Gaming and Leisure Properties, Inc.
November 8, 2016

Gaming and Leisure Properties, Inc. Announces Third Quarter 2016 Results

- Establishes 2016 Fourth Quarter Guidance and Revises Full Year Guidance -

- Declares 2016 Fourth Quarter Dividend of $0.60 per Common Share -

WYOMISSING, Pa., Nov. 08, 2016 (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, 2016.

Financial Highlights

  Three Months Ended
 September 30,
(in millions, except per share data) 2016 Actual 2016 Guidance (1) 2015 Actual
Net Revenue $233.3  $233.9  $147.8 
Net Income $89.6  $89.0  $33.2 
Funds From Operations (2) $113.0  $112.6  $57.1 
Adjusted Funds From Operations (3) $158.6  $156.6  $82.2 
Adjusted EBITDA (4) $209.5  $208.1  $111.0 
       
Net income, per diluted common share $0.43  $0.43  $0.28 
             
             

(1) The guidance figures in the tables above present the guidance provided on August 9, 2016, for the three months ended September 30, 2016.

(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 and direct financing lease adjustments, 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 and the amortization of land rights.

Gaming and Leisure Properties, Inc. Chief Executive Officer, Peter M. Carlino commented, "Our diverse, national portfolio of triple-net gaming assets continues to provide steady, predictable cash flows, as evidenced by our third quarter results. This was the first full quarter that we owned the 14 properties acquired from Pinnacle Entertainment, Inc. (NASDAQ:PNK) and we immediately benefited from these additional assets as our increased scale, combined with the ongoing stability of the regional gaming market, led to revenue growth of approximately 58% over the third quarter of 2015. Also during the quarter we added yet another high quality asset to our portfolio with the acquisition of the Meadows Racetrack and Casino ("the Meadows") real estate assets, while PNK purchased the operating assets and leased the Meadows real property assets under a separate triple-net lease. The total cost of the Meadows was $327.8 million which includes all fees and taxes. Post quarter-end, we committed to provide a new unsecured loan of up to $13.0 million to an affiliate of Casino Queen for their purchase of the Lady Luck Casino in Marquette, Iowa. At the time of funding of the new loan, Casino Queen will pay in full the remaining principal of their existing secured loan to the Company in the amount of $26.7 million. Looking ahead, we continue to pursue incremental acquisitions as our balance sheet naturally deleverages further, and while transaction activity in the regional gaming space remains lumpy, we believe there are opportunities for us to utilize our industry knowledge and relationships to create significant additional value. In the meantime, GLPI offers a stable, well supported dividend for investors combined with attractive long-term growth prospects. We remain on track to reach our stated goal of total company leverage of under 5.5 times Adjusted EBITDA, pro forma for a full year impact of both PNK and the Meadows, by year-end."

The Company's third quarter 2016 net income as compared to its guidance was impacted by the following:

In addition, AFFO was impacted by $0.9 million of favorable capital maintenance expenditures for the quarter as compared to guidance.

Portfolio Update

GLPI owns approximately 4,350 acres of land and 15.1 million square feet of building space, which was 100% occupied as of September 30, 2016. At the end of the third quarter of 2016, the Company owned the real estate associated with 36 casino facilities and leases 18 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.) (the "TRS properties").

Capital maintenance expenditures at the TRS properties were $0.5 million for the three months ended September 30, 2016.

Balance Sheet Update

The Company had $25.4 million of unrestricted cash on hand and $4.7 billion in total debt, including $1,125.0 million of debt outstanding under its unsecured credit facility term loans and $165.0 million outstanding under its unsecured credit facility revolver at September 30, 2016. The Company's debt structure at September 30, 2016 was as follows:

  As of September 30, 2016
  Interest Rate Balance
    (in thousands)
Unsecured Term Loan A (1) 2.263% $300,000 
Unsecured Term Loan A-1 (1) 2.273% 825,000 
Unsecured $700 Million Revolver (1) 2.285% 165,000 
Senior Unsecured Notes Due 2018 4.375% 550,000 
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 2026 5.375% 975,000 
Capital Lease 4.780% 1,313 
Total long-term debt   4,716,313 
Less: unamortized debt issuance costs   (54,630)
Total long-term debt, net of unamortized debt issuance costs   4,661,683 
Less: current maturities of long-term debt   (106)
Long-term debt, net of unamortized debt issuance costs and current maturities   $4,661,577 
       
       

(1) The rate on the term loan facilities and revolver is Libor plus 1.75%. The Company's revolver and $300.0 million term loan credit facility mature on October 28, 2018 and the incremental term loan of $825.0 million matures on April 28, 2021.

Financing
Through September 30, 2016, GLPI sold approximately 1.3 million shares of its common stock at an average price of  $35.00 per share under its at the market ("ATM") program, which generated gross proceeds of approximately $46.3 million (net proceeds of approximately $45.7 million). The Company used the net proceeds from ATM Program to partially fund its acquisition of the Meadow's real estate assets.

Dividends

On August 3, 2016, the Company's Board of Directors declared the third quarter dividend. Shareholders of record on September 12, 2016 received $0.60 per common share, which was paid on September 23, 2016. On November 4, 2016, the Company declared its fourth quarter 2016 dividend of $0.60 per common share, payable on December 16, 2016 to shareholders of record on December 5, 2016.

Guidance

The table below sets forth current guidance targets for financial results for the 2016 fourth quarter and full year, based on the following assumptions: 

(in millions) Fourth Quarter Full Year
Cash Rental Receipts    
PENN $110.8  $442.7 
PNK $101.4  $264.1 
Casino Queen $3.6  $14.2 
PENN non-assigned land lease $(0.7) $(2.9)
Total Cash Rental Receipts $215.1  $718.1 
     
Non-Cash Adjustments    
Straight-line rent $(16.2) $(58.7)
PNK direct financing lease $(18.0) $(48.5)
Property taxes paid by tenants $20.8  $68.7 
PNK land lease paid by tenant $2.2  $6.0 
Total Rent as Reported $203.9  $685.6 
         
  Three Months Ending December 31, Full Year Ending December 31,
(in millions, except per share data) 2016 Guidance 2015 Actual Revised 2016 Guidance Prior 2016 Guidance 2015 Actual
Net Revenue $238.6  $128.7  $828.1  $822.0  $575.1 
Net Income $91.2  $29.8  $286.8  $283.8  $128.1 
Funds From Operations (1) $116.1  $53.7  $382.5  $378.4  $223.8 
Adjusted Funds From Operations (2) $162.0  $80.6  $539.2  $531.8  $321.8 
Adjusted EBITDA (3) $215.5  $109.9  $718.7  $709.6  $440.0 
           
Net income, per diluted common share $0.44  $0.25  $1.59  $1.57  $1.08 
                     
                     

(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 and direct financing lease adjustments, 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 and the amortization of land rights.

Conference Call Details

The Company will hold a conference call on November 8, 2016 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: 1-877-407-0784
International: 1-201-689-8560

Conference Call Playback:

Domestic: 1-877-870-5176
International: 1-858-384-5517
Passcode: 13647100
The playback can be accessed through November 15, 2016.

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 and direct financing lease 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, straight-line rent adjustments, direct financing lease adjustments and the amortization of land rights.

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, including statements regarding our financial outlook for the fourth quarter of 2016 and the full 2016 fiscal year and our expectations regarding future acquisitions 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 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; 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, 2015, 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. 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 (203) 682-8211.

Contact

Investor Relations — Gaming and Leisure Properties, Inc. 

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 Ended
 September 30,
 Nine Months Ended
 September 30,
 2016 2015 2016 2015
Revenues       
Rental income$160,664  $97,754  $402,980  $293,597 
Income from direct financing lease18,155    30,786   
Real estate taxes paid by tenants20,438  13,778  47,938  40,071 
Total rental revenue and income from direct financing lease199,257  111,532  481,704  333,668 
Gaming32,770  34,915  103,692  108,425 
Food, beverage and other2,613  2,794  8,221  8,464 
Total revenues234,640  149,241  593,617  450,557 
Less promotional allowances(1,365) (1,449) (4,161) (4,193)
Net revenues233,275  147,792  589,456  446,364 
Operating expenses       
Gaming18,080  19,357  56,119  58,644 
Food, beverage and other2,037  2,128  6,174  6,489 
Real estate taxes20,866  14,174  49,148  41,138 
General and administrative21,821  19,285  64,988  64,546 
Depreciation27,165  27,557  81,267  82,585 
Total operating expenses89,969  82,501  257,696  253,402 
Income from operations143,306  65,291  331,760  192,962 
        
Other income (expenses)       
Interest expense(52,880) (31,226) (132,217) (90,373)
Interest income481  581  1,652  1,761 
Total other expenses(52,399) (30,645) (130,565) (88,612)
        
Income from operations before income taxes90,907  34,646  201,195  104,350 
Income tax expense1,307  1,417  5,582  6,001 
Net income$89,600  $33,229  $195,613  $98,349 
        
Earnings per common share:       
Basic earnings per common share$0.43  $0.29  $1.15  $0.86 
Diluted earnings per common share$0.43  $0.28  $1.14  $0.83 
                


GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Operations
(in thousands) (unaudited)
    
 NET REVENUES ADJUSTED EBITDA
 Three Months Ended
 September 30,
 Three Months Ended
 September 30,
 2016 2015 2016 2015
Real estate$199,257  $111,532  $201,600  $102,353 
GLP Holdings, LLC. (TRS)34,018  36,260  7,899  8,627 
Total$233,275  $147,792  $209,499  $110,980 
        
 NET REVENUES ADJUSTED EBITDA
 Nine Months Ended
 September 30,
 Nine Months Ended
 September 30,
 2016 2015 2016 2015
Real estate$481,704  $333,668  $475,466  $301,515 
GLP Holdings, LLC. (TRS)107,752  112,696  27,715  28,648 
Total$589,456  $446,364  $503,181  $330,163 
                

 

GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
General and Administrative Expenses
(in thousands) (unaudited)
    
 Three Months Ended
 September 30,
 Nine Months Ended
 September 30,
 2016 2015 2016 2015
Real estate general and administrative expenses (1) (2)$16,203  $13,521  $48,393  $46,665 
GLP Holdings, LLC. (TRS) general and administrative expenses  (2)5,618  5,764  16,595  17,881 
Total$21,821  $19,285  $64,988  $64,546 
                
                

(1) Includes stock based compensation of $5.3 million and $19.6 million for the three and nine months ended September 30, 2016, respectively, and $7.2 million and $24.6 million for the three and nine months ended September 30, 2015, respectively.

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

Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA
Gaming and Leisure Properties, Inc. and Subsidiaries
CONSOLIDATED
(in thousands) (unaudited)
    
 Three Months Ended
 September 30,
 Nine Months Ended
 September 30,
 2016 2015 2016 2015
Net income$89,600  $33,229  $195,613  $98,349 
(Gains) or losses from dispositions of property(445) 22  (460) 89 
Real estate depreciation23,802  23,867  71,164  71,718 
Funds from operations$112,957  $57,118  $266,317  $170,156 
Straight-line rent adjustments14,517  13,957  42,429  41,869 
Direct financing lease adjustments18,004    30,529   
Other depreciation (1)3,363  3,690  10,103  10,867 
Amortization of land rights2,311    3,852   
Debt issuance costs amortization3,257  3,691  11,889  7,730 
Stock based compensation4,641  4,153  13,804  12,658 
Maintenance CAPEX (2)(496) (382) (1,693) (2,108)
Adjusted funds from operations$158,554  $82,227  $377,230  $241,172 
Interest, net52,399  30,645  130,565  88,612 
Income tax expense1,307  1,417  5,582  6,001 
Maintenance CAPEX (2)496  382  1,693  2,108 
Debt issuance costs amortization(3,257) (3,691) (11,889) (7,730)
Adjusted EBITDA$209,499  $110,980  $503,181  $330,163 
                
                

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

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

Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA
Gaming and Leisure Properties, Inc. and Subsidiaries
REAL ESTATE and CORPORATE (REIT)
(in thousands) (unaudited)
    
 Three Months Ended
 September 30,
 Nine Months Ended
 September 30,
 2016 2015 2016 2015
Net income$88,261  $31,626  $189,016  $91,777 
(Gains) or losses from dispositions of property(471) 10  (471) 56 
Real estate depreciation23,802  23,867  71,164  71,718 
Funds from operations$111,592  $55,503  $259,709  $163,551 
Straight-line rent adjustments14,517  13,957  42,429  41,869 
Direct financing lease adjustments18,004    30,529   
Other depreciation (1)526  470  1,573  1,405 
Amortization of land rights2,311    3,852   
Debt issuance costs amortization3,257  3,691  11,889  7,730 
Stock based compensation4,641  4,153  13,804  12,658 
Maintenance CAPEX       
Adjusted funds from operations$154,848  $77,774  $363,785  $227,213 
Interest, net (2)49,799  28,045  122,764  80,811 
Income tax expense210  225  806  1,221 
Maintenance CAPEX       
Debt issuance costs amortization(3,257) (3,691) (11,889) (7,730)
Adjusted EBITDA$201,600  $102,353  $475,466  $301,515 
                
                

(1) Other depreciation includes equipment depreciation from the Company's 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, 2016 and 2015, 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 Ended
 September 30,
 Nine Months Ended
 September 30,
 2016 2015 2016 2015
Net income$1,339  $1,603  $6,597  $6,572 
Losses from dispositions of property26  12  11  33 
Real estate depreciation       
Funds from operations$1,365  $1,615  $6,608  $6,605 
Straight-line rent adjustments       
Direct financing lease adjustments       
Other depreciation (1)2,837  3,220  8,530  9,462 
Amortization of land rights       
Debt issuance costs amortization       
Stock based compensation       
Maintenance CAPEX (2)(496) (382) (1,693) (2,108)
Adjusted funds from operations$3,706  $4,453  $13,445  $13,959 
Interest, net2,600  2,600  7,801  7,801 
Income tax expense1,097  1,192  4,776  4,780 
Maintenance CAPEX (2)496  382  1,693  2,108 
Debt issuance costs amortization       
Adjusted EBITDA$7,899  $8,627  $27,715  $28,648 
                
                

(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.