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): 2/24/2022
(Exact name of registrant as specified in its charter)
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(Address of principal executive offices)
(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):
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 24, 2022, Gaming and Leisure Properties, Inc. issued a press release announcing its financial results for the three and twelve months ended December 31, 2021. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 104 | The cover page from the Company's Current Report on Form 8-K, dated February 24, 2022, formatted in Inline XBRL. | |||||||
* * *
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: March 2, 2022 | GAMING AND LEISURE PROPERTIES, INC. | |||||||
| By: | /s/ Peter M. Carlino | |||||||
| Name: | Peter M. Carlino | |||||||
| Title: | Chairman of the Board and Chief Executive Officer | |||||||
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GAMING AND LEISURE PROPERTIES, INC. REPORTS FOURTH QUARTER 2021 RESULTS
Establishes 2021 First Quarter Dividend of $0.69 per Common Share
WYOMISSING, PA — February 24, 2022 — Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) (“GLPI” or the “Company”) today announced financial results for the fourth quarter and year-ended December 31, 2021.
Financial Highlights
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
| (in millions, except per share data) | 2021 Actual | 2020 Actual | 2021 Actual | 2020 Actual | ||||||||||||||||||||||
| Total Revenue | $ | 298.3 | $ | 300.2 | $ | 1,216.4 | $ | 1,153.2 | ||||||||||||||||||
| Income From Operations | $ | 204.4 | $ | 241.5 | $ | 841.8 | $ | 809.3 | ||||||||||||||||||
| Net income | $ | 119.6 | $ | 169.3 | $ | 534.1 | $ | 505.7 | ||||||||||||||||||
FFO (1) (4) | $ | 178.0 | $ | 184.1 | $ | 765.7 | $ | 684.4 | ||||||||||||||||||
AFFO (2) (4) | $ | 205.3 | $ | 193.4 | $ | 812.0 | $ | 757.4 | ||||||||||||||||||
Adjusted EBITDA (3) (4) | $ | 277.2 | $ | 264.6 | $ | 1,096.6 | $ | 1,035.5 | ||||||||||||||||||
Net income, per diluted common share and OP units (4) | $ | 0.50 | $ | 0.74 | $ | 2.26 | $ | 2.30 | ||||||||||||||||||
FFO, per diluted common share and OP units (4) | $ | 0.74 | $ | 0.81 | $ | 3.24 | $ | 3.11 | ||||||||||||||||||
AFFO, per diluted common share and OP units (4) | $ | 0.85 | $ | 0.85 | $ | 3.44 | $ | 3.45 | ||||||||||||||||||
(1) FFO is net income, excluding (gains) or losses from sales of property and real estate depreciation as defined by NAREIT.
(2) AFFO is FFO, excluding stock based compensation expense, the amortization of debt issuance costs, bond premiums and original issuance discounts, other depreciation, amortization of land rights, straight-line rent adjustments, gains on sales of operations, net of tax, losses on debt extinguishment, and provision for credit losses, net, reduced by capital maintenance expenditures.
(3) Adjusted EBITDA is net income, excluding interest, income tax expense, depreciation, (gains) or losses from sales of property and gains on sales of operations net of tax, stock based compensation expense, straight-line rent adjustments, amortization of land rights, losses on debt extinguishment, and provision for credit losses, net.
(4) Metrics are presented assuming full conversion of limited partnership units to common shares and therefore before the income statement impact of non-controlling interests.
Peter Carlino, Chairman and Chief Executive Officer of GLPI, commented, “The fourth quarter of 2021 was an active and productive period for GLPI marked by strong operating results and increased dividends as we continue to leverage our deep knowledge of the gaming sector to drive long-term growth while actively managing our tenant relationships, financing activities and capital structure.
“During the fourth quarter, we added a new marquee tenant to our roster of the nation’s leading regional gaming operators through the completion of new lease and partnership agreements with The Cordish Companies (“Cordish”), a preeminent developer of large-scale experiential real estate projects, casinos, hospitality and entertainment districts. The new leases have strong rent coverage at an accretive cap rate and grow our rental cash flows while further expanding and diversifying our tenant base. Furthermore, our agreement with Cordish aligns both companies for potential future casino development and financing partnerships in other areas of their portfolio of real estate and operating businesses. We closed the
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acquisition of the real property assets of Live! Casino & Hotel Maryland ("Maryland Live!") in a creative manner, by assuming approximately $363 million in debt (which has since been repaid) and issuing approximately $200 million of operating partnership units. The remaining consideration was a mix of cash on hand, proceeds of our December 3.250% senior unsecured notes offering and our recent common stock offering which also partially prefunds the acquisition of the real property assets of Live! Casino & Hotel Philadelphia and Live! Casino Pittsburgh, for which we entered into definitive agreements during the fourth quarter.
“During the quarter, we also completed the sale of the operations of Hollywood Casino Baton Rouge to Casino Queen and entered into an amended and restated master lease with Casino Queen, which added the Baton Rouge facility to their existing lease for the DraftKings at Casino Queen property in East St. Louis. As with our Cordish and Bally's Corporation ("Bally's") arrangement, we have structured a longer-term opportunity with Casino Queen as we now have the right of first refusal for other sale leaseback transactions for up to an incremental $50 million of rent over the next 2 years.
“In the second half of this year, we expect to complete the acquisition of the real estate assets of Bally's Corporation’s casino properties in Rock Island, Illinois and Black Hawk, Colorado subsequent to which we will add these properties to the existing Bally’s master lease. We have positioned GLPI for future growth opportunities with Bally’s by securing the right of first refusal to fund real property acquisition or development project costs associated with all potential future transactions in Michigan, Maryland, Virginia and New York through one or more sale-leaseback or similar transactions for a term of seven years.
“Looking forward, we believe GLPI is well positioned to deliver long-term growth based on our relationships with the nation’s most esteemed regional gaming operators, our rights and options to participate in select tenants’ future growth and expansion initiatives, and our ability to structure and fund transactions at attractive rates. Taken together, these factors support our confidence that the Company is well positioned to extend its long-term record of shareholder value creation.”
Recent Developments
•As of December 31, 2021, all of our tenants were current with respect to their rental obligations, inclusive of $1.3 million in rent collected during the fourth quarter from Casino Queen, which was deferred earlier in 2021 related to COVID-19 closures. All of our properties are currently open to the public.
•On December 17, 2021, the Company completed its previously announced transaction to sell the operations of Hollywood Casino Baton Rouge ("HCBR") to Casino Queen for $28.2 million, resulting in a pre-tax gain of $6.8 million ($7.7 million after-tax loss). GLPI continues to own the real estate and entered into an amended and restated master lease with Casino Queen, which includes their DraftKings at Casino Queen property in East St. Louis and the HCBR facility, for annual cash rent of $21.4 million with a new initial term of 15 years and four 5-year extensions. Rent will be increased annually by 0.5% for the first six years. Beginning with the seventh lease year through the remainder of the lease term, if the Consumer Price Index ("CPI") increases by at least 0.25% for any lease year, annual rent shall be increased by 1.25%; if the CPI increase is less than 0.25%, rent will remain unchanged for such lease year. GLPI will complete the previously announced land side development project at HCBR and the rent under the master lease will be adjusted upon completion to reflect a yield of 8.25% on our project costs. GLPI will also have a right of first refusal with Casino Queen for other sale leaseback transactions for up to an incremental $50 million of rent over the next 2 years. Finally, GLPI received a one-time cash payment of $4 million in satisfaction of the outstanding loan to Casino Queen which was recorded in provision for credit losses, net and has been excluded from AFFO and Adjusted EBITDA.
•On December 6, 2021, GLPI announced it had agreed to acquire the real property assets of Maryland Live!, Live! Casino & Hotel Philadelphia, and Live! Casino Pittsburgh, including applicable long-term ground leases, from affiliates of Cordish for $1.81 billion. The transaction also includes a binding partnership on future Cordish casino developments, as well as potential financing partnerships between GLPI and Cordish in other areas of Cordish's portfolio of real estate and operating businesses. GLPI will enter into a new triple-net master lease with Cordish for Live! Casino & Hotel Philadelphia, and Live! Casino Pittsburgh that will have an initial annual rent of $50.0 million. On December 29, 2021, GLPI completed its acquisition of the real property assets of Maryland Live! and entered into a single asset lease for the property which has an initial annual rent of $75.0 million (the "Maryland Live! Lease"). The master lease and the Maryland Live! Lease will have and have initial terms of 39 years, with a maximum of 60 years inclusive of tenant renewal options. The initial annual cash rents on both leases contain a 1.75% fixed yearly escalator on the entirety of the rent, commencing upon the second anniversary of the leases.
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•After the announcement of the Cordish transactions, GLPI announced a common stock offering and a Senior Note offering to partially finance the transactions. GLPI issued 8,855,000 shares raising net proceeds of approximately $391.5 million and issued $800 million of 10 year senior unsecured notes with a coupon of 3.25%, priced at 99.376% to par. In connection with the closing of the Maryland Live! acquisition, the Company also issued 4.35 million operating partnership units ("OP units") to affiliates of Cordish which are exchangeable into common shares of the Company on a one for one basis.
•On April 13, 2021, GLPI announced an agreement to acquire the real estate assets of Bally's (NYSE: BALY) casino properties in Rock Island, Illinois and Black Hawk, Colorado, for total consideration of $150 million. The parties expect to add the properties to the master lease created in connection with Bally's acquisition of Tropicana Evansville and Dover Downs Hotel & Casino (the "Bally's Master Lease") (described more fully below). These transactions are expected to generate incremental annualized rent of $12.0 million, with a normalized rent coverage of 2.25x in the first calendar year post-acquisition. The transactions are expected to close in the second half of 2022.
•As part of the Rock Island and Black Hawk acquisitions, Bally’s also granted GLPI a right of first refusal to fund the real property acquisition or development project costs associated with all potential future transactions in Michigan, Maryland, Virginia and New York through one or more sale-leaseback or similar transactions for a term of seven years.
•Bally’s also agreed to acquire both GLPI’s non-land real estate assets and Penn National Gaming, Inc.'s ("Penn's") (NASDAQ: PENN) outstanding equity interests in Tropicana Las Vegas Hotel and Casino, Inc. for an aggregate cash acquisition price of $150 million. GLPI will retain ownership of the land and concurrently enter into a 50-year ground lease with Bally's for an initial annual rent of $10.5 million. The ground lease will be supported by a Bally’s corporate guarantee, cross-defaulted with the Bally’s Master Lease. This transaction is expected to close in the second half of 2022.
Dividends
On November 29, 2021, the Company's Board of Directors declared a fourth quarter dividend of $0.67 per share on the Company's common stock. The dividend was paid on December 23, 2021 to shareholders of record on December 9, 2021.
The Company completed a special earnings and profits dividend related to the sale of the operations of HCBR and Hollywood Casino Perryville of $0.24 per share on the Company's common stock. This dividend was paid on January 7, 2022 to shareholders of record on December 27, 2021.
On February 24, 2022, the Company's Board of Directors declared the first quarter 2022 dividend of $0.69 per common share, payable on March 25, 2022 to shareholders of record on March 11, 2022.
Portfolio Update
GLPI's primary business consists of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements. As of December 31, 2021, GLPI's portfolio consisted of interests in 51 gaming and related facilities, including approximately 35 acres of real estate at Tropicana Las Vegas, the real property associated with 34 gaming and related facilities operated by Penn (excluding the Tropicana Las Vegas), the real property associated with 7 gaming and related facilities operated by Caesars Entertainment, Inc. ("Caesars"), the real property associated with 4 gaming and related facilities operated by Boyd Gaming Corporation (NYSE: BYD), the real property associated with 2 gaming and related facilities operated by Bally's, the real property associated with gaming and related facilities at Live! Casino & Hotel Maryland operated by Cordish and the real property associated with 2 gaming and related facilities operated by Casino Queen. These facilities are geographically diversified across 17 states and contain approximately 27.6 million square feet of improvements.
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Conference Call Details
The Company will hold a conference call on February 25, 2022 at 10:00 a.m. (Eastern Time) to discuss its financial results, current business trends and market conditions.
To Participate in the Telephone Conference Call:
Dial in at least five minutes prior to start time.
Domestic: 1-877/407-0784
International: 1-201/689-8560
Conference Call Playback:
Domestic: 1-844/512-2921
International: 1-412/317-6671
Passcode: 13715360
The playback can be accessed through Friday, March 4, 2022.
Webcast
The conference call will be available in the Investor Relations section of the Company's website at www.glpropinc.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary software. A replay of the call will also be available for 90 days thereafter on the Company’s website.
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GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data) (unaudited)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Rental income | $ | 285,461 | $ | 268,325 | $ | 1,106,658 | $ | 1,031,036 | |||||||||||||||
| Interest income from real estate loans | — | — | — | 19,130 | |||||||||||||||||||
| Total income from real estate | 285,461 | 268,325 | 1,106,658 | 1,050,166 | |||||||||||||||||||
| Gaming, food, beverage and other | 12,874 | 31,836 | 109,693 | 102,999 | |||||||||||||||||||
| Total revenues | 298,335 | 300,161 | 1,216,351 | 1,153,165 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Gaming, food, beverage and other | 4,965 | 17,162 | 53,039 | 56,698 | |||||||||||||||||||
| Land rights and ground lease expense | 13,052 | 7,098 | 37,390 | 29,041 | |||||||||||||||||||
| General and administrative | 15,276 | 16,844 | 61,245 | 68,572 | |||||||||||||||||||
| Gains from dispositions | (7,029) | (41,390) | (21,751) | (41,393) | |||||||||||||||||||
| Depreciation | 59,401 | 58,940 | 236,434 | 230,973 | |||||||||||||||||||
| Provision for credit losses, net | 8,226 | — | 8,226 | — | |||||||||||||||||||
| Total operating expenses | 93,891 | 58,654 | 374,583 | 343,891 | |||||||||||||||||||
| Income from operations | 204,444 | 241,507 | 841,768 | 809,274 | |||||||||||||||||||
| Other income (expenses) | |||||||||||||||||||||||
| Interest expense | (71,779) | (70,485) | (283,037) | (282,142) | |||||||||||||||||||
| Interest income | 13 | 78 | 197 | 569 | |||||||||||||||||||
| Insurance gain | 3,500 | — | 3,500 | — | |||||||||||||||||||
| Losses on debt extinguishment | — | — | — | (18,113) | |||||||||||||||||||
| Total other expenses | (68,266) | (70,407) | (279,340) | (299,686) | |||||||||||||||||||
| Income before income taxes | 136,178 | 171,100 | 562,428 | 509,588 | |||||||||||||||||||
| Income tax provision | 16,551 | 1,759 | 28,342 | 3,877 | |||||||||||||||||||
| Net income | $ | 119,627 | $ | 169,341 | $ | 534,086 | $ | 505,711 | |||||||||||||||
| Less: Net income attributable to noncontrolling interest in Operating Partnership | (39) | — | (39) | — | |||||||||||||||||||
| Net income attributable to common shareholders | 119,588 | $ | 169,341 | $ | 534,047 | $ | 505,711 | ||||||||||||||||
Earnings per common share: | |||||||||||||||||||||||
| Basic earnings attributable to common shareholders | $ | 0.50 | $ | 0.75 | $ | 2.27 | $ | 2.31 | |||||||||||||||
| Diluted earnings attributable to common shareholders | $ | 0.50 | $ | 0.74 | $ | 2.26 | $ | 2.30 | |||||||||||||||
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GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Operations
(in thousands) (unaudited)
| TOTAL REVENUES | ADJUSTED EBITDA | ||||||||||||||||||||||
| Three Months Ended December 31, | Three Months Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Real estate | $ | 283,458 | $ | 268,325 | $ | 266,882 | $ | 255,430 | |||||||||||||||
| TRS Segment | 14,877 | 31,836 | 10,301 | 9,122 | |||||||||||||||||||
| Total | $ | 298,335 | $ | 300,161 | $ | 277,183 | $ | 264,552 | |||||||||||||||
| TOTAL REVENUES | ADJUSTED EBITDA | ||||||||||||||||||||||
| Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Real estate | 1,102,653 | 1,050,166 | $ | 1,050,844 | $ | 1,009,708 | |||||||||||||||||
| TRS Segment | 113,698 | 102,999 | $ | 45,787 | $ | 25,748 | |||||||||||||||||
| Total | $ | 1,216,351 | $ | 1,153,165 | $ | 1,096,631 | $ | 1,035,456 | |||||||||||||||
GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
General and Administrative Expense (1)
(in thousands) (unaudited)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Real estate general and administrative expenses | $ | 12,225 | $ | 11,292 | $ | 42,993 | $ | 48,019 | |||||||||||||||
| TRS Segment general and administrative expenses | 3,051 | 5,552 | 18,252 | 20,553 | |||||||||||||||||||
| Total reported general and administrative expenses | 15,276 | 16,844 | 61,245 | 68,572 | |||||||||||||||||||
(1) General and administrative expenses include payroll related expenses, insurance, utilities, professional fees and other administrative costs.
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GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Current Year Revenue Detail
(in thousands) (unaudited)
| Three Months Ended December 31, 2021 | Building base rent | Land base rent | Percentage rent | Total cash rental income | Straight-line rent adjustments | Ground rent in revenue | Other rental revenue | Total rental income | ||||||||||||||||||
| Penn Master Lease | $ | 70,783 | $ | 23,492 | $ | 23,532 | $ | 117,807 | $ | 2,231 | $ | 684 | $ | — | $ | 120,722 | ||||||||||
| Amended Pinnacle Master Lease | 57,936 | 17,814 | 6,695 | 82,445 | (4,836) | 2,077 | — | 79,686 | ||||||||||||||||||
| Penn Meadows Lease | 3,953 | — | 2,262 | 6,215 | 571 | — | 60 | 6,846 | ||||||||||||||||||
| Penn Morgantown Lease | — | 750 | — | 750 | — | — | — | 750 | ||||||||||||||||||
Penn Perryville Lease (1) | 1,457 | 485 | — | 1,942 | 60 | — | — | 2,002 | ||||||||||||||||||
| Caesars Master Lease | 15,628 | 5,933 | — | 21,561 | 2,590 | 378 | — | 24,529 | ||||||||||||||||||
| Lumiere Place Lease | 5,772 | — | — | 5,772 | 544 | — | — | 6,316 | ||||||||||||||||||
| BYD Master Lease | 19,290 | 2,946 | 2,461 | 24,697 | 574 | 551 | — | 25,822 | ||||||||||||||||||
| BYD Belterra Lease | 681 | 474 | 454 | 1,609 | (303) | — | — | 1,306 | ||||||||||||||||||
| Bally's Master Lease | 10,000 | — | — | 10,000 | — | 2,263 | — | 12,263 | ||||||||||||||||||
| Casino Queen Master Lease | 3,366 | — | 1,835 | 5,201 | 18 | — | — | 5,219 | ||||||||||||||||||
| Total | $ | 188,866 | $ | 51,894 | $ | 37,239 | $ | 277,999 | $ | 1,449 | $ | 5,953 | $ | 60 | $ | 285,461 | ||||||||||
| Year Ended December 31, 2021 | Building base rent | Land base rent | Percentage rent | Total cash rental income | Straight-line rent adjustments | Ground rent in revenue | Other rental revenue | Total rental income | ||||||||||||||||||
| Penn Master Lease | $ | 280,338 | $ | 93,969 | $ | 97,814 | 472,121 | $ | 8,926 | $ | 3,013 | $ | 12 | $ | 484,072 | |||||||||||
| Amended Pinnacle Master Lease | 230,230 | 71,256 | 26,779 | 328,265 | (19,346) | 7,430 | — | 316,349 | ||||||||||||||||||
| Penn Meadows Lease | 15,811 | — | 9,046 | 24,857 | 2,288 | — | 195 | 27,340 | ||||||||||||||||||
| Penn Morgantown Lease | — | 3,000 | — | 3,000 | — | — | — | 3,000 | ||||||||||||||||||
Penn Perryville Lease (1) | 2,914 | 971 | — | 3,885 | 120 | — | — | 4,005 | ||||||||||||||||||
| Caesars Master Lease | 62,514 | 23,729 | — | 86,243 | 10,358 | 1,586 | — | 98,187 | ||||||||||||||||||
| Lumiere Place Lease | 22,875 | — | — | 22,875 | 544 | — | — | 23,419 | ||||||||||||||||||
| BYD Master Lease | 76,652 | 11,785 | 9,845 | 98,282 | 2,296 | 1,726 | — | 102,304 | ||||||||||||||||||
| BYD Belterra Lease | 2,709 | 1,894 | 1,817 | 6,420 | (1,211) | — | — | 5,209 | ||||||||||||||||||
| Bally's Master Lease | 23,111 | — | — | 23,111 | — | 4,832 | — | 27,943 | ||||||||||||||||||
| Casino Queen Master Lease | 9,388 | — | 5,424 | 14,812 | 18 | — | — | 14,830 | ||||||||||||||||||
| Total | $ | 726,542 | $ | 206,604 | $ | 150,725 | $ | 1,083,871 | $ | 3,993 | $ | 18,587 | $ | 207 | $ | 1,106,658 | ||||||||||
(1) Rent for the Perryville Lease has been recorded in the TRS segment.
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Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA
Gaming and Leisure Properties, Inc. and Subsidiaries
CONSOLIDATED
(in thousands, except per share and share data) (unaudited)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net income | $ | 119,627 | $ | 169,341 | $ | 534,086 | $ | 505,711 | |||||||||||||||
| (Gains) losses from dispositions of property | (206) | (41,390) | 711 | (41,393) | |||||||||||||||||||
| Real estate depreciation | 58,564 | 56,141 | 230,941 | 220,069 | |||||||||||||||||||
| Funds from operations | $ | 177,985 | $ | 184,092 | $ | 765,738 | $ | 684,387 | |||||||||||||||
| Straight-line rent adjustments | (1,449) | (818) | (3,993) | 4,576 | |||||||||||||||||||
Other depreciation (1) | 837 | 2,799 | 5,493 | 10,904 | |||||||||||||||||||
| Amortization of land rights | 6,445 | 2,961 | 15,616 | 12,022 | |||||||||||||||||||
| Amortization of debt issuance costs, bond premiums and original issuance discounts | 2,519 | 2,471 | 9,929 | 10,503 | |||||||||||||||||||
| Stock based compensation | 3,645 | 3,352 | 16,831 | 20,004 | |||||||||||||||||||
| Loss (gain) on sale of operations, net of tax | 7,730 | — | (3,560) | — | |||||||||||||||||||
| Losses on debt extinguishment | — | — | — | 18,113 | |||||||||||||||||||
| Provision for credit losses, net | 8,226 | — | 8,226 | — | |||||||||||||||||||
Capital maintenance expenditures (2) | (615) | (1,501) | (2,270) | (3,130) | |||||||||||||||||||
| Adjusted funds from operations | $ | 205,323 | $ | 193,356 | $ | 812,010 | $ | 757,379 | |||||||||||||||
| Interest, net | 71,766 | 70,407 | 282,840 | 281,573 | |||||||||||||||||||
| Income tax expense | 1,998 | 1,759 | 9,440 | 3,877 | |||||||||||||||||||
Capital maintenance expenditures (2) | 615 | 1,501 | 2,270 | 3,130 | |||||||||||||||||||
| Amortization of debt issuance costs, bond premiums and original issuance discounts | (2,519) | (2,471) | (9,929) | (10,503) | |||||||||||||||||||
| Adjusted EBITDA | $ | 277,183 | $ | 264,552 | $ | 1,096,631 | $ | 1,035,456 | |||||||||||||||
| Net income, per diluted common shares and OP units | $ | 0.50 | $ | 0.74 | $ | 2.26 | $ | 2.30 | |||||||||||||||
| FFO, per diluted common share and OP units | $ | 0.74 | $ | 0.81 | $ | 3.24 | $ | 3.11 | |||||||||||||||
| AFFO, per diluted common share and OP units | $ | 0.85 | $ | 0.85 | $ | 3.44 | $ | 3.45 | |||||||||||||||
| Weighted average number of common shares and OP units outstanding | |||||||||||||||||||||||
| Diluted common shares | 241,369,486 | 227,842,874 | 236,230,630 | 219,772,725 | |||||||||||||||||||
| OP units | 141,808 | — | 35,743 | — | |||||||||||||||||||
| Diluted common shares and OP units | 241,511,294 | 227,842,874 | 236,266,373 | 219,772,725 | |||||||||||||||||||
(1) Other depreciation includes both real estate and equipment depreciation from the Company's taxable REIT subsidiaries, as well as equipment depreciation from the REIT subsidiaries.
(2) Capital maintenance expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out or no longer cost effective to repair.
8
Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, AFFO to Adjusted EBITDA and
Adjusted EBITDA to Cash Net Operating Income
Gaming and Leisure Properties, Inc. and Subsidiaries
REAL ESTATE and CORPORATE (REIT)
(in thousands) (unaudited)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net income | $ | 123,443 | $ | 168,585 | $ | 514,883 | $ | 508,060 | |||||||||||||||
| (Gains) losses from dispositions of property | (225) | (41,402) | 604 | (41,402) | |||||||||||||||||||
| Real estate depreciation | 58,321 | 56,141 | 230,333 | 220,069 | |||||||||||||||||||
| Funds from operations | $ | 181,539 | $ | 183,324 | $ | 745,820 | $ | 686,727 | |||||||||||||||
| Straight-line rent adjustments | (1,389) | (818) | (3,873) | 4,576 | |||||||||||||||||||
Other depreciation (1) | 470 | 480 | 1,881 | 1,972 | |||||||||||||||||||
| Amortization of land rights | 6,445 | 2,961 | 15,616 | 12,022 | |||||||||||||||||||
| Amortization of debt issuance costs, bond premiums and original issuance discounts and premiums | 2,519 | 2,471 | 9,929 | 10,503 | |||||||||||||||||||
| Stock based compensation | 3,645 | 3,352 | 16,831 | 20,004 | |||||||||||||||||||
| Losses on debt extinguishment | — | — | — | 18,113 | |||||||||||||||||||
| Provision for credit losses, net | 8,226 | — | 8,226 | — | |||||||||||||||||||
Capital maintenance expenditures (2) | — | (31) | (65) | (186) | |||||||||||||||||||
| Adjusted funds from operations | $ | 201,455 | $ | 191,739 | $ | 794,365 | $ | 753,731 | |||||||||||||||
Interest, net (3) | 67,742 | 65,949 | 265,439 | 265,597 | |||||||||||||||||||
| Income tax expense | 204 | 182 | 904 | 697 | |||||||||||||||||||
Capital maintenance expenditures (2) | — | 31 | 65 | 186 | |||||||||||||||||||
| Amortization of debt issuance costs, bond premiums and original issuance discounts and premiums | (2,519) | (2,471) | (9,929) | (10,503) | |||||||||||||||||||
| Adjusted EBITDA | $ | 266,882 | $ | 255,430 | $ | 1,050,844 | $ | 1,009,708 | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Adjusted EBITDA | $ | 266,882 | $ | 255,430 | $ | 1,050,844 | $ | 1,009,708 | |||||||||||||||
| Real estate general and administrative expenses | 12,225 | 11,292 | 42,993 | 48,019 | |||||||||||||||||||
| Stock based compensation | (3,645) | (3,352) | (16,831) | (20,004) | |||||||||||||||||||
REIT Cash net operating income (4) | $ | 275,462 | $ | 263,370 | $ | 1,077,006 | $ | 1,037,723 | |||||||||||||||
(1) Other depreciation includes both real estate and equipment depreciation from the Company's taxable REIT subsidiaries, as well as equipment depreciation from the REIT subsidiaries.
(2) Capital maintenance expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out or no longer cost effective to repair.
(3) Interest, net, is net of intercompany interest eliminations of $4.0 million and $17.4 million for the three months and year ended December 31, 2021, compared to $4.5 million and $16.0 million for the corresponding periods in the prior year.
(4) REIT cash net operating income is rental and other property income, less cash property level expenses. Amounts for the three months and year ended December 31, 2021 exclude cash rents of $1.9 million and $3.9 million, respectively, from the Perryville Lease which was recorded in the TRS segment.
9
Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA
Gaming and Leisure Properties, Inc. and Subsidiaries
TRS Segment
(in thousands) (unaudited)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net income | $ | (3,816) | $ | 756 | $ | 19,203 | $ | (2,349) | |||||||||||||||
| Losses from dispositions of property | 19 | 12 | 107 | 9 | |||||||||||||||||||
| Real estate depreciation | 243 | — | 608 | — | |||||||||||||||||||
| Funds from operations | $ | (3,554) | $ | 768 | $ | 19,918 | $ | (2,340) | |||||||||||||||
Other depreciation (1) | 367 | 2,319 | 3,612 | 8,932 | |||||||||||||||||||
| Loss (gain) on sale of operations, net of tax | 7,730 | — | (3,560) | — | |||||||||||||||||||
| Straight-line rent adjustments | (60) | — | (120) | — | |||||||||||||||||||
Capital maintenance expenditures (2) | (615) | (1,470) | (2,205) | (2,944) | |||||||||||||||||||
| Adjusted funds from operations | $ | 3,868 | $ | 1,617 | $ | 17,645 | $ | 3,648 | |||||||||||||||
| Interest, net | 4,024 | 4,458 | 17,401 | 15,976 | |||||||||||||||||||
| Income tax expense | 1,794 | 1,577 | 8,536 | 3,180 | |||||||||||||||||||
Capital maintenance expenditures (2) | 615 | 1,470 | 2,205 | 2,944 | |||||||||||||||||||
| Adjusted EBITDA | $ | 10,301 | $ | 9,122 | $ | 45,787 | $ | 25,748 | |||||||||||||||
(1) Other depreciation includes both real estate and equipment depreciation from the Company's taxable REIT subsidiaries, as well as equipment depreciation from the REIT subsidiaries.
(2) Capital maintenance expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out or no longer cost effective to repair.
10
Gaming and Leisure Properties, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
| December 31, 2021 | December 31, 2020 | ||||||||||
| Assets | |||||||||||
| Real estate investments, net | $ | 7,777,551 | $ | 7,287,158 | |||||||
| Investment in leases, financing receivables - net | 1,201,670 | — | |||||||||
| Property and equipment, used in operations, net | 12,977 | 80,618 | |||||||||
| Assets held for sale | 77,728 | 61,448 | |||||||||
| Tropicana, Las Vegas Investment | — | 304,831 | |||||||||
| Right-of-use assets and land rights, net | 851,819 | 769,197 | |||||||||
| Cash and cash equivalents | 724,595 | 486,451 | |||||||||
| Other assets | 44,109 | 44,665 | |||||||||
| Total assets | $ | 10,690,449 | $ | 9,034,368 | |||||||
| Liabilities | |||||||||||
| Accounts payable | $ | 779 | $ | 375 | |||||||
| Dividend payable and accrued expenses | 62,764 | 398 | |||||||||
| Accrued interest | 71,810 | 72,285 | |||||||||
| Accrued salaries and wages | 6,798 | 5,849 | |||||||||
| Gaming, property, and other taxes | 502 | 146 | |||||||||
| Income taxes payable | 5,166 | — | |||||||||
| Operating lease liabilities | 183,945 | 152,203 | |||||||||
| Financing lease liabilities | 53,309 | — | |||||||||
| Long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts | 6,552,372 | 5,754,689 | |||||||||
| Deferred rental revenue | 329,068 | 333,061 | |||||||||
| Deferred tax liabilities | — | 359 | |||||||||
| Other liabilities | 33,796 | 39,985 | |||||||||
| Total liabilities | 7,300,309 | 6,359,350 | |||||||||
| Equity | |||||||||||
| 00 | |||||||||||
| Preferred stock ($.01 par value, 50,000,000 shares authorized, no shares issued or outstanding at December 31, 2021 and December 31, 2020) | — | — | |||||||||
| Common stock ($.01 par value, 500,000,000 shares authorized, 247,206,937 shares and 232,452,220 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively) | 2,472 | 2,325 | |||||||||
| Additional paid-in capital | 4,953,943 | 4,284,789 | |||||||||
| Retained deficit | (1,771,402) | (1,612,096) | |||||||||
| Total equity attributable to Gaming and Leisure Properties | 3,185,013 | 2,675,018 | |||||||||
| Noncontrolling interests in GLPI's Operating Partnership (4,348,774 units and no units outstanding at December 31, 2021 and December 31, 2020, respectively) | 205,127 | — | |||||||||
| Total equity | 3,390,140 | 2,675,018 | |||||||||
| Total liabilities and equity | $ | 10,690,449 | $ | 9,034,368 | |||||||
11
Debt Capitalization
The Company had $724.6 million of unrestricted cash and $6.55 billion in total debt at December 31, 2021. The Company’s debt structure as of December 31, 2021 was as follows:
| Years to Maturity | Interest Rate | Balance | |||||||||||||||
| (in thousands) | |||||||||||||||||
Unsecured $1,175 Million Revolver Due May 2023 (1) | 1.4 | —% | $ | — | |||||||||||||
Unsecured Term Loan A-2 Due May 2023 (1) | 1.4 | 1.60% | 424,019 | ||||||||||||||
| Senior Unsecured Notes Due November 2023 | 1.8 | 5.38% | 500,000 | ||||||||||||||
| Senior Unsecured Notes Due September 2024 | 2.7 | 3.35% | 400,000 | ||||||||||||||
| Senior Unsecured Notes Due June 2025 | 3.4 | 5.25% | 850,000 | ||||||||||||||
| Senior Unsecured Notes Due April 2026 | 4.3 | 5.38% | 975,000 | ||||||||||||||
| Senior Unsecured Notes Due June 2028 | 6.4 | 5.75% | 500,000 | ||||||||||||||
| Senior Unsecured Notes Due January 2029 | 7.0 | 5.30% | 750,000 | ||||||||||||||
| Senior Unsecured Notes Due January 2030 | 8.0 | 4.00% | 700,000 | ||||||||||||||
| Senior Unsecured Notes Due January 2031 | 9.0 | 4.00% | 700,000 | ||||||||||||||
| Senior Unsecured Notes due January 2032 | 10.0 | 3.25% | 800,000 | ||||||||||||||
| Other | 4.7 | 4.78% | 725 | ||||||||||||||
| Total long-term debt | 6,599,744 | ||||||||||||||||
Less: unamortized debt issuance costs, bond premiums and original issuance discounts | (47,372) | ||||||||||||||||
Total long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts | $ | 6,552,372 | |||||||||||||||
Weighted average | 5.8 | 4.46 | % | ||||||||||||||
(1) The rate on the term loan facility and revolver is LIBOR plus 1.50%.
(2) Total debt net of cash totaled $5.83 billion at December 31, 2021.
Rating Agency Update - Issue Rating
| Rating Agency | Rating | |||||||
| Standard & Poor's | BBB- | |||||||
| Fitch | BBB- | |||||||
| Moody's | Ba1 | |||||||
12
Properties
| Description | Location | Date Acquired | Tenant/Operator | ||||||||
| PENN Master Lease (19 Properties) | |||||||||||
| Hollywood Casino Lawrenceburg | Lawrenceburg, IN | 11/1/2013 | PENN | ||||||||
| Hollywood Casino Aurora | Aurora, IL | 11/1/2013 | PENN | ||||||||
| Hollywood Casino Joliet | Joliet, IL | 11/1/2013 | PENN | ||||||||
| Argosy Casino Alton | Alton, IL | 11/1/2013 | PENN | ||||||||
| Hollywood Casino Toledo | Toledo, OH | 11/1/2013 | PENN | ||||||||
| Hollywood Casino Columbus | Columbus, OH | 11/1/2013 | PENN | ||||||||
| Hollywood Casino at Charles Town Races | Charles Town, WV | 11/1/2013 | PENN | ||||||||
| Hollywood Casino at Penn National Race Course | Grantville, PA | 11/1/2013 | PENN | ||||||||
| M Resort | Henderson, NV | 11/1/2013 | PENN | ||||||||
| Hollywood Casino Bangor | Bangor, ME | 11/1/2013 | PENN | ||||||||
| Zia Park Casino | Hobbs, NM | 11/1/2013 | PENN | ||||||||
| Hollywood Casino Gulf Coast | Bay St. Louis, MS | 11/1/2013 | PENN | ||||||||
| Argosy Casino Riverside | Riverside, MO | 11/1/2013 | PENN | ||||||||
| Hollywood Casino Tunica | Tunica, MS | 11/1/2013 | PENN | ||||||||
| Boomtown Biloxi | Biloxi, MS | 11/1/2013 | PENN | ||||||||
| Hollywood Casino St. Louis | Maryland Heights, MO | 11/1/2013 | PENN | ||||||||
| Hollywood Gaming Casino at Dayton Raceway | Dayton, OH | 11/1/2013 | PENN | ||||||||
| Hollywood Gaming Casino at Mahoning Valley Race Track | Youngstown, OH | 11/1/2013 | PENN | ||||||||
| 1st Jackpot Casino | Tunica, MS | 5/1/2017 | PENN | ||||||||
| Amended Pinnacle Master Lease (12 Properties) | |||||||||||
| Ameristar Black Hawk | Black Hawk, CO | 4/28/2016 | PENN | ||||||||
| Ameristar East Chicago | East Chicago, IN | 4/28/2016 | PENN | ||||||||
| Ameristar Council Bluffs | Council Bluffs, IA | 4/28/2016 | PENN | ||||||||
| L'Auberge Baton Rouge | Baton Rouge, LA | 4/28/2016 | PENN | ||||||||
| Boomtown Bossier City | Bossier City, LA | 4/28/2016 | PENN | ||||||||
| L'Auberge Lake Charles | Lake Charles, LA | 4/28/2016 | PENN | ||||||||
| Boomtown New Orleans | New Orleans, LA | 4/28/2016 | PENN | ||||||||
| Ameristar Vicksburg | Vicksburg, MS | 4/28/2016 | PENN | ||||||||
| River City Casino & Hotel | St. Louis, MO | 4/28/2016 | PENN | ||||||||
| Jackpot Properties (Cactus Petes and Horseshu) | Jackpot, NV | 4/28/2016 | PENN | ||||||||
| Plainridge Park Casino | Plainridge, MA | 10/15/2018 | PENN | ||||||||
| CZR Master Lease (6 Properties) | |||||||||||
| Tropicana Atlantic City | Atlantic City, NJ | 10/1/2018 | CZR | ||||||||
| Tropicana Laughlin | Laughlin, NV | 10/1/2018 | CZR | ||||||||
| Trop Casino Greenville | Greenville, MS | 10/1/2018 | CZR | ||||||||
| Belle of Baton Rouge | Baton Rouge, LA | 10/1/2018 | CZR | ||||||||
| Isle Casino Hotel Bettendorf | Bettendorf, IA | 12/18/2020 | CZR | ||||||||
| Isle Casino Hotel Waterloo | Waterloo, IA | 12/18/2020 | CZR | ||||||||
| BYD Master Lease (3 Properties) | |||||||||||
| Belterra Casino Resort | Florence, IN | 4/28/2016 | BYD | ||||||||
| Ameristar Kansas City | Kansas City, MO | 4/28/2016 | BYD | ||||||||
| Ameristar St. Charles | St. Charles, MO | 4/28/2016 | BYD | ||||||||
| Bally's Master Lease ( 2 Properties) | |||||||||||
| Tropicana Evansville | Evansville, IN | 06/03/2021 | BALY | ||||||||
| Dover Downs | Dover, DE | 06/03/2021 | BALY | ||||||||
| Casino Queen Master Lease (2 Properties) | |||||||||||
| Casino Queen | East St. Louis, IL | 1/23/2014 | Casino Queen | ||||||||
| Hollywood Casino Baton Rouge | Baton Rouge, LA | 12/17/2021 | Casino Queen | ||||||||
| Single Asset Leases | |||||||||||
| Belterra Park Gaming & Entertainment Center | Cincinnati, OH | 10/15/2018 | BYD | ||||||||
| Lumière Place | St. Louis, MO | 10/1/2018 | CZR | ||||||||
| The Meadows Racetrack and Casino | Washington, PA | 9/9/2016 | PENN | ||||||||
| Hollywood Casino Morgantown | Morgantown, PA | 10/1/2020 | PENN | ||||||||
| Hollywood Casino Perryville | Perryville, MD | 7/1/2021 | PENN | ||||||||
| Live! Hotel & Casino Maryland | Hanover, MD | 12/29/2021 | Cordish | ||||||||
| TRS Segment | |||||||||||
| Tropicana Las Vegas | Las Vegas, NV | 4/16/2020 | PENN | ||||||||
13
Lease Information
| Master Leases | ||||||||||||||||||||
| PENN Master Lease | PENN Amended Pinnacle Master Lease | Caesars Amended and Restated Master Lease | BYD Master Lease | Bally's Master Lease | Casino Queen Master Lease | |||||||||||||||
| Property Count | 19 | 12 | 6 | 3 | 2 | 2 | ||||||||||||||
| Number of States Represented | 10 | 8 | 5 | 2 | 2 | 2 | ||||||||||||||
| Commencement Date | 11/1/2013 | 4/28/2016 | 10/1/2018 | 10/15/2018 | 6/3/2021 | 12/17/2021 | ||||||||||||||
| Lease Expiration Date | 10/31/2033 | 4/30/2031 | 9/30/2038 | 04/30/2026 | 06/02/2036 | 12/17/2036 | ||||||||||||||
| Remaining Renewal Terms | 15 (3x5 years) | 20 (4x5 years) | 20 (4x5 years) | 25 (5x5 years) | 20 (4x5 years) | 20 (4x5 years) | ||||||||||||||
| Corporate Guarantee | Yes | Yes | Yes | No | Yes | Yes | ||||||||||||||
| Master Lease with Cross Collateralization | Yes | Yes | Yes | Yes | Yes | Yes | ||||||||||||||
| Technical Default Landlord Protection | Yes | Yes | Yes | Yes | Yes | Yes | ||||||||||||||
Default Adjusted Revenue to Rent Coverage (1) | 1.1 | 1.2 | 1.2 | 1.4 | 1.35 | 1.4 | ||||||||||||||
| Competitive Radius Landlord Protection | Yes | Yes | Yes | Yes | Yes | Yes | ||||||||||||||
| Escalator Details | ||||||||||||||||||||
| Yearly Base Rent Escalator Maximum | 2% | 2% | (3) | 2% | (4) | (5) | ||||||||||||||
Coverage ratio at September 30, 2021 (2) | 2.16 | 2.17 | 2.43 | 2.72 | N/A | 2.40 | ||||||||||||||
| Minimum Escalator Coverage Governor | 1.8 | 1.8 | N/A | 1.8 | N/A | N/A | ||||||||||||||
| Yearly Anniversary for Realization | November | May | October | May | June | December | ||||||||||||||
| Percentage Rent Reset Details | ||||||||||||||||||||
| Reset Frequency | 5 years | 2 years | N/A | 2 years | N/A | N/A | ||||||||||||||
| Next Reset | November 2023 | May 2022 | N/A | May 2022 | N/A | N/A | ||||||||||||||
(1) In support of our tenants, compliance with this ratio has been waived for all periods impacted by COVID-19. The Bally's Master Lease ratio declines to 1.20 once annual rent reaches $60 million.
(2) Information with respect to our tenants' rent coverage over the trailing twelve months was provided by our tenants as of September 30, 2021. GLPI has not independently verified the accuracy of the tenants' information and therefore makes no representation as to its accuracy.
(3) In the third lease year the annual building base rent became $62.1 million and the annual land component was increased to $23.6 million. Building base rent shall be increased by 1.25% annually in the 5th and 6th lease year, 1.75% in the 7th and 8th lease year, and 2% in the 9th lease year and each year thereafter. On December 18, 2020, the Company and Caesars completed an Exchange Agreement (the "Exchange Agreement") with subsidiaries of Caesars in which Caesars transferred to the Company the real estate assets of Waterloo and Bettendorf in exchange for the transfer by the Company to Caesars of the real property assets of Tropicana Evansville, plus a cash payment of $5.7 million. In connection with the Exchange Agreement, the annual building base rent was increased to $62.5 million and the annual land component was increased to $23.7 million.
(4) If the CPI increase is at least 0.5% for any lease year, then the rent under the Bally's Master Lease shall increase by the greater of 1% of the rent as of the immediately preceding lease year and the CPI increase capped at 2%. If the CPI is less than 0.5% for such lease year, then the rent shall not increase for such lease year.
(5) Rent increases by 0.5% for the first six years. Beginning in the seventh lease year through the remainder of the lease term, if the CPI increases by at least 0.25% for any lease year then annual rent shall be increased by 1.25%, and if the CPI is less than 0.25% then rent will remain unchanged for such lease year.
14
Lease Information
| Single Property Leases | ||||||||||||||||||||
| Belterra Park Lease operated by BYD | PENN-Meadows Lease | Lumière Place Lease operated by CZR | PENN - Morgantown Lease | PENN- Perryville Lease | Live! Casino & Hotel- Maryland | |||||||||||||||
| Commencement Date | 10/15/2018 | 9/9/2016 | 9/29/2020 | 10/1/2020 | 7/1/2021 | 12/29/2021 | ||||||||||||||
| Lease Expiration Date | 04/30/2026 | 9/30/2026 | 10/31/2033 | 10/31/2040 | 6/30/2041 | 12/31/2060 | ||||||||||||||
| Remaining Renewal Terms | 25 (5x5 years) | 19 (3x5years, 1x4 years) | 20 (4x5 years) | 30 (6x5 years) | 15 (3x5 years) | 21 (1x11 years, 1x10 years) | ||||||||||||||
| Corporate Guarantee | No | Yes | Yes | Yes | Yes | No | ||||||||||||||
| Technical Default Landlord Protection | Yes | Yes | Yes | Yes | Yes | Yes | ||||||||||||||
Default Adjusted Revenue to Rent Coverage (1) | 1.4 | 1.2 | 1.2 | N/A | 1.2 | 1.4 | ||||||||||||||
| Competitive Radius Landlord Protection | Yes | Yes | Yes | N/A | Yes | Yes | ||||||||||||||
| Escalator Details | ||||||||||||||||||||
| Yearly Base Rent Escalator Maximum | 2% | 5% (2) | 1.25% (3) | 1.5% (4) | 1.5% (5) | 1.75% (6) | ||||||||||||||
Coverage ratio at September 30, 2021 (7) | 4.54 | 1.47 | 2.85 | N/A | N/A | N/A | ||||||||||||||
| Minimum Escalator Coverage Governor | 1.8 | 2.0 | N/A | N/A | N/A | N/A | ||||||||||||||
| Yearly Anniversary for Realization | May | October | October | October | July | January 2024 | ||||||||||||||
| Percentage Rent Reset Details | ||||||||||||||||||||
| Reset Frequency | 2 years | 2 years | N/A | N/A | N/A | N/A | ||||||||||||||
| Next Reset | May 2022 | October 2022 | N/A | N/A | N/A | N/A | ||||||||||||||
(1) In support of our tenants, compliance with this ratio has been waived for all periods impacted by COVID-19.
(2) Meadows contains an annual escalator for up to 5% of the base rent, if certain rent coverage ratio thresholds are met, which remains at 5% until the earlier of 10 years or the year in which total rent is $31 million, at which point the escalator is reduced to 2%.
(3) For the second through fifth lease years, after which time the annual escalation becomes 1.75% for the 6th and 7th lease years and then 2% for the remaining term of the lease.
(4) Increases by 1.5% on the opening date and for the first three lease years. Commencing on the fourth anniversary of the opening date and for each anniversary thereafter, if the CPI increase is at least 0.5% for any lease year, the rent for such lease year shall increase by 1.25% of rent as of the immediately preceding lease year, and if the CPI increase is less than 0.5% for such lease year, then the rent shall not increase for such lease year.
(5) Building base rent increase for the second through fourth lease years, after which time the annual escalation becomes 1.25% to the extent CPI for the preceding lease year is at least 0.5%.
(6) Effective on the second anniversary of the commencement date of the lease.
(7) Information with respect to our tenants' rent coverage over the trailing twelve months was provided by our tenants as of September 30, 2021. GLPI has not independently verified the accuracy of the tenants' information and therefore makes no representation as to its accuracy.
15
Disclosure Regarding Non-GAAP Financial Measures
FFO, FFO per diluted common share and OP units, AFFO, AFFO per diluted common share and OP units, Adjusted EBITDA and REIT Cash NOI, which are detailed in the reconciliation tables that accompany this release, are used by the Company as performance measures for benchmarking against the Company’s peers and as internal measures of business operating performance, which is used for a bonus metric. These metrics are presented assuming full conversion of limited partnership units to common shares and therefore before the income statement impact of non-controlling interests. The Company believes FFO, FFO per diluted common share and OP units, AFFO, AFFO per diluted common share and OP units, Adjusted EBITDA and REIT Cash NOI provide a meaningful perspective of the underlying operating performance of the Company’s current business. This is especially true since these measures exclude real estate depreciation and we believe that real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time. REIT Cash NOI is rental and other property income, inclusive of rent credits recognized during 2020 in connection with the Tropicana Las Vegas transaction, less cash property level expenses. REIT Cash NOI excludes depreciation, the amortization of land rights, real estate general and administrative expenses, other non-routine costs and the impact of certain generally accepted accounting principles (“GAAP”) adjustments to rental revenue, such as straight-line rent adjustments and non-cash ground lease income and expense. It is management's view that REIT Cash NOI is a performance measure used to evaluate the operating performance of the Company’s real estate operations and provides investors relevant and useful information because it reflects only income and operating expense items that are incurred at the property level and presents them on an unleveraged basis.
FFO, FFO per diluted common share and OP units, AFFO, AFFO per diluted common share and OP units, Adjusted EBITDA and REIT Cash NOI are non-GAAP financial measures that are considered supplemental measures for the real estate industry and a supplement to GAAP measures. NAREIT defines FFO as net income (computed in accordance with GAAP), excluding (gains) or losses from sales of property and real estate depreciation. We have defined AFFO as FFO excluding stock based compensation expense, the amortization of debt issuance costs, bond premiums and original issuance discounts, other depreciation, the amortization of land rights, straight-line rent adjustments, (gains) or losses on sales of operations, net of tax, losses on debt extinguishment, and provision for credit losses, net, reduced by capital maintenance expenditures. We have defined Adjusted EBITDA as net income excluding interest, income tax expense, depreciation, (gains) or losses from sales of property and (gains) or losses on sales of operations, net of tax, stock based compensation expense, straight-line rent adjustments, amortization of land rights, losses on debt extinguishment, and provision for credit losses, net. For financial reporting and debt covenant purposes, the Company includes the amounts of non-cash rents earned in FFO, AFFO, and Adjusted EBITDA. Finally, we have defined REIT Cash NOI as Adjusted EBITDA for the REIT excluding real estate general and administrative expenses and including stock based compensation expense and (gains) or losses from sales of property.
FFO, FFO per diluted common share and OP units, AFFO, AFFO per diluted common share and OP units, Adjusted EBITDA and REIT Cash NOI are not recognized terms under GAAP. These non-GAAP financial measures: (i) do not represent cash flow from operations as defined by GAAP; (ii) should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating, investing and financing activities; and (iii) are not alternatives to cash flow as a measure of liquidity. In addition, these measures should not be viewed as an indication of our ability to fund all of our cash needs, including to make cash distributions to our shareholders, to fund capital improvements, or to make interest payments on our indebtedness. Investors are also cautioned that FFO, FFO per share, AFFO, AFFO per share, Adjusted EBITDA and REIT Cash NOI, as presented, may not be comparable to similarly titled measures reported by other real estate companies, including REITs, due to the fact that not all real estate companies use the same definitions. Our presentation of these measures does not replace the presentation of our financial results in accordance with GAAP.
About Gaming and Leisure Properties
GLPI is engaged in the business of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements, pursuant to which the tenant is responsible for all facility maintenance, insurance required in connection with the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.
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Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including our expectations regarding our receipt of rent payments in future periods, the impact of future transactions, the Company's position to deliver long-term growth and extend its long-term record of shareholder value creation and expected future 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 effect of pandemics such as COVID-19 on GLPI as a result of the impact of such pandemics on the business operations of GLPI’s tenants and their continued ability to pay rent in a timely manner or at all; GLPI’s ability to successfully consummate the announced transactions with Cordish and Bally's, including the ability of the parties to satisfy the various conditions to closing, including receipt of all required regulatory approvals, or other delays or impediments to completing the proposed transactions; the availability of and the ability to identify suitable and attractive acquisition and development opportunities and the ability to acquire and lease those properties on favorable terms; the ability to receive, or delays in obtaining, the regulatory approvals required to own and/or operate its properties, or other delays or impediments to completing acquisitions or projects; GLPI's ability to maintain its status as a REIT; our ability to access capital through debt and equity markets in amounts and at rates and costs acceptable to GLPI; the impact of our substantial indebtedness on our future operations; changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs or to the gaming or lodging industries; and other factors described in GLPI’s Annual Report on Form 10-K for the year ended December 31, 2021, 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 as presented or at all.
Contact
Gaming and Leisure Properties, Inc. Investor Relations
Matthew Demchyk, Chief Investment Officer Joseph Jaffoni, Richard Land, James Leahy at JCIR
610/378-8232 212/835-8500
glpi@jcir.com
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