Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

 
FORM 8-K
 

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

Date of Report (Date of earliest event reported): August 1, 2018

 
GAMING AND LEISURE PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
 
PENNSYLVANIA
 
001-36124
 
46-2116489
(State or Other Jurisdiction of
Incorporation or Organization)
 
(Commission file number)
 
(IRS Employer Identification Number)

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

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

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

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

Emerging growth company  o

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





 

Item 2.02.  Results of Operations and Financial Condition.
 
On August 1, 2018, Gaming and Leisure Properties, Inc. issued a press release announcing its financial results for the three and six months ended June 30, 2018.  A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

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

Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits
 
Exhibit
Number
 
Description
 
 
 
99.1
 
 
* * *

2



SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
Dated: August 1, 2018
GAMING AND LEISURE PROPERTIES, INC.
 
 
 
 
 
By:
/s/ Steven T. Snyder
 
Name:
Steven T. Snyder
 
Title:
Interim Chief Financial Officer



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Exhibit


Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12381923&doc=3
 
GAMING AND LEISURE PROPERTIES, INC. ANNOUNCES SECOND QUARTER 2018 RESULTS

- Completes Refinancing of all 2018 Debt Maturities with Attractive Long-Term Interest Rates -
- Declares 2018 Third Quarter Dividend of $0.63 per Common Share -
- Establishes 2018 Third Quarter and Revises Full Year Guidance -

 
WYOMISSING, PA. — August 1, 2018 — Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) (the “Company”), the first gaming-focused real estate investment trust (“REIT”) in North America, today announced results for the quarter ended June 30, 2018.
 
Financial Highlights
 
 
 
Three Months Ended 
 June 30,
(in millions, except per share data)
 
2018 Actual
 
2018  Guidance (1)
 
2017 Actual
Total Revenue
 
$
254.2

 
$
254.2

 
$
243.4

Net Income
 
$
92.0

 
$
105.8

 
$
96.3

Funds From Operations (2)
 
$
116.9

 
$
130.5

 
$
121.4

Adjusted Funds From Operations (3)
 
$
169.2

 
$
169.7

 
$
167.8

Adjusted EBITDA (4)
 
$
225.1

 
$
224.4

 
$
222.2

 
 
 
 
 
 
 
Net income, per diluted common share
 
$
0.43

 
$
0.49

 
$
0.45

 
 
(1)  The guidance figures in the tables above present the guidance provided on April 25, 2018 for the three months ended June 30, 2018.

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

(3)  Adjusted funds from operations (“AFFO”) is FFO, excluding stock based compensation expense, debt issuance costs amortization, other depreciation, amortization of land rights, straight-line rent adjustments, direct financing lease adjustments, losses on debt extinguishment and retirement costs, reduced by capital maintenance expenditures.

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

Chief Executive Officer, Peter M. Carlino, commented “The second quarter was a period of significant progress for the Company. We have addressed all 2018 debt maturities through our new debt financing transactions.  We successfully refinanced the 2018 notes and repaid our Term Loan A as well as a portion of our Term Loan A-1 with a new $1.0 billion issuance of 7 year and 10 year notes at an attractive blended interest rate of 5.5%.  We now have a well-laddered maturity schedule with no more than $1.0 billion of debt maturing in any calendar year with no maturities until November 2020.  In addition, we amended our revolving credit facility to both extend the maturity to 2023 and increase the capacity to $1.1 billion.  The new revolver will afford us substantial flexibility for financing future acquisitions while also significantly reducing our refinancing risk.  We believe these transactions position the Company with a stable capital structure and the flexibility to grow.”
“Additionally, during the quarter, the Company continued to work towards closing our previously announced transactions.  We expect the combination of Penn National Gaming, Inc. (NASDAQ: PENN) and Pinnacle Entertainment, Inc. (NASDAQ: PNK) to be completed in the fourth quarter and the acquisition of the Tropicana Entertainment Inc. (“Tropicana”) assets to be

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completed by the end of the year.  The transactions will add eight new properties to our portfolio with annual rent of approximately $156 million at a very attractive blended cap rate of 10.2%.  Notably, the transactions will add two highly respected gaming operators, Eldorado Resorts, Inc. (NASDAQ: ERI) and Boyd Gaming Corporation (NASDAQ: BYD), as meaningful tenants and valued partners.  We continue to expect these transactions to increase our dividend by approximately 8% to 10%.”

“Finally, our business continues to operate with significant stability and predictability.  Cash rent earned in the quarter was in line with our expectations and EBITDA modestly exceeded guidance.  While the focus in the second quarter was largely on the balance sheet transactions and pending acquisitions, we are pleased to recognize that the underlying business of our tenants is healthy and our portfolio of existing assets is performing well.”

The Company's second quarter net income as compared to guidance was primarily impacted by the following variances:

Corporate overhead had an unfavorable variance of $9.6 million due to the retirement of our former Chief Financial Officer offset by a favorable variance of $1.0 million relating to lower than anticipated legal and outside service expense;
Losses on debt extinguishment had an unfavorable variance of $3.5 million; and
Net interest had an unfavorable variance of $1.1 million due to the refinancing of 2018 debt maturities.

Portfolio Update
 
GLPI owns over 4,400 acres of land and approximately 15 million square feet of building space, which was 100% occupied as of June 30, 2018. At the end of the second quarter of 2018, the Company owned the real estate associated with 38 casino facilities and leases 20 of these facilities to PENN, 15 of these facilities to PNK and one to Casino Queen in East St. Louis, Illinois. Two of the gaming facilities, located in Baton Rouge, Louisiana and Perryville, Maryland, are owned and operated by a subsidiary of GLPI, GLP Holdings, Inc., (collectively, the “TRS Properties”).

Capital maintenance expenditures for the Company were $1.2 million for the three months ended June 30, 2018.

Balance Sheet Update
 
The Company had $144.5 million of unrestricted cash and $4.5 billion in total debt at June 30, 2018.  The increase in our cash position as compared to prior periods is a result of the recent financing transactions and the call for redemption of the remaining 4.375% Notes due 2018 which will be redeemed in August 2018. The Company’s debt structure as of June 30, 2018 was as follows:
 
 
As of June 30, 2018
 
 
Interest Rate
 
Balance
 
 
 
 
(in thousands)
Unsecured Term Loan A-1 (1)
 
3.585
%
 
$
525,000

Unsecured $1,100 Million Revolver (1)
 
%
 

Senior Unsecured Notes Due 2018
 
4.375
%
 
156,457

Senior Unsecured Notes Due 2020
 
4.875
%
 
1,000,000

Senior Unsecured Notes Due 2021
 
4.375
%
 
400,000

Senior Unsecured Notes Due 2023
 
5.375
%
 
500,000

Senior Unsecured Notes Due 2025
 
5.250
%
 
500,000

Senior Unsecured Notes Due 2026
 
5.375
%
 
975,000

Senior Unsecured Notes Due 2028
 
5.750
%
 
500,000

Capital Lease
 
4.780
%
 
1,171

Total long-term debt
 
 

 
$
4,557,628

Less: unamortized debt issuance costs
 
 
 
(50,884
)
Total long-term debt, net of unamortized debt issuance costs
 
 
 
$
4,506,744

 
(1)  The rate on the term loan facility and revolver is LIBOR plus 1.50%. The Company's revolver matures on May 21, 2023 and the incremental term loan of $525.0 million matures on April 28, 2021.

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As of June 30, 2018, the Company had $213.7 million remaining for issuance under the ATM Program and had not entered into any forward sale agreements. No shares were issued under the ATM Program during the quarter ended June 30, 2018.

As of June 30, 2018, the Company had 214,506,117 weighted average diluted shares outstanding.

Dividends
 
On April 24, 2018, the Company’s Board of Directors declared the second quarter 2018 dividend.  Shareholders of record on June 15, 2018 received $0.63 per common share, which was paid on June 29, 2018.  On July 31, 2018, the Company declared its third quarter 2018 dividend of 0.63 per common share, payable on September 21, 2018 to shareholders of record on September 7, 2018.

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Guidance

The table below sets forth current guidance targets for financial results for the 2018 third quarter and full year, based on the following assumptions:

Excludes any impact of the transactions announced on December 18, 2017 with PENN, PNK, and BYD, which are expected to close in the fourth quarter of 2018;

Excludes any impact of the transaction announced on April 16, 2018, to acquire the real estate assets of Tropicana, which is expected to close by the end of 2018;

Reported rental income of approximately $885.8 million for the year and $223.4 million for the third quarter, consisting of:
(in millions)
 
Third Quarter
 
Full Year
Cash Rental Receipts
 
 
 
 
PENN
 
$
115.9

 
$
461.7

PNK
 
103.6

 
410.7

Casino Queen
 
3.6

 
14.5

PENN non-assigned land lease
 
(0.7
)
 
(2.8
)
Total Cash Rental Receipts
 
$
222.4

 
$
884.1

 
 
 
 
 
Non-Cash Adjustments
 
 
 
 
Straight-line rent
 
$
(15.9
)
 
$
(51.9
)
PNK direct financing lease
 
(8.0
)
 
(45.2
)
Property taxes paid by tenants
 
21.8

 
86.4

Land leases paid by tenants
 
3.1

 
12.4

Total Rent as Reported
 
$
223.4

 
$
885.8


Cash rent includes incremental escalator on the PENN building rent component effective November 1, 2018, which increases 2018 annual rent by $0.9 million, consistent with tenant's July 26, 2018 earnings press release;

Five year variable rent reset on the PENN lease effective November 1, 2018, which reduces 2018 annual rent by $1.9 million, consistent with tenant's July 26, 2018 earnings press release;

Cash rent includes incremental escalator on the PNK building rent component effective April 28, 2018, which increases 2018 annual rent by $3.9 million;

Two year variable rent reset on the PNK lease effective April 28, 2018, which reduces 2018 annual rent by $0.8 million;

Adjusted EBITDA from the TRS Properties of approximately $32.9 million for the year and $7.3 million for the third quarter;

Blended income tax rate at the TRS Properties of 33%;
 
LIBOR is based on the forward yield curve; and

The basic share count is approximately 213.7 million shares for the year and 213.9 million shares for the third quarter and the fully diluted share count is approximately 214.8 million shares for the year and 214.9 million shares for the third quarter.



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Three Months Ended September 30,
 
Full Year Ending December 31,
(in millions, except per share data)
 
2018  Guidance
 
2017  Actual
 
Revised 2018 Guidance
 
Prior 2018 Guidance (4)
 
2017   Actual
Total Revenue
 
$
255.2

 
$
244.5

 
$
1,018.9

 
$
1,020.5

 
$
971.3

 
 
 
 
 
 
 
 
 
 
 
Net Income
 
$
106.1

 
$
97.0

 
$
412.2

 
$
433.1

 
$
380.6

Losses or (gains) from dispositions of property
 

 
0.4

 
0.2

 

 
0.5

Real estate depreciation
 
24.4

 
25.3

 
98.6

 
98.6

 
100.6

Funds From Operations (1)
 
$
130.5

 
$
122.7

 
$
511.0

 
$
531.7

 
$
481.7

Straight-line rent adjustments
 
15.9

 
16.6

 
51.9

 
51.9

 
66.0

Direct financing lease adjustments
 
8.0

 
18.6

 
45.2

 
45.2

 
73.1

Other depreciation
 
2.9

 
3.3

 
11.5

 
11.5

 
12.9

Amortization of land rights
 
2.7

 
2.8

 
10.9

 
10.9

 
10.4

Debt issuance costs amortization
 
3.0

 
3.3

 
12.1

 
13.0

 
13.0

Stock based compensation
 
3.3

 
3.7

 
11.2

 
16.0

 
15.6

Losses on debt extinguishment
 

 

 
3.5

 

 

Retirement costs
 

 

 
13.1

 

 

Capital maintenance expenditures
 
(1.2
)
 
(0.5
)
 
(4.3
)
 
(4.3
)
 
(3.2
)
Adjusted Funds From Operations (2)
 
$
165.1

 
$
170.5

 
$
666.1

 
$
675.9

 
$
669.5

Interest, net
 
58.5

 
54.0

 
226.1

 
217.2

 
215.1

Income tax expense
 
1.0

 
1.7

 
5.0

 
5.7

 
9.8

Capital maintenance expenditures
 
1.2

 
0.5

 
4.3

 
4.3

 
3.2

Debt issuance costs amortization
 
(3.0
)
 
(3.3
)
 
(12.1
)
 
(13.0
)
 
(13.0
)
Adjusted EBITDA (3)
 
$
222.8

 
$
223.4

 
$
889.4

 
$
890.1

 
$
884.6

 
 
 
 
 
 
 
 
 
 
 
Net income, per diluted common share
 
$
0.49

 
$
0.45

 
$
1.92

 
$
2.01

 
$
1.79

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

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

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

(4)        The guidance figures in the tables above present the guidance provided on April 25, 2018 for the year ended December 31, 2018.













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Conference Call Details
 
The Company will hold a conference call on August 1, 2018 at 9:00 a.m. (Eastern Time) to discuss its financial results, current business trends and market conditions.
 
Webcast
 
The conference call will be available in the Investor Relations section of the Company's website at www.glpropinc.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. A replay of the call will also be available for 90 days on the Company’s website.
 
To Participate in the Telephone Conference Call:
Dial in at least five minutes prior to start time.
Domestic: 1-877-407-0784
International: 1-201-689-8560

Conference Call Playback:
Domestic: 1-844-512-2921
International: 1-412-317-6671
Passcode: 13681224
The playback can be accessed through August 8, 2018

Disclosure Regarding Non-GAAP Financial Measures
 
Funds From Operations (“FFO”), Adjusted Funds From Operations (“AFFO”) and Adjusted EBITDA, which are detailed in the reconciliation tables that accompany this release, are used by the Company as performance measures for benchmarking against the Company’s peers and as internal measures of business operating performance, which is used for a bonus metric. The Company believes FFO, AFFO, and Adjusted EBITDA provide a meaningful perspective of the underlying operating performance of the Company’s current business.  This is especially true since these measures exclude real estate depreciation, and we believe that real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time. In addition, in order for the Company to qualify as a REIT, it must distribute 90% of its REIT taxable income annually. The Company adjusts AFFO accordingly to provide our investors an estimate of taxable income for this distribution requirement. Direct financing lease adjustments represent the portion of cash rent we receive from tenants that is applied against our lease receivable and thus not recorded as revenue and the amortization of land rights represents the non-cash amortization of the value assigned to the Company's assumed ground leases.

FFO, AFFO and Adjusted EBITDA are non-GAAP financial measures, that are considered a supplemental measure for the real estate industry and a supplement to GAAP measures. NAREIT defines FFO as net income (computed in accordance with generally accepted accounting principles), excluding (gains) or losses from sales of property and real estate depreciation.  We have defined AFFO as FFO excluding stock based compensation expense, debt issuance costs amortization, other depreciation, amortization of land rights, straight-line rent adjustments, direct financing lease adjustments, losses on debt extinguishment and retirement costs, reduced by capital maintenance expenditures. Finally, we have defined Adjusted EBITDA as net income excluding interest, taxes on income, depreciation, (gains) or losses from sales of property, stock based compensation expense, straight-line rent adjustments, direct financing lease adjustments, the amortization of land rights, losses on debt extinguishment and retirement costs.

FFO, AFFO and Adjusted EBITDA are not recognized terms under GAAP.  Because certain companies do not calculate FFO, AFFO, and Adjusted EBITDA 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.

About Gaming and Leisure Properties

GLPI is engaged in the business of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements, pursuant to which the tenant is responsible for all facility maintenance, insurance required in connection with the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties. GLPI expects to grow its portfolio by pursuing opportunities to acquire additional gaming

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facilities to lease to gaming operators. GLPI also intends to diversify its portfolio over time, including by acquiring properties outside the gaming industry to lease to third parties. GLPI elected to be taxed as a REIT for United States federal income tax purposes commencing with the 2014 taxable year and is the first gaming-focused REIT in North America.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our financial outlook for the third quarter of 2018 and the full 2018 fiscal year; our expectations regarding future acquisitions, the expected impact of PENN's proposed acquisition of PNK and the related transactions with BYD and our proposed acquisition of the real estate assets of Tropicana and related acquisition of operating assets by Eldorado, and dividend payments. Forward looking statements can be identified by the use of forward looking terminology such as “expects,” “believes,” “estimates,” “intends,” “may,” “will,” “should” or “anticipates” or the negative or other variation of these or similar words, or by discussions of future events, strategies or risks and uncertainties. Such forward looking statements are inherently subject to risks, uncertainties and assumptions about GLPI and its subsidiaries, including risks related to the following: the availability of and the ability to identify suitable and attractive acquisition and development opportunities and the ability to acquire and lease those properties on favorable terms; the ability to receive, or delays in obtaining, the regulatory approvals required to own and/or operate its properties, or other delays or impediments to completing GLPI’s planned acquisitions or projects, including the acquisitions of the real property assets of Tropicana and related acquisition of operating assets by Eldorado, PENN's Plainridge Park Casino and PNK's Belterra Park as well as the other transactions contemplated in connection with PENN's proposed acquisition of PNK; the satisfaction of the conditions to closing of the real property assets of each of Tropicana and related acquisition of operating assets by Eldorado, PENN, PNK, and BYD, including the timely receipt of all necessary regulatory approvals, financing and other matters, in connection with the proposed Tropicana acquisition and PENN's proposed acquisition of PNK, and the related divestitures to BYD; GLPI's ability to maintain its status as a REIT; our ability to access capital through debt and equity markets in amounts and at rates and costs acceptable to GLPI, including through GLPI's existing ATM program; changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs or to the gaming or lodging industries; and other factors described in GLPI’s Annual Report on Form 10-K for the year ended December 31, 2017, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, each as filed with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to GLPI or persons acting on GLPI’s behalf are expressly qualified in their entirety by the cautionary statements included in this press release. GLPI undertakes no obligation to publicly update or revise any forward-looking statements contained or incorporated by reference herein, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks, uncertainties and assumptions, the forward looking events discussed in this press release may not occur.

Additional Information

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended. In connection with the establishment of its ATM Program, the Company filed with the SEC a prospectus supplement dated August 9, 2016 to the prospectus contained in its effective Registration Statement on Form S-3 (No. 333-210423), filed with the SEC on March 28, 2016.  This communication is not a substitute for the filed Registration Statement/prospectus or any other document that the Company may file with the SEC or send to its shareholders in connection with the proposed transactions. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND PROSPECTUS THAT HAVE BEEN FILED WITH THE SEC AND OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN, OR WILL CONTAIN, IMPORTANT INFORMATION. You may obtain free copies of the registration statement/prospectus and other relevant documents filed by the Company with the SEC at the SEC’s website at www.sec.gov. Copies of the documents filed with the SEC by the Company are available free of charge on the Company’s investor relations website at investors.glpropinc.com or by contacting the Company’s investor relations representative at (610) 378-8396.

Contact
 
Investor Relations – Gaming and Leisure Properties, Inc.
Hayes Croushore
T: 610-378-8396
Email: Hcroushore@glpropinc.com

7




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

        
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Revenues
 

 
 

 
 

 
 

Rental income
$
169,865

 
$
167,763

 
$
339,270

 
$
332,924

Income from direct financing lease
26,984

 
18,516

 
45,605

 
36,340

Real estate taxes paid by tenants
21,483

 
20,840

 
42,761

 
42,560

Total rental revenue and income from direct financing lease
218,332

 
207,119

 
427,636

 
411,824

Gaming, food, beverage and other
35,889

 
36,272

 
70,635

 
74,280

Total revenues
254,221

 
243,391

 
498,271

 
486,104

Operating expenses
 

 
 

 
 

 
 

Gaming, food, beverage and other
20,407

 
20,669

 
40,065

 
41,745

Real estate taxes
21,800

 
20,912

 
43,395

 
43,055

Land rights and ground lease expense
6,444

 
6,035

 
12,976

 
11,210

General and administrative
24,806

 
14,656

 
41,266

 
30,712

Depreciation
27,523

 
28,423

 
55,477

 
56,680

Total operating expenses
100,980

 
90,695

 
193,179

 
183,402

Income from operations
153,241

 
152,696

 
305,092

 
302,702

 
 
 
 
 
 
 
 
Other income (expenses)
 

 
 

 
 

 
 

Interest expense
(57,055
)
 
(54,657
)
 
(111,123
)
 
(108,606
)
Interest income
891

 
487

 
1,372

 
951

  Losses on debt extinguishment
(3,473
)
 

 
(3,473
)
 

Total other expenses
(59,637
)
 
(54,170
)
 
(113,224
)
 
(107,655
)
 
 
 
 
 
 
 
 
Income from operations before income taxes
93,604

 
98,526

 
191,868

 
195,047

  Income tax expense
1,606

 
2,192

 
3,098

 
4,722

Net income
$
91,998

 
$
96,334

 
$
188,770

 
$
190,325

 
 
 
 
 
 
 
 
Earnings per common share:
 

 
 

 
 

 
 

Basic earnings per common share
$
0.43

 
$
0.46

 
$
0.88

 
$
0.91

Diluted earnings per common share
$
0.43

 
$
0.45

 
$
0.88

 
$
0.90

 
  



8



GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Operations
(in thousands) (unaudited)
 
 
TOTAL REVENUES
 
ADJUSTED EBITDA
 
Three Months Ended 
 June 30,
 
Three Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Real estate
$
218,332

 
$
207,119

 
$
215,435

 
$
212,114

GLP Holdings, LLC (TRS)
35,889

 
36,272

 
9,693

 
10,081

Total
$
254,221

 
$
243,391

 
$
225,128

 
$
222,195

 
 
 
 
 
 
 
 
 
TOTAL REVENUES
 
ADJUSTED EBITDA
 
Six Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Real estate
$
427,636

 
$
411,824

 
$
427,464

 
$
420,224

GLP Holdings, LLC (TRS)
70,635

 
74,280

 
19,009

 
20,991

Total
$
498,271

 
$
486,104

 
$
446,473

 
$
441,215


 
GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
General and Administrative Expenses
(in thousands) (unaudited)
 
        
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Real estate general and administrative expenses (1)
$
19,082

 
$
9,198

 
$
30,068

 
$
19,524

GLP Holdings, LLC (TRS) general and administrative expenses  (1)
5,724

 
5,458

 
11,198

 
11,188

Total
$
24,806

 
$
14,656

 
$
41,266

 
$
30,712

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


9



Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA
Gaming and Leisure Properties, Inc. and Subsidiaries
CONSOLIDATED
(in thousands) (unaudited)
 
 
        
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Net income
$
91,998

 
$
96,334

 
$
188,770

 
$
190,325

Losses (gains) from dispositions of property
225

 
(11
)
 
225

 
94

Real estate depreciation
24,651

 
25,108

 
49,749

 
50,011

Funds from operations
$
116,874

 
$
121,431

 
$
238,744

 
$
240,430

Straight-line rent adjustments
16,616

 
16,493

 
33,233

 
32,738

Direct financing lease adjustments
11,030

 
18,232

 
29,239

 
35,845

Other depreciation (1)
2,872

 
3,315

 
5,728

 
6,669

Amortization of land rights
2,728

 
2,589

 
5,455

 
4,900

Debt issuance costs amortization
3,039

 
3,256

 
6,296

 
6,513

Stock based compensation
616

 
3,773

 
4,603

 
8,256

Losses on debt extinguishment
3,473

 

 
3,473

 

Retirement costs
13,149

 

 
13,149

 

Capital maintenance expenditures (2)
(1,162
)
 
(1,245
)
 
(1,984
)
 
(1,727
)
Adjusted funds from operations
$
169,235

 
$
167,844

 
$
337,936

 
$
333,624

Interest, net
56,164

 
54,170

 
109,751

 
107,655

Income tax expense
1,606

 
2,192

 
3,098

 
4,722

Capital maintenance expenditures (2)
1,162

 
1,245

 
1,984

 
1,727

Debt issuance costs amortization
(3,039
)
 
(3,256
)
 
(6,296
)
 
(6,513
)
Adjusted EBITDA
$
225,128

 
$
222,195

 
$
446,473

 
$
441,215

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

(2) Capital maintenance expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out or no longer cost effective to repair.

10



Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA
Gaming and Leisure Properties, Inc. and Subsidiaries
REAL ESTATE and CORPORATE (REIT)
(in thousands) (unaudited)
 
        
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Net income
$
88,870

 
$
93,590

 
$
182,586

 
$
184,369

Gains from dispositions of property
(9
)
 

 
(9
)
 

Real estate depreciation
24,651

 
25,108

 
49,749

 
50,011

Funds from operations
$
113,512

 
$
118,698

 
$
232,326

 
$
234,380

Straight-line rent adjustments
16,616

 
16,493

 
33,233

 
32,738

Direct financing lease adjustments
11,030

 
18,232

 
29,239

 
35,845

Other depreciation (1)
521

 
518

 
1,038

 
1,039

Amortization of land rights
2,728

 
2,589

 
5,455

 
4,900

Debt issuance costs amortization
3,039

 
3,256

 
6,296

 
6,513

Stock based compensation
616

 
3,773

 
4,603

 
8,256

Losses on debt extinguishment
3,473

 

 
3,473

 

Retirement costs
13,149

 

 
13,149

 

Capital maintenance expenditures (2)
(3
)
 

 
(51
)
 

Adjusted funds from operations
$
164,681

 
$
163,559

 
$
328,761

 
$
323,671

Interest, net (2)
53,562

 
51,569

 
104,549

 
102,454

Income tax expense
228

 
242

 
399

 
612

Capital maintenance expenditures (2)
3

 

 
51

 

Debt issuance costs amortization
(3,039
)
 
(3,256
)
 
(6,296
)
 
(6,513
)
Adjusted EBITDA
$
215,435

 
$
212,114

 
$
427,464

 
$
420,224

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

(2)  Interest expense, net is net of intercompany interest eliminations of $2.6 million and $5.2 million for both the three and six months ended June 30, 2018 and 2017.


11



Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA
Gaming and Leisure Properties, Inc. and Subsidiaries
GLP HOLDINGS, LLC (TRS)
(in thousands) (unaudited)
 
        
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Net income
$
3,128

 
$
2,744

 
$
6,184

 
$
5,956

Losses (gains) from dispositions of property
234

 
(11
)
 
234

 
94

Real estate depreciation

 

 

 

Funds from operations
$
3,362

 
$
2,733

 
$
6,418

 
$
6,050

Straight-line rent adjustments

 

 

 

Direct financing lease adjustments

 

 

 

Other depreciation (1)
2,351

 
2,797

 
4,690

 
5,630

Amortization of land rights

 

 

 

Debt issuance costs amortization

 

 

 

Stock based compensation

 

 

 

Losses on debt extinguishment

 

 

 

Retirement costs

 

 

 

Capital maintenance expenditures (2)
(1,159
)
 
(1,245
)
 
(1,933
)
 
(1,727
)
Adjusted funds from operations
$
4,554

 
$
4,285

 
$
9,175

 
$
9,953

Interest, net
2,602

 
2,601

 
5,202

 
5,201

Income tax expense
1,378

 
1,950

 
2,699

 
4,110

Capital maintenance expenditures (2)
1,159

 
1,245

 
1,933

 
1,727

Debt issuance costs amortization

 

 

 

Adjusted EBITDA
$
9,693

 
$
10,081

 
$
19,009

 
$
20,991

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

(2) Capital maintenance expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out or no longer cost effective to repair.


12