Operator News

US – Gaming and Leisure up in Q3 with boost from Perryville sale

By Phil - 1 November 2021

Gaming and Leisure Properties, owner of 50 premier gaming assets across 17 states, outperformed the third quarter of 2020 with income from operations increasing by $24m over the same period last year.

That was primarily due to a gain on the sale of the company’s Perryville’s operations of $15.6m. The company, who’s tenants include Penn National Gaming, Caesars Entertainment, Boyd Gaming Corporation, Casino Queen, and Bally’s, said that as of October 28, 2021, all 50 of its properties were open to the public, including Hollywood Casino Baton Rouge which is owned and operated by the company’s taxable REIT subsidiary and has been contracted for sale.

Peter Carlino, Chairman and Chief Executive Officer of GLPI, commented, “The strong earnings growth GLPI achieved in the first half of 2021 continued with another period of consistent earnings in the third quarter. Our third quarter net income and AFFO exceeded the comparable period in 2020 by 17.3 per cent and 6.4 per cent, respectively, demonstrating our ability to consistently build value by working creatively and collaboratively with existing tenants through the pandemic, while establishing new relationships with leading regional gaming operators. During the quarter, we completed the sale of the operations of Hollywood Casino Perryville, resulting in proceeds of approximately $31m. We are delighted to further expand our relationship with Penn National Gaming through this transaction while enhancing GLPI’s forward earnings visibility by divesting and converting a TRS operating asset into a property generating recurring rental income.

“GLPI’s high quality tenant roster continues to highlight the strength and resiliency of regional gaming markets as our operators continue to enjoy strong consumer demand and elevated margins. These factors, combined with several additions to our portfolio over the past year, contributed to the strength of our third quarter AFFO along with the trigger of certain rent escalations. Furthermore, our four publicly traded tenants, which in aggregate account for 99% of our annual rent contributions, have significantly bolstered their balance sheets and enhanced their liquidity since the onset of the pandemic.

“Our record of consistent value creation also reflects our ongoing commitment to balance sheet strength which has positioned GLPI as an investment grade issuer. Looking forward, we believe GLPI is well positioned to deliver further growth as we pursue additional portfolio expansion and diversification while benefiting from the ongoing strength in regional gaming markets, with many of the operations at GLPI’s properties continuing to generate record results. Taken together, these factors support our confidence that the Company is well positioned to extend its long-term record of shareholder value creation.”

In July, GLPI completed the previously announced sale of the operations of Hollywood Casino Perryville to Penn National Gaming for $31.1m in cash. GLPI entered into a new triple net lease with Penn for an initial term of 20 years, with three 5-year renewal options.

The company also announced an expansion of its relationship with Bally’s Corporation to acquire the real estate assets of Bally’s casino properties in Rock Island, Illinois and Black Hawk, Colorado, for total consideration of $150m. The parties expect to add the properties to the master lease created in connection with Bally’s acquisition of Tropicana Evansville and Dover Downs Hotel & Casino. These transactions are expected to generate incremental annualized rent of $12.0 million, with a normalized rent coverage of 2.25x in the first calendar year post-acquisition. The transactions are expected to close in early 2022.

Bally’s also granted GLPI a right of first refusal to fund the real property acquisition or development project costs associated with all potential future transactions in Michigan, Maryland, Virginia and New York through one or more sale-leaseback or similar transactions for a term of seven years.