May 20, 2022

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Gaming and Leisure Properties, Inc. Reports First Quarter 2022 Results

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WYOMISSING, Pa., April 28, 2022 (GLOBE NEWSWIRE) — Gaming and Leisure Properties, Inc. GLPI (“GLPI” or the “Company”) today announced financial results for the quarter ended March 31, 2022.

Financial Highlights

    Three Months Ended March 31,
(in millions, except per share data)     2022     2021
Total Revenue   $ 315.0   $ 301.5
Income from Operations   $ 199.8   $ 200.1
Net Income   $ 121.7   $ 127.2
FFO (1) (4)   $ 180.3   $ 183.6
AFFO (2) (4)   $ 218.6   $ 195.7
Adjusted EBITDA (3) (4)   $ 293.3   $ 266.6
Net income, per diluted common share and OP units(4)   $ 0.48   $ 0.54
FFO, per diluted common share and OP units (4)   $ 0.71   $ 0.79
AFFO, per diluted common share and OP units (4)   $ 0.86   $ 0.84

___________________________________

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

(2)  Adjusted Funds From Operations (“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, accretion on investment in leases, financing receivables, non-cash adjustments to financing lease liabilities, 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 sale of operations net of tax, stock based compensation expense, straight-line rent adjustments, amortization of land rights, accretion on investment in leases, financing receivables, non-cash adjustments to financing lease liabilities, 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, “Our solid first quarter financial results reflect our ongoing initiatives to expand the Company’s high-quality, top-performing regional gaming portfolio managed by the industry’s leading operators.

“In this regard, during Q1 we completed the acquisition of the land and real estate assets of Live! Casino & Hotel Philadelphia and Live! Casino Pittsburgh from The Cordish Companies (“Cordish”), one of the nation’s most capable developers of large-scale experiential real estate projects, casinos, hospitality and entertainment districts. This transaction followed the new lease and partnership agreements completed with Cordish in the 2021 fourth quarter whereby GLPI acquired the land and real estate assets of Live! Casino & Hotel Maryland and created a new partnership with Cordish for future casino developments and potential financing arrangements between GLPI and Cordish in other areas of Cordish’s portfolio of real estate and operating businesses.

“Cordish’s first-class assets lead their respective markets and the quality, excitement and entertainment delivered by their Maryland, Philadelphia and Pittsburgh properties exemplify the power of their Live! brand.   From a financial perspective, our new lease agreements with Cordish have strong rent coverage at an accretive cap rate while further expanding and diversifying our tenant base. We are delighted to add another marquee tenant to GLPI’s roster of blue-chip regional gaming operators and to benefit from the rental cash flows from these agreements.

“We began the second quarter with the completion of the previously announced acquisition from Bally’s Corporation (“Bally’s”) of the land and real estate assets of their three casinos in Black Hawk, CO as well as Bally’s Quad Cities Casino & Hotel in Rock Island, IL, and added these properties to the existing Bally’s master lease. We are pleased to broaden our relationship with Bally’s and expand our presence in Black Hawk, one of the nation’s fastest growing regional gaming markets.

“We have also positioned GLPI for future growth opportunities with Cordish with our agreement to co-invest in all new gaming developments in which Cordish engages over a 7 year period beginning with the closing date of the PA properties. In addition, we have secured the right of first refusal to fund real property acquisition or development project costs associated with potential transactions in Michigan, Maryland, Virginia and New York through one or more sale-leaseback or similar transactions for a term of seven years with Bally’s and have also completed a right of first refusal arrangement with Casino Queen.

“Looking forward, GLPI is well positioned to drive further growth based on our growing broad portfolio of blue-chip regional gaming assets, close relationships with our tenants, our rights and options to participate in select tenants’ future growth and expansion initiatives, and our ability to structure and finance transactions that we believe will be accretive to rental cash flows. We believe these factors will support our ability to increase our cash dividends and further our goal of enhancing long-term shareholder value.”

Recent Developments

  • On April 1, 2022, GLPI completed its previously announced acquisition from Bally’s BALY of the land and real estate assets of Bally’s three Black Hawk casinos in Black Hawk, Colorado, and Bally’s Quad Cities Casino & Hotel in Rock Island, Illinois, for total consideration of $150 million. These properties were added to the Bally’s Master Lease, with the rent for the Bally’s Master Lease increased by $12.0 million on an annual basis. The rent is subject to contractual escalations based on the Consumer Price Index (“CPI”), with a 1% floor and a 2% ceiling, subject to the CPI meeting a 0.5% threshold.
  • Bally’s agreed to acquire both GLPI’s non-land real estate assets and Penn National Gaming, Inc.’s PENN (“Penn”) outstanding equity interests in Tropicana Las Vegas Hotel and Casino, Inc. (the “Tropicana Las Vegas”) 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 and cross-defaulted with the Bally’s Master Lease. The transaction is expected to close in the second half of 2022.
  • On March 1, 2022, GLPI completed the acquisition of the land and real estate assets of Live! Casino & Hotel Philadelphia (“Live! Philadelphia”) and Live! Casino Pittsburgh (“Live! Pittsburgh”) from Cordish for total consideration of approximately $689 million (inclusive of transaction costs). The Company funded the acquisition by assuming approximately $423 million in debt (which the Company repaid), and issuing approximately $137 million of operating partnership units (3.0 million total units), with the balance paid from cash on hand, which was in part generated by its December issuance of senior unsecured notes and common stock.
  • Simultaneous with the March 1, 2022 closing of the above transaction, the Company entered into a master lease with Cordish (the “Pennsylvania Live! Master Lease”), pursuant to which Cordish will continue its ownership, control and management of the operations of Live! Philadelphia and Live! Pittsburgh. The Pennsylvania Live! Master Lease has an initial annual rent of $50.0 million and an initial term of 39 years, with a maximum term of 60 years, inclusive of tenant renewal options, as well as a fixed annual lease escalation of 1.75% on the entirety of rent commencing on the lease’s second anniversary.
  • On December 29, 2021, the Company completed the acquisition of the land and real estate assets of Live! Casino & Hotel Maryland (“Live! Maryland”) from Cordish for total consideration of $1.16 billion (inclusive of transaction costs). Cordish and the Company entered into a lease with Cordish (the “Maryland Live! Lease”), pursuant to which Cordish will continue its ownership, control and management of the operations of Live! Maryland. The Maryland Live! Lease has an initial annual rent of $75 million and an initial term of 39 years, with a maximum term of 60 years, inclusive of tenant renewal options, as well as a fixed annual lease escalation of 1.75% on the entirety of rent commencing on the leases’ second anniversary. The transaction also includes a 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 funded the transaction by assuming $363 million in debt, which was repaid, and issuing $205 million of operating partnership units (4.35 million total units), with the balance of the consideration from cash on hand, which in part was generated by GLPI’s December issuance of senior unsecured notes and common stock.

Dividends  

On February 24, 2022, the Company’s Board of Directors declared the first quarter dividend of $0.69 per common share, which was paid on March 25, 2022 to shareholders of record on March 11, 2022.

The Company also completed a special earnings and profits dividend of $0.24 per share on the Company’s common stock related to its sale of the operations of Hollywood Casino Baton Rouge and Hollywood Casino Perryville. This dividend was paid on January 7, 2022, to shareholders of record on December 27, 2021.

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 March 31, 2022, GLPI’s portfolio consisted of interests in 53 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. CZR (“Caesars”), the real property associated with 4 gaming and related facilities operated by Boyd Gaming Corporation BYD (“Boyd”), the real property associated with 2 gaming and related facilities operated by Bally’s, the real property associated with 3 gaming and related facilities 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 28.5 million square feet of improvements.

Conference Call Details

The Company will hold a conference call on April 29, 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: 13729075
The playback can be accessed through Friday, May 6, 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.

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

  Three Months Ended March 31,  
    2022       2021    
Revenues        
Rental income $ 287,777     $ 263,842    
Interest income from investment in leases, financing receivables   27,189          
Total income from real estate   314,966       263,842    
Gaming, food, beverage and other         37,701    
Total revenues   314,966       301,543    
         
Operating expenses        
Gaming, food, beverage and other         19,926    
Land rights and ground lease expense   13,704       6,733    
General and administrative   15,732       16,082    
(Gains) or losses from dispositions of property   (51 )        
Depreciation   59,129       58,701    
Provision for credit losses, net   26,656          
Total operating expenses   115,170       101,442    
Income from operations   199,796       200,101    
         
Other income (expenses)        
Interest expense   (77,922 )     (70,413 )  
Interest income   22       124    
Total other expenses   (77,900 )     (70,289 )  
         
Income before income taxes   121,896       129,812    
Income tax expense   204       2,628    
Net income $ 121,692     $ 127,184    
Less: Net income attributable to noncontrolling interest in Operating Partnership   (2,424 )        
Net income attributable to common shareholders $ 119,268     $ 127,184    
         
Earnings per common share:        
Basic earnings attributable to common shareholders $ 0.48     $ 0.55    
Diluted earnings attributable to common shareholders $         0.48     $         0.54    

GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIES
Current Year Revenue Detail
(in thousands) (unaudited)

Three Months Ended March 31, 2022 Building
base rent
Land base
rent
Percentage
rent
Total cash
income
Straight-line rent adjustments Ground rent in revenue Accretion on financing leases Other rental revenue Total income from real estate
Penn Master Lease $ 71,249 $ 23,492 $ 23,637 $ 118,378 $ 2,232   $ 678 $ $ $ 121,288
Amended Pinnacle Master Lease   57,936   17,814   6,695   82,445   (4,837 )   1,872       79,480
Penn Meadows Lease   3,953     2,261   6,214   572         134   6,920
Penn Morgantown Lease     762     762             762
Penn Perryville Lease   1,457   486     1,943   60           2,003
Caesars Master Lease   15,629   5,932     21,561   2,589     378       24,528
Lumiere Place Lease   5,772       5,772   544           6,316
BYD Master Lease   19,289   2,946   2,461   24,696   574     432       25,702
BYD Belterra Lease   682   473   454   1,609   (303 )         1,306
Bally’s Master Lease   10,000       10,000       2,178       12,178
Maryland Live! Lease   18,750       18,750       2,094   3,059     23,903
Pennsylvania Live! Master Lease   4,167       4,167       106   666     4,939
Casino Queen Master Lease   5,529       5,529   112           5,641
Total $ 214,413 $ 51,905 $ 35,508 $ 301,826 $ 1,543   $ 7,738 $ 3,725 $ 134 $ 314,966

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 March 31,
    2022       2021  
Net income $ 121,692     $ 127,184  
(Gains) or losses from dispositions of property   (51 )      
Real estate depreciation   58,659       56,389  
Funds from operations $ 180,300     $ 183,573  
Straight-line rent adjustments   (1,543 )     (828 )
Other depreciation (1)   470       2,312  
Provision for credit losses, net   26,656        
Amortization of land rights   5,990       2,843  
Amortization of debt issuance costs, bond premiums and original issuance discounts   2,771       2,470  
Stock based compensation   7,600       5,788  
Accretion on investment in leases, financing receivables   (3,725 )      
Non-cash adjustment to financing lease liabilities   124        
Capital maintenance expenditures (2)   (15 )     (438 )
Adjusted funds from operations $ 218,628     $ 195,720  
Interest, net (3)   77,230     $ 70,289  
Income tax expense   204     $ 2,628  
Capital maintenance expenditures (2)   15     $ 438  
Amortization of debt issuance costs, bond premiums and original issuance discounts   (2,771 )   $ (2,470 )
Adjusted EBITDA $ 293,306     $ 266,605  
       
Net income, per diluted common share and OP units $ 0.48     $ 0.54  
FFO, per diluted common share and OP units $ 0.71     $ 0.79  
AFFO, per diluted common share and OP units $ 0.86     $ 0.84  
       
Weighted average number of common shares OP units outstanding      
Diluted common shares   248,041,490       233,465,063  
OP units   5,388,276        
Diluted common shares and OP units   253,429,766       233,465,063  

____________________________

(1) Other depreciation includes both real estate and equipment depreciation from the Company’s operations at Hollywood Casino Perryville and Hollywood Casino Baton Rouge which were sold in 2021, 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) Current year amount excludes non-cash interest expense gross up related to the ground lease for the Live! Maryland property.

Reconciliation of Cash Net Operating Income
Gaming and Leisure Properties, Inc. and Subsidiaries
CONSOLIDATED
(in thousands, except per share and share data) (unaudited)

  Three Months Ended
March 31, 2022
Adjusted EBITDA $ 293,306  
General and administrative expenses   15,732  
Stock based compensation   (7,600 )
Cash net operating income (1) $ 301,438  

____________________________

(1) Cash net operating income is rental and other property income less cash property level expenses.

Gaming and Leisure Properties, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)

  March 31, 2022   December 31, 2021
Assets      
Real estate investments, net $ 7,721,298     $ 7,777,551  
Investment in leases, financing receivables, net   1,867,721       1,201,670  
Assets held for sale   77,728       77,728  
Right-of-use assets and land rights, net   845,316       851,819  
Cash and cash equivalents   156,020       724,595  
Other assets   52,397       57,086  
Total assets $ 10,720,480     $ 10,690,449  
       
Liabilities      
Accounts payable, dividend payable and accrued expenses $ 3,625     $ 63,543  
Accrued interest   89,189       71,810  
Accrued salaries and wages   1,990       6,798  
Operating lease liabilities   183,410       183,945  
Financing lease liabilities   53,433       53,309  
Long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts   6,555,077       6,552,372  
Deferred rental revenue   327,525       329,068  
Other liabilities   37,746       39,464  
Total liabilities   7,251,995       7,300,309  
       
Equity      
Preferred stock ($.01 par value, 50,000,000 shares authorized, no shares issued or outstanding at March 31, 2022 and December 31, 2021)          
Common stock ($.01 par value, 500,000,000 shares authorized, 247,544,343 and 247,206,937 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively)   2,475       2,472  
Additional paid-in capital   4,949,638       4,953,943  
Accumulated deficit   (1,823,139 )     (1,771,402 )
Total equity attributable to Gaming and Leisure Properties   3,128,974       3,185,013  
Noncontrolling interests in GLPI’s Operating Partnership (7,366,683 units and 4,348,774 units outstanding at March 31, 2022 and December 31, 2021, respectively)   339,511       205,127  
Total equity   3,468,485       3,390,140  
Total liabilities and equity $ 10,720,480     $ 10,690,449  

Debt Capitalization

The Company had net debt of $6.40 billion consisting of $156.0 million of unrestricted cash and $6.56 billion in total debt at March 31, 2022.  The Company’s debt structure as of March 31, 2022 was as follows:

       
    Years to Maturity Interest Rate   Balance
          (in thousands)
Unsecured $1,175 Million Revolver Due May 2023 (1)   1.1 %    
Unsecured Term Loan A-2 Due May 2023 (1)   1.1 1.95 %   424,019  
Senior Unsecured Notes Due November 2023   1.6 5.38 %   500,000  
Senior Unsecured Notes Due September 2024   2.4 3.35 %   400,000  
Senior Unsecured Notes Due June 2025   3.2 5.25 %   850,000  
Senior Unsecured Notes Due April 2026   4.0 5.38 %   975,000  
Senior Unsecured Notes Due June 2028   6.2 5.75 %   500,000  
Senior Unsecured Notes Due January 2029   6.8 5.30 %   750,000  
Senior Unsecured Notes Due January 2030   7.8 4.00 %   700,000  
Senior Unsecured Notes Due January 2031   8.8 4.00 %   700,000  
Senior Unsecured Notes Due January 2032   9.8 3.25 %   800,000  
Other   4.4 4.78 %   690  
Total long-term debt         6,599,709  
Less: unamortized debt issuance costs, bond premiums and original issuance discounts         (44,632 )
Total long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts         6,555,077  
Weighted average   5.5 4.49 %    
           

________________________________

(1)  The rate on the term loan facility and revolver is LIBOR plus 1.50%.

Rating Agency – Issue Rating

Rating Agency   Rating
Standard & Poor’s   BBB-
Fitch   BBB-
Moody’s   Ba1

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 1/23/2014 Casino Queen
Hollywood Casino Baton Rouge Baton Rouge, LA 12/17/2021 Casino Queen
Pennsylvania Live! Master Lease (2 Properties)      
Live! Casino & Hotel Philadelphia Philadelphia, PA 3/1/2022 Cordish
Live! Casino Pittsburgh Greensburg, PA 3/1/2022 Cordish
       
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! Casino Maryland Hanover, MD 12/29/2021 Cordish
       
TRS Segment      
Tropicana Las Vegas Las Vegas, NV 4/16/2020 PENN

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 Pennsylvania Live! Master Lease operated by Cordish
Property Count 19 12 6 3 2   2 2
Number of States Represented 10 8 5 2 2   2 1
Commencement Date 11/1/2013 4/28/2016 10/1/2018 10/15/2018 6/3/2021 12/17/2021 3/1/2022
Lease Expiration Date 10/31/2033 4/30/2031 9/30/2038 04/30/2026 06/02/2036 12/17/2036 3/31/2061
Remaining Renewal Terms 15 (3×5 years) 20 (4×5 years) 20 (4×5 years) 25 (5×5 years) 20 (4×5 years) 20 (4X5 years) 21 (1 x 11 years,
1 x 10 years)
Corporate Guarantee Yes Yes Yes No Yes Yes No
Master Lease with Cross Collateralization Yes Yes Yes Yes Yes Yes Yes
Technical Default Landlord Protection Yes Yes Yes Yes Yes Yes Yes
Default Adjusted Revenue to Rent Coverage 1.1 1.2 1.2 1.4 1.35% (1) 1.4 1.4
Competitive Radius Landlord Protection Yes Yes Yes Yes Yes Yes Yes
Escalator Details              
Yearly Base Rent Escalator Maximum 2% 2% (3) 2% (4)   (5) 1.75% (6)
Coverage ratio at December 31, 2021 (2) 2.26 2.29 2.69 2.93 N/A 3.12 N/A
Minimum Escalator Coverage Governor 1.8 1.8 N/A 1.8 N/A N/A N/A
Yearly Anniversary for Realization November May October May June December March 2024
Percentage Rent Reset Details              
Reset Frequency 5 years 2 years N/A 2 years N/A N/A N/A
Next Reset November 2023 May 2022 N/A May 2022 N/A N/A N/A
(1)   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 December 31, 2021. Casino Queen Master Lease is calculated on a proforma basis for the addition of Hollywood Casino Baton Rouge. 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.
     
(6)   Effective on the second anniversary of the commencement date of the lease.

Lease Information

    Single Property Leases      
  Belterra Park Lease operated by BYD Meadows Lease operated by PENN Lumière Place Lease operated by CZR Morgantown Lease operated by PENN Perryville Lease operated by PENN Live! Casino & Hotel Maryland operated by Cordish
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 (5×5 years) 19 (3x5years, 1×4 years) 20 (4×5 years) 30 (6×5 years) 15 (3×5 years) 21 (1 x 11 years, 1 x 10 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 1.4 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% (1) 1.25% (2) 1.5% (3) 1.5% (4) 1.75% (5)
Coverage ratio at December 31, 2021 (6) 4.21 1.77 2.93 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)   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%.
     
(2)   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.
     
(3)   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.
     
(4)   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%.
     
(5)   Effective on the second anniversary of the commencement date of the lease.
     
(6)   Information with respect to our tenants’ rent coverage over the trailing twelve months was provided by our tenants as of December 31, 2021. GLPI has not independently verified the accuracy of the tenants’ information and therefore makes no representation as to its accuracy.

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 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 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. Cash NOI is rental and other property income, less cash property level expenses. 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 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 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 dispositions 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, accretion on investment in leases, financing receivables, non-cash adjustments to financing lease liabilities, straight-line rent adjustments, (gains) or losses on sale 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 dispositions of property and gains or losses on sales of operations, net of tax, stock based compensation expense, straight-line rent adjustments, the amortization of land rights, accretion on investment in leases, financing receivables, non-cash adjustments to financing lease liabilities, 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 Cash NOI as Adjusted EBITDA excluding general and administrative expenses and including stock based compensation expense and (gains) or losses from dispositions of property.

FFO, FFO per diluted common share and OP units, AFFO, AFFO per diluted common share and OP units, Adjusted EBITDA and 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 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.

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 ability to increase AFFO and dividends through portfolio expansion and diversification and the potential impact of future transactions, if any. 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 such pandemics may have on the business operations of GLPI’s tenants and their continued ability to pay rent in a timely manner or at all; the potential negative impact of recent high levels of inflation (which have been exacerbated by the armed conflict between Russia and Ukraine) on our tenants operations, GLPI’s ability to participate in its tenants’ growth and expansion initiatives, GLPI’s ability to successfully consummate the announced transaction for Tropicana Las Vegas with 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 transaction; 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
610/401-2900   212/835-8500
[email protected]   [email protected]

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