Yahoo Finance Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) Q1 2024 Earnings Call Transcript
Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) Q1 2024 Earnings Call Transcript April 26, 2024
Gaming and Leisure Properties, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Ladies and gentlemen, good morning and welcome to the Gaming and Leisure Properties, Inc. First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joe Jaffoni, Investor Relations. Please go ahead, sir.
Joseph Jaffoni: Thank you, Ryan, and good morning, everyone, and thank you for joining Gaming and Leisure Properties' first quarter 2024 earnings call and webcast. The press release distributed yesterday afternoon is available on the Investor Relations section in our website at www.glpropinc.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. Forward-looking statements may include those related to revenue, operating income, and financial guidance as well as non-GAAP financial measures such as FFO and AFFO.
As a reminder, forward-looking statements represent management's current estimates and the company assumes no obligation to update any forward-looking statements in the future. We encourage listeners to review the more detailed discussions related to the risk factors and forward-looking statements contained in the company's filings with the SEC, including the Form 10-K and 10-Q and in the earnings release as well as the definitions and reconciliations of non-GAAP financial measures contained in the company's earnings release. On this morning's call, we are joined by Peter Carlino, Chairman and Chief Executive Officer of Gaming and Leisure Properties. Also joining today's call are Brandon Moore, Chief Operating Officer, General Counsel, and Secretary; Desiree Burke, Chief Financial Officer and Treasurer; Steve Ladany, Senior Vice President and Chief Development Officer; and Matthew Demchyk, Senior Vice President and Chief Investment Officer.
With that, it's my pleasure to turn the call over to Peter Carlino. Peter, please go ahead.
Peter Carlino: Well, thanks, Joe, and good morning to everyone. As usual, let me call your attention to my written comments in our release, which highlights that this has been a steady quarter for us during which we strengthened our balance sheet in anticipation for what we would hope to deliver through the balance of this year. And in the last paragraph of my comments from which, I'll briefly quote, in 2023, we completed over $1.1 billion of transactions, including over $760 million of traditional real estate acquisitions and $337 million of loan funding commitments. The overall 2023 transaction value, despite a challenged market environment reflects our creativity and creating comprehensive financing solutions for our tenant partners.
Our 2023 addition set the stage for financial growth in 2024 and beyond. So that -- I can say that look we're -- we're now working on a number of transactions, both small and larger. And I think you -- most of you recognize that what we do is highly complex and it requires a great deal of careful structuring and often regulatory approval. Nonetheless, we expect that our performance will level out acceptably well as it always has over the next -- over the balance of this year and beyond. So we feel pretty good about that. And one final gratuitous comment I'll throw in, that as a large shareholder, I couldn't be more delighted with the growth in our dividends over these last years and our announcement this quarter as well. So with that, I'm going to turn it over to Desiree Burke to make some comments?
Desiree?
Desiree Burke: Thanks, Peter, and good morning, everybody. I'm just going to highlight for the group, what's happening in our income statement for the quarter. For the first quarter, our total income from real estate exceeded the first quarter of '23 by over $20 million. This growth was driven by the Tioga acquisition, which increased cash rental income by $2.2 million, the Rockford acquisition, which increased cash rental income by $3.1 million, the Casino Queen Marquette acquisition and the Baton Rouge Landside development, which increased cash rental income by $2.3 million, the recognition of escalators and percentage rent adjustments on our leases, which added approximately $3.5 million of cash rent, the combination of non-cash investment lease adjustments and straight line rent adjustments, which drove a collective year-over-year increase of $9.4 million.
As far as operating expenses go, they increased by $30 million, but that was primarily due to a non-cash increase in the provision for credit losses. Our PENN Amended Pinnacle and Boyd Master Leases have rent resets that are occurring on May 1st of 2024. We continue to expect that these resets will result in increased percentage rent adjustments of between $4 million and $5 million annually. In addition, we expect to receive full escalation on these contingent escalation leases, which will result in $6.5 million of additional rent annually. Finally, the Amended PENN Master Lease is subject to contingent escalation as well on November 1st of '24 and if obtained in full would result in $4.2 million of annual rent. Included in today's release is our AFFO guidance ranging from $3.71 to $3.74 per diluted share in OP units.
Please note that this guidance does not include the impact of future transactions. We have invested in a zero coupon six-month treasury bill that matures in August of 2024 at an implied yield of 5.32%. So in addition to the cash that you see on our balance sheet, we also have this treasury bill. Our rent coverage remains strong ranging from 1.98 to 2.71 in our Master Leases as of the end of the prior quarter. With that, I'll turn it over to Matt for comments.
Matthew Demchyk: Thanks, Desiree, and thanks everyone for joining us this morning. Our focus on stability and dependability continues to show in the consistency of GLPI's cash flows and the solid four-wall coverage across our leases. Our business model is built to navigate business cycles, including economic and interest rate volatility. History suggests that heightened volatility, often leads to opportunity for those who are prepared. At GLPI, we have worked hard to prepare. Our leverage and liquidity are at levels that strengthen and support our business model. We've got normalized debt-to-EBITDA in the mid-4s, a staggered maturity profile, our next unsecured maturity not due until mid-next year and significant available liquidity between a revolver and quarter-end cash position.
We have positioned the company to have optionality on incremental capital sourcing for transactions as they arise. Our track record of creativity, makes us an ideal choice for counterparties, who would benefit from bespoke financing solutions. Our partners want not only to solve their current needs, but also to have a partner, who can predictably continue to meet them well into the future. We've always been a dependable capital partner and in the current backdrop, the value of that dependability has gone up. As potential counterparties need to do things, we are here ready for them, willing and able. We are focused on closing opportunities to prudently deploy our shareholders capital. I'll now turn the call back to Peter.
Peter Carlino: Thanks, Matthew, and thanks, Desiree. I think you all have a pretty clear picture of who we are and where we're headed. So with that, operator, would you please open the floor to questions.
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