Market Overview

Gaming and Leisure Properties, Inc. Announces Third Quarter 2018 Results

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- Completes Acquisition Financing -
- Establishes 2018 Fourth Quarter and Revises Full Year Guidance -
- Completes Acquisition of the Real Estate Assets of Tropicana Entertainment and the Acquisitions and Lease Modifications to Accommodate the Acquisition of Pinnacle Entertainment, Inc. by Penn National Gaming, Inc. in October -

WYOMISSING, Pa., Nov. 01, 2018 (GLOBE NEWSWIRE) -- Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) (the "Company"), the first gaming-focused real estate investment trust ("REIT") in North America, today announced results for the quarter ended September 30, 2018.

Financial Highlights

    Three Months Ended
 September 30,
(in millions, except per share data)   2018
Actual
  2018
Guidance (1)
  2017
Actual
Total Revenue   $ 254.1     $ 255.2     $ 244.5
Net Income   $ 104.8     $ 106.1     $ 97.0
Funds From Operations (2)   $ 129.4     $ 130.5     $ 122.7
Adjusted Funds From Operations (3)   $ 164.1     $ 165.1     $ 170.5
Adjusted EBITDA (4)   $ 222.2     $ 222.8     $ 223.4
             
Net income, per diluted common share   $ 0.49     $ 0.49     $ 0.45

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

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

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

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

Chief Executive Officer, Peter M. Carlino, commented, "While our real estate portfolio continued to perform as expected during the quarter, we remained focused on the execution of our previously announced acquisitions.  On September 26, 2018 we completed a very successful $1.1 billion note offering, with the benefit of our recently achieved investment grade credit rating.  On October 1, 2018 we announced the completion of our acquisition of the real property assets of Tropicana Entertainment Inc. ("Tropicana") and on October 15, 2018 we announced the completion of the transactions related to the acquisition of Pinnacle Entertainment, Inc. (NASDAQ:PNK) by Penn National Gaming, Inc. (NASDAQ:PENN).  In aggregate these transactions increased our annual real estate income by approximately $155 million, while expanding and diversifying our geographic footprint and tenant roster.  These transactions are immediately accretive as demonstrated by our announcement on October 15, 2018 of our fourth quarter dividend of $0.68 per common share, which is an 8% increase from the prior quarter."

Mr. Carlino continued, "Today we are happy to celebrate the five year anniversary of our spin from PENN and reflect on our substantial accomplishments.  We have completed transactions worth approximately $6.8 billion, growing our real estate revenue by over $580 million annually and increasing our dividend by 31% since our first quarter as a REIT.  In the process our portfolio has grown from 20 assets in 12 states to 46 assets in 16 states and we have expanded from one tenant to four tenants.  To fund these acquisitions, we have successfully issued approximately 90 million shares of common stock and completed $3.5 billion in note offerings.  Notably, we have achieved all this with a commitment to accretion and stability.  In the next five years, we anticipate building upon our success with further opportunities to grow our business and create value for shareholders."

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

  • Income from rental activities had an unfavorable variance of $0.5 million, primarily due to performance at PENN's Hollywood Casino Columbus and Hollywood Casino Toledo; and
  • Net interest had an unfavorable variance of $0.5 million as the Company took advantage of favorable long-term interest rates prior to closing on its acquisitions.

Portfolio Update

GLPI owns over 4,300 acres of land and approximately 15 million square feet of building space, which was 100% occupied as of September 30, 2018. At the end of the third quarter of 2018, the Company owned the real estate associated with 38 casino facilities and leases 20 of these facilities to PENN, 15 of these facilities to PNK and one to Casino Queen in East St. Louis, Illinois. Two of the gaming facilities, located in Baton Rouge, Louisiana and Perryville, Maryland, are owned and operated by a subsidiary of GLPI, GLP Holdings, Inc., (collectively, the "TRS Properties").

Capital maintenance expenditures for the Company were $1.0 million for the three months ended September 30, 2018.

Balance Sheet Update

The Company had $1,162.8 million of unrestricted cash and $5.4 billion in total debt at September 30, 2018.  On September 26, 2018, the Company issued $1,100.0 million of notes.  The net proceeds from the sale of the notes together with $386.0 million drawn on its revolver were used during October 2018 to (i) finance GLPI's acquisition of the real property assets of Plainridge Park Casino from PENN and its issuance of a secured mortgage loan to Boyd Gaming Corporation (NYSE:BYD) in connection with BYD's acquisition of the real property assets of Belterra Park Gaming & Entertainment Center, (ii) finance GLPI's acquisition of substantially all the real property assets of five gaming facilities owned by Tropicana and its issuance of a mortgage loan to Eldorado Resorts, Inc. (NASDAQ:ERI) in connection with ERI's acquisition of the real property assets of Lumière Place, and (iii) pay the estimated transaction fees and expenses associated with the transactions.

The Company's debt structure as of September 30, 2018 was as follows:

    As of September 30, 2018
    Interest Rate   Balance
        (in thousands)
Unsecured Term Loan A-1 (1)   3.665 %   $ 525,000  
Unsecured $1,100 Million Revolver (1)   %    
Senior Unsecured Notes Due 2018   4.375 %    
Senior Unsecured Notes Due 2020   4.875 %   1,000,000  
Senior Unsecured Notes Due 2021   4.375 %   400,000  
Senior Unsecured Notes Due 2023   5.375 %   500,000  
Senior Unsecured Notes Due 2025   5.250 %   850,000  
Senior Unsecured Notes Due 2026   5.375 %   975,000  
Senior Unsecured Notes Due 2028   5.750 %   500,000  
Senior Unsecured Notes Due 2029   5.300 %   750,000  
Capital Lease   4.780 %   1,142  
Total long-term debt       $ 5,501,142  
Less: unamortized debt issuance costs, bond premiums and original issuance discounts       (51,995 )
Total long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts       $ 5,449,147  

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

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

As of September 30, 2018, the Company had 214,717,803 weighted average diluted shares outstanding.

Dividends

On July 31, 2018, the Company's Board of Directors declared the third quarter 2018 dividend.  Shareholders of record on September 7, 2018 received $0.63 per common share, which was paid on September 21, 2018.  On October 12, 2018, the Company declared its fourth quarter 2018 dividend of $0.68 per common share, payable on December 28, 2018 to shareholders of record on December 14, 2018.

Guidance

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

  • Includes the impact of the transactions closed on October 1, 2018, to acquire the real estate assets of Tropicana and the impact of the transaction closed on October 15, 2018 with PENN, PNK, and BYD;
  • Reflects estimated accounting treatment of the completed transactions;
  • Reported revenue from real estate of approximately $924.6 million for the year and $274.6 million for the fourth quarter, consisting of:
         
(in millions)   Fourth
Quarter
  Full Year
Cash Revenue from Real Estate        
PENN   $ 189.3     $ 536.3  
PNK   15.6     322.8  
ERI   27.5     27.5  
BYD   22.2     22.2  
Casino Queen   3.6     14.5  
PENN non-assigned land lease   (0.7 )   (2.8 )
Total Cash Revenue from Real Estate   $ 257.5     $ 920.5  
         
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