any accumulated earnings and profits relating to the real property assets and attributable to any pre-REIT years, including any earnings and profits allocated to GLPI in connection with the Spin-Off, to comply with certain REIT qualification requirements (the “Purging Distribution”). The Purging Distribution, which was paid on February 18, 2014, totaled approximately $1.05 billion and was comprised of cash and GLPI common stock.  See Note 8 for further details.

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

 

The condensed consolidated financial statements include the accounts of GLPI and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses for the reporting periods. Actual results could differ from those estimates.

 

Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. The notes to the consolidated financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2013 (our “Annual Report”) should be read in conjunction with these condensed consolidated financial statements.  The December 31, 2013 financial information has been derived from the Company’s audited consolidated financial statements.

 

2.              Summary of Significant Accounting Policies

 

Fair Value of Financial Instruments

 

The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate:

 

Cash and Cash Equivalents

 

The fair value of the Company’s cash and cash equivalents approximates the carrying value of the Company’s cash and cash equivalents, due to the short maturity of the cash equivalents.

 

Long-term Debt

 

The fair value of the senior notes and senior unsecured credit facility is estimated based on quoted prices in active markets and as such is a Level 1 measurement as defined under ASC 820 “Fair Value Measurements and Disclosures.”

 

The estimated fair values of the Company’s financial instruments are as follows (in thousands):

 

 

 

March 31, 2014

 

December 31, 2013

 

 

 

Carrying
Amount

 

Fair
Value

 

Carrying
Amount

 

Fair
Value

 

Financial assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

48,278

 

$

48,278

 

$

285,221

 

$

285,221

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

 

 

 

 

 

 

 

Senior unsecured credit facility

 

450,000

 

441,000

 

300,000

 

294,750

 

Senior notes

 

2,050,000

 

2,114,250

 

2,050,000

 

2,058,750

 

 

Comprehensive Income

 

Comprehensive income includes net income and all other non-owner changes in shareholders’ equity during a period. The Company did not have any non-owner changes in shareholders’ equity for the three months ended March 31, 2014 and 2013, and comprehensive income for the three months ended March 31, 2014 and 2013 was equivalent to net income for those time periods.

 

Revenue Recognition and Promotional Allowances

 

The Company recognizes rental revenue from tenants, including rental abatements, lease incentives and contractually fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when collectability is reasonably assured. Contingent rental income is recognized once the lessee achieves the specified target. Recognition of rental income commences when control of the facility has been transferred to the tenant. For facilities being jointly developed with the tenant, the Company retains control of the assets to be leased until operations commence and control is transferred to the tenant.

 

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As of March 31, 2014, all but three of the Company’s properties were leased to a subsidiary of Penn under the Master Lease. The obligations under the Master Lease are guaranteed by Penn and by most Penn subsidiaries that occupy and operate the facilities leased under the Master Lease. A default by Penn or its subsidiaries with regard to any facility will cause a default with regard to the Master Lease. In January 2014, GLPI completed the asset acquisition of Casino Queen in East St. Louis, Illinois. GLPI subsequently leased the property back to Casino Queen on a “triple net” basis on terms similar to those in the Master Lease.

 

The rent structure under the Master Lease with Penn includes a fixed component, a portion of which is subject to an annual 2% escalator if certain rent coverage ratio thresholds are met, and a component that is based on the performance of the facilities, which is adjusted, subject to certain floors (i) every 5 years by an amount equal to 4% of the average change to net revenues of all facilities under the Master Lease (other than Hollywood Casino Columbus and Hollywood Casino Toledo) during the preceding five years, and (ii) monthly by an amount equal to 20% of the change in net revenues of Hollywood Casino Columbus and Hollywood Casino Toledo during the preceding month. In addition to rent, all properties under the Master Lease with Penn are required to pay the following: (1) all facility maintenance, (2) all insurance required in connection with the leased properties and the business conducted on the leased properties, (3) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor) and (4) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.

 

Additionally, in accordance with ASC 605, “Revenue Recognition,” the Company records revenue for the real estate taxes paid by its tenants on the leased properties under the Master Lease with an offsetting expense in real estate taxes within the consolidated statement of income as the Company has concluded it is the primary obligor under the Master Lease.

 

Gaming revenue generated by the TRS Properties mainly consists of video lottery gaming revenue, and to a lesser extent, table game and poker revenue. Video lottery gaming revenue is the aggregate net difference between gaming wins and losses with liabilities recognized for funds deposited by customers before gaming play occurs, for “ticket-in, ticket-out” coupons in the customers’ possession, and for accruals related to the anticipated payout of progressive jackpots. Progressive slot machines, which contain base jackpots that increase at a progressive rate based on the number of coins played, are charged to revenue as the amount of the jackpots increases. Table game gaming revenue is the aggregate of table drop adjusted for the change in aggregate table chip inventory. Table drop is the total dollar amount of the currency, coins, chips, tokens, outstanding counter checks (markers), and front money that are removed from the live gaming tables. Additionally, food and beverage revenue is recognized as services are performed.

 

The following table discloses the components of gaming revenue within the condensed consolidated statements of income for the three months ended March 31, 2014 and 2013:

 

 

 

Three Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

(in thousands)

 

Video lottery

 

$

33,381

 

$

37,352

 

Table game

 

4,940

 

3,448

 

Poker

 

434

 

280

 

Total gaming revenue, net of cash incentives

 

$

38,755

 

$

41,080

 

 

Gaming revenue is recognized net of certain sales incentives in accordance with ASC 605-50, “Revenue Recognition—Customer Payments and Incentives.” The Company records certain sales incentives and points earned in point-loyalty programs as a reduction of revenue.

 

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The retail value of food and beverage and other services furnished to guests without charge is included in gross revenues and then deducted as promotional allowances. The amounts included in promotional allowances for the three months ended March 31, 2014 and 2013 are as follows:

 

 

 

Three Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

(in thousands)

 

Food and beverage

 

$

1,361

 

$

1,517

 

Other

 

9

 

129

 

Total promotional allowances

 

$

1,370

 

$

1,646

 

 

The estimated cost of providing such complimentary services, which is primarily included in food, beverage, and other expense, for the three months ended March 31, 2014 and 2013 are as follows:

 

 

 

Three Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

(in thousands)

 

Food and beverage

 

$

716

 

$

713

 

Other

 

3

 

69

 

Total cost of complimentary services

 

$

719

 

$

782

 

 

Gaming and Admission Taxes

 

For the TRS Properties, the Company is subject to gaming and admission taxes based on gross gaming revenues in the jurisdictions in which it operates. The Company primarily recognizes gaming tax expense based on the statutorily required percentage of revenue that is required to be paid to state and local jurisdictions in the states where or in which wagering occurs. At Hollywood Casino Baton Rouge, the gaming admission tax is based on graduated tax rates. The Company records gaming and admission taxes at the Company’s estimated effective gaming tax rate for the year, considering estimated taxable gaming revenue and the applicable rates. Such estimates are adjusted each interim period. If gaming tax rates change during the year, such changes are applied prospectively in the determination of gaming tax expense in future interim periods. For the three months ended March 31, 2014 and 2013, these expenses, which are recorded within gaming expense in the condensed consolidated statements of income, totaled $17.3 million, and $18.7 million, respectively.

 

Earnings Per Share

 

The Company calculates earnings per share (“EPS”) in accordance with ASC 260, “Earnings Per Share.” Basic EPS is computed by dividing net income applicable to common stock by the weighted-average number of common shares outstanding during the period, excluding net income attributable to participating securities (unvested restricted stock awards). Diluted EPS reflects the additional dilution for all potentially-dilutive securities such as stock options and unvested restricted shares. Basic and diluted EPS for the three months ended March 31, 2013 were retroactively restated for the number of GLPI basic and diluted shares outstanding immediately following the Spin-Off and to include the shares issued as part of the Purge Distribution.

 

The following table reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS for the three months ended March 31, 2014 and 2013 (in thousands):

 

Three months ended March 31, 

 

2014

 

2013

 

 

 

 

 

 

 

Determination of shares:

 

 

 

 

 

Weighted-average common shares outstanding

 

111,198

 

110,582

 

Assumed conversion of dilutive employee stock-based awards

 

6,282

 

4,703

 

Assumed conversion of restricted stock

 

370

 

318

 

Diluted weighted-average common shares outstanding

 

117,850

 

115,603

 

 

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The following table presents the calculation of basic and diluted EPS for the Company’s common stock for the three months ended March 31, 2014 and 2013:

 

Three months ended March 31, 

 

2014

 

2013

 

 

 

(in thousands, expect per share data)

 

Calculation of basic EPS:

 

 

 

 

 

Net income

 

$

44,312

 

$

3,214

 

Less: Net income allocated to participating securities

 

(175

)

(12

)

Net income attributable to common shareholders

 

$

44,137

 

$

3,202

 

Weighted-average common shares outstanding

 

111,198

 

110,582

 

Basic EPS

 

$

0.40

 

$

0.03

 

 

 

 

 

 

 

Calculation of diluted EPS:

 

 

 

 

 

Net income

 

$

44,312

 

$

3,214

 

Diluted weighted-average common shares outstanding

 

117,850

 

115,603

 

Diluted EPS

 

$

0.38

 

$

0.03

 

 

There were no outstanding options to purchase shares of common stock during the three months ended March 31, 2014 and 2013 that were not included in the computation of diluted EPS because they were antidilutive.

 

Stock-Based Compensation

 

The Company accounts for stock compensation under ASC 718, “Compensation - Stock Compensation,” which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. This expense is recognized ratably over the requisite service period following the date of grant. The fair value for stock options is estimated at the date of grant using the Black-Scholes option- pricing model. There were no stock option grants awarded in the first quarter 2014.

 

Additionally, the cash-settled phantom stock units (“PSU”) entitle employees to receive cash based on the fair value of the Company’s common stock on the vesting date. These PSUs are accounted for as liability awards and are re-measured at fair value each reporting period until they become vested with compensation expense being recognized over the requisite service period in accordance with ASC 718-30, “Compensation-Stock Compensation, Awards Classified as Liabilities.”

 

In addition, the Company’s stock appreciation rights (“SAR”) are accounted for as liability awards since they will be settled in cash. The fair value of these awards is calculated during each reporting period and estimated using the Black-Scholes option pricing model.

 

In connection with the Spin-Off of GLPI, employee stock options and cash settled stock appreciation rights of Penn were converted through the issuance of GLPI employee stock options and GLPI cash settled stock appreciation rights and an adjustment to the exercise prices of their Penn awards. The number of options and cash settled stock appreciation rights, subject to and the exercise price of each converted award was adjusted to preserve the same intrinsic value of the awards that existed immediately prior to the Spin-Off.

 

Holders of outstanding restricted stock awards and cash settled phantom stock unit awards received an additional share of restricted stock or cash settled phantom stock unit awards in GLPI common stock at the Spin-Off so that the intrinsic value of these awards were equivalent to those that existed immediately prior to the Spin-Off.

 

The adjusted options and SARs, as well as the restricted stock awards and PSUs, otherwise remain subject to their original terms, except that for purposes of the adjusted Penn awards (including in determining exercisability and the post-termination exercise period), continued service with GLPI following the distribution date shall be deemed continued service with Penn.

 

As of March 31, 2014, there was $5.8 million of total unrecognized compensation cost for stock options that will be recognized over the grants remaining weighted average vesting period of 1.47 years. For the three months ended March 31, 2014, the Company recognized $1.4 million of compensation expense associated with these awards. In addition, the Company also recognized $3.3 million of compensation expense for the three months ended March 31, 2014, relating to the first quarter $.52 dividend paid on vested employee stock options.

 

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As of March 31, 2014, there was $6.4 million of total unrecognized compensation cost for restricted stock awards that will be recognized over the grants remaining weighted average vesting period of 3.28 years. For the three months ended March 31, 2014, the Company recognized $0.6 million of compensation expense associated with these awards.

 

The following table contains information on restricted stock award activity for the three months ended March 31, 2014.

 

 

 

Number of
Award Shares

 

Outstanding at December 31, 2013

 

419,067

 

E&P Purge

 

106,261

 

Granted

 

64,279

 

Released

 

(110,714

)

Canceled

 

(37,274

)

Outstanding at March 31, 2014

 

441,619

 

 

In addition, there was $8.1 million of total unrecognized compensation cost at March 31, 2014, which will be recognized over the awards remaining weighted average vesting period of 2.37 years, for Penn and GLPI PSUs held by GLPI employees that will be cash-settled by GLPI. For the three months ended March 31, 2014, the Company recognized $0.4 million of compensation expense associated with these awards. In addition, the Company also recognized $0.4 million for the three months ended March 31, 2014, relating to the purge distribution dividend and the first quarter $.52 dividend paid on unvested PSUs.

 

Additionally, there was $0.3 million of total unrecognized compensation cost at March 31, 2014, which will be recognized over the grants remaining weighted average vesting period of 1.62 years, for Penn and GLPI SARs held by GLPI employees that will be cash-settled by GLPI. For the three months ended March 31, 2014, the Company recognized $21 thousand of compensation expense associated with these awards.

 

Upon the declaration of the Purging Distribution, GLPI options and GLPI SARs were adjusted in a manner that preserved both the pre-distribution intrinsic value of the options and SARs and the pre-distribution ratio of the stock price to exercise price that existed immediately before the Purging Distribution. Additionally, upon declaration of the Purging Distribution, holders of GLPI PSUs were credited with the special dividend, which will accrue and be paid, if applicable, on the vesting date of the related PSU. Holders of GLPI restricted stock were entitled to receive the special dividend with respect to such restricted stock on the same date or dates that the special dividend was payable on GLPI common stock to shareholders of GLPI generally.

 

Segment Information

 

Consistent with how the Company’s Chief Operating Decision Maker reviews and assesses the Company’s financial performance, the Company has two reportable segments, GLP Capital, L.P. (a wholly-owned subsidiary of GLPI through which GLPI owns substantially all of its assets) (“GLP Capital”) and the TRS Properties. The GLP Capital reportable segment consists of the leased real property and represents the majority of the Company’s business. The TRS Properties reportable segment consists of Hollywood Casino Perryville and Hollywood Casino Baton Rouge. See Note 9 for further information with respect to the Company’s segments.

 

3.              Acquisitions

 

In January 2014, the Company completed the asset acquisition of the real property associated with the Casino Queen in East St. Louis, Illinois for $140.7 million, including transaction fees of $0.7 million.  Simultaneously with the acquisition, GLPI also provided Casino Queen with a $43 million, five year term loan at 7% interest, pre-payable at any time, which, together with the sale proceeds, completely refinanced and retired all of Casino Queen’s outstanding long-term debt obligations. As of March 31, 2014, the balance of this loan was $41 million, due to principal and interest payments made.  GLPI leased the property back to Casino Queen on a “triple net” basis on terms similar to those in the Master Lease and will result in approximately $14 million in annual rent.  The lease has an initial term of 15 years, and the tenant has an option to renew it at the same terms and conditions for four successive five year periods.

 

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4.              Real Estate Investments

 

Real estate investments, net, represents investments in 20 properties and is summarized as follows:

 

 

 

March 31,

 

December 31,

 

 

 

2014

 

2013

 

 

 

(in thousands)

 

Land and improvements

 

$

453,141

 

$

382,581

 

Building and improvements

 

2,120,663

 

2,050,533

 

Construction in progress

 

87,323

 

61,677

 

Total real estate investments

 

2,661,127

 

2,494,791

 

Less accumulated depreciation

 

(507,474

)

(484,488

)

Real estate investments, net

 

$

2,153,653

 

$

2,010,303

 

 

Construction in progress primarily represents two development projects which the Company is responsible for the real estate construction costs, namely Hollywood at Dayton Raceway and Hollywood at Mahoning Valley Race Track which Penn anticipates opening in the fall of 2014.  The Company acquired the real estate of Casino Queen for $140.7 million in January 2014.

 

5.              Property and Equipment Used in Operations

 

Property and equipment used in operations, net, consists of the following and primarily represents the assets utilized in the TRS:

 

 

 

March 31,

 

December 31,

 

 

 

2014

 

2013

 

 

 

(in thousands)

 

 

 

 

 

 

 

Land and improvements

 

$

31,635

 

$

27,586

 

Building and improvements

 

116,267

 

115,888

 

Furniture, fixtures, and equipment

 

102,740

 

101,288

 

Construction in progress

 

504

 

203

 

Total property and equipment

 

251,146

 

244,965

 

Less accumulated depreciation

 

(109,260

)

(105,844

)

Property and equipment, net

 

$

141,886

 

$

139,121

 

 

6.              Long-term Debt

 

Long-term debt is as follows:

 

 

 

March 31,

 

December 31,

 

 

 

2014

 

2013

 

 

 

(in thousands)

 

Senior unsecured credit facility

 

$

450,000

 

$

300,000

 

$550 million 4.375% senior notes due November 2018

 

550,000

 

550,000

 

$1,000 million 4.875% senior notes due November 2020

 

1,000,000

 

1,000,000

 

$500 million 5.375% senior notes due November 2023

 

500,000

 

500,000

 

 

 

$

2,500,000

 

$

2,350,000

 

 

The following is a schedule of future minimum repayments of long-term debt as of March 31, 2014 (in thousands):

 

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2014

 

$

 

2015

 

 

2016

 

 

2017

 

 

2018

 

1,000,000

 

Thereafter

 

1,500,000

 

Total minimum payments

 

$

2,500,000

 

 

The Company participates in a $1,000.0 million senior unsecured credit facility (the “Credit Facility”), consisting of a $700.0 million revolving credit facility and a $300.0 million Term Loan A facility. The Credit Facility matures on October 28, 2018. At March 31, 2014, the Credit Facility had a gross outstanding balance of $450 million, consisting of the $300 million Term Loan A facility and $150 million of borrowings under the revolving credit facility. As of March 31, 2014, $550 million remained available under the Credit Facility.

 

The Credit Facility contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of GLPI and its subsidiaries, to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations or pay certain dividends and other restricted payments. The Credit Facility contains the following financial covenants, which are measured quarterly on a trailing four-quarter basis: a maximum total debt to total asset value ratio, a maximum senior secured debt to total asset value ratio, a maximum ratio of certain recourse debt to unencumbered asset value and a minimum fixed charge coverage ratio. In addition, GLPI is required to maintain a minimum tangible net worth. GLPI is required to maintain its status as a REIT on and after the effective date of its election to be treated as a REIT, which election GLPI intends to make on its U.S. federal income tax return for its first full fiscal year following the Spin-Off. GLPI is permitted to pay dividends to its shareholders as may be required in order to maintain REIT status, subject to the absence of payment or bankruptcy defaults. GLPI is also permitted to make other dividends and distributions subject to pro forma compliance with the financial covenants and the absence of defaults. The Credit Facility also contains certain customary affirmative covenants and events of default. Such events of default include the occurrence of a change of control and termination of the Master Lease (subject to certain replacement rights). The occurrence and continuance of an event of default under the Credit Facility will enable the lenders under the Credit Facility to accelerate the loans, and terminate the commitments, thereunder.

 

The Notes contain covenants limiting the Company’s ability to: incur additional debt and use their assets to secure debt; merge or consolidate with another company; and make certain amendments to the Master Lease. The Notes also require the Company to maintain a specified ratio of unencumbered assets to unsecured debt. These covenants are subject to a number of important and significant limitations, qualifications and exceptions.

 

At March 31, 2014, the Company was in compliance with all required covenants.

 

7.              Commitments and Contingencies

 

Litigation

 

Pursuant to a Separation and Distribution Agreement between Penn and GLPI, any liability arising from or relating to legal proceedings involving the businesses and operations of Penn’s real property holdings prior to the Spin-Off (other than any liability arising from or relating to legal proceedings where the dispute arises from the operation or ownership of the TRS Properties) will be retained by Penn and Penn will indemnify GLPI (and its subsidiaries, directors, officers, employees and agents and certain other related parties) against any losses it may incur arising from or relating to such legal proceedings.

 

The Company is subject to various legal and administrative proceedings relating to personal injuries, employment matters, commercial transactions, and other matters arising in the normal course of business. The Company does not believe that the final outcome of these matters will have a material adverse effect on the Company’s consolidated financial position or results of operations. In addition, the Company maintains what it believes is adequate insurance coverage to further mitigate the risks of such proceedings. However, such proceedings can be costly, time consuming, and unpredictable and, therefore, no assurance can be given that the final outcome of such proceedings may not materially impact the Company’s financial condition or results of operations. Further, no assurance can be given that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters.

 

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8.              Dividends

 

On February 18, 2014, GLPI made the Purging Distribution, which totaled $1.05 billion and was comprised of cash and GLPI common stock, to distribute the accumulated earnings and profits related to the real property assets and attributable to any pre-REIT years, including any earnings and profits allocated to GLPI in connection with the Spin-Off. Shareholders were given the option to elect either an all-cash or all-stock dividend, subject to a total cash limitation of $210 million. Of the 88,691,827 shares of common stock outstanding on the record date, approximately 54.3% elected the cash distribution and approximately 45.7% elected a stock distribution or made no election. Shareholders electing cash received $4.358049 plus 0.195747 additional GLPI shares per common share held on the record date. Shareholders electing stock or not making an election received 0.309784 additional GLPI shares per common share held on the record date. Stock dividends were paid based on the volume weighted average price for the three trading days ended February 13, 2014 of $38.2162 per share. Approximately 22.0 million shares were issued in connection with this dividend payment.  In addition, cash distributions were made to GLPI and Penn employee restricted stock award holders in the amount of $1 million for the purging distribution.  GLPI and Penn have jointly requested a Pre-Filing Agreement from the Internal Revenue Service pursuant to Revenue Procedure 2009-14 to confirm the appropriate allocation of Penn’s historical earnings and profits between GLPI and Penn.  The outcome of this request may affect the amount of the dividend required to be paid by GLPI to its shareholders prior to December 31, 2014.

 

Additionally, on February 18, 2014, the Company’s Board of Directors declared its first quarterly dividend of $0.52 per common share, which was paid on March 28, 2014, in the amount of $58 million, to shareholders of record on March 7, 2014. In addition, dividend payments were made to GLPI restricted stock award holders in the amount of $1.0 million.

 

9.              Segment Information

 

The following tables present certain information with respect to the Company’s segments. Intersegment revenues between the Company’s segments were not material in any of the periods presented below.

 

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GLP Capital (1)

 

TRS Properties

 

Eliminations (2)

 

Total

 

 

 

(in thousands)

 

For the three months ended March 31, 2014

 

 

 

 

 

 

 

 

 

Net revenues

 

$

118,112

 

$

40,216

 

$

 

$

158,328

 

Income from operations

 

67,871

 

6,463

 

 

74,334

 

Interest, net

 

28,428

 

2,601

 

(2,601

)

28,428

 

Income from operations before income taxes

 

42,044

 

3,862

 

 

45,906

 

Income tax provision

 

 

1,594

 

 

1,594

 

Net income

 

42,044

 

2,268

 

 

44,312

 

Depreciation

 

23,441

 

3,081

 

 

26,522

 

Capital project expenditures, net of reimbursements

 

24,002

 

 

 

24,002

 

Capital maintenance expenditures

 

 

871

 

 

871

 

 

 

 

 

 

 

 

 

 

 

For the three months ended March 31, 2013

 

 

 

 

 

 

 

 

 

Net revenues

 

$

 

$

42,649

 

$

 

$

42,649

 

Income from operations

 

 

6,810

 

 

6,810

 

Income from operations before income taxes

 

 

5,530

 

 

5,530

 

Income tax provision

 

 

2,316

 

 

2,316

 

Net income

 

 

3,214

 

 

3,214

 

Depreciation

 

 

3,588

 

 

3,588

 

Capital project expenditures, net of reimbursements

 

 

78

 

 

78

 

Capital maintenance expenditures

 

 

896

 

 

896

 

 

 

 

 

 

 

 

 

 

 

Balance sheet at March 31,2014

 

 

 

 

 

 

 

 

 

Total assets

 

$

2,324,839

 

$

237,047

 

 

$

2,561,886

 

 

 

 

 

 

 

 

 

 

 

Balance sheet at December 31, 2013

 

 

 

 

 

 

 

 

 

Total assets

 

$

2,379,243

 

$

229,996

 

 

$

2,609,239

 

 


(1)         GLP Capital operations commenced November 1, 2013 in connection with the Spin-Off.

(2)         Amounts in the “Eliminations” column represent the elimination of intercompany interest payments from the Company’s TRS Properties business segment to its GLP Capital business segment.

 

10.  Pre-Spin Transactions with Penn

 

Before the Spin-Off, Hollywood Casino Baton Rouge and Hollywood Casino Perryville had a corporate overhead assessment with Penn, whereby Penn provided various management services in consideration of a management fee equal to 3% of net revenues. The Company incurred and paid management fees of $1.3 million for the three months ended March 31, 2013. In connection with the completion of the Spin-Off, the management fee agreements between Penn and Hollywood Casino Baton Rouge and Hollywood Casino Perryville were terminated.

 

11.  Supplemental Disclosures of Cash Flow Information

 

Prior to the Spin-Off, the Company’s Hollywood Casino Baton Rouge and Hollywood Casino Perryville paid no federal income taxes directly to tax authorities and instead settled all intercompany balances with Penn. These settlements included, among other things, the share of the income taxes allocated by Penn to Hollywood Casino Baton Rouge and Hollywood Casino Perryville. The amounts paid to Penn for Hollywood Casino Baton Rouge and Hollywood Casino Perryville’s allocated share of federal income taxes was $1.8 million for the three months ended March 31, 2013. Hollywood Casino Baton Rouge and Hollywood Casino Perryville made federal income tax payments directly to tax authorities of $1.4 million for the three months ended March 31, 2014. Hollywood Casino Baton Rouge and Hollywood Casino Perryville made state income tax payments directly to the state authorities of $0.9 million for the three months ended March 31, 2014 and no payments for the three months ended March 31, 2013. In addition, GLPI, prior to qualifying for REIT status, was subjected to corporate federal and state income taxes. The Company paid federal income tax directly

 

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to tax authorities of $10.1 million for the three months ended March 31, 2014. The Company also paid state income tax payments of $1.4 million directly to the state authorities for the three months ended March 31, 2014. Cash paid for interest was $2.1 million for the three months ended March 31, 2014 and no interest was paid for the three months ended March 31, 2013.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Our Operations

 

On November 15, 2012, Penn announced that it intended to pursue a plan to separate the majority of its operating assets and real property assets into two publicly traded companies including an operating entity, and, through a tax-free spin-off of its real estate assets to holders of its common and preferred stock, a newly formed publicly traded REIT.

 

The Company was incorporated in Pennsylvania on February 13, 2013, as a wholly-owned subsidiary of Penn. In connection with the Spin-Off, which was completed on November 1, 2013, Penn contributed to GLPI through a series of internal corporate restructurings substantially all of the assets and liabilities associated with Penn’s real property interests and real estate development business, as well as the assets and liabilities of Hollywood Casino Baton Rouge and Hollywood Casino Perryville, which are referred to as the “TRS Properties,” in a tax-free distribution. We intend to elect on our U.S. federal income tax return for our taxable year beginning on January 1, 2014 to be treated as a REIT and we, together with an indirectly wholly-owned subsidiary of the Company, GLP Holdings, Inc., intend to jointly elect to treat each of GLP Holdings, Inc., Louisiana Casino Cruises, Inc. and Penn Cecil Maryland, Inc. as a “taxable REIT subsidiary” effective on the first day of the first taxable year of GLPI as a REIT. As a result of the Spin-Off, GLPI owns substantially all of Penn’s former real property assets and leases back most of those assets to Penn for use by its subsidiaries, under the Master Lease, and GLPI also owns and operates the TRS Properties through an indirect, wholly-owned subsidiary,GLP Holding, Inc. The assets and liabilities of GLPI were recorded at their respective historical carrying values at the time of the Spin-Off.

 

Prior to the Spin-Off, GLPI and Penn entered into a Separation and Distribution Agreement setting forth the mechanics of the Spin-Off, certain organizational matters and other ongoing obligations of Penn and GLPI. Penn and GLPI or their respective subsidiaries, as applicable, also entered into a number of other agreements prior to the Spin-Off to provide a framework for the restructuring and for the relationships between GLPI and Penn after the Spin-Off.

 

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 March 31, 2014, GLPI’s portfolio consisted of 22 gaming and related facilities, which included the TRS Properties, the real property associated with 19 gaming and related facilities of Penn (including two properties under development in Dayton, Ohio and Mahoning Valley, Ohio), and the real property associated with the Casino Queen acquired in January 2014.  These facilities are geographically diversified across 13 states.

 

We expect to grow our portfolio by aggressively pursuing opportunities to acquire additional gaming facilities to lease to gaming operators under prudent terms, which may or may not include Penn. We believe that a number of gaming operators would like to de-lever or are seeking liquidity while continuing to generate the benefits of continued operations, which may present significant expansion opportunities for us to pursue. Of particular significance, we believe that a number of gaming operators would be willing to enter into transactions designed to monetize their real estate assets (i.e., gaming facilities) through sale-leaseback transactions with an unrelated party not perceived to be a competitor. These gaming operators could use the proceeds from the sale of those assets to repay debt and rebalance their capital structures, while maintaining the use of the sold gaming facilities through long term leases. Additionally, we believe we have the ability to leverage the expertise our management team has developed over the years to secure additional avenues for growth beyond the gaming industry. Accordingly, we anticipate we will be able to effect strategic acquisitions unrelated to the gaming industry as well as other acquisitions that may prove complementary to GLPI’s gaming facilities.

 

In connection with the Spin-Off, Penn allocated its accumulated earnings and profits (as determined for U.S. federal income tax purposes) for periods prior to the consummation of the Spin-Off between Penn and GLPI. In connection with its election to be taxed as a REIT for U.S. federal income tax purposes, GLPI declared a special dividend to its shareholders to distribute any accumulated earnings and profits relating to the real property assets and attributable to any pre-REIT years, including any earnings and profits allocated to GLPI in connection with the Spin-Off, to comply with certain REIT qualification requirements. The Purging Distribution, which was paid on February 18, 2014, totaled approximately $1.05 billion and was comprised of cash and GLPI common stock. Gaming and Leisure Properties, Inc. (“GLPI”) and Penn National Gaming, Inc. (“Penn”) have jointly requested a Pre-Filing Agreement from the Internal Revenue Service pursuant to Revenue Procedure 2009-14 to confirm the appropriate allocation of Penn’s historical earnings and profits between GLPI and Penn.  The outcome of this request may affect the amount of the dividend required to be paid by GLPI to its shareholders prior to December 31, 2014. See Note 8 for further details.

 

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As of March 31, 2014, the majority of our earnings are the result of the rental revenue from the lease of our properties to a subsidiary of Penn pursuant to the Master Lease. The Master Lease is a “triple-net” operating lease with an initial term of 15 years, with no purchase option, followed by four 5 year renewal options (exercisable by Penn) on the same terms and conditions. The rent structure under the Master Lease includes a fixed component, a portion of which is subject to an annual 2% escalator if certain rent coverage ratio thresholds are met, and a component that is based on the performance of the facilities, which is adjusted, subject to certain floors (i) every 5 years by an amount equal to 4% of the average change to net revenues of all facilities under the Master Lease (other than Hollywood Casino Columbus and Hollywood Casino Toledo) during the preceding five years, and (ii) monthly by an amount equal to 20% of the change in net revenues of Hollywood Casino Columbus and Hollywood Casino Toledo during the preceding month. In addition to rent, the tenant is required to pay the following: (1) all facility maintenance, (2) all insurance required in connection with the leased properties and the business conducted on the leased properties, (3) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor) and (4) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.

 

Additionally, in accordance with ASC 605, “Revenue Recognition” (“ASC 605”), the Company records revenue for the real estate taxes paid by its tenants on the leased properties with an offsetting expense in general and administrative expense within the consolidated statement of income as the Company believes it is the primary obligor.

 

Gaming revenue for our TRS properties is derived primarily from gaming on slot machines and to a lesser extent, table game and poker revenue, which is highly dependent upon the volume and spending levels of customers at our TRS Properties. Other TRS revenues are derived from our dining, retail, and certain other ancillary activities.

 

Segment Information

 

Consistent with how our Chief Operating Decision Maker reviews and assesses our financial performance, we have two reportable segments, GLP Capital and the TRS Properties. The GLP Capital reportable segment consists of the leased real property and represents the majority of our business. The TRS Properties reportable segment consists of Hollywood Casino Perryville and Hollywood Casino Baton Rouge.

 

Executive Summary

 

Financial Highlights

 

We reported net revenues and income from operations of $158.3 million and $74.3 million, respectively, for the three months ended March 31, 2014 compared to $42.6 million and $6.8 million, respectively, for the corresponding period in the prior year. The major factors affecting our results for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, were:

 

·                  Rental revenue of $118.1 million for the three months ended March 31, 2014 and zero for the three months ended March 31, 2013 as we had not yet entered into a lease with Penn.

 

·                  Increased depreciation expense of $22.9 million for the three months ended March 31, 2014, compared to the corresponding period in the prior year, primarily due to the real property assets transferred to GLPI as part of the Spin-Off.

 

·                  Interest expense of $29 million for the three months ended March 31, 2014 related to our fixed and variable rate borrowings entered into in connection with the Spin-Off.

 

·                  Increased General and Administrative expenses of $15.0 million for the three months ended March 31, 2014, primarily resulting from general and administrative expenses for our GLP Capital segment of $14.8 million for the three months ended March 31, 2014, which included compensation expense of $3.2 million,  stock based compensation charges of $6.1 million, legal expenses of $1.0 million, rent expense for those leases assigned to GLPI as part of the Spin-Off for $0.7 million, and transition services fees of $0.8 million for the three months ended March 31, 2014.

 

·                  Net income increased by $41.1 million for the three months ended March 31, 2014, as compared to the corresponding period in the prior year, primarily due to the variances explained above.

 

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Segment Developments

 

The following are recent developments that have had or will have an impact on us by segments:

 

GLP Capital

 

·                  In June 2012, Penn announced that it had filed applications with the Ohio Lottery Commission for Video Lottery Sales Agent Licenses for its Ohio racetracks, and with the Ohio State Racing Commission for permission to relocate the racetracks. In connection with the Spin-Off, Penn transferred these properties to us and we received the appropriate approvals from the Ohio regulatory bodies to participate in the development of the new racetracks. The new Mahoning Valley facility, which will be a thoroughbred track and feature approximately 850 video lottery terminals, will be located on 193 acres in Mahoning Valley’s Centrepointe Business Park near the intersection of Interstate 80 and Ohio Route 46. The Dayton facility, which will be a standardbred track and feature approximately 1,000 video lottery terminals, will be located on 119 acres on the site of an abandoned Delphi Automotive plant near Wagner Ford and Needmore roads in North Dayton. We expect both facilities to open in the fall of 2014. GLPI’s share of the budget for these two projects is limited solely to real estate construction costs which are budgeted at $100.0 million and $89.5 million for the Mahoning Valley and Dayton facilities, respectively, of which $35.5 million and $39.1 million have been incurred through March 31, 2014. Penn expects to open these facilities in the fall of 2014 at which time these two facilities will be added to the Master Lease.

 

·                  In April, Iowa Racing and Gaming Commission ruled that Argosy Casino Sioux City must cease operations by July 1, 2014, which will result in reduced rental revenue in the amount of $3.1 million in the second half of 2014.

 

·                  On December 9, 2013, GLPI announced that it had entered into an agreement to acquire the real estate assets associated with the Casino Queen in East St. Louis, Illinois. The casino and adjacent land cover approximately 78 acres and include a 157 room hotel and a 38,000 square foot casino. The transaction closed in January 2014. See Note 3 to the condensed consolidated financial statements for further details.

 

TRS Properties

 

·                  Hollywood Casino Perryville faced increased competition and its results have been negatively impacted by the opening of a casino complex, Maryland Live!, at the Arundel Mills mall in Anne Arundel, Maryland. The casino opened on June 6, 2012 with approximately 3,200 slot machines and significantly increased its slot machine offerings by mid-September 2012 to approximately 4,750 slot machines. In addition, the Anne Arundel facility opened table games on April 11, 2013, and opened a 52 table poker room in late August 2013. Finally, additional competition is expected for Hollywood Casino Perryville with the planned mid 2014 opening of a new $400 million casino facility in Baltimore City County.

 

·                  In November 2012, voters approved legislation authorizing a sixth casino in Prince George’s County and the ability to add table games to Maryland’s five existing and planned casinos. The new law also changes the tax rate casino operators pay the state, varying from casino to casino, allows all casinos in Maryland to be open 24 hours per day for the entire year, and permits casinos to directly purchase slot machines in exchange for gaming tax reductions. For our Hollywood Casino Perryville facility, table games were opened on March 5, 2013 and the tax rate will decrease upon the opening of the Prince George casino from 67 percent to 61 percent with an option for an additional 5 percent reduction if an independent commission agrees. In December 2013, the license for the sixth casino in Prince George’s County was granted. The proposed $925 million casino, which can not open until the earlier of July 2016 or 30 months after the casino being built in Baltimore opens, will adversely impact Hollywood Casino Perryville’s financial results.

 

·                  A new riverboat casino and hotel in Baton Rouge, Louisiana, L’Auberge, opened on September 1, 2012.  The opening of this riverboat casino has and will continue to have an adverse effect on the financial results of Hollywood Casino Baton Rouge.

 

Critical Accounting Estimates

 

We make certain judgments and use certain estimates and assumptions when applying accounting principles in the preparation of our consolidated financial statements. The nature of the estimates and assumptions are material due to

 

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the levels of subjectivity and judgment necessary to account for highly uncertain factors or the susceptibility of such factors to change. We have identified the accounting for income taxes, real estate investments, and goodwill and other intangible assets as critical accounting estimates, as they are the most important to our financial statement presentation and require difficult, subjective and complex judgments.

 

We believe the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations and, in certain situations, could have a material adverse effect on our consolidated financial condition.

 

For further information on our critical accounting estimates, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the notes to our audited consolidated financial statements included in our Annual Report. There has been no material change to these estimates for the three months ended March 31, 2014.

 

Results of Operations

 

The following are the most important factors and trends that contribute to our operating performance:

 

·                  The fact that a wholly-owned subsidiary of Penn is the lessee of substantially all of our properties pursuant to the Master Lease and accounts for a significant portion of our revenues. We expect to grow our portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators under prudent terms, which may or may not include Penn.

 

·                  The fact that the rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the Treasury. Changes to the tax laws or interpretations thereof, with or without retroactive application, could materially and adversely affect GLPI investors or GLPI.

 

·                  The successful execution of the development and construction activities currently underway at the two Ohio properties, as well as the risks associated with the costs, regulatory approval and timing of these activities.

 

·                  The risks related to economic conditions and the effect of such conditions on consumer spending for leisure and gaming activities, which may negatively impact our gaming tenants and operators.

 

The consolidated results of operations for the three months ended March 31, 2014 and 2013 are summarized below:

 

 

 

Three Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

(in thousands)

 

Revenues

 

 

 

 

 

Rental

 

$

106,114

 

$

 

Real estate taxes paid by tenants

 

11,998

 

 

Total rental revenue

 

118,112

 

 

Gaming

 

38,755

 

41,080

 

Food, beverage and other

 

2,831

 

3,215

 

Total revenues

 

159,698

 

44,295

 

Less promotional allowances

 

(1,370

)

(1,646

)

Net revenues

 

158,328

 

42,649

 

Operating expenses

 

 

 

 

 

Gaming

 

21,562

 

23,139

 

Food, beverage and other

 

2,546

 

2,767

 

Real estate taxes

 

12,423

 

406

 

General and administrative

 

20,941

 

5,939

 

Depreciation

 

26,522

 

3,588

 

Total operating expenses

 

83,994

 

35,839

 

Income from operations

 

$

74,334

 

$

6,810

 

 

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Certain information regarding our results of operations by segment for the three months ended March 31, 2014 and 2013 is summarized below:

 

 

 

Net Revenues

 

Income (loss) from Operations

 

Three Months Ended March 31,

 

2014

 

2013

 

2014

 

2013

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

GLP Capital

 

$

118,112

 

$

 

$

67,871

 

$

 

TRS Properties

 

40,216

 

42,649

 

6,463

 

6,810

 

Total

 

$

158,328

 

$

42,649

 

$

74,334

 

$

6,810

 

 

Adjusted EBITDA, FFO and AFFO

 

Adjusted EBITDA, Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”) are non-GAAP financial measures used by the Company as performance measures for benchmarking against the Company’s peers and as internal measures of business operating performance. The Company believes Adjusted EBITDA, FFO, and AFFO 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.

 

FFO is a non-GAAP financial measure that is considered a supplemental measure for the real estate industry and a supplement to GAAP measures. The National Association of Real Estate Investment Trusts defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and real estate depreciation. We have defined AFFO as FFO excluding stock based compensation expense, debt issuance costs amortization and other depreciation expense reduced by maintenance capital expenditures. Finally, we have defined Adjusted EBITDA as net income excluding interest, taxes on income, depreciation, and gains (or losses) from sales of property, management fees, and stock based compensation expense.

 

Adjusted EBITDA, FFO, and AFFO are not recognized terms under GAAP. Because certain companies do not calculate Adjusted EBITDA, FFO and AFFO in the same way and certain other companies may not perform such calculation, those measures as used by other companies may not be consistent with the way the Company calculates such measures and should not be considered as alternative measures of operating profit or net income. The Company’s presentation of these measures does not replace the presentation of the Company’s financial results in accordance with GAAP.

 

The reconciliation of the Company’s net income per GAAP to Adjusted EBITDA, FFO and AFFO for the three months ended March 31, 2014 and 2013 is as follows:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2014

 

2013

 

Net income

 

$

44,312

 

$

3,214

 

Real estate depreciation

 

23,441

 

 

Gains (losses) from sales of property

 

158

 

(28

)

Funds from operations

 

$

67,911

 

$

3,186

 

Other depreciation

 

3,081

 

3,588

 

Debt issuance cost amortization

 

2,007

 

 

Stock based compensation

 

1,951

 

 

Maintenance CAPEX

 

(871

)

(896

)

Adjusted funds from operations

 

$

74,079

 

$

5,878

 

Interest, net

 

28,428

 

 

Management fees

 

 

1,280

 

Taxes on income

 

1,594

 

2,316

 

Maintenance CAPEX

 

871

 

896

 

Debt issuance cost amortization

 

(2,007

)

 

Adjusted EBITDA

 

$

102,965

 

$

10,370

 

 

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The reconciliation of each segment’s net income per GAAP to FFO, AFFO, and Adjusted EBITDA for the three months ended March 31, 2014 and 2013 is as follows:

 

 

 

GLP Capital (1)

 

TRS Properties

 

Three Months Ended March 31, 

 

2014

 

2014

 

2013

 

 

 

(in thousands)

 

Net income

 

$

42,044

 

$

2,268

 

$

3,214

 

Real estate depreciation

 

23,441

 

 

 

Losses (gains) from sales of property

 

 

158

 

(28

)

Funds from operations

 

$

65,485

 

$

2,426

 

$

3,186

 

Other depreciation

 

 

3,081

 

3,588

 

Debt issuance costs amortization

 

2,007

 

 

 

Stock based compensation

 

1,951

 

 

 

Maintenance CAPEX

 

 

(871

)

(896

)

Adjusted funds from operations

 

$

69,443

 

$

4,636

 

$

5,878

 

Interest, net

 

25,827

 

2,601

 

 

Management fees

 

 

 

1,280

 

Taxes on income

 

 

1,594

 

2,316

 

Maintenance CAPEX

 

 

871

 

896

 

Debt issuance costs amortization

 

(2,007

)

 

 

Adjusted EBITDA

 

$

93,263

 

$

9,702

 

$

10,370

 

 


(1)                                 GLP Capital operations commenced November 1, 2013 in connection with the Spin-Off.

 

FFO, AFFO, and Adjusted EBITDA, for our GLP Capital segment were $65.5 million, $69.4 million and $93.3 million, respectively, for the three months ended March 31, 2014.

 

Net income for our TRS Properties segment decreased by $0.9 million for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, primarily due to additional competition, which negatively impacted Hollywood Casino Baton Rouge, namely the opening of the new L’Auberge riverboat casino and hotel in Baton Rouge, Louisiana on September 1, 2012.  FFO for our TRS Properties segment decreased by $0.8 million for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, primarily due to the decrease in net income described above.  AFFO for our TRS Properties segment decreased by $1.2 million for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, primarily due to the decrease described above as well as a $0.5 million decrease in depreciation at Hollywood Casino Perryville, due to certain equipment purchased at opening, now  being fully depreciated.  Adjusted EBITDA for our TRS Properties segment decreased by $0.7 million for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, primarily due to the decrease described above.

 

Revenues

 

Revenues for the three months ended March 31, 2014 and 2013 were as follows (in thousands):

 

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Table of Contents

 

 

 

 

 

 

 

 

 

Percentage

 

Three Months Ended March 31,

 

2014

 

2013

 

Variance

 

Variance

 

Total rental revenue

 

$

118,112

 

$

 

$

118,112

 

N/A

 

Gaming

 

38,755

 

41,080

 

(2,325

)

-5.7

%

Food, beverage and other

 

2,831

 

3,215

 

(384

)

-11.9

%

Revenues

 

159,698

 

44,295

 

115,403

 

260.5

%

Less promotional allowances

 

(1,370

)

(1,646

)

276

 

-16.8

%

Net revenues

 

$

158,328

 

$

42,649

 

$

115,679

 

271.2

%

 

Total rental revenue

 

For the three months ended March 31, 2014, rental income was $118.1 million for our GLP Capital segment, which included $12 million of revenue for the real estate taxes paid by our tenants on the leased properties. In accordance with ASC 605, the Company is required to present the real estate taxes paid by its tenants on the leased properties as revenue with an offsetting expense as the Company believes it is the primary obligor.

 

Gaming revenue

 

Gaming revenue for our TRS Properties segment decreased by $2.3 million, or 5.7%, for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, due to decreased gaming revenue at Hollywood Casino Baton Rouge of $2.6 million from the impact of L’Auberge riverboat casino and hotel in Baton Rouge, Louisiana opening on September 1, 2012.

 

Operating Expenses

 

Operating expenses for the three months ended March 31, 2014 and 2013 were as follows (in thousands):

 

 

 

 

 

 

 

 

 

Percentage

 

Three Months Ended March 31,

 

2014

 

2013

 

Variance

 

Variance

 

Gaming

 

$

21,562

 

$

23,139

 

$

(1,577

)

-6.8

%

Food, beverage and other

 

2,546

 

2,767

 

(221

)

-8.0

%

Real estate taxes

 

12,423

 

406

 

12,017

 

2959.9

%

General and administrative

 

20,941

 

5,939

 

15,002

 

252.6

%

Depreciation

 

26,522

 

3,588

 

22,934

 

639.2

%

Total operating expenses

 

$

83,994

 

$

35,839

 

$

48,155

 

134.4

%

 

Gaming expense

 

Gaming expense for our TRS Properties segment decreased by $1.6 million, or 6.8%, for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, primarily due to a $0.8 million decrease in gaming taxes resulting from decreased taxable gaming revenue at Hollywood Casino Baton Rouge and a $0.6 million slot tax reduction due to implementation of table games at Hollywood Casino Perryville.

 

Real estate taxes

 

Real estate taxes increased by $12 million, or 2959.9%, for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, primarily due to the real estate taxes paid by our tenants on the leased properties in our GLP Capital segment. Although this amount is paid by our tenants, we are required to present this amount in both revenues and expense for financial reporting purposes under ASC 605.

 

General and administrative expense

 

General and administrative costs include items such as compensation costs (including stock based compensation awards), professional services, rent expense and costs associated with development activities. In addition, Penn provides GLPI with certain administrative and support services on a transitional basis pursuant to the Transition Services

 

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Agreement. The fees charged to GLPI for Transition Services furnished pursuant to this agreement are determined based on fixed percentages of Penn’s internal costs which percentages are intended to approximate the actual cost incurred by Penn in providing the Transition Services to GLPI for the relevant period. Under the Transition Services Agreement, Penn will provide these services for a period of up to two years, unless terminated sooner by GLPI.

 

General and administrative expenses increased by $15 million, or 252.6%, for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, primarily resulting from general and administrative expenses for our GLP Capital segment of $14.8 million for the three months ended March 31, 2014, which included compensation expense of $3.2 million,  stock based compensation charges of $6.1 million, legal expenses of $1 million, rent expense for those leases assigned to GLPI as part of the Spin-Off for $0.7 million, and transition services fees of $0.8 million for the three months ended March 31, 2014.

 

Depreciation expense

 

Depreciation expense increased by $22.9 million, or 639.2%, to $26.5 million for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, primarily due to the real property assets transferred to GLPI as part of the Spin-Off in our GLP Capital segment.

 

Other income (expenses)

 

Other income (expenses) for the three months ended March 31, 2014 and 2013 were as follows (in thousands):

 

 

 

 

 

 

 

 

 

Percentage

 

Three Months Ended March 31,

 

2014

 

2013

 

Variance

 

Variance

 

Interest expense

 

$

(28,974

)

$

 

$

(28,974

)

N/A

 

Interest income

 

546

 

 

546

 

N/A

 

Management fee

 

 

(1,280

)

1,280

 

-100.0

%

Total operating expenses

 

$

(28,428

)

$

(1,280

)

$

(27,148

)

2120.9

%

 

Interest expense

 

For the three months ended March 31, 2014, interest expense was $29 million related to our fixed and variable rate borrowings.

 

Management fee

 

Management fees decreased by $1.3 million, for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, due to the management agreement with Penn terminating on November 1, 2013 in connection with the Spin-Off.

 

Taxes

 

Our effective tax rate (income taxes as a percentage of income from operations before income taxes) decreased to 3.5% for the three months ended March 31, 2014, as compared to 41.9% for the three months ended March 31, 2013, primarily due to the Company intending to elect to be taxed as a REIT for our taxable year beginning on January 1, 2014.  As a REIT, we will no longer be required to pay federal corporate income tax on earnings from operation of the REIT that are distributed to our shareholders. We will continue to be required to pay federal and state corporate income taxes on earnings of our TRS Properties.

 

Liquidity and Capital Resources

 

Our primary sources of liquidity and capital resources are cash flow from operations, borrowings from banks and proceeds from the issuance of debt and equity securities.

 

Net cash provided by operating activities was $79.7 million during the three months ended March 31, 2014, while $3.8 million in net cash was used during the three months ended March 31, 2013. The increase in net cash provided by

 

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operating activities of $83.5 million for the three months ended March 31, 2014 compared to the corresponding period in the prior year was primarily comprised of an increase in cash receipts from customers/tenants of $116.9 million, an increase in cash paid to suppliers and vendors of $22.5 million, an increase in cash paid to employees of $9.5 million, and a net decrease of $0.8 million related to cash paid for taxes and intercompany federal and state income tax transfers with Penn by our TRS Properties prior to the Spin-Off, all of which were partially offset by an increase in cash paid for interest of $2.1 million. The increase in cash receipts collected from our customers/tenants for the three months ended March 31, 2014 compared to the corresponding period in the prior year was primarily due to three months of rental income of $118.1 million partially offset by a decrease of $2.4 million in our TRS properties’ net revenues due to the impact of new competition previously mentioned in their respective markets.

 

Net cash used in investing activities totaled $210.0 million and $0.9 million for the three months ended March 31, 2014 and 2013, respectively.  The increase in net cash used in investing activities of $209.1 million for the three months ended March 31, 2014 compared to the corresponding period in the prior year was primarily due to a $140.7 million dollar payment associated with the Casino Queen asset acquisition along with the  $43 million, five year term loan  to Casino Queen, less $2 million of principal payments for the quarter ended March 31, 2014, as well as  increased capital expenditures of $23.9 million primarily related to construction spend at the two facilities under development in Ohio.

 

Financing activities used net cash of $106.7 million during the three months ended March 31, 2014 and provided cash of $7.3 million during the three months ended March 31, 2013. Net cash used in financing activities for the three months ended March 31, 2014 included dividend payments of $270.0 million, partially offset by net proceeds from the issuance of long-term debt, net of repayments of long-term debt of $150 million.

 

Capital Expenditures

 

Capital expenditures are accounted for as either capital project or capital maintenance (replacement) expenditures. Capital project expenditures are for fixed asset additions that expand an existing facility or create a new facility. 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.

 

Capital expenditures totaled $24.0 million for the three months ended March 31, 2014 and primarily consisted of $9.6 million and $12.9 million for the real estate related construction costs of the Mahoning Valley facility and the Dayton facility, respectively.

 

In June 2012, Penn announced that it had filed applications with the Ohio Lottery Commission for Video Lottery Sales Agent Licenses for its Ohio racetracks, and with the Ohio State Racing Commission for permission to relocate the racetracks. In connection with the Spin-Off, Penn transferred these properties to us and we received the appropriate approvals from the Ohio regulatory bodies to participate in the development of the new racetracks. The new Mahoning Valley facility, which will be a thoroughbred track and feature approximately 850 video lottery terminals, will be located on 193 acres in Mahoning Valley’s Centrepointe Business Park near the intersection of Interstate 80 and Ohio Route 46. The Dayton facility, which will be a standardbred track and feature approximately 1,000 video lottery terminals, will be located on 119 acres on the site of an abandoned Delphi Automotive plant near Wagner Ford and Needmore roads in North Dayton. We expect both facilities to open in the fall of 2014. Upon the opening of the new facilities, both will be added to the Master Lease. GLPI’s share of the budget for these two projects is limited solely to real estate construction costs, which are budgeted at $100.0 million and $89.5 million for the Mahoning Valley and Dayton facilities, respectively, of which $35.5 million and $39.0 million have been incurred through March 31, 2014.

 

During the three months ended March 31, 2014, we spent approximately $0.9 million for capital maintenance expenditures. The majority of the capital maintenance expenditures were for slot machines and slot machine equipment at our TRS properties. Our tenants are responsible for capital maintenance expenditures at our leased properties.

 

Debt

 

The Company participates in a $1,000.0 million senior unsecured credit facility (the “Credit Facility”), consisting of a $700.0 million revolving credit facility and a $300.0 million Term Loan A facility. The Credit Facility matures on October 28, 2018. At March 31, 2014, the Credit Facility had a gross outstanding balance of $450 million, consisting of the $300 million Term Loan A facility and $150 million of borrowings under the revolving credit facility. As of March 31, 2014, $550 million remained available under the Credit Facility.

 

The Credit Facility contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of GLPI and its subsidiaries, to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations or pay certain dividends and other restricted payments. The Credit

 

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Facility contains the following financial covenants, which are measured quarterly on a trailing four-quarter basis: a maximum total debt to total asset value ratio, a maximum senior secured debt to total asset value ratio, a maximum ratio of certain recourse debt to unencumbered asset value and a minimum fixed charge coverage ratio. In addition, GLPI is required to maintain a minimum tangible net worth. GLPI is required to maintain its status as a REIT on and after the effective date of its election to be treated as a REIT, which election GLPI intends to make on its U.S. federal income tax return for its first full fiscal year following the Spin-Off. GLPI is permitted to pay dividends to its shareholders as may be required in order to maintain REIT status, subject to the absence of payment or bankruptcy defaults. GLPI is also permitted to make other dividends and distributions subject to pro forma compliance with the financial covenants and the absence of defaults. The Credit Facility also contains certain customary affirmative covenants and events of default. Such events of default include the occurrence of a change of control and termination of the Master Lease (subject to certain replacement rights). The occurrence and continuance of an event of default under the Credit Facility will enable the lenders under the Credit Facility to accelerate the loans, and terminate the commitments, thereunder.

 

The Notes contain covenants limiting the Company’s ability to: incur additional debt and use their assets to secure debt; merge or consolidate with another company; and make certain amendments to the Master Lease. The Notes also require the Company to maintain a specified ratio of unencumbered assets to unsecured debt. These covenants are subject to a number of important and significant limitations, qualifications and exceptions.

 

At March 31, 2014, the Company was in compliance with all required covenants.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We face market risk exposure in the form of interest rate risk. These market risks arise from our debt obligations. We have no international operations. Our exposure to foreign currency fluctuations is not significant to our financial condition or results of operations.

 

GLPI’s primary market risk exposure is interest rate risk with respect to its indebtedness of $2,500.0 million at March 31, 2014. Furthermore, $2,050.0 million of our obligations are the senior unsecured notes that have fixed interest rates with maturing dates ranging from four to nine years. An increase in interest rates could make the financing of any acquisition by GLPI more costly as well as increase the costs of its variable rate debt obligations. Rising interest rates could also limit GLPI’s ability to refinance its debt when it matures or cause GLPI to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness. GLPI may manage, or hedge, interest rate risks related to its borrowings by means of interest rate swap agreements. GLPI also expects to manage its exposure to interest rate risk by maintaining a mix of fixed and variable rates for its indebtedness. However, the REIT provisions of the Code substantially limit GLPI’s ability to hedge its assets and liabilities.

 

The table below provides information at March 31, 2014 about our financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents notional amounts maturing during the year and the related weighted-average interest rates by maturity dates. Notional amounts are used to calculate the contractual payments to be exchanged by maturity date and the weighted-average interest rates are based on implied forward LIBOR rates at March 31, 2014.

 

 

 

04/01/14 - 03/31/15

 

04/01/15 - 03/31/16

 

04/01/16 - 03/31/17

 

04/01/17 - 03/31/18

 

04/01/18 - 03/31/19

 

Thereafter

 

Total

 

Fair Value
03/31/14

 

 

 

(in thousands)

 

Long-term debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed rate

 

$

 

$

 

$

 

$

 

$

550,000

 

$

1,500,000

 

$

2,050,000

 

$

2,114,250

 

Average interest rate

 

 

 

 

 

 

 

 

 

4.38

%

5.04

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable rate

 

$

 

$

 

$

 

$

 

$

450,000

 

$

 

$

450,000

 

$

441,000

 

Average interest rate (1) 

 

 

 

 

 

 

 

 

 

4.64

%

 

 

 

 

 

 

 


(1)                                 Estimated rate, reflective of forward LIBOR plus the spread over LIBOR applicable to variable-rate borrowing.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Controls and Procedures

 

The Company’s management, under the supervision and with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2014, which is the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well-designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2014 to ensure that information required to be disclosed by the Company in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the United States Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

 

Changes in Internal Control over Financial Reporting

 

There were no changes that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

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PART II. OTHER INFORMATION

 

ITEM 1 — LEGAL PROCEEDINGS

 

Information in response to this Item is incorporated by reference to the information set forth in “Note 7: Commitments and Contingencies” in the Notes to the condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q.

 

ITEM 1A — RISK FACTORS

 

Risk factors that affect our business and financial results are discussed in Part I, “Item 1A. Risk Factors,” of our Annual Report. There have been no material changes in our risk factors from those previously disclosed in our Annual Report. You should carefully consider the risks described in our Annual Report and below, which could materially affect our business, financial condition or future results. The risks described in our Annual Report and below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.

 

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

The Company did not repurchase any shares of common stock during the three months ended March 31, 2014.

 

ITEM 3 — DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4 — MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5 — OTHER INFORMATION

 

Not applicable.

 

ITEM 6. EXHIBITS

 

Exhibit

 

Description of Exhibit

 

 

 

10.1*

 

First Amendment to the Master Lease Agreement, dated as of March 5, 2014, by and among GLP Capital L.P. and Penn Tenant, LLC.

 

 

 

31.1*

 

CEO Certification pursuant to rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.

 

 

 

31.2*

 

CFO Certification pursuant to rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.

 

 

 

32.1*

 

CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.2*

 

CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

101**

 

Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013, (ii) the Condensed Consolidated Statements of Income for the three months ended March 31, 2014 and 2013, (iii) the Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2014 and 2013, (iv) the Condensed Consolidated Statements of Cash Flows for three months ended March 31, 2014 and 2013and (v) the notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.

 


*                                         Filed or furnished, as applicable, herewith

 

**                                  Pursuant to applicable securities law and regulations, the interactive data file is deemed not filed or a part of a registration statement or prospectus for purposes of section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

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Table of Contents

 

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 thereunto duly authorized.

 

 

GAMING AND LEISURE PROPERTIES, INC.

 

 

May 12, 2014

By:

/s/ William J. Clifford

 

 

William J. Clifford

 

 

Chief Financial Officer

 

 

(Principal Financial Officer)

 

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Table of Contents

 

EXHIBIT INDEX

 

Exhibit

 

Description of Exhibit

 

 

 

10.1

 

First Amendment to the Master Lease Agreement, dated as of March 5, 2014, by and among GLP Capital L.P. and Penn Tenant, LLC.

 

 

 

31.1

 

CEO Certification pursuant to rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.

 

 

 

31.2

 

CFO Certification pursuant to rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.

 

 

 

32.1

 

CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

101*

 

Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013, (ii) the Condensed Consolidated Statements of Income for the three months ended March 31, 2014 and 2013, (iii) the Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2014 and 2013, (iv) the Condensed Consolidated Statements of Cash Flows for three months ended March 31, 2014 and 2013 and (v) the notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.

 


*                                         Pursuant to applicable securities law and regulations, the interactive data file is deemed not filed or a part of a registration statement or prospectus for purposes of section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

32


Exhibit 10.1

 

EXECUTION VERSION

 

FIRST AMENDMENT TO MASTER LEASE

 

THIS FIRST AMENDMENT TO MASTER LEASE (this “Amendment”) shall amend that certain Master Lease, dated November 1, 2013 (the “Effective Date”), by and among GLP Capital, L.P. (together with its permitted successors and assigns, “Landlord”) and Penn Tenant, LLC (together with its permitted successors and assigns, “Tenant”)(the “Master Lease”, capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to them in the Master Lease) and is being entered into on this 5th day of March 2014, and shall be effective as of the Effective Date, by and between Landlord and Tenant, as more fully set forth herein.

 

WHEREAS, Landlord and Tenant each desire to amend the Master Lease to amend “Exhibit B” attached thereto in order to amend certain of the legal descriptions of the Land set forth therein, as more fully described herein.

 

NOW, THEREFORE, in consideration of the provisions set forth in the Master Lease as amended by this Amendment, including, but not limited to, the mutual representations, warranties, covenants and agreements contained therein and herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby respectively acknowledged, and subject to the terms and conditions thereof and hereof, the parties, intending to be legally bound, hereby agree that the Master Lease shall be amended as follows:

 

ARTICLE I
AMENDMENT OF EXHIBIT B TO THE MASTER LEASE

 

1.1          The parties hereby agree that “Exhibit B” of the Master Lease shall be amended as follows:

 

(a)           Beginning on page B-5 of “Exhibit B” and with respect to Boomtown Casino, Biloxi, MS, the following text shall be deleted in its entirety, and such Land described below shall not be Leased Property under the Master Lease:

 

EXHIBIT A:

 

STATE OF MISSISSIPPI - FEE OWNER

BTN, INC. — LESSEE

(TIDELANDS LEASE)

 

A parcel located in Section 28, Township 7 South, Range 9 West, in the Second Judicial District of Harrison County, Mississippi, more particularly described as follows:

 

Commencing at a point on the North margin of Bay View Avenue, said point being at the intersection of said North margin with the extension of the East margin of Main Street; thence run North 0 degrees 30 minutes 07 seconds East, for a distance of 453 feet to the POINT OF BEGINNING; thence continue North 0 degrees 30 minutes 07 seconds East, for a distance of 445.0 feet to a point; thence run South 89 degrees 29 minutes 53 seconds East, for a distance of 210.0 feet to a point; thence run South 0 degrees 30 minutes 07 seconds West, for a distance of 155.0 feet to a point; thence run South 89 degrees 29 minutes 53 seconds East, for a distance of 150.0 feet to a point; thence run South 0 degrees 30 minutes 07 seconds West for a distance of 116.0 feet to a point; thence run South 89 degrees 29 minutes 53 seconds East for a distance of 61.62 feet to a point; thence run South 0

 



 

degrees 30 minutes 07 seconds West, for a distance of 174.0 feet to a point; thence run North 89 degrees 29 minutes 53 seconds West for a distance of 421.62 feet to the POINT OF BEGINNING; said parcel containing 147,672 square feet, or 3.39 acres, approximately.

 

PARCEL 1410C-01-004.001

 

NOTE: EXHIBIT B THROUGH EXHIBIT E INTENTIONALLY DELETED

 

EXHIBIT F:

 

Notwithstanding the deletion of the above legal description, the barge which is situated upon the above legal description shall continue to be Leased Property under the Master Lease.

 

(b)           Beginning on page B-7 of “Exhibit B” and with respect to Boomtown Casino, Biloxi, MS, the following text shall be deleted in its entirety, and such Land described below shall not be Leased Property under the Master Lease:

 

OFF SITE PARKING SOUTH SIDE BAY VIEW:

R.A. FAYARD SEAFOOD COMPANY - FEE OWNER

BTN, INC. — LESSEE

SUAREZ FAMILY LTD PARTNERSHIP II FEE

BTN, INC. — LESSEE

 

A parcel of land situated in Fractional Section 27, Township 7 South, Range 9 West, City of Biloxi, Second Judicial District of Harrison County, Mississippi, better described as follows:

 

Beginning at the intersection of the South margin of Bay View Avenue and the West margin of Lameuse Street in the City of Biloxi, Second Judicial District of Harrison County, Mississippi, thence S 00°23’22” E 189.37 feet along said West margin of Lameuse Street to the intersection of said West margin of Lameuse Street and the North margin of Smith Street, thence N 89°42’32” W 143.23 feet along said North margin of Smith Street, thence N 00°33’12” E 20.44 feet, thence S 89°27’44” W 123.17 feet, thence N 00°19’57” W 79.19 feet, thence N 88°51’28” W 100.93 feet to the East margin of Parker Street, thence N 03°48’57” E 129.34 feet along said East margin, thence N 09°49’53” E 33.96 feet along said East margin to the South margin of Bay View Avenue, thence along a curve concave to the north having a radius of 1325.57 feet for a distance of 360.75 feet, having a chord bearing of S 78°04’04” E for a distance of 359.64 feet along said South margin of Bay View Avenue to the Point of Beginning.

 

PARCELS 1410C-03-027.000, 1410C-03-043.000

 

OFF SITE PARKING NORTH SIDE BAY VIEW (LEASED):

R.A. FAYARD SEAFOOD COMPANY - FEE OWNER

BTN, INC. — LESSEE

SUAREZ FAMILY LTD PARTNERSHIP II - FEE OWNER

BTN, INC. — LESSEE

 

A parcel of land situated in Fractional Section 27, Township 7 South,

 

2



 

Range 9 West, City of Biloxi, Second Judicial District of Harrison County, Mississippi, better described as follows:

 

Commencing at the intersection of the South margin of Bay View Avenue and the West margin of Lameuse Street in the City of Biloxi, Second Judicial District of Harrison County, Mississippi, thence N 00°29’26” W 40.13 feet to the North margin of Bay View Avenue and the Point of Beginning, thence along a curve concave to the north having a radius of 1285.57 feet for a distance of 385.53 feet, along said North margin of Bay View Avenue, having a chord bearing of N 77°07’26” W for a distance of 384.09 feet, thence N 02°16’29” W 76.75 feet to a PK nail in a bulkhead on the south shoreline of the Back Bay of Biloxi, thence along said bulkhead S 79°01’40” E 142.12 feet to a PK nail, thence S 81°01’07” E 96.68 feet to a PK nail, thence N 55°36’39” E 6.25 feet to a PK nail, thence S 87°45’44” E 150.36 feet to a PK nail, thence N 43°15’00” E 37.90 feet to a PK nail, thence departing said bulkhead S 00°25’42” E 147.76 feet to the North margin of Bay View Avenue, thence along said North margin N 86°37’55” W 40.09 feet to the Point of Beginning.

 

PARCELS 1410C-01-008.001, 1410C-01-009.000, 1410C-01-010.000

 

WAREHOUSE SITE (LEASED):

DESPORTE PROPERTIES, LLC - FEE OWNER

BTN, INC. — LESSEE

 

A parcel of land situated in Biloxi City Block 53, Section 34, Township 7 South, Range 9 West, Biloxi, Second Judicial District of Harrison County, Mississippi, better described as follows:

 

Commencing at the intersection of the South margin of Division Street and the West margin of Oak Street, Biloxi, Second Judicial District of Harrison County, Mississippi, thence S 89°53’20” W 366.87 feet along said South margin of Division Street to the Point of Beginning, thence S 00°25’17” E 373.38 feet, thence S 89°12’24” W 120.00 feet, thence N 00°25’33” W 374.81 feet to the South margin of Division Street, thence N 89°53’20” E 120.00 feet along said South margin to the Point of Beginning.

 

PARCEL 1410H-04-080.000

 

(c)           On page B-5 of “Exhibit B” and with respect to Boomtown Casino, Biloxi, MS, after reference to “Boomtown Casino, Biloxi, MS”, the following text shall be inserted, and such Land described below shall be Leased Property under the Master Lease:

 

OFF SITE PARKING (LEASED):

GARY GOLLOTT, TOMMY GOLLOTT and TYRONE GOLLOTT — FEE OWNER

BTN, INC. — LESSEE

 

Legal description of real property situated in the City of Biloxi, Second Judicial District of Harrison County, Mississippi:

 

Beginning at a point on the South side of East Bay View Avenue 68.3 feet East of the East line of Davis Street, measuring the distance along

 

3



 

the South side of East Bay View Avenue; thence in a Southerly direction along the East line of the property now or formerly of Thelma G. Luxich a distance of 210 feet to the property of the Southern Shell Fish Company; thence in an Easterly direction along the North line of the property now or formerly of the Southern Shell Fish Company, a distance of 65 feet to a stake set to mark the Southeast corner of the described property; thence in a Northerly direction on a line parallel with the West line of this property a distance of 230 feet to a stake on the South side of East Bay View Avenue; thence in a Southwesterly direction along the South side of East Bay View Avenue a distance of 68.3 feet to the place of beginning; being bounded North by East Bay View Avenue, West by the property now or formerly of Luxich; East by the property now or formerly of Dacey; and South by the property now or formerly of Southern Shell Fish Company.

 

AND ALSO DESCRIBED AS:

 

Lot 2 of Block 2, Wm. Gorenflo Addition to the City of Biloxi, as recorded in the Office of the Chancery Clerk of the Second Judicial District of Harrison County, Mississippi.

 

Said property is also described by the following metes and bounds description according to the Survey of Moran, Seymour & Associates, dated August 16, 1994, as follows:

 

All of Lot 2, Block 2, William Gorenflo Addition to the City of Biloxi, as recorded in the Office of the Chancery Clerk of the Second Judicial District of Harrison County, Mississippi, being more properly described as follows:

 

Beginning at the intersection of the South margin of Bayview Avenue with the East margin of Davis Street; thence running 68.30 feet in a northeasterly direction along the South margin of Bayview Avenue to the POINT OF BEGINNING; thence run N 74  45’ 47” E a distance of 68.30 feet to a point on the South margin of Bayview Avenue; thence run S 00  04’ 18” W a distance of 230.0 feet to an iron pipe; thence run N 89  51’ 38” W a distance of 65.20 feet to a point; thence run N 00  06’ 42” W a distance of 211.89 feet to the POINT OF BEGINNING, said property containing 14,483 square feet, or 0.33 acres, more or less.

 

PARCEL 1410C-02-045.000

 

(d)           Beginning on page B-14 of “Exhibit B” and with respect to Hollywood Casino Aurora, Aurora, IL, the following text shall be deleted in its entirety, and such Land described below shall not be Leased Property under the Master Lease:

 

PARCEL 3:

 

THE ESTATE OR INTEREST IN THE LAND DESCRIBED OR REFERRED TO IN AS PARCEL 3 IS A LEASEHOLD ESTATE, AS LEASEHOLD ESTATE IS DEFINED IN PARAGRAPH 1 (H) OF THE CONDITIONS AND STIPULATIONS OF THE ALTA LEASEHOLD POLICY, CREATED BY THE INSTRUMENT HEREIN REFERRED TO AS THE LEASE, EXECUTED BY THE CITY OF AURORA AND CONSENTED TO BY THE AURORA METROPOLITAN EXPOSITION AUDITORIUM AND OFFICE

 

4



 

BUILDING AUTHORITY, AS LESSOR, AND AURORA RIVERBOATS, INC., AS LESSEE, DATED JUNE 04, 1991, A MEMORANDUM OF WHICH WAS RECORDED NOVEMBER 14, 1991 AS DOCUMENT NO. 91K62158, DEMISING THE LAND FOR A TERM FOR 30 YEARS WITH ONE OR MORE 5 YEAR EXTENSIONS NOT TO EXCEED 99 YEARS AS MORE FULLY SET FORTH IN THE LEASE, DEMISING THE FOLLOWING DESCRIBED LAND:

 

THAT PART OF LOT 1 AND LOTS 2, 3, 4, 5 AND 6, IN BLOCK 1 OF WILDER’S AMENDED ADDITION TO WEST AURORA COMPLETED, PART OF C. HOYT’S SUBDIVISION OF THAT PART OF BLOCK 1, IN THE ORIGINAL TOWN OF WEST AURORA, LYING EAST OF RIVER STREET AND NORTH OF MILL STREET, LOTS 1,2,16, AND THE ALLEY ADJACENT THERETO OF HOYT AND BROTHER CO., SUBDIVISION, COUNSEL STREET AND VACATED COUNCIL STREET ALL DESCRIBED AS FOLLOWS:

 

BEGINNING AT THE MOST WESTERLY CORNER OF LOT 1 IN BLOCK 1 OF SAID WILDER’S AMENDED ADDITION, BEGIN ON THE SOUTHEASTERLY LINE OF RIVER STREET; THENCE NORTHEASTERLY ALONG SAID SOUTHEASTERLY LINE 256.0 FEET TO THE NORTHERLY CORNER OF LOT 2 IN SAID HOYT AND BROTHER CO., SUBDIVISION; THENCE SOUTHEASTERLY ALONG THE NORTHEASTERLY LINE OF LOT 2 IN SAID HOYT AND BROTHERS CO., SUBDIVISION 80.0 FEET TO THE EASTERLY CORNER THEREOF; THENCE SOUTHEASTERLY ALONG A LINE FORMING AN ANGLE OF 196 DEGREES 41 MINUTES 26 SECONDS WITH THE LAST DESCRIBED COURSE (MEASURED COUNTER-CLOCKWISE THEREFROM) 20.88 FEET TO THE MOST NORTHERLY CORNER OF SAID LOT 16; THENCE SOUTHEASTERLY ALONG THE NORTHEASTERLY LINE OF SAID LOT 16, 125.66 FEET TO THE NORTHWESTERLY CORNER OF A TRACT OF LAND CONVEYED TO THE FOX VALLEY PARK DISTRICT BY DISTRICT BY DOCUMENT 1672103; THENCE SOUTHWESTERLY ALONG A NORTHWESTERLY LINE OF SAID TRACT FORMING AN ANGLE OF 80 DEGREES 57 MINUTES 03 SECONDS WITH THE LAST DESCRIBED COURSE (MEASURED COUNTER-CLOCKWISE THEREFROM) 28.0 FEET TO AN ANGLE IN SAID NORTHWESTERLY LINE; THENCE SOUTHEASTERLY AT RIGHT ANGLES TO THE LAST DESCRIBED COURSE 24.0 FEET; THENCE SOUTHWESTERLY AT RIGHT ANGLES TO THE LAST DESCRIBED COURSE 198.94 FEET; THENCE SOUTHEASTERLY ALONG A LINE FORMING AN ANGLE OF 53 DEGREES 30 MINUTES 42 SECONDS WITH THE PROLONGATION OF THE LAST DESCRIBED COURSE (MEASURED COUNTER-CLOCKWISE THEREFROM) 24.54 FEET TO THE NORTHEASTERLY LINE OF GALENA BOULEVARD AS ESTABLISHED BY COUNTY COURT PROCEEDINGS KNOWN AS CASE NUMBER 5190; THENCE NORTHWESTERLY ALONG THE NORTHEASTERLY LINE OF SAID GALENA BOULEVARD 242.42 FEET TO AN ANGLE IN SAID NORTHEASTERLY LINE; THENCE NORTHWESTERLY ALONG SAID NORTHEASTERLY

 

5



 

LINE 46.09 FEET TO THE POINT OF BEGINNING, IN THE CITY OF AURORA, KANE COUNTY ILLINOIS.

 

PARCEL 4:

 

THE ESTATE OR INTEREST IN THE LAND DESCRIBED OR REFERRED TO IN THIS COMMITMENT AND COVERED HEREIN AS PARCEL 4 IS A LEASEHOLD ESTATE, AS LEASEHOLD ESTATE IS DEFINED IN PARAGRAPH 1 (H) OF THE CONDITIONS AND STIPULATIONS OF THE ALTA LEASEHOLD POLICY, CREATED BY THE INSTRUMENT HEREIN REFERRED TO AS THE LEASE, EXECUTED BY THE CITY OF AURORA AND CONSENTED TO BY THE AURORA METROPOLITAN EXPOSITION AUDITORIUM AND OFFICE BUILDING AUTHORITY, AS LESSOR, AND HOLLYWOOD CASINO-AURORA INC., AS LESSEE, DATED JUNE 12, 1995, A MEMORANDUM OF WHICH WAS RECORDED OCTOBER 24, 1995 AS DOCUMENT NO. 95K63744, WHICH DEMISES THE LAND FOR A TERM FOR 30 YEARS WITH FOUR 5 YEAR EXTENSIONS AS MORE FULLY SET FORTH IN THE LEASE, DEMISING THE FOLLOWING DESCRIBED LAND:

 

LOTS 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 AND PARTS OF LOTS A AND B IN BLOCK 2 OF ISLAND AVENUE ADDITION TO AURORA, AND THAT PART OF THE SOUTHWEST 1/4 OF SECTION 22, TOWNSHIP 38 NORTH, RANGE 8 EAST OF THE THIRD PRINCIPAL MERIDIAN DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST WESTERLY CORNER OF SAID LOT 9 AT THE NORTHEAST CORNER OF ISLAND AVENUE AND GALENA BOULEVARD (FORMERLY MAIN STREET); THENCE NORTHEASTERLY ALONG THE NORTHWESTERLY LINES OF SAID LOTS 9,10,11 AND 12 TO THE MOST NORTHERLY CORNER OF SAID LOT 12; THENCE NORTHEASTERLY 8.0 FEET ON A NORTHEASTERLY EXTENSION OF SAID NORTHWESTERLY LINE OF SAID LOT 12; THENCE NORTHEASTERLY AT AN ANGLE OF 178 DEGREES 05 MINUTES 40 SECONDS MEASURED CLOCKWISE FROM THE LAST DESCRIBED COURSE, 178.6 FEET; THENCE NORTHWESTERLY AT AN ANGLE OF 87 DEGREES 49 MINUTES 20 SECONDS MEASURED CLOCKWISE FROM THE LAST DESCRIBED COURSE, 13.06 FEET; THENCE NORTHEASTERLY AT AN ANGLE OF 90 DEGREES 25 MINUTES MEASURED COUNTER-CLOCKWISE FROM THE LAST DESCRIBED COURSE 117.35 FEET: THENCE NORTHEASTERLY, EASTERLY, SOUTHEASTERLY, SOUTHERLY AND SOUTHWESTERLY 361.28 FEET ON THE ARC OF A CURVE TO THE RIGHT TANGENT TO THE LAST DESCRIBED COURSE HAVING A RADIUS OF 115.0 FEET, THRU A CENTRAL ANGLE OF 180 DEGREES 00 MINUTES; THENCE SOUTHWESTERLY ALONG A LINE TANGENT TO THE LAST DESCRIBED CURVE, 321.6 FEET TO A LINE PARALLEL WITH AND 170.0 FEET NORTHERLY OF, AS MEASURED AT RIGHT ANGLES THEREFROM THE NORTHEASTERLY LINE OF GALENA BOULEVARD, SUCH PARALLEL LINE ALSO BEING A SOUTHEASTERLY EXTENSION OF THE NORTHEASTERLY LINE OF SAID LOT 12; THENCE SOUTHEASTERLY ALONG

 

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SAID EXTENSIONS OF THE NORTHEASTERLY LINE OF SAID LOT 12 TO A LINE (HEREAFTER REFERRED TO AS LINE A) DRAWN FROM A POINT ON THE NORTHEASTERLY LINE OF GALENA BOULEVARD 44.18 FEET SOUTHEASTERLY OF THE SOUTHWEST CORNER OF SAID LOT A, SAID LINE A MEASURED NORTHEASTERLY AT AN ANGLE OF 88 DEGREES 19 MINUTES MEASURED CLOCKWISE FROM SAID NORTHERLY LINE OF GALENA BOULEVARD; THENCE SOUTHWESTERLY ALONG LINE A, 170.07 FEET TO THE NORTHEAST LINE OF GALENA BOULEVARD; THENCE NORTHWESTERLY ALONG THE NORTHEASTERLY LINE OF GALENA BOULEVARD, BEING THE SOUTHWESTERLY LINES OF LOTS 1, 2, 3, 4, 5, 6, 7, 8 AND 9 AND PART OF LOT A, 242.8 FEET TO THE POINT OF BEGINNING, (EXCEPT THAT PART DESCRIBED AS FOLLOWS: THAT PART OF THE SOUTHWEST 1/4 OF SECTION 22, TOWNSHIP 38 NORTH, RANGE 8, EAST OF THE THIRD PRINCIPAL MERIDIAN DESCRIBED AS FOLLOWS: COMMENCING AT THE NORTHWESTERLY CORNER OF LOT 12 IN SAID BLOCK 2; THENCE NORTHEASTERLY 8.0 FEET ON THE NORTHEASTERLY EXTENSION OF THE NORTHWESTERLY LINE OF SAID LOT 12 HAVING AN ASSUMED BEARING OF NORTH 54 DEGREES 28 MINUTES 44 SECONDS EAST, THENCE NORTH 52 DEGREES 34 MINUTES 26 SECONDS EAST, A DISTANCE OF 178.6 FEET TO THE SOUTHWESTERLY LINE OF NEW YORK STREET (ALSO KNOWN AS ILLINOIS ROUTE 65 AND U.S. ROUTE 30); THENCE NORTH 39 DEGREES 36 MINUTES 14 SECONDS WEST ON THE SOUTHWESTERLY LINE OF SAID NEW YORK STREET, A DISTANCE OF 13.05 FEET; THENCE NORTH 49 DEGREES 58 MINUTES 56 SECONDS EAST, A DISTANCE OF 66.0 FEET TO THE NORTHEASTERLY LINE OF SAID NEW YORK STREET FOR THE POINT OF BEGINNING; THENCE CONTINUING NORTH 48 DEGREES 58 MINUTES 46 SECONDS EAST A DISTANCE OF 50.75 FEET TO A POINT OF CURVE; THENCE NORTHEASTERLY TO THE SOUTHWESTERLY 361.26 FEET ON THE ARC OF A CURVE TANGENT TO THE LAST DESCRIBED COURSE, BEING CONCAVE TO THE SOUTHWEST, HAVING A RADIUS OF 115.0 FEET WITH A CHORD DISTANCE OF 230.0 FEET AND A CHORD BEARING OF SOUTH 40 DEGREES 01 MINUTES 14 SECONDS EAST, THENCE SOUTH 49 DEGREES 58 MINUTES 46 SECONDS WEST, TANGENT TO THE LAST DESCRIBED CURVE A DISTANCE OF 51.34 FEET TO THE NORTHEASTERLY LINE OF SAID NEW YORK STREET; THENCE NORTH 39 DEGREES 41 MINUTES 03 SECONDS WEST ON THE NORTHEASTERLY LINE OF SAID NEW YORK STREET, A DISTANCE OF 229.46 FEET TO THE POINT OF BEGINNING) ALL IN THE CITY OF AURORA, KANE COUNTY, ILLINOIS.

 

 

(e)           Beginning on page B-15 of “Exhibit B” and with respect to Hollywood Casino Aurora, Aurora, IL, the following text shall be inserted, and such Land described below shall be included as Leased Property under the Master Lease:

 

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PARCEL 3:

 

THAT PART OF BLOCKS 7, 8, 15 AND 16 AND PART OF VACATED CEDAR STREET LYING BETWEEN SAID BLOCKS 8 AND 15 OF WILDER’S AMENDED ADDITION TO WEST AURORA, COMPLETED, DESCRIBED AS FOLLOWS:

 

BEGINNING AT THE SOUTHWESTERLY CORNER OF SAID BLOCK 7, THENCE NORTHEASTERLY ALONG THE SOUTHEASTERLY LINE OF REIVER STREET, 990 FEET; THENCE SOUTHEASTERLY PARALLEL WITH THE SOUTHEASTERLY LINE OF SAID BLOCK 7, 250.09 FEET; THENCE SOUTHERLY ALONG A LINE MAKING AN ANGLE OF 112 DEGREES 11 MINUTES 10 SECONDS MEASURED COUNTER-CLOCKWISE FROM THE LAST DESCRIBED LINE, 269.98 FEET; THENCE SOUTHWESTERLY PARALLEL WITH THE SOUTHEASTERLY LINE OF SAID RIVER STREET, 740 FEET TO THE SOUTHWESTERLY LINE OF SAID BLOCK 7; THENCE NORTHWESTERLY ALONG SAID SOUTHWESTERLY LINE 350 FEET TO THE POINT OF BEGINNING, (EXCEPT THAT PART DESCRIBED AS FOLLOWS: COMMENCING AT THE MOST WESTERLY CORNER OF SAID BLOCK; THENCE SOUTHEASTERLY ALONG THE SOUTHWESTERLY LINE OF SAID BLOCK 330.0 FEET FOR A POINT OF BEGINNING; THENCE CONTINUING SOUTHEASTERLY ALONG SAID SOUTHWESTERLY LINE 20.0 FEET; THENCE NORTHEASTERLY PARALLEL WITH THE NORTHWESTELRY LINE OF SAID BLOCK 120.0 FEET; THENCE SOUTHWESTERLY 121.49 FEET TO THE POINT OF BEGINNING) IN THE CITY OF AURORA, KANE COUNTY, ILLINOIS IN THE CITY OF AURORA.

 

ALSO EXCEPT THAT PART OF BLOCK 7 OF WILDER’S AMENDED ADDITION TO WEST AURORA COMPLETED, DESCRIBED AS FOLLOWS: COMMENCING AT THE MOST WESTERLY CORNER OF SAID BLOCK, THENCE SOUTHEASTERLY ALONG THE SOUTHWESWTERLY LINE OF SAID BLOCK 316.00 FEET FOR THE POINT OF BEGINNING; THENCE NORTHEASTERLY ALONG A LINE MARKING AN ANGLE OF 96 DEGREES 56 MINUTES 28 SECONDS MEASURED CLOCKWISE FROM THE LAST DESCRIBED COURSE 115.85 FEET; THENCE NORTHEASTERLY ALONG A LINE MAKING AN ANGLE OF 184 DEGREES 11 MINUTES 44 SECONDS MEASURED CLOCKWISE FROM THE LAST DESCRIBED COURSE, 94.78 FEET TO A LINE DRAWN PARALLEL WITH AND 350 FEET EASTERLY OF THE WESTERLY LINE OF SAID BLOCK 7, MEASURED ALONG THE SOUTHERLY LINE OF SAID BLOCK; THENCE SOUTHERLY ALONG SAID PARALLEL LINE 208 FEET TO THE SOUTHERLY LINE OF SAID BLOCK; THENCE WESTERLY ALONG SAID SOUTHERLY LINE 34 FEET TO THE POINT OF BEGINNING, IN THE CITY OF AURORA, KANE COUNTY ILLINOIS.

 

ALSO EXCEPTING THAT PARCEL DESCRIBED IN DEED TO THE CITY OF AURORA RECORDED NOVEMBER 22, 1993 AS DOCUMENT 93K093298.

 

Permanent Index Number: 15-22-178-012

 

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Permanent Index Number: 15-22-178-010

 

(f)            Beginning on page B-40 of “Exhibit B” with respect to Hollywood Bangor, Bangor, ME, the following text shall be deleted in its entirety and shall be replaced with the language set forth in paragraph (g) below:

 

Parcel III-Dutton Street Parking

 

A certain lot or parcel of land located in the City of Bangor, County of Penobscot, State of Maine, more particularly described as follows:

 

Beginning at the North corner of a parcel of land described in a deed to Irving Oil Corporation, dated September 5, 1972, and recorded in the Penobscot County Registry of Deeds, Book 2300, Page 253, as shown on a plan entitled “Proposed Parking Lease Area Expansion, Hollywood Slots Bangor Maine”, prepared by Shyka, Sheppard, and Garster, Land Surveyors, dated February 4, 2008, Project No. 04-146;

 

Thence S 20° 35’ 27” W along the West line of said Irving Oil Corporation a distance of one hundred fifty-one and five hundredths (151.05) feet;

 

Thence S 32° 27’ 41” W a distance of one hundred sixteen and ninety hundredths (116.90) feet to the northeast line of a parcel of land described in a deed to Heng Yuk Luu et al, dated June 15, 2005, and recorded in said Registry in Book 9925, Page 66;

 

Thence N 56° 16’ 00” W along the Northeast line of said Luu et al a distance of sixty-six and sixty-two hundredths (66.62) feet to the north corner of said Luu parcel;

 

Thence S 30° 27’ 00” W along the Northwest line of said Luu et al a distance of one hundred thirty and twenty-seven hundredths (130.27) feet to the northeast line of Lot 6, as shown on a plan entitled “Plan of part of Dutton Farm”, dated July 1898, and recorded in said Registry in Plan Book 6, Page 29;

 

Thence N 56° 16’ 00” W along the Northeast sideline of said subdivision a distance of one hundred eighty-nine and seventy-two hundredths (189.72) feet;

 

Thence N 33° 38’ 45” E a distance of three hundred ninety-three and seventy hundredths (393.70) feet to a point, said point being on the Southwest line of said Dutton Street;

 

Thence S 56° 21’ 15” E along said extension and the southwest sideline of said Dutton Street a distance of two hundred twelve and fifty-four hundredths (212.54) feet to the Point of Beginning.

 

Parcel IV-Additional Dutton Street Parking

 

A certain lot or parcel of land located in the City of Bangor, County of Penobscot, State of Maine, more particularly described as follows:

 

Beginning at a point on the Southwest line of Dutton Street, said point being N 56° 21’ 15” W of and two hundred twelve and fifty-four

 

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hundredths (212.54) feet from the north corner of a parcel of land described in a deed to Irving Oil Corporation, dated September 5, 1972, and recorded in the Penobscot County Registry of Deeds, Book 2300, Page 253, as shown on a plan “Proposed Parking Lease Area Expansion, Hollywood Slots Bangor Maine”, prepared by Shyka, Sheppard, and Garster, Land Surveyors, dated February 4, 2008, Project No. 04-146;

 

Thence S 33° 38’ 45” W a distance of three hundred ninety-three and seventy hundredths (393.70) feet to a point, said point being on the Northeast line of Lot 10 (March Street), as shown on a plan entitled “Plan of part of Dutton Farm”, dated July 1898, and recorded in said Registry in Plan Book 6, Page 29;

 

Thence N 56° 16’ 00” W along the Northeast sideline of said subdivision and the extension thereof a distance of one hundred thirty-five and fifty-three hundredths (135.53) feet;

 

Thence N 33° 38’ 38” E a distance of three hundred ninety-three and forty-nine hundredths (393.49) feet to a point, said point being on the extension of the Southwest line of said Dutton Street;

 

Thence S 56° 21’ 15” E along said extension and the Southwest sideline of said Dutton Street a distance of one hundred thirty-five and fifty-five hundredths (135.55) feet to the Point of Beginning.

 

(g)           Beginning on page B-40 of “Exhibit B” with respect to Hollywood Bangor, Bangor, ME, the following text shall be inserted after the legal description of “Parcel II- Park of Bass Park”, and such Land described below shall be Leased Property under the Master Lease:

 

Parcel III- Dutton Street Parking:

 

A certain lot or parcel of land, and any and all improvements thereon, located northwest of the north end of Dutton Street in the City of Bangor, County of Penobscot, State of Maine, more particularly described as follows:

 

BEGINNING at the south corner of a parcel of land described in “Exhibit B, Section II—Leasehold, Parcel II-Part of Bass Park” of a Memorandum of Lease between GLP Capital, L.P. (Lessor) and Penn Tennant, LLC (Lessee) executed October 28, 2013 and recorded in the Penobscot County Registry of Deeds in Book 13393, Page 226, said point being S05˚45’35”W of and nine hundred thirty and sixty-seven hundredths (930.67) feet from the point of beginning of said Leasehold;

 

THENCE N42˚16’00”E along the southeast line of said leasehold one hundred five and zero hundredths (105.00) feet to a point on a non-tangent curve to the left, said curve having a radius of two hundred eighty-six and zero hundredths (286.00) feet;

 

THENCE along said curve along said leasehold an arc distance of three hundred thirty-two and ninety hundredths (332.90) feet to a point that is S82˚23’13”E of and three hundred fourteen and forty-two hundredths (314.42) feet from the last mentioned point;

 

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THENCE S59˚38’55”E a distance of two hundred sixty-six and thirty-two hundredths (266.32) feet;

 

THENCE S35˚28’24”W a distance of five hundred ten and thirty hundredths (510.30) feet;

 

THENCE N55˚10’57”W a distance of four hundred twenty-eight and seventy-seven hundredths (428.77) feet to a feet to a point of tangency of a tangent curve to the right, said curve having a radius of two hundred thirty-three and zero hundredths (233.00) feet;

 

THENCE along said curve an arc distance of one hundred twenty-nine and eighty-eight hundredths (129.88) feet to a point that is N39˚12’47”W of and one hundred twenty-eight and twenty-one hundredths (128.21) feet from said point of tangency;

 

THENCE N23˚14’38”W a distance of three hundred six and twelve hundredths (306.12) feet to a point of tangency of a tangent curve to the left, said curve having a radius of four hundred and zero hundredths (400.00) feet;

 

THENCE along said curve an arc distance of one hundred seventy-five and forty-two hundredths (175.42) feet to a point that is N35˚48’25”W of and one hundred seventy-four and one hundredths (174.01) feet from said point of tangency;

 

THENCE N48˚22’13”W a distance of three hundred twenty-nine and eighty-four hundredths (329.84) feet to said leasehold;

 

THENCE N77˚12’53”E along a south line of said leasehold a distance of forty-five and fifty hundredths (45.50) feet;

 

THENCE S48˚22’13”E along said leasehold seven hundred twenty-five and zero hundredths (725.00) feet to the POINT OF BEGINNING.

 

Containing 6.812 acres.

 

This description was prepared by Shyka, Sheppard & Garster, Land Surveyors, and is based on a plan entitled, “ALTA/ACSM Land Title Survey of Property of GLP Capital, LP” prepared by Shyka, Sheppard and Garster, Land Surveyors, dated December 17, 2013.  Bearings reference Grid North, Maine East Zone, NAD83, based on GPS network observations made in August 2004.  Distances are ground distances.

 

Parcel IV-Additional Dutton Street Parking

 

A certain lot or parcel of land, and any and all improvements thereon, located on the southwest side of Buck Street in the City of Bangor, County of Penobscot, State of Maine, more particularly described as follows:

 

BEGINNING on the southwest side of Buck Street at an east corner of a parcel of land described in “Exhibit B, Section II—Leasehold, Parcel II-Part of Bass Park” of a Memorandum of Lease between GLP Capital, L.P. (Lessor) and Penn Tennant, LLC (Lessee) executed

 

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October 28, 2013 and recorded in the Penobscot County Registry of Deeds in Book 13393, Page 226, said point being N56˚57’22”W of and one thousand five hundred ten and thirty-seven hundredths (1510.37) feet from the intersection of the northwest line of Main Street and the southwest side of said Buck Street, as shown on a plan entitled “Plan of Main Street for Confirmation,” prepared by Shyka, Sheppard & Garster Land Surveyors dated November 5, 2007 and recorded in the Penobscot County Registry of Deeds Plan File 2007-166;

 

THENCE S56˚57’22”E along said southwest side of said Buck Street a distance of six hundred fifteen and zero hundredths (615.00) feet;

 

THENCE S36˚13’04”W a distance of ninety and zero hundredths (90.00) feet;

 

THENCE S12˚48’05”W a distance of one hundred thirty and zero hundredths (130.00) feet to a point on said leasehold on a non-tangent curve to the left, said curve having a radius of two hundred eighty-six and zero hundredths (286.00) feet;

 

THENCE along said curve, also being along said leasehold, an arc distance of one hundred thirty-three and forty-four hundredths (133.44) feet to a point that is N33˚18’43”W of and one hundred thirty-two and twenty-four hundredths (132.24) feet from the last mentioned point;

 

THENCE N46˚40’44”W along said leasehold five hundred forty-two and fifty-six hundredths (542.56) feet;

 

THENCE N33˚02’38”E along said leasehold sixty-two and zero hundredths (62.00) feet to the POINT OF BEGINNING.

 

Containing 1.702 acres.

 

This description was prepared by Shyka, Sheppard & Garster, Land Surveyors, and is based on a plan entitled, “ALTA/ACSM Land Title Survey of Property of GLP Capital, LP” prepared by Shyka, Sheppard and Garster, Land Surveyors, dated December 17, 2013.  Bearings reference Grid North, Maine East Zone, NAD83, based on GPS network observations made in August, 2004.  Distances are ground distances.

 

(h)           Page B-0 of “Exhibit B”, which follows after page B-47 of “Exhibit B”, shall be renumbered to be page “B-48” and all of the following pages of “Exhibit B” shall be renumbered accordingly.

 

(i)            Beginning on renumbered page B-87 (renumbered in accordance with paragraph (h) above) of “Exhibit B”, all of the legal descriptions provided for “Hollywood Casino Columbus, Columbus, OH” shall be deleted in their entireties and be replaced with the following:

 

Tract I

 

29.493 Acre Tract

 

Situated in the State of Ohio, County of Franklin, City of Columbus, being in Virginia Military Survey Lots 1425 and 1482, and being all of

 

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the remainder of an 112.581 acre tract conveyed to CD Gaming Ventures, Inc. as described in Instrument Number 201002050015189, Tract I, all references being those of record in the Franklin County, Ohio Recorder’s Office and being more particularly described as follows:

 

Commencing at a monument (FCGS 1379) found at the centerline intersection of West Broad Street (U.S. Route 40) (160’) and Georgesville Road (Width Varies);

 

Thence southerly, with the centerline of Georgesville Road, the west line of a 1.048 acre tract conveyed to Board of Franklin County Commissioners as described in Instrument Number 200211270304863 and the west line of a 0.9921 acre tract conveyed to Franklin County Commissioners as described in Instrument Number 201108170102936, South 07° 07’ 57” West, 1208.79 feet to the southwest corner of said 0.9921 acre tract and the northwest corner of a 1.3699 acre tract conveyed to Franklin County Commissioners as described in Instrument Number 201108170102922;

 

Thence easterly, with the south line of said 0.9921 acre tract and the north line of said 1.3699 acre tract, North 87° 14’ 04” East, 91.36 feet to an iron pin set at the southeast corner of said 0.9921 acre tract, the northeast corner of said 1.3699 acre tract, the southwest corner of the remainder of a 34.521 acre tract conveyed to CD Gaming Future Expansion, LLC as described in Instrument Number 201102140022643, the northwest corner of the remainder of said 112.581 acre tract, being in the easterly right-of-way line of Georgesville Road, and being the TRUE POINT OF BEGINNING;

 

Thence easterly, with the north line of the remainder of said 112.581 acre tract and the south line of the remainder of said 34.521 acre tract, North 87° 14’ 04” East, 738.69 feet to an iron pin set at an angle point in said south and north lines;

 

Thence easterly, continuing with the north line of the remainder of said 112.581 acre tract and the south line of the remainder of said 34.521 acre tract, South 82° 52’ 03” East, 546.17 feet to an iron pin set at an angle point in said south and north lines;

 

Thence easterly, continuing with the north line of the remainder of said 112.581 acre tract and the south line of the remainder of said 34.521 acre tract, North 84° 53’ 46” East, 870.23 feet to an iron pin set at the northeast corner of the remainder of said 112.581 acre tract, the southeast corner of the remainder of said 34.521 acre tract, and the west line of Lot No. 36 of Alice Rita Subdivision as recorded in Plat Book 46, Page 30;

 

Thence southerly, with the east line of the remainder of said 112.581 acre tract and the west line of Lot Nos. 26-36 of said Alice Rita Subdivision, South 03° 14’ 07” East, 600.00 feet to an iron pin set at the southeast corner of the remainder of said 112.581 acre tract and the northeast corner of the remainder of a 24.936 acre tract conveyed to CD Gaming Parking, LLC as described in Instrument Number 201102140022642;

 

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Thence westerly, with the south line of the remainder of said 112.581 acre tract and the north line of said 24.936 acre tract, North 88° 51’ 21” West, 1289.23 feet to an iron pin set at an angle point in said south and north lines;

 

Thence southwesterly, continuing with the south line of the remainder of said 112.581 acre tract and the north line of said 24.936 acre tract, South 52° 07’ 57” West, 211.19 feet to an iron pin set at an angle point in said south and north lines;

 

Thence westerly, continuing with the south line of the remainder of said 112.581 acre tract and the north line of said 24.936 acre tract, North 86° 16’ 42” West, 787.17 feet to an iron pin set at the southwest corner of the remainder of said 112.581 acre tract, the northwest corner of said 24.936 acre tract, the southeast corner of said 1.3699 acre tract, and the northeast corner of a 1.2213 acre tract conveyed to Franklin County Commissioners as described in Instrument Number 201108170102930, being in the easterly right-of-way line of Georgesville Road;

 

Thence northerly, with the easterly right-of-way line of Georgesville Road, the west line of the remainder of said 112.581 acre tract, and the east line of said 1.3699 acre tract, North 07° 07’ 57” East, 346.52 feet to an angle point in said right-of-way line, west line, and east line;

 

Thence westerly, with the easterly right-of-way line of Georgesville Road, the west line of the remainder of said 112.581 acre tract, and the east line of said 1.3699 acre tract, North 82° 52’ 03” West, 15.00 feet to an angle point in said right-of-way line, west line, and east line;

 

Thence northerly, with the easterly right-of-way line of Georgesville Road, the west line of the remainder of said 112.581 acre tract, and the east line of said 1.3699 acre tract, North 07° 07’ 57” East, 262.92 feet to the TRUE POINT OF BEGINNING, containing 29.493 acres more or less.

 

Subject to all legal rights-of-way and/or easements, if any of previous record.

 

All iron pins set are 5/8” rebar, 30” in length with a yellow plastic cap with “EP FERRIS SURVEYOR 8230” inscribed on top.

 

Basis of Bearing: Bearings are based upon the Ohio State Plane Coordinate System, South Zone, NAD83 (CORS 96). Said bearings originated from a field traverse which was tied (referenced) to said coordinate system by GPS observations and observations of selected stations in the Ohio Department of Transportation Virtual Reference Station network. The portion of the centerline of Georgesville Road, bearing North 07° 07’ 57” East, and all other bearings upon this meridian, is designated the “basis of bearing” for this description.

 

The field survey for this boundary survey was conducted on 03-22-10 to 10-04-10.

 

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This description was prepared by Matthew E. Ferris, Registered Surveyor No. 8230, of E.P. Ferris & Associates, Inc. on January 23, 2014.

 

Tract II

 

24.936 Acre Tract

 

Situated in the State of Ohio, County of Franklin, Township of Franklin, being in Virginia Military Survey Lots 1425 and 1482, and being part of an 112.581 acre tract conveyed to CD Gaming Ventures, Inc. as described in Instrument Number 201002050015189, Tract I, all references being those of record in the Franklin County, Ohio Recorder’s Office and being more particularly described as follows:

 

Commencing at a monument (FCGS 1379) found at the centerline intersection of West Broad Street (U.S. Route 40) (160’) and Georgesville Road (110’);

 

Thence southerly, with the centerline of Georgesville Road, the west line of a 1.048 acre tract conveyed to Board of Franklin County Commissioners as described in Instrument Number 200211270304863 and the west line of said 112.581 acre tract, South 07° 07’ 57” West, 1808.79 feet to a “MAG” nail set, being the True Point of Beginning;

 

Thence easterly, crossing said 112.581 acre tract, South 86° 16’ 42” East, 892.36 feet to an iron pin set;

 

Thence northeasterly, continuing across said 112.581 acre tract, North 52° 07’ 57” East, 211.19 feet to an iron pin set;

 

Thence easterly, continuing across said 112.581 acre tract, South 88° 51’ 21” East, 1289.23 feet to an iron pin set in the east line of said 112.581 acre tract, the west line of Lot No. 26 of Alice Rita Subdivision as recorded in Plat Book 46, Page 30 and on the corporation line of the City of Columbus and Franklin Township;

 

Thence southerly, with said corporation line, the east line of said 112.581 acre tract, and the west line of Lot No. 26 of said Alice Rita Subdivision, South 03° 14’ 07” East, 92.03 feet to a 5/8” rebar found capped “Woolpert” at the southeast corner of said 112.581 acre tract and the northeast corner of a tract of land conveyed to Camp Chase Industrial Railroad Corp. as described in Official Record Volume 28363 F03, being on the west line of Lot No. 26 of said Alice Rita Subdivision;

 

Thence southwesterly, with the south line of said 112.581 acre tract, and the north line of said Camp Chase Industrial Railroad Corp. tract, South 54° 38’ 50” West, 475.24 feet to an iron pin set;

 

Thence westerly, crossing said 112.581 acre tract, North 88° 51’ 21” West, 610.89 feet to an iron pin set;

 

Thence southwesterly, continuing across said 112.581 acre tract, South 52° 07’ 57” West, 496.75 feet to an iron pin set;

 

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Thence westerly, continuing across said 112.581 acre tract, North 87° 36’ 39” West, 1033.13 feet to a “MAG” nail set in the west line of said 112.581 acre tract and the centerline of Georgesville Road;

 

Thence northerly, with the west line of said 112.581 acre tract and the centerline of Georgesville Road, North 07° 07’ 57” East, 575.00 feet to the True Point of Beginning, containing 24.936 acres more or less.

 

Subject to all legal rights-of-way and/or easements, if any of previous record.

 

All iron pins set are 5/8” rebar, 30” in length with a yellow plastic cap with “EP Ferris Surveyor 8230” inscribed on top.

 

Basis of Bearing: Bearings are based upon the Ohio State Plane Coordinate System, South Zone, NAD83 (CORS 96). Said bearings originated from a field traverse which was tied (referenced) to said coordinate system by GPS observations and observations of selected stations in the Ohio Department of Transportation Virtual Reference Station network. The portion of the centerline of Georgesville Road, bearing North 07° 07’ 57” East, and all other bearings upon this meridian, is designated the “basis of bearing” for this description.

 

This description was prepared by Matthew E. Ferris, Registered Surveyor No. 8230, of E.P. Ferris & Associates, Inc. on February 14, 2011.

 

Less and excepting therefrom the following 1.2213 acre tract known as Parcel 1B-WD as conveyed by CD Gaming Parking, LLC to The Franklin County Commissioners in Instrument Number 201108170102930:

 

Parcel 1B-WD

 

Situated in the State of Ohio, County of Franklin, Township of Franklin, and being in Virginia Military District Survey Numbers 1425 and 1482 and also being in a 24.936 acre tract as conveyed to CD Gaming Parking, LLC in Instrument Number 201102140022642 (all references being to records of the Recorder’s Office, Franklin County, Ohio), and bounded and described as follows:

 

Commencing at “FCGS 1379” found at the centerline of right-of-way of Phillipi Road and Georgesville Road (C.R. 26), and being a Point of Intersection, also being the centerline of right-of-way of West Broad Street (U.S. 40);

 

Thence with the centerline of Georgesville Road (C.R. 26), the west line of a 1.048 acre tract as conveyed to The Board of Franklin County Commissioners in Instrument Number 200211270304863, the west line of a 34.521 acre tract as conveyed to CD Gaming Future Expansion, LLC in Instrument Number 201102140022643, and the west line of the remainder of a 112.581 acre tract as conveyed as conveyed to CD Gaming Ventures, Inc. in Instrument Number 201002050015189, Tract I, South 07 degrees 07 minutes 57 seconds West, 1808.79 feet to the northwest corner of said 24.936 acre tract and the southwest corner of

 

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the remainder of said 112.581 acre tract in the centerline of Georgesville Road (C.R. 26) and being the True Point of Beginning of the parcel herein described;

 

Thence with the north line of said 24.936 acre tract and the south line of the remainder of said 112.581 acre tract crossing the existing easterly right-of-way line of Georgesville Road (C.R. 26), South 86 degrees 16 minutes 42 seconds East, 105.19 feet to an iron pin set in said north and south line in the proposed easterly right-of-way line of Georgesville Road (C.R. 26);

 

Thence crossing said 24.936 acre tract with the proposed easterly right-of-way line of Georgesville Road (C.R. 26), South 07 degrees 07 minutes 57 seconds West, 103.48 feet to an iron pin set;

 

Thence continuing across said 24.936 acre tract with the proposed easterly right-of-way line of Georgesville Road (C.R. 26), North 82 degrees 52 minutes 03 seconds West, 15.00 feet to an iron pin set;

 

Thence continuing across said 24.936 acre tract with the proposed easterly right-of-way line of Georgesville Road (C.R. 26), South 07 degrees 07 minutes 57 seconds West, 470.31 feet to an iron pin set in the south line of said 24.936 acre tract and the north line of a 22.259 acre tract as conveyed to CD Gaming Future Development, LLC in Instrument Number 201102140022644;

 

Thence with the south line of said 24.936 acre tract and the north line of said 22.259 acre tract, North 87 degrees 36 minutes 39 seconds West, 90.31 feet to the southwest corner of said 24.936 acre tract and the northwest corner of said 22.259 acre tract;

 

Thence with the centerline of Georgesville Road (C.R. 26) and the west line of said 24.936 acre tract, North 07 degrees 07 minutes 57 seconds East, 575.00 feet to the Point of Beginning.

 

Subject to all legal rights-of-way, easements, and restrictions, if any, of previous records.

 

The above described area is contained within the Franklin County Auditor’s Permanent Parcel Numbers: 140-007465 containing 1.2213 acres, more or less, which includes 0.7911 acres in the present road occupied.

 

The bearings shown on this described herein are based on the Ohio State Plane Coordinate System, South Zone, NAD83 (CORS96). Said bearings originated from a field traverse which was tied to said coordinate system by GPS observations and observations of selected stations in the Ohio Department of Transportation Virtual Reference Station network. The portion of the centerline of Georgesville Road having a bearing of (South 07 degrees 07 minutes 57 seconds West) and monumented as shown hereon, is designated the “basis of bearing” for this survey.

 

This description was prepared and reviewed on May 18, 2011 by Edward P. Ferris, Registered Survey No. 6027, and is based upon a field survey performed by E.P. Ferris & Associates, Inc.

 

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Monuments referred to as Iron Pins Set are 5/8 inch rebar 30 inches long with a yellow plastic cap stamped “Franklin County Engineer”.

 

Grantor reserves the right of ingress and egress to and from all residual areas.

 

Tract III

 

34.521 Acre Tract

 

Situated in the State of Ohio, County of Franklin, Township of Franklin, being in Virginia Military Survey Lot 1482, and being part of an 112.581 acre tract conveyed to CD Gaming Ventures, Inc. as described in Instrument Number 201002050015189, Tract I, all references being those of record in the Franklin County, Ohio Recorder’s Office and being more particularly described as follows:

 

Commencing at a monument (FCGS 1379) found at the centerline intersection of West Broad Street (U.S. Route 40) (160’) and Georgesville Road (110’);

 

Thence southerly, with the centerline of Georgesville Road and the west line of a 1.048 acre tract conveyed to Board of Franklin County Commissioners as described in Instrument Number 200211270304863, South 07° 07’ 57” West, 528.58 feet;

 

Thence easterly, leaving the centerline of Georgesville Road, crossing said 1.048 acre tract, North 86° 32’ 36” East, 73.25 feet to a 5/8” rebar found capped “Woolpert”, said iron pin being the northwest corner of said 112.581 acre tract, the southwest corner of a 6.423 acre tract conveyed to West Highland Plaza LLC as described in Instrument Number 200212260332012, and in the corporation line of the City of Columbus and Franklin Township, being the True Point of Beginning,

 

Thence easterly, with said corporation line, the north line of said 112.581 acre tract, the south line of said 6.423 acre tract, the south line of a 2.951 acre tract conveyed to West Highland Plaza as described in Instrument Number 200707110121493, the south line of a 2.368 acre tract conveyed to Buckeye Express Wash LLC as described in Instrument Number 200807310116827, and the south line of a 2.126 acre tract conveyed to Haydocy Pontiac-GMC Truck Inc. as described in Instrument Number 200308070249570, North 86° 32’ 36” East, 1450.29 feet to an 3/4” iron pin found capped “EMH&T” at an angle point in said north line, the southeast corner of said 2.126 acre tract, and on the west line of an 8.326 acre tract conveyed to Haydocy Realty Co. LLC as described in Instrument Number 199911050278956;

 

Thence southerly, with said corporation line, the north line of said 112.581 acre tract, and the west line of said 8.326 acre tract, South 03° 27’ 56” East, 120.56 feet to a “MAG” nail found at an angle point in said north line and being the southwest corner of said 8.326 acre tract;

 

Thence easterly, with said corporation line, the north line of said 112.581 acre tract, and the south line of said 8.326 acre tract, North 81° 06’ 58” East, 593.51 feet to and iron pin set at the northeast corner of

 

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said 112.581 acre tract, the southeast corner of said 8.326 acre tract, and on the west line of Lot No. 49 of Alice Rita Subdivision as recorded in Plat Book 46, Page 30;

 

Thence southerly, with said corporation line, the east line of said 112.581 acre tract, and the west line of Lot Nos. 36-49 of said Alice Rita Subdivision, South 03° 14’ 07” East, 689.58 feet to an iron pin set;

 

Thence westerly, crossing said 112.581 acre tract, South 84° 53’ 46” West, 870.23 feet to an iron pin set;

 

Thence westerly, continuing across said 112.581 acre tract, North 82° 52’ 03” West, 546.17 feet to an iron pin set;

 

Thence westerly, continuing across said 112.581 acre tract, South 87° 14’ 04” West, 830.05 feet to a “MAG” nail set in the centerline of Georgesville Road and on the west line of said 112.581 acre tract;

 

Thence northerly, with the centerline of Georgesville Road and the west line of said 112.581 acre tract, North 07° 07’ 57” East, 403.09 feet to a “MAG’’ nail set an angle point in the west line of said 112.581 acre tract, and being the southwest corner of said 1.048 acre tract;

 

Thence easterly, with the west line of said 112.581 acre tract and the south line of said 1.048 acre tract, South 82° 52’ 03” East, 60.00 feet to an iron pin set at an angle point in the west line of said 112.581 acre tract, the southeast corner of said 1.048 acre tract, and on the easterly right-of-way line of Georgesville Road;

 

Thence northerly, continuing with the west line of said 112.581 acre tract, the east line of said 1.048 acre tract and the easterly right-of-way line of Georgesville Road, North 07° 07’ 57” East, 173.64 feet to a 5/8” rebar found capped “Woolpert” at an angle point in said west and east line;

 

Thence northerly, continuing with the west line of said 112.581 acre tract, the east line of said 1.048 acre tract, and the easterly right-of-way line of Georgesville Road, North 20° 39’ 28” East, 51.31 feet to a 5/8” rebar found capped “Woolpert” at an angle point in said west and east line;

 

Thence northerly, continuing with the west line of said 112.581 acre tract, the east line of said 1.048 acre tract, and the easterly right-of-way line of Georgesville Road, North 07° 07’ 57” East, 67.05 feet to the True Point of Beginning, containing 34.521 acres more or less.

 

Subject to all legal rights-of-way and/or easements, if any of previous record.

 

All iron pins set are 5/8” rebar, 30” in length with a yellow plastic cap with “EP Ferris Surveyor 8230” inscribed on top.

 

Basis of Bearing: Bearings are based upon the Ohio State Plane Coordinate System, South Zone, NAD83 (CORS 96). Said bearings originated from a field traverse which was tied (referenced) to said coordinate system by GPS observations and observations of selected

 

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stations in the Ohio Department of Transportation Virtual Reference Station network. The portion of the centerline of Georgesville Road, bearing North 07° 07’ 57” East, and all other bearings upon this meridian, is designated the “basis of bearing” for this description.

 

This description was prepared by Matthew E. Ferris, Registered Surveyor No. 8230, of E.P. Ferris & Associates, Inc. on February 14, 2011.

 

Less and excepting therefrom the following 0.9921 acre tract known as Parcel 1C-WD as conveyed by CD Gaming Future Expansion LLC to the Franklin County Commissioners in Instrument Number 201108170102936:

 

Parcel 1C-WD

 

Situated in the State of Ohio, County of Franklin, Township of Franklin, and being in Virginia Military District Survey Number 1482 and also being in a 34.521 acre tract as conveyed to CD Gaming Future Expansion, LLC in Instrument Number 201102140022643 (all references being to records of the Recorder’s Office, Franklin County, Ohio), and bounded and described as follows:

 

Commencing at “FCGS 1379” found at the centerline of right-of-way of Phillipi Road and Georgesville Road (C.R. 26), and being a Point of Intersection, also being the centerline of right-of-way of West Broad Street (U.S. 40);

 

Thence with the centerline of Georgesville Road (C.R. 26) and the west line of a 1.048 acre tract as conveyed to The Board of Franklin County Commissioners in Instrument Number 200211270304863, South 07 degrees 07 minutes 57 seconds West, 805.70 feet to an angle point in the west line of said 34.521 acre tract and being the southwest corner of said 1.048 acre tract and being the True Point of Beginning of the parcel herein described;

 

Thence with the west line of said 34.521 acre tract and the south line of said 1.048 acre tract, South 82 degrees 52 minutes 03 seconds East, 60.00 feet to an angle point in the west line of said 34.521 acre tract, the southeast corner of said 1.048 acre tract in the existing easterly right-of-way line of Georgesville Road (C.R. 26);

 

Thence with the west line of said 34.521 acre tract, the east line of said 1.048 acre tract, and the existing easterly right-of-way line of Georgesville Road (C.R. 26), North 07 degrees 07 minutes 57 seconds East, 173.64 feet to a point, reference an iron pin found, capped “Woolpert Inc”, South 04 degrees 59 minutes 39 seconds East 0.44 feet;

 

Thence continuing with the west line of said 34.521 acre tract, the east line of said 1.048 acre tract, and the existing easterly right-of-way line of Georgesville Road (C.R. 26), North 20 degrees 39 minutes 28 seconds East, 51.31 feet to a point, reference an iron pin found, capped “Woolpert Inc”, South 03 degrees 50 minutes 15 seconds West, 0.50 feet;

 

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Thence continuing with the West line of said 34.521 acre tract, the east line of said 1.048 acre tract, and the existing easterly right-of-way line of Georgesville Road (C.R. 26), North 07 degrees 07 minutes 57 seconds East, 67.05 feet to a point, reference an iron pin found, capped “Woolpert Inc”, North 86 degrees 32 minutes 36 seconds East 0.07 feet in the east line of said 1.048 acre tract at the northwest corner of said 34.521 acre tract, the southwest corner of a 6.4230 acre tract as conveyed to West Highland Plaza, LLC in Instrument Number 200707110121493, Parcel I;

 

Thence with the north line of said 34.521 acre tract and the south line of said 6.4230 acre tract, North 86 degrees 32 minutes 36 seconds East, 18.31 feet to an iron pin set in said north and south line and also being in the proposed easterly right-of-way line of Georgesville Road (C.R. 26);

 

Thence crossing said 34.521 acre tract with the proposed easterly right-of-way line of Georgesville Road (C.R. 26), South 07 degrees 07 minutes 57 seconds West, 681.33 feet to an iron pin set in the south line of said 34.521 acre tract and the north line of the remainder of a 112.581 acre tract as conveyed to CD Gaming Ventures, Inc. in Instrument Number 201002050015189, Tract I;

 

Thence with the south line of said 34.521 acre tract and the north line of the remainder of said 112.581 acre tract, South 87 degrees 14 minutes 04 seconds West, 91.36 feet to the southwest corner of said 34.521 acre tract and the northwest corner of the remainder of said 112.581 acre tract;

 

Thence with the west line of said 34.521 acre tract and the centerline of Georgesville Road (C.R. 26), North 07 degrees 07 minutes 57 seconds East, 403.09 feet to the Point of Beginning.

 

Subject to all legal rights-of-way, easements, and restrictions, if any, of previous record.

 

The above described area is contained within the Franklin County Auditor’s Permanent Parcel Numbers: 140-007466 containing 0.9921 acres, more or less, which includes 0.5480 acres in the present road occupied.

 

The bearings shown on this described herein are based on the Ohio State Plane Coordinate System, South Zone, NAD83 (CORS96). Said bearings originated from a field traverse which was tied to said coordinate system by GPS observations and observations of selected stations in the Ohio Department of Transportation Virtual Reference Station network. The portion of the centerline of Georgesville Road having a bearing of (South 07 degrees 07 minutes 57 seconds West) and monumented as shown hereon, is designated the “basis of bearing” for this survey.

 

This description was prepared and reviewed on May 18, 2011 by Edward P. Ferris Registered Surveyor No. 6027, and is based upon a field survey performed by E.P. Ferris & Associates, Inc.

 

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Monuments referred to as Iron Pins Set are 5/8 inch rebar 30 inches long with a yellow plastic cap stamped “Franklin County Engineer”.

 

Grantor reserves the right of ingress and egress to and from all residual areas.

 

Tract IV

 

22.259 Acre Tract

 

Situated in the State of Ohio, County of Franklin, Township of Franklin, being in Virginia Military Survey Lot 1425, and being part of an 112.581 acre tract conveyed to CD Gaming Ventures, Inc. as described in Instrument Number 201002050015189, Tract I, all references being those of record in the Franklin County, Ohio Recorder’s Office and being more particularly described as follows:

 

Commencing at a monument (FCGS 1379) found at the centerline intersection of West Broad Street (U.S. Route 40) (160’) and Georgesville Road (110’);

 

Thence southerly, with the centerline of Georgesville Road, the west line of a 1.048 acre tract conveyed to Board of Franklin County Commissioners as described in Instrument Number 200211270304863 and the west line of said 112.581 acre tract, South 07° 07’ 57” West, 2383.79 feet to a “MAG” nail set, and being the True Point of Beginning;

 

Thence easterly, crossing said 112.581 acre tract, South 87° 36’ 39” East, 1033.13 feet to an iron pint set;

 

Thence northeasterly, continuing across said 112.581 acre tract, North 52° 07’ 57” East, 496.75 feet to an iron pin set;

 

Thence easterly, crossing said 112.581 acre tract, South 88° 51’ 21” East, 610.89 feet to an iron pin set in the south line of said 112.581 acre tract and the north line of a tract of land conveyed to Camp Chase Industrial Railroad Corp. as described in Official Record Volume 28363 F03;

 

Thence southwesterly, with the south line of said 112.581 acre tract and the north line of said Camp Chase Industrial Railroad Corp. tract, South 54° 38’ 50” West, 587.07 feet to an iron pin set at an angle point in said south and north line;

 

Thence southwesterly, with the south line of said 112.581 acre tract and the north line of said Camp Chase Industrial Railroad Corp. tract, South 45° 07’ 01” West, 265.42 feet to a 5/8” rebar found capped “Woolpert” at an angle point in said south and north line;

 

Thence southwesterly, with the south line of said 112.581 acre tract and the north line of said Camp Chase Industrial Railroad Corp. tract, South 39° 13’ 25” West, 211.64 feet to a 5/8” rebar found capped “Woolpert” at an angle point in said south and north line, being on the corporation line of the City of Columbus and Franklin Township;

 

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Thence southwesterly, with said corporation line, the south line of said 112.581 acre tract, and north line of said Camp Chase Industrial Railroad Corp. tract, South 54° 37’ 57” West, 1038.29 feet to a 5/8” rebar found capped “Woolpert” at a southwest corner of said 112.581 acre tract and a southeast corner of a 9.052 acre tract conveyed to CD Gaming Ventures, Inc. as described in Instrument Number 201002050015189, Tract II;

 

Thence northeasterly, with said corporation line, the west line of said 112.581 acre tract, and the east line of said 9.052 acre tract, North 27° 15’ 29” East, 149.00 feet to a 5/8” rebar found capped “Woolpert” at an angle point in said west and east line;

 

Thence northerly, with said corporation line, the west line of said 112.581 acre tract, and the east line of said 9.052 acre tract, North 22° 08’ 13” East, 196.74 feet to a 5/8” rebar found capped “Woolpert” at an angle point in said west and east line;

 

Thence northerly, with said corporation line, the west line of said 112.581 acre tract, and the east line of said 9.052 acre tract, North 05° 10’ 59” East, 149.38 feet to a 5/8” rebar found capped “Woolpert” at an angle point in said west and east line;

 

Thence northerly, with said corporation line, the west line of said 112.581 acre tract, and the east line of said 9.052 acre tract, North 03° 24’ 52” West, 149.83 feet to an iron pin found at an angle point in said west line and being the northeast corner of said 9.052 acre tract;

 

Thence westerly, with said corporation line, the west line of said 112.581 acre tract, and the north line of said 9.052 acre tract, South 86° 26’ 45” West, passing a 5/8” rebar found in the easterly right-of-way line of Georgesville Road at 533.11 feet, 594.17 feet to a “MAG” nail set at a southwest corner of said 112.581 acre tract, the northwest corner of said 9.052 acre tract, and being in the centerline of Georgesville Road;

 

Thence northerly, with the west line of said 112.581 acre tract and the centerline of Georgesville Road, North 07° 07’ 57” East, 469.70 feet to the True Point of Beginning, containing 22.259 acres more or less.

 

Subject to all legal rights-of-way and/or easements, if any of previous record.

 

All iron pins set are 5/8” rebar, 30” in length with a yellow plastic cap with “EP Ferris Surveyor 8230” inscribed on top.

 

Basis of Bearing: Bearings are based upon the Ohio State Plane Coordinate System, South Zone, NAD83 (CORS 96). Said bearings originated from a field traverse which was tied (referenced) to said coordinate system by GPS observations and observations of selected stations in the Ohio Department of Transportation Virtual Reference Station network. The portion of the centerline of Georgesville Road, bearing North 07° 07’ 57” East, and all other bearings upon this meridian, is designated the “basis of bearing” for this description.

 

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This description was prepared by Matthew E. Ferris, Registered Surveyor No. 8230, of E.P. Ferris & Associates, Inc. on February 14, 2011.

 

TRACT V

 

9.052 acre parcel

 

Situate in Virginia Military Survey Lot 1425, City of Columbus, County of Franklin, State of Ohio, and being part of a 147.973 acre tract of land as conveyed to Delphi Automotive Systems LLC by deed recorded in Instrument No. 199902010025133 (all references to deeds, microfiche, plats, surveys, etc. refer to the records of the Franklin County Recorder’s Office, unless noted otherwise) and being more particularly bounded and described as follows:

 

Commencing for reference at a monument found (FCGS 13 79) at the intersection of the centerline of West Broad Street (U.S. Route 40) with the centerline of Georgesville Road, said point bears North eighty-eight degrees ten minutes twenty-nine seconds East (N88°10’29”E) for a distance of two thousand one hundred thirty-seven and 66/100 feet (2137.66’) from a monument found (Frank140);

 

thence along the centerline of said Georgesville Road and the west line of said 147.973 acre tract South seven degrees seven minutes fifty-four seconds West (S07°07’54”W) for a distance of two thousand eight hundred fifty-three and 58/100 feet (2,853.58’) to a railroad spike set at the True Point of Beginning of the herein described tract of land;

 

thence across said 147.973 acre tract and along the existing City of Columbus corporation line as recorded in Official Record Volume 14730 E16 for the following five (5) courses:

 

1. North eighty-six degrees twenty-six minutes forty-three seconds East (N86°26’43”E) (passing an iron pin found on the east right of way line of said Georgesville Road at 61.06’) for a distance of five hundred ninety-three and 99/100 feet (593.99’) to a 5/8” iron pin found (no cap);

 

2. South three degrees twenty-eight minutes twenty-five seconds East (S03°28’25”E) for a distance of one hundred forty-nine and 96/100 feet (149.96’) to an iron pin set;

 

3. South five degrees eleven minutes thirty-three seconds West (S05°11’33”W) for a distance of one hundred forty-nine and 38/100 feet (149.38’) to an iron pin set;

 

4. South twenty-two degrees nine minutes fifty-eight seconds West (S22°09’58”W) for a distance of one hundred ninety-six and 72/100 feet (196.72’) to an iron pin set;

 

5. South twenty-seven degrees fifteen minutes sixteen seconds West (S27°15’16”W) for a distance of one hundred forty-eight and 91/100 feet (148.91’) to an iron pin set on the north line of a tract of land as

 

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conveyed to Camp Chase Industrial Railroad Corp. by deed recorded in Official Record Volume 28363 F03;

 

thence along said line South fifty-four degrees thirty-eight minutes forty-seven seconds West (S54°38’47”W) for a distance of one hundred ninety-eight and 22/100 feet (198.22’) to a 5/8” iron pin found (Thomas Eng & Surveying cap) at the northeast corner of a 1.423 acre tract of land as conveyed to Salvation Army by deed recorded in Official Record Volume 9220 F13;

 

thence along the north line of said 1.423 acre tract North eighty-two degrees fifty-two minutes six seconds West (N82°52’06”W) for a distance of three hundred sixty-seven and 90/100 feet (367.90’) to a P.K. nail found at the northwest corner of said 1.423 acre tract, said point also being on the centerline of said Georgesville Road;

 

thence along the centerline of said Georgesville Road North seven degrees seven minutes fifty-four seconds East (N07°07’54”E) for a distance of six hundred fifty and 24/100 feet (650.24’) to the True Point of Beginning, containing nine and 052/1000 (9.052) acres, more or less.

 

Iron pins set are 5/8” rebar, 30” in length, with a plastic plug placed on top inscribed with the name “Woolpert Inc”, unless otherwise noted. All monuments found are in good condition unless otherwise noted.

 

This description was prepared from a field survey performed by Woolpert, Inc., in January, 2010 with bearin