Gaming and Leisure Properties, Inc.
October 29, 2015

Gaming and Leisure Properties, Inc. Announces Third Quarter 2015 Results

- Establishes 2015 Fourth Quarter Guidance and Updates Full Year Guidance -

- Declares 2015 Fourth Quarter Dividend -

WYOMISSING, Pa., Oct. 29, 2015 (GLOBE NEWSWIRE) -- Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) (the "Company"), the first gaming-focused REIT in North America, today announced results for the quarter ended September 30, 2015.

Financial Highlights

 Three Months Ended
 September 30,
(in millions, except per share data)
2015 Actual

2015  Guidance (1)
2014 Actual
(As restated)
Net Revenue $ 147.8 $ 146.7 $ 146.9
Adjusted EBITDA (2) $ 111.0 $ 109.7 $ 107.5
Net Income $ 33.2 $ 33.7 $ 37.3
Funds From Operations (3) $ 57.1 $ 57.6 $ 60.6
Adjusted Funds From Operations (4) $ 82.2 $ 80.8 $ 79.5
       
Net income, per diluted common share $ 0.28 $ 0.28 $ 0.32
FFO, per diluted common share $ 0.48 $ 0.48 $ 0.52
AFFO, per diluted common share  $ 0.69  $ 0.68  $ 0.68
 _______________________________
(1)  The guidance figures in the tables above present the guidance provided on July 30, 2015, for the three months ended September 30, 2015, restated for the straight-line rent adjustments.
(2)  Adjusted EBITDA is net income excluding interest, taxes on income, depreciation, (gains) or losses from sales of property, stock based compensation expense and straight-line rent adjustments.
(3)  Funds from operations (FFO) is net income, excluding (gains) or losses from sales of property and real estate depreciation as defined by NAREIT.
(4)  Adjusted funds from operations (AFFO) is FFO, excluding stock based compensation expense, debt issuance costs amortization, other depreciation and straight-line rent adjustments, reduced by capital maintenance expenditures.

The Company's third quarter 2015 results from rental activities and its property results in the TRS were favorable to guidance by $0.3 million each. Corporate expenses were approximately $0.7 million lower than guidance primarily due to lower cash-settled equity compensation expense. In addition, affecting net income is a $1.6 million charge for the bridge financing relating to the Pinnacle transaction.

Gaming and Leisure Properties, Inc. Chief Executive Officer, Peter M. Carlino commented, "Since our listing only two years ago, we have successfully created shareholder value through the stability and growth of our cashflows. Our third quarter results reflect the consistency of these cashflows and the security of our triple-net lease structure wherein over 80% of our rental income is fixed. Currently, we are focused on closing our previously announced acquisition of Pinnacle Entertainment's (NYSE:PNK) real estate assets which we expect to occur in the first quarter of 2016. This transaction will benefit shareholders by increasing our rental income, as well as increasing our size, tenant and geographic diversity. As a management team, we remain highly aligned with our shareholders and we are more excited than ever for the future."

As described in the Current Report on Form 8-K filed by the Company on October 22, 2015, the Company is restating its consolidated financial statements for the percentage rent received from Penn National Gaming which was known at the lease commencement date and should have been recorded on a straight-line basis over the initial non-cancelable lease term and any reasonably assured renewals terms rather than recognized as received. All prior periods in this press release have been restated for this adjustment, and the Company has set a target date of November 9, 2015 to file its amended financial statements with the SEC.

Portfolio Update

GLPI owns approximately 3,111 acres of land and 7.2 million square feet of building space, which was 100% occupied as of September 30, 2015. At the end of the third quarter of 2015, the Company owned the real estate associated with 21 casino facilities and leases 18 of these facilities to PENN 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.).

In November 2013, the Company entered into a triple-net lease with PENN, in which substantially all of PENN's former real property assets were leased back to PENN (the "Master Lease"). We currently estimate PENN's rent coverage ratio to be 1:85:1.

Capital project expenditures, which totaled $2.9 million for the three months ended September 30, 2015, primarily related to the Corporate headquarters and completion of Dayton and Youngstown. Capital maintenance expenditures at the TRS properties were $0.4 million for the three months ended September 30, 2015.

Balance Sheet Update

The Company had $42.7 million of unrestricted cash on hand and $2.5 billion in total debt, including $300.0 million of debt outstanding under its unsecured credit facility term loan and $190.0 million outstanding under its unsecured credit facility revolver at September 30, 2015. The Company's debt structure at September 30, 2015 was as follows:

 As of September 30, 2015
 Interest RateBalance
   (in thousands)
Unsecured Term Loan A (1) 1.801% $ 300,000
Unsecured $700 Million Revolver (1) 1.696% 190,000
Senior Unsecured Notes Due 2018 4.375% 550,000
Senior Unsecured Notes Due 2020 4.875% 1,000,000
Senior Unsecured Notes Due 2023 5.375% 500,000
Capital Lease 4.780% 1,414
Total long-term debt   2,541,414
Less current maturities of long-term debt   (101)
Long-term debt, net of current maturities   $ 2,541,313
____________________________________    
(1) The margin on the term loan and revolver is Libor plus 1.50%. The Company's credit facility matures on October 28, 2018.
     

Dividends

On July 30, 2015, the Company's Board of Directors declared the third quarter dividend. Shareholders of record on September 14, 2015 received $0.545 per common share, which was paid on September 25, 2015. On October 28, 2015, the Company declared its fourth quarter dividend of $0.545 per common share, payable on December 18, 2015 to shareholders of record on December 1, 2015.

Guidance

The table below sets forth current guidance targets for financial results for the 2015 fourth quarter and full year, based on the following assumptions:

 Three Months Ending 
December 31,

Full Year Ending December 31,
(in millions, except per share data)

2015 
Guidance


2014 Actual
(As restated)

2015
Revised
Guidance


2015 Prior
Guidance (4)


2014 Actual
(As restated)
Net Revenue $ 145.2 $ 145.1 $ 591.6 $ 590.4 $ 591.1
Adjusted EBITDA (1) $ 109.0 $ 105.1 $ 439.2 $ 437.9 $ 422.5
Net Income $ 31.0 $ 30.2 $ 129.3 $ 132.1 $ 138.8
Funds From Operations (2) $ 54.8 $ 52.7 $ 224.9 $ 227.7 $ 231.6
Adjusted Funds From Operations (3) $ 79.5 $ 75.8 $ 320.6 $ 319.3 $ 307.3
           
Net income, per diluted common share $ 0.26 $ 0.26 $ 1.09 $ 1.11 $ 1.18
FFO, per diluted common share $ 0.46 $ 0.45 $ 1.89 $ 1.91 $ 1.97
AFFO, per diluted common share $ 0.67 $ 0.65 $ 2.70 $ 2.68 $ 2.61
___________________________________          
(1)  Adjusted EBITDA is net income excluding interest, taxes on income, depreciation, (gains) or losses from sales of property, stock based compensation expense and straight-line rent adjustments.  
(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 and straight-line rent adjustments, reduced by capital maintenance expenditures.  
(4) The guidance figures in the tables above present the guidance provided on July 30, 2015 for the full year ended December 31, 2015, restated for the straight-line rent adjustments.  

Conference Call Details

The Company will hold a conference call on October 29, 2015 at 10:00 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: 1-877-705-6003
International: 1-201-493-6725

Conference Call Playback:

Domestic: 1-877-870-5176
International: 1-858-384-5517
Passcode: 13621888
The playback can be accessed through November 5, 2015.

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. 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.

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 and straight-line rent adjustments, 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 and straight-line rent adjustments.

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 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 real estate investment trust ("REIT") for United States federal income tax purposes commencing with the 2014 taxable year and is the first gaming-focused REIT.

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. These 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: risks relating to the ultimate impact and timing of the Company's restatement of its financial statements; the risk that additional information will come to light during the course of the preparation of restated financial statements that alters the scope or magnitude of the restatement; 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 successful resolution of outstanding litigation against the owners of the Meadows Racetrack & Casino); GLPI's ability to enter into definitive agreements with a third party operator for the Meadows Racetrack & Casino; the ultimate timing and outcome of the Company's proposed acquisition of substantially all of the real estate assets of Pinnacle Entertainment, Inc. ("Pinnacle"), including the Company's and Pinnacle's ability to obtain the financing and third party approvals and consents necessary to complete the acquisition; the ultimate outcome and results of integrating the assets to be acquired by the Company in the proposed transaction with Pinnacle; the effects of a transaction between GLPI and Pinnacle on each party, including the post-transaction impact on GLPI's financial condition, operating results, strategy and plans; GLPI's ability to maintain its status as a REIT; 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; our ability to access capital through debt and equity markets in amounts and at rates and costs acceptable to GLPI; 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, 2014, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K 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 proposed transaction between the Company and Pinnacle, the Company has filed with the SEC a registration statement on Form S-4 (File No. 333-206649) that includes a preliminary joint proxy statement of the Company and Pinnacle that also constitutes a prospectus of the Company. This communication is not a substitute for the joint proxy statement/prospectus or any other document that the Company or Pinnacle may file with the SEC or send to their shareholders in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE FORM S-4, INCLUDING THE PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS FILED AND OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC (INCLUDING THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS) IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You may obtain free copies of the preliminary joint proxy statement/prospectus and other relevant documents filed by the Company and Pinnacle 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 (203) 682-8211. Copies of the documents filed with the SEC by Pinnacle are available free of charge on Pinnacle's investor relations website at investors.pnkinc.com or by contacting Pinnacle's investor relations department at (702) 541-7777.

Certain Information Regarding Participants

The Company and Pinnacle and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC. Investors may obtain information regarding the names, affiliations and interests of the Company's directors and executive officers in the Company's Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 27, 2015, and its proxy statement for its 2015 Annual Meeting, which was filed with the SEC on April 30, 2015. Investors may obtain information regarding the names, affiliations and interests of Pinnacle's directors and executive officers in Pinnacle's Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on March 2, 2015, and its proxy statement for its 2015 Annual Meeting, which was filed with the SEC on April 10, 2015. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the preliminary joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed transaction. Investors should read the definitive joint proxy statement/prospectus carefully and in its entirety when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents at the SEC's website at www.sec.gov.

Contact

Investor Relations - Gaming and Leisure Properties, Inc.

Brad Cohen
T: 203-682-8211
Email: Brad.Cohen@icrinc.com

Kara Smith
T: 646-277-1211
Email: Kara.Smith@icrinc.com

Bill Clifford
T: 610-401-2900
Email: Bclifford@glpropinc.com

GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data) (unaudited)
         
 Three Months EndedNine Months Ended
 September 30,September 30,
 2015201420152014
   (As restated)  (As restated)
Revenues        
Rental $ 97,754 $ 96,437 $ 293,597 $ 289,817
Real estate taxes paid by tenants (1) 13,778 12,512 40,071 36,956
Total rental revenue 111,532 108,949 333,668 326,773
Gaming 34,915 36,473 108,425 114,677
Food, beverage and other 2,794 3,015 8,464 8,934
Total revenues 149,241 148,437 450,557 450,384
Less promotional allowances (1,449) (1,531) (4,193) (4,396)
Net revenues 147,792 146,906 446,364 445,988
Operating expenses        
Gaming 19,357 20,504 58,644 64,233
Food, beverage and other 2,128 2,471 6,489 7,526
Real estate taxes (1) 14,174 12,929 41,138 38,208
General and administrative (2) 19,285 17,743 64,546 58,215
Depreciation 27,557 26,526 82,585 79,397
Total operating expenses 82,501 80,173 253,402 247,579
Income from operations 65,291 66,733 192,962 198,409
         
Other income (expenses)        
Interest expense (31,226) (29,378) (90,373) (87,460)
Interest income 581 623 1,761 1,837
Total other expenses (30,645) (28,755) (88,612) (85,623)
         
Income from operations before income taxes 34,646 37,978 104,350 112,786
Income tax expense 1,417 665 6,001 4,181
Net income $ 33,229 $ 37,313 $ 98,349 $ 108,605
         
Earnings per common share:        
Basic earnings per common share $ 0.29 $ 0.33 $ 0.86 $ 0.97
Diluted earnings per common share $ 0.28 $ 0.32 $ 0.83 $ 0.92
 _______________________________________        
(1)  According to ASC 605, Revenue Recognition, the Company is required to gross up rental income by the amount of real estate taxes paid by tenants under the triple-net lease structure and also reflect an offsetting expense in operating expenses.
(2)  General and administrative expenses include payroll related expenses, insurance, utilities, supplies and other administrative costs.
 
GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Operations
(in thousands) (unaudited)
         
 NET REVENUESADJUSTED EBITDA
 Three Months EndedThree Months Ended
 September 30,September 30,
 2015201420152014
   (As restated)    
Real estate $ 111,532 $ 108,956 $ 102,353 $ 99,146
GLP Holdings, LLC. (TRS) 36,260 37,950 8,627 8,392
Total$ 147,792$ 146,906$ 110,980$ 107,538
         
 NET REVENUESADJUSTED EBITDA
 Nine Months EndedNine Months Ended
 September 30,September 30,
 2015201420152014
   (As restated)    
Real estate $ 333,668 $ 326,780 $ 301,515 $ 289,056
GLP Holdings, LLC. (TRS) 112,696 119,208 28,648 28,307
Total$ 446,364$ 445,988$ 330,163$ 317,363
 
GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
General and Administrative Expenses
(in thousands) (unaudited)
         
 Three Months EndedNine Months Ended
 September 30,September 30,
 2015201420152014
Real estate general and administrative expenses (1) $ 13,521 $ 11,569 $ 46,665 $ 40,156
GLP Holdings, LLC. (TRS) general and administrative expenses 5,764 6,174 17,881 18,059
Total$ 19,285$ 17,743$ 64,546$ 58,215
 ______________________________________        
(1) Includes stock based compensation of $7.2 million and $24.6 million for the three and nine months ended September 30, 2015, respectively and $7.4 million and $20.6 million for the three and nine months ended September 30, 2014, respectively.
 
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 EndedNine Months Ended
 September 30,September 30,
 2015201420152014
   (As restated)  (As restated)
Net income$ 33,229$ 37,313$ 98,349$ 108,605
Losses or (gains) from dispositions of property 22 (146) 89 13
Real estate depreciation 23,867 23,472 71,718 70,205
Funds from operations$ 57,118$ 60,639$ 170,156$ 178,823
Straight-line rent adjustments 13,957 10,889 41,869 30,921
Other depreciation (1) 3,690 3,054 10,867 9,192
Debt issuance costs amortization 3,691 2,020 7,730 6,038
Stock based compensation 4,153 3,536 12,658 8,623
Maintenance CAPEX (2) (382) (641) (2,108) (2,109)
Adjusted funds from operations$ 82,227$ 79,497$ 241,172$ 231,488
Interest, net 30,645 28,755 88,612 85,623
Income tax expense 1,417 665 6,001 4,181
Maintenance CAPEX (2) 382 641 2,108 2,109
Debt issuance costs amortization (3,691) (2,020) (7,730) (6,038)
Adjusted EBITDA$ 110,980$ 107,538$ 330,163$ 317,363
 ___________________________________        
(1) Other depreciation includes both real estate and equipment depreciation from the Company's taxable REIT subsidiaries.
(2) Capital maintenance expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out or no longer cost effective to repair.
 
Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA
Gaming and Leisure Properties, Inc. and Subsidiaries
REAL ESTATE and CORPORATE (REIT)
(in thousands) (unaudited)
         
 Three Months EndedNine Months Ended
 September 30,September 30,
 2015201420152014
   (As restated)  (As restated)
Net income$ 31,626$ 35,035$ 91,777$ 101,427
Losses or (gains) from dispositions of property 10 (150) 56 (150)
Real estate depreciation 23,867 23,472 71,718 70,205
Funds from operations$ 55,503$ 58,357$ 163,551$ 171,482
Straight-line rent adjustments 13,957 10,889 41,869 30,921
Other depreciation (1) 470 1,405
Debt issuance costs amortization 3,691 2,020 7,730 6,038
Stock based compensation 4,153 3,536 12,658 8,623
Maintenance CAPEX
Adjusted funds from operations$ 77,774$ 74,802$ 227,213$ 217,064
Interest, net (2) 28,045 26,155 80,811 77,821
Income tax expense 225 209 1,221 209
Maintenance CAPEX
Debt issuance costs amortization (3,691) (2,020) (7,730) (6,038)
Adjusted EBITDA$ 102,353$ 99,146$ 301,515$ 289,056
 _____________________________________        
(1) Other depreciation includes equipment depreciation from the Company's nontaxable REIT subsidiaries.
(2)   Interest expense, net is net of intercompany interest eliminations of $2.6 million and $7.8 million for both the three and nine months ended September 30, 2015 and 2014, respectively.
 
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 EndedNine Months Ended
 September 30,September 30,
 2015201420152014
Net income$ 1,603$ 2,278$ 6,572$ 7,178
Losses from dispositions of property 12 4 33 163
Real estate depreciation
Funds from operations$ 1,615$ 2,282$ 6,605$ 7,341
Straight-line rent adjustments
Other depreciation (1) 3,220 3,054 9,462 9,192
Debt issuance costs amortization
Stock based compensation
Maintenance CAPEX (2) (382) (641) (2,108) (2,109)
Adjusted funds from operations$ 4,453$ 4,695$ 13,959$ 14,424
Interest, net 2,600 2,600 7,801 7,802
Income tax expense 1,192 456 4,780 3,972
Maintenance CAPEX (2) 382 641 2,108 2,109
Debt issuance costs amortization
Adjusted EBITDA$ 8,627$ 8,392$ 28,648$ 28,307
 ______________________________________        
(1) Other depreciation includes both real estate and equipment depreciation from the Company's taxable 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.