Gaming and Leisure Properties, Inc. Reports Record Second Quarter 2019 Results
- Establishes 2019 Third Quarter Guidance and Updates Full Year Guidance -
WYOMISSING, Pa., Aug. 07, 2019 (GLOBE NEWSWIRE) -- Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) (“GLPI” or the “Company”), North America's first gaming-focused real estate investment trust (“REIT”), today announced results for the quarter ended June 30, 2019. Second quarter total revenue grew 13.7%, net income grew by 1.1%, Adjusted EBITDA increased 15.9% and FFO and AFFO rose 35.7% and 9.3%, respectively. The year-over-year financial growth primarily reflects GLPI’s October 2018 acquisitions of real property assets operated by Boyd Gaming Corporation (“BYD”), Eldorado Resorts, Inc. (“ERI”) and Penn National Gaming, Inc. (“PENN”).
Chief Executive Officer, Peter M. Carlino, commented “Our solid second quarter results reflect the stability and durability of GLPI’s diversified rental stream as the leading owner of regional gaming real estate. As the M&A and transaction environment remains active across the gaming industry, we continue to invest in existing and new tenant relationships with a dedication to sourcing portfolio enhancing accretive growth opportunities. The GLPI team remains deeply focused on delivering results, prudently managing the balance sheet, and positioning the Company to extend its long track record of value creation for shareholders.”
The second quarter operating results include the acceleration of depreciation and land rights amortization of $16.6 million due to the previously announced closure of the Resorts Casino Tunica property by our tenant, which does not alter the amount of rent due from the tenant under its master lease. During the 2019 second quarter, shareholders received a quarterly cash dividend of $0.68 per share, which marks a 7.9% increase over the comparable period in 2018. This $2.72 annualized dividend amount represents a 5.24% increase on a compound annual basis since the Company's formation.
Financial Highlights
| Three Months Ended June 30, | ||||||||
| (in millions, except per share data) | 2019 Actual | 2018 Actual | ||||||
| Total Revenue | $ | 289.0 | $ | 254.2 | ||||
| Net Income | $ | 93.0 | $ | 92.0 | ||||
| Funds From Operations (1) | $ | 158.6 | $ | 116.9 | ||||
| Adjusted Funds From Operations (2) | $ | 185.0 | $ | 169.2 | ||||
| Adjusted EBITDA (3) | $ | 260.9 | $ | 225.1 | ||||
| Net income, per diluted common share | $ | 0.43 | $ | 0.43 | ||||
| FFO, per diluted common share | $ | 0.74 | $ | 0.54 | ||||
| AFFO, per diluted common share | $ | 0.86 | $ | 0.79 | ||||
(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, the amortization of land rights, straight-line rent adjustments, direct financing lease adjustments, losses on debt extinguishment, retirement costs and goodwill and loan impairment charges, reduced by capital maintenance expenditures.
(3) Adjusted EBITDA is net income, excluding interest, taxes on income, depreciation, (gains) or losses from sales of property, stock based compensation expense, straight-line rent adjustments, direct financing lease adjustments, the amortization of land rights, losses on debt extinguishment, retirement costs and goodwill and loan impairment charges.
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 June 30, 2019, GLPI's portfolio consisted of interests in 46 gaming and related facilities, including Hollywood Casino Baton Rouge and Hollywood Casino Perryville, which are referred to as the "TRS Properties", the real property associated with 33 gaming and related facilities operated by PENN, the real property associated with 6 gaming and related facilities operated by ERI (including one mortgaged facility), the real property associated with 4 gaming and related facilities operated by BYD (including one mortgaged facility) and the real property associated with the Casino Queen in East St. Louis, Illinois. These facilities are geographically diversified across 16 states and contain approximately 23.5 million square feet.
Guidance
The table below sets forth current guidance targets for financial results for the 2019 third quarter and full year, based on the following assumptions:
- Includes the full year impact of the transaction closed on October 1, 2018, with ERI and the impact of the transactions closed on October 15, 2018 with PENN, Pinnacle Entertainment, Inc. (“PNK”) and BYD;
- Reported range of revenue from real estate of approximately $1,024.0 to $1,024.9 million for the year and $256.3 million for the third quarter consisting of:
| Three Months Ended September 30, 2019 | Full Year Ending December 31, 2019 | |||||||||||
| (in millions) | Third Quarter | Full Year Range | ||||||||||
| Cash Revenue from Real Estate | ||||||||||||
| PENN | $ | 202.5 | $ | 810.2 | $ | 811.1 | ||||||
| ERI | 27.5 | 110.3 | 110.3 | |||||||||
| BYD | 26.3 | 104.2 | 104.2 | |||||||||
| Casino Queen | 3.6 | 14.5 | 14.5 | |||||||||
| PENN non-assigned land lease | (0.7 | ) | (2.8 | ) | (2.8 | ) | ||||||
| Total Cash Revenue from Real Estate | $ | 259.2 | $ | 1,036.4 | $ | 1,037.3 | ||||||
| Non-Cash Adjustments | ||||||||||||
| Straight-line rent | $ | (8.6 | ) | $ | (34.6 | ) | $ | (34.6 | ) | |||
| Land leases paid by tenants | 5.7 | 22.2 | 22.2 | |||||||||
| Total Revenue from Real Estate as Reported | $ | 256.3 | $ | 1,024.0 | $ | 1,024.9 | ||||||
- Cash rent from PENN excludes the 2019 escalation related to the PNK master lease, as PENN has reported coverage on this lease of 1.75 times for the trailing twelve months ended June 30, 2019, the calculation as of the anniversary date of this lease is currently under review by GLPI;
- Adjusted EBITDA from the TRS Properties of approximately $29.0 million for the year and $6.7 million for the third quarter and reflects the impact of the Maryland state budget process which revoked the previously approved tax relief granted by the Maryland Lottery Commission;
- Blended income tax rate at the TRS Properties of 33%;
- LIBOR is based on the forward yield curve; and
- The basic share count is approximately 214.6 million shares for the year and the third quarter and the fully diluted share count is approximately 215.5 million shares for the year and for the third quarter.
| Three Months Ended September 30, | Full Year Ending December 31, | |||||||||||||||||||
| (in millions, except per share data) | 2019 Guidance | 2018 Actual | 2019 Guidance Range | 2018 Actual | ||||||||||||||||
| Total Revenue | $ | 288.0 | $ | 254.1 | $ | 1,151.5 | $ | 1,152.4 | $ | 1,055.7 | ||||||||||
| Net Income | $ | 107.6 | $ | 104.8 | $ | 401.4 | $ | 404.3 | $ | 339.5 | ||||||||||
| Losses from dispositions of property | — | 0.2 | — | — | 0.3 | |||||||||||||||
| Real estate depreciation | 55.1 | 24.4 | 230.9 | 230.9 | 125.6 | |||||||||||||||
| Funds From Operations (1) | $ | 162.7 | $ | 129.4 | $ | 632.3 | $ | 635.2 | $ | 465.4 | ||||||||||
| Straight-line rent adjustments | 8.6 | 15.9 | 34.6 | 34.6 | 61.9 | |||||||||||||||
| Direct financing lease adjustments | — | 8.0 | — | — | 38.4 | |||||||||||||||
| Other depreciation | 2.3 | 2.8 | 9.8 | 9.8 | 11.4 | |||||||||||||||
| Amortization of land rights | 3.1 | 2.7 | 18.7 | 18.7 | 11.3 | |||||||||||||||
| Amortization of debt issuance costs, bond premiums and original issuance discounts | 2.9 | 3.0 | 11.6 | 11.6 | 12.2 | |||||||||||||||
| Stock based compensation | 4.0 | 3.3 | 16.4 | 16.4 | 11.2 | |||||||||||||||
| Losses on debt extinguishment | — | — | — | — | 3.5 | |||||||||||||||
| Retirement costs | — | — | — | — | 13.1 | |||||||||||||||
| Goodwill impairment charges | — | — | — | — | 59.5 | |||||||||||||||
| Loan impairment charges | — | — | 13.0 | 13.0 | — | |||||||||||||||
| Capital maintenance expenditures | (1.0 | ) | (1.0 | ) | (3.5 | ) | (3.5 | ) | (4.3 | ) | ||||||||||
| Adjusted Funds From Operations (2) | $ | 182.6 | $ | 164.1 | $ | 732.9 | $ | 735.8 | $ | 683.6 | ||||||||||
| Interest, net | 76.4 | 58.9 | 305.9 | 305.9 | 245.9 | |||||||||||||||
| Income tax expense | 1.0 | 1.1 | 4.3 | 4.3 | 5.0 | |||||||||||||||
| Capital maintenance expenditures | 1.0 | 1.0 | 3.5 | 3.5 | 4.3 | |||||||||||||||
| Amortization of debt issuance costs, bond premiums and original issuance discounts | (2.9 | ) | (2.9 | ) | (11.6 | ) | (11.6 | ) | (12.2 | ) | ||||||||||
| Adjusted EBITDA (3) | $ | 258.1 | $ | 222.2 | $ | 1,035.0 | $ | 1,037.9 | $ | 926.6 | ||||||||||
| Net income, per diluted common share | $ | 0.50 | $ | 0.49 | $ | 1.86 | $ | 1.88 | $ | 1.58 | ||||||||||
| FFO, per diluted common share | $ | 0.75 | $ | 0.60 | $ | 2.93 | $ | 2.95 | $ | 2.17 | ||||||||||
| AFFO, per diluted common share | $ | 0.85 | $ | 0.76 | $ | 3.40 | $ | 3.41 | $ | 3.18 | ||||||||||
(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, 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, retirement costs, goodwill impairment charges and loan impairment charges, reduced by capital maintenance expenditures.
(3) Adjusted EBITDA is net income, excluding interest, taxes on income, depreciation, (gains) or losses from sales of property, stock based compensation expense, straight-line rent adjustments, direct financing lease adjustments, the amortization of land rights, losses on debt extinguishment, retirement costs, goodwill impairment charges and loan impairment charges.
Conference Call Details
The Company will hold a conference call on August 8, 2019 at 9:00 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: 1-877/407-0784International: 1-201/689-8560
Conference Call Playback:Domestic: 1-844/512-2921International: 1-412/317-6671Passcode: 13692174The playback can be accessed through August 15, 2019.
WebcastThe 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 SUBSIDIARIESConsolidated Statements of Operations(in thousands, except per share data) (unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Revenues | |||||||||||||||
| Rental income | $ | 248,563 | $ | 169,865 | $ | 496,241 | $ | 339,270 | |||||||
| Income from direct financing lease | — | 26,984 | — | 45,605 | |||||||||||
| Interest income from mortgaged real estate | 7,201 | — | 14,394 | — | |||||||||||
| Real estate taxes paid by tenants | — | 21,483 | — | 42,761 | |||||||||||
| Total income from real estate | 255,764 | 218,332 | 510,635 | 427,636 | |||||||||||
| Gaming, food, beverage and other | 33,249 | 35,889 | 66,242 | 70,635 | |||||||||||
| Total revenues | 289,013 | 254,221 | 576,877 | 498,271 | |||||||||||
| Operating expenses | |||||||||||||||
| Gaming, food, beverage and other | 19,168 | 20,407 | 38,190 | 40,065 | |||||||||||
| Real estate taxes | — | 21,800 | — | 43,395 | |||||||||||
| Land rights and ground lease expense | 15,229 | 6,444 | 24,478 | 12,976 | |||||||||||
| General and administrative | 15,984 | 24,806 | 33,224 | 41,266 | |||||||||||
| Depreciation | 67,865 | 27,523 | 126,443 | 55,477 | |||||||||||
| Loan impairment charges | — | — | 13,000 | — | |||||||||||
| Total operating expenses | 118,246 | 100,980 | 235,335 | 193,179 | |||||||||||
| Income from operations | 170,767 | 153,241 | 341,542 | 305,092 | |||||||||||
| Other income (expenses) | |||||||||||||||
| Interest expense | (76,523 | ) | (57,055 | ) | (153,251 | ) | (111,123 | ) | |||||||
| Interest income | 248 | 891 | 337 | 1,372 | |||||||||||
| Losses on debt extinguishment | — | (3,473 | ) | — | (3,473 | ) | |||||||||
| Total other expenses | (76,275 | ) | (59,637 | ) | (152,914 | ) | (113,224 | ) | |||||||
| Income from operations before income taxes | 94,492 | 93,604 | 188,628 | 191,868 | |||||||||||
| Income tax expense | 1,459 | 1,606 | 2,585 | 3,098 | |||||||||||
| Net income | $ | 93,033 | $ | 91,998 | $ | 186,043 | $ | 188,770 | |||||||
| Earnings per common share: | |||||||||||||||
| Basic earnings per common share | $ | 0.43 | $ | 0.43 | $ | 0.87 | $ | 0.88 | |||||||
| Diluted earnings per common share | $ | 0.43 | $ | 0.43 | $ | 0.86 | $ | 0.88 | |||||||
GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIESOperations(in thousands) (unaudited)
| TOTAL REVENUES | ADJUSTED EBITDA | ||||||||||||||
| Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Real estate | $ | 255,764 | $ | 218,332 | $ | 252,368 | $ | 215,435 | |||||||
| GLP Holdings, LLC (TRS) | 33,249 | 35,889 | 8,502 | 9,693 | |||||||||||
| Total | $ | 289,013 | $ | 254,221 | $ | 260,870 | $ | 225,128 | |||||||
| TOTAL REVENUES | ADJUSTED EBITDA | ||||||||||||||
| Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Real Estate | $ | 510,635 | $ | 427,636 | $ | 502,478 | $ | 427,464 | |||||||
| GLP Holdings, LLC (TRS) | 66,242 | 70,635 | 16,811 | 19,009 | |||||||||||
| Total | $ | 576,877 | $ | 498,271 | $ | 519,289 | $ | 446,473 | |||||||
GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIESCurrent Year Revenue Detail(in thousands) (unaudited)
| Three Months Ended June 30, 2019 | PENN Master Lease | Amended Pinnacle Master Lease | ERI Master Lease and Mortgage | BYD Master Lease and Mortgage | PENN - Meadows Lease | Casino Queen Lease | Total | |||||||||||||||||||||
| Building base rent | $ | 68,482 | $ | 56,297 | $ | 15,229 | $ | 18,702 | $ | 3,284 | $ | 2,276 | $ | 164,270 | ||||||||||||||
| Land base rent | 23,492 | 17,778 | 3,340 | 2,933 | — | — | 47,543 | |||||||||||||||||||||
| Percentage rent | 21,873 | 7,905 | 3,340 | 2,796 | 2,792 | 1,356 | 40,062 | |||||||||||||||||||||
| Total cash rental income | $ | 113,847 | $ | 81,980 | $ | 21,909 | $ | 24,431 | $ | 6,076 | $ | 3,632 | $ | 251,875 | ||||||||||||||
| Straight-line rent adjustments | 2,232 | (6,319 | ) | (2,894 | ) | (2,235 | ) | 573 | — | (8,643 | ) | |||||||||||||||||
| Ground rent in revenue | 926 | 1,729 | 2,115 | 418 | — | — | 5,188 | |||||||||||||||||||||
| Other rental revenue | — | — | — | — | 143 | — | 143 | |||||||||||||||||||||
| Total rental income | $ | 117,005 | $ | 77,390 | $ | 21,130 | $ | 22,614 | $ | 6,792 | $ | 3,632 | $ | 248,563 | ||||||||||||||
| Interest income from mortgaged real estate | — | — | 5,590 | 1,611 | — | — | 7,201 | |||||||||||||||||||||
| Total income from real estate | $ | 117,005 | $ | 77,390 | $ | 26,720 | $ | 24,225 | $ | 6,792 | $ | 3,632 | $ | 255,764 | ||||||||||||||
| Six Months Ended June 30, 2019 | PENN Master Lease | Amended Pinnacle Master Lease | ERI Master Lease and Mortgage | BYD Master Lease and Mortgage | PENN - Meadows Lease | Casino Queen Lease | Total | |||||||||||||||||||||
| Building base rent | $ | 136,964 | $ | 112,078 | $ | 30,459 | $ | 36,988 | $ | 6,567 | $ | 4,551 | $ | 327,607 | ||||||||||||||
| Land base rent | 46,984 | 35,481 | 6,680 | 5,839 | — | — | 94,984 | |||||||||||||||||||||
| Percentage rent | 43,558 | 15,738 | 6,680 | 5,566 | 5,584 | 2,712 | 79,838 | |||||||||||||||||||||
| Total cash rental income | $ | 227,506 | $ | 163,297 | $ | 43,819 | $ | 48,393 | $ | 12,151 | $ | 7,263 | $ | 502,429 | ||||||||||||||
| Straight-line rent adjustments | 4,463 | (12,637 | ) | (5,789 | ) | (4,469 | ) | 1,145 | — | (17,287 | ) | |||||||||||||||||
| Ground rent in revenue | 1,888 | 3,510 | 4,501 | 852 | — | — | 10,751 | |||||||||||||||||||||
| Other rental revenue | — | — | — | — | 348 | — | 348 | |||||||||||||||||||||
| Total rental income | $ | 233,857 | $ | 154,170 | $ | 42,531 | $ | 44,776 | $ | 13,644 | $ | 7,263 | $ | 496,241 | ||||||||||||||
| Interest income from mortgaged real estate | — | — | 11,181 | 3,213 | — | — | 14,394 | |||||||||||||||||||||
| Total income from real estate | $ | 233,857 | $ | 154,170 | $ | 53,712 | $ | 47,989 | $ | 13,644 | $ | 7,263 | $ | 510,635 | ||||||||||||||
GAMING AND LEISURE PROPERTIES, INC. AND SUBSIDIARIESGeneral and Administrative Expense(in thousands) (unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Real estate general and administrative expenses (1) | $ | 10,400 | $ | 19,082 | $ | 21,978 | $ | 30,068 | |||||||
| GLP Holdings, LLC (TRS) general and administrative expenses (1) | 5,584 | 5,724 | 11,246 | 11,198 | |||||||||||
| Total reported general and administrative expenses | $ | 15,984 | $ | 24,806 | $ | 33,224 | $ | 41,266 | |||||||
(1) General and administrative expenses include payroll related expenses, insurance, utilities, professional fees and other administrative costs.
Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDAGaming and Leisure Properties, Inc. and SubsidiariesCONSOLIDATED(in thousands) (unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Net income | $ | 93,033 | $ | 91,998 | $ | 186,043 | $ | 188,770 | |||||||
| Losses from dispositions of property | 6 | 225 | 13 | 225 | |||||||||||
| Real estate depreciation | 65,568 | 24,651 | 121,243 | 49,749 | |||||||||||
| Funds from operations | $ | 158,607 | $ | 116,874 | $ | 307,299 | $ | 238,744 | |||||||
| Straight-line rent adjustments | 8,643 | 16,616 | 17,287 | 33,233 | |||||||||||
| Direct financing lease adjustments | — | 11,030 | — | 29,239 | |||||||||||
| Other depreciation (1) | 2,297 | 2,872 | 5,200 | 5,728 | |||||||||||
| Amortization of land rights | 9,406 | 2,728 | 12,496 | 5,455 | |||||||||||
| Amortization of debt issuance costs, bond premiums and original issuance discounts | 2,899 | 3,039 | 5,790 | 6,296 | |||||||||||
| Stock based compensation | 4,183 | 616 | 8,508 | 4,603 | |||||||||||
| Losses on debt extinguishment | — | 3,473 | — | 3,473 | |||||||||||
| Retirement costs | — | 13,149 | — | 13,149 | |||||||||||
| Loan impairment charges | — | — | 13,000 | — | |||||||||||
| Capital maintenance expenditures (2) | (1,017 | ) | (1,162 | ) | (1,547 | ) | (1,984 | ) | |||||||
| Adjusted funds from operations | $ | 185,018 | $ | 169,235 | $ | 368,033 | $ | 337,936 | |||||||
| Interest, net | 76,275 | 56,164 | 152,914 | 109,751 | |||||||||||
| Income tax expense | 1,459 | 1,606 | 2,585 | 3,098 | |||||||||||
| Capital maintenance expenditures (2) | 1,017 | 1,162 | 1,547 | 1,984 | |||||||||||
| Amortization of debt issuance costs, bond premiums and original issuance discounts | (2,899 | ) | (3,039 | ) | (5,790 | ) | (6,296 | ) | |||||||
| Adjusted EBITDA | $ | 260,870 | $ | 225,128 | $ | 519,289 | $ | 446,473 | |||||||
| Net income, per diluted common share | $ | 0.43 | $ | 0.43 | $ | 0.86 | $ | 0.88 | |||||||
| FFO, per diluted common share | $ | 0.74 | $ | 0.54 | $ | 1.43 | $ | 1.11 | |||||||
| AFFO, per diluted common share | $ | 0.86 | $ | 0.79 | $ | 1.71 | $ | 1.58 | |||||||
| Weighted average number of common shares outstanding | |||||||||||||||
| Diluted | 215,604,907 | 214,560,099 | 215,520,316 | 214,506,117 | |||||||||||
(1) Other depreciation includes both real estate and equipment depreciation from the Company's taxable REIT subsidiaries, as well as equipment depreciation from the REIT subsidiaries.
(2) Capital maintenance expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out or no longer cost effective to repair.
Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, AFFO to Adjusted EBITDA andAdjusted EBITDA to Cash Net Operating IncomeGaming and Leisure Properties, Inc. and SubsidiariesREAL ESTATE and CORPORATE (REIT)(in thousands) (unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Net income | $ | 90,197 | $ | 88,870 | $ | 180,960 | $ | 182,586 | |||||||
| Losses (gains) from dispositions of property | 1 | (9 | ) | 8 | (9 | ) | |||||||||
| Real estate depreciation | 65,568 | 24,651 | 121,243 | 49,749 | |||||||||||
| Funds from operations | $ | 155,766 | $ | 113,512 | $ | 302,211 | $ | 232,326 | |||||||
| Straight-line rent adjustments | 8,643 | 16,616 | 17,287 | 33,233 | |||||||||||
| Direct financing lease adjustments | — | 11,030 | — | 29,239 | |||||||||||
| Other depreciation (1) | 499 | 521 | 999 | 1,038 | |||||||||||
| Amortization of land rights | 9,406 | 2,728 | 12,496 | 5,455 | |||||||||||
| Amortization of debt issuance costs, bond premiums and original issuance discounts | 2,899 | 3,039 | 5,790 | 6,296 | |||||||||||
| Stock based compensation | 4,183 | 616 | 8,508 | 4,603 | |||||||||||
| Losses on debt extinguishment | — | 3,473 | — | 3,473 | |||||||||||
| Retirement costs | — | 13,149 | — | 13,149 | |||||||||||
| Loan impairment charges | — | — | 13,000 | — | |||||||||||
| Capital maintenance expenditures (2) | (2 | ) | (3 | ) | (4 | ) | (51 | ) | |||||||
| Adjusted funds from operations | $ | 181,394 | $ | 164,681 | $ | 360,287 | $ | 328,761 | |||||||
| Interest, net (3) | 73,674 | 53,562 | 147,712 | 104,549 | |||||||||||
| Income tax expense | 197 | 228 | 265 | 399 | |||||||||||
| Capital maintenance expenditures (2) | 2 | 3 | 4 | 51 | |||||||||||
| Amortization of debt issuance costs, bond premiums and original issuance discounts | (2,899 | ) | (3,039 | ) | (5,790 | ) | (6,296 | ) | |||||||
| Adjusted EBITDA | $ | 252,368 | $ | 215,435 | $ | 502,478 | $ | 427,464 | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| 2019 | 2019 | ||||||
| Adjusted EBITDA | $ | 252,368 | $ | 502,478 | |||
| Real estate general and administrative expenses | 10,400 | 21,978 | |||||
| Stock based compensation | (4,183 | ) | (8,508 | ) | |||
| Losses from dispositions of property | (1 | ) | (8 | ) | |||
| Cash net operating income(4) | $ | 258,584 | $ | 515,940 | |||
(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 expense, net is net of intercompany interest eliminations of $2.6 million and $5.2 million for the three and six months ended June 30, 2019 and 2018, respectively.
(4) Cash net operating income (“Cash NOI”) is rental and other property income less cash property level expenses.
Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDAGaming and Leisure Properties, Inc. and SubsidiariesGLP HOLDINGS, LLC (TRS)(in thousands) (unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Net income | $ | 2,836 | $ | 3,128 | $ | 5,083 | $ | 6,184 | |||||||
| Losses from dispositions of property | 5 | 234 | 5 | 234 | |||||||||||
| Real estate depreciation | — | — | — | — | |||||||||||
| Funds from operations | $ | 2,841 | $ | 3,362 | $ | 5,088 | $ | 6,418 | |||||||
| Straight-line rent adjustments | — | — | — | — | |||||||||||
| Direct financing lease adjustments | — | — | — | — | |||||||||||
| Other depreciation (1) | 1,798 | 2,351 | 4,201 | 4,690 | |||||||||||
| Amortization of land rights | — | — | — | — | |||||||||||
| Amortization of debt issuance costs, bond premiums and original issuance discounts | — | — | — | — | |||||||||||
| Stock based compensation | — | — | — | — | |||||||||||
| Losses on debt extinguishment | — | — | — | — | |||||||||||
| Retirement costs | — | — | — | — | |||||||||||
| Loan impairment charges | — | — | — | — | |||||||||||
| Capital maintenance expenditures (2) | (1,015 | ) | (1,159 | ) | (1,543 | ) | (1,933 | ) | |||||||
| Adjusted funds from operations | $ | 3,624 | $ | 4,554 | $ | 7,746 | $ | 9,175 | |||||||
| Interest, net | 2,601 | 2,602 | 5,202 | 5,202 | |||||||||||
| Income tax expense | 1,262 | 1,378 | 2,320 | 2,699 | |||||||||||
| Capital maintenance expenditures (2) | 1,015 | 1,159 | 1,543 | 1,933 | |||||||||||
| Amortization of debt issuance costs, bond premiums and original issuance discounts | — | — | — | — | |||||||||||
| Adjusted EBITDA | $ | 8,502 | $ | 9,693 | $ | 16,811 | $ | 19,009 | |||||||
(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.
Gaming and Leisure Properties, Inc. and SubsidiariesConsolidated Balance Sheets(amounts in thousands, except share and per share data) (unaudited)
| June 30, 2019 | December 31, 2018 | ||||||
| Assets | |||||||
| Real estate investments, net | $ | 7,210,028 | $ | 7,331,460 | |||
| Property and equipment, used in operations, net | 97,219 | 100,884 | |||||
| Mortgage loans receivable | 303,684 | 303,684 | |||||
| Right-of-use assets and land rights, net | 862,927 | 673,207 | |||||
| Cash and cash equivalents | 24,739 | 25,783 | |||||
| Prepaid expenses | 2,943 | 30,967 | |||||
| Goodwill | 16,067 | 16,067 | |||||
| Other intangible assets | 9,577 | 9,577 | |||||
| Loan receivable | — | 13,000 | |||||
| Deferred tax assets | 5,721 | 5,178 | |||||
| Other assets | 30,959 | 67,486 | |||||
| Total assets | $ | 8,563,864 | $ | 8,577,293 | |||
| Liabilities | |||||||
| Accounts payable | $ | 171 | $ | 2,511 | |||
| Accrued expenses | 6,778 | 30,297 | |||||
| Accrued interest | 53,340 | 45,261 | |||||
| Accrued salaries and wages | 8,120 | 17,010 | |||||
| Gaming, property, and other taxes | 966 | 42,879 | |||||
| Lease liabilities | 202,098 | — | |||||
| Long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts | 5,796,990 | 5,853,497 | |||||
| Deferred rental revenue | 311,198 | 293,911 | |||||
| Deferred tax liabilities | 233 | 261 | |||||
| Other liabilities | 25,283 | 26,059 | |||||
| Total liabilities | 6,405,177 | 6,311,686 | |||||
| Shareholders’ equity | |||||||
| Preferred stock ($.01 par value, 50,000,000 shares authorized, no shares issued or outstanding at June 30, 2019 and December 31, 2018) | — | — | |||||
| Common stock ($.01 par value, 500,000,000 shares authorized, 214,673,135 and 214,211,932 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively) | 2,147 | 2,142 | |||||
| Additional paid-in capital | 3,951,949 | 3,952,503 | |||||
| Accumulated deficit | (1,795,409 | ) | (1,689,038 | ) | |||
| Total shareholders’ equity | 2,158,687 | 2,265,607 | |||||
| Total liabilities and shareholders’ equity | $ | 8,563,864 | $ | 8,577,293 | |||
Debt Capitalization
The Company had $24.7 million of unrestricted cash and $5.8 billion in total debt at June 30, 2019. The Company’s debt structure as of June 30, 2019 was as follows:
| As of June 30, 2019 | ||||||||
| Years to Maturity | Interest Rate | Balance | ||||||
| (in thousands) | ||||||||
| Unsecured $1,175 Million Revolver Due May 2023 (1) | 3.9 | 3.917 | % | $ | 340,000 | |||
| Unsecured Term Loan A-1 Due April 2021 (1) | 1.8 | 3.902 | % | 525,000 | ||||
| Senior Unsecured Notes Due November 2020 | 1.3 | 4.875 | % | 1,000,000 | ||||
| Senior Unsecured Notes Due April 2021 | 1.8 | 4.375 | % | 400,000 | ||||
| Senior Unsecured Notes Due November 2023 | 4.3 | 5.375 | % | 500,000 | ||||
| Senior Unsecured Notes Due June 2025 | 5.9 | 5.250 | % | 850,000 | ||||
| Senior Unsecured Notes Due April 2026 | 6.8 | 5.375 | % | 975,000 | ||||
| Senior Unsecured Notes Due June 2028 | 8.9 | 5.750 | % | 500,000 | ||||
| Senior Unsecured Notes Due January 2029 | 9.6 | 5.300 | % | 750,000 | ||||
| Finance lease liability | 7.2 | 4.780 | % | 1,052 | ||||
| Total long-term debt | $ | 5,841,052 | ||||||
| Less: unamortized debt issuance costs, bond premiums and original issuance discounts | (44,062 | ) | ||||||
| Total long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts | $ | 5,796,990 | ||||||
| Weighted average | 5.1 | 5.008 | % | |||||
(1) The rate on the term loan facility and revolver is LIBOR plus 1.50%.
Rating Agency Update - Issue Rating
| Rating Agency | Rating | |
| Standard & Poor's | BBB- | |
| Fitch | BBB- | |
| Moody's | Ba1 |
Dividends
On May 28, 2019, the Company’s Board of Directors declared the second quarter 2019 dividend. Shareholders of record on June 14, 2019 received $0.68 per common share, which was paid on June 28, 2019. The Company anticipates the following schedule regarding dividends to be paid in 2019:
| Payment Dates | |
| March 22, 2019 | (paid) |
| June 28, 2019 | (paid) |
| September 20, 2019 | |
| December 27, 2019 | |
Properties
| Description | Location | Date Acquired | Tenant/Operator |
| PENN Master Lease (20 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 |
| Resorts Casino Tunica | Tunica, MS | 5/1/2017 | 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 |
| ERI Master Lease (5 Properties) | |||
| Tropicana Atlantic City | Atlantic City, NJ | 10/1/2018 | ERI |
| Tropicana Evansville | Evansville, IN | 10/1/2018 | ERI |
| Tropicana Laughlin | Laughlin, NV | 10/1/2018 | ERI |
| Trop Casino Greenville | Greenville, MS | 10/1/2018 | ERI |
| Belle of Baton Rouge | Baton Rouge, LA | 10/1/2018 | ERI |
| 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 |
| Single Asset Leases | |||
| The Meadows Racetrack and Casino | Washington, PA | 9/9/2016 | PENN |
| Casino Queen | East St. Louis, IL | 1/23/2014 | Casino Queen |
| Mortgaged Properties | |||
| Belterra Park Gaming & Entertainment Center | Cincinnati, OH | N/A | BYD |
| Lumière Place | St. Louis, MO | N/A | ERI |
| TRS Properties | |||
| Hollywood Casino Baton Rouge | Baton Rouge, LA | 11/1/2013 | GLPI |
| Hollywood Casino Perryville | Perryville, MD | 11/1/2013 | GLPI |
Lease and Mortgage Information
| Master Leases | Single Asset Leases | |||||||||||
| PENN Master Lease | Amended Pinnacle Master Lease | ERI Master Lease | BYD Master Lease | PENN-Meadows Lease | Casino Queen Lease | |||||||
| Property Count | 20 | 12 | 5 | 3 | 1 | 1 | ||||||
| Number of States Represented | 10 | 8 | 5 | 2 | 1 | 1 | ||||||
| Commencement Date | 11/1/2013 | 4/28/2016 | 10/1/2018 | 10/15/2018 (1) | 9/9/2016 | 1/23/2014 | ||||||
| Initial Term | 15 | 10 | 15 | 10 (1) | 10 | 15 | ||||||
| Renewal Terms | 20 (4x5 years) | 25 (5x5 years) | 20 (4x5 years) | 25 (5x5 years) | 19 (3x5years, 1x4 years) | 20 (4x5 years) | ||||||
| Corporate Guarantee | Yes | Yes | Yes | No | Yes | No | ||||||
| Master Lease with Cross Collateralization | Yes | Yes | Yes | Yes | No | No | ||||||
| Technical Default Landlord Protection | Yes | Yes | Yes | Yes | Yes | Yes | ||||||
| Default Adjusted Rent to Revenue Coverage | 1.1 | 1.2 | 1.2 | 1.4 | 1.2 | 1.4 | ||||||
| Competitive Radius Landlord Protection | Yes | Yes | Yes | Yes | Yes | Yes | ||||||
| Escalator Details | ||||||||||||
| Yearly Base Rent Escalator Maximum | 2% | 2% | 2% | 2% | 5% (2) | 2% | ||||||
| Coverage as of Tenants' latest Earnings Report | 1.89 | 1.75 | 1.93 | 1.92 | 1.92 | 1.20 (3) | ||||||
| Minimum Escalator Coverage Governor | 1.8 | 1.8 | 1.2 (4) | 1.8 | 2.0 | 1.8 | ||||||
| Yearly Anniversary for Realization | November 2019 | May 2020 | October 2019 | May 2020 | October 2019 | February 2020 | ||||||
| Percentage Rent Reset Details | ||||||||||||
| Reset Frequency | 5 years | 2 years | 2 years | 2 years | 2 years | 5 years | ||||||
| Next Reset | November 2023 | May 2020 | October 2020 | May 2020 | October 2020 | February 2024 | ||||||
| Mortgages | ||||
| BYD (Belterra) (5) | ERI (Lumière Place) | |||
| Property Count | 1 | 1 | ||
| Commencement Date | 10/15/2018 | 10/1/2018 | ||
| Current Interest Rate | 11.20% | 9.09% | ||
| Credit Enhancement | Guarantee from Master Lease Entity | Corporate Guarantee | ||
(1) Boyd assumed Pinnacle's legacy lease initial term, which will end on April 30, 2026.(2) Meadows yearly escalator is 5% until a breakpoint when it resets to 2%.(3) Not a public reporting entity, number certified by tenant as of March 31, 2019.(4) Eldorado escalator governor is 1.2x for the initial 5 years and then 1.8x in subsequent years.(5) The Belterra Park mortgage is supported by the BYD Master Lease subsidiaries and its terms are consistent with the BYD Master Lease.
Disclosure Regarding Non-GAAP Financial Measures
Funds From Operations (“FFO”), Adjusted Funds From Operations (“AFFO”), 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. The Company believes FFO, AFFO, 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. In addition, in order for the Company to qualify as a REIT, it must distribute 90% of its REIT taxable income annually. The Company adjusts AFFO accordingly to provide our investors an estimate of taxable income for this distribution requirement. Direct financing lease adjustments represent the portion of cash rent we received from tenants that was applied against our lease receivable and thus not recorded as revenue and the amortization of land rights represents the non-cash amortization of the value assigned to the Company's assumed ground leases. 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 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, AFFO, 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 generally accepted accounting principles), excluding (gains) or losses from sales of property and real estate depreciation. We have defined AFFO as FFO excluding stock based compensation expense, the amortization of debt issuance costs, bond premiums and original issuance discounts, other depreciation, the amortization of land rights, straight-line rent adjustments, direct financing lease adjustments, losses on debt extinguishment, retirement costs and goodwill and loan impairment charges, reduced by capital maintenance expenditures. We have defined Adjusted EBITDA as net income excluding interest, taxes on income, depreciation, (gains) or losses from sales of property, stock based compensation expense, straight-line rent adjustments, direct financing lease adjustments, the amortization of land rights, losses on debt extinguishment, retirement costs, and goodwill and loan impairment charges. Finally, we have defined 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, AFFO, 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. GLPI expects to grow its portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators. GLPI also intends to diversify its portfolio over time, including by acquiring properties outside the gaming industry to lease to third parties. GLPI elected to be taxed as a REIT for United States federal income tax purposes commencing with the 2014 taxable year and is the first gaming-focused REIT in North America.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our financial outlook for the third quarter of 2019 and the full 2019 fiscal year; our expectations regarding future acquisitions and expected 2019 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 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, 2018, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, each as filed with the Securities and Exchange Commission. In light of these risks, uncertainties and assumptions, the forward looking events discussed in this press release may not occur. 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.
Tenant Information
Information with respect to our tenants' rent coverage is derived from the public statements and filings of PENN, BYD and ERI and from certifications provided by Casino Queen, Inc. GLPI has not independently verified the accuracy of this information and therefore makes no representation as to the accuracy of such information.
Contact
| Investor Relations – Gaming and Leisure Properties, Inc. | |
| Steven T. Snyder | Joseph Jaffoni, Richard Land, James Leahy at JCIR |
| T: 610/378-8215 | T: 212/835-8500 |
| Email: [email protected] | Email: [email protected] |
