GLPI Q1 2014 - EARNINGS PREP

Consensus estimates, management guidance and commentary, and questions for management in preparation for the earnings release/call tomorrow.

 

 

1Q14 CONSENSUS ESTIMATES

  • Total revenues:  $159 million
  • Adjusted EBITDA:  $107 million
  • FFO:  $0.68/share
  • AFFO:  $0.71/share

MANAGEMENT GUIDANCE

Q1 2014:

  • Total Rental Income:  $477 million with ~$421 million from PENN, ~$13 million from Casino Queen, ~$46 million to account for property taxes paid by PENN, and reduced by ~$3 million to account for non-assigned land lease payments made by PENN
  • Net Revenue:  $158.1 million
  • Adjusted EBITDA:  $106.6 million
  • Net Income:  $44.1 million
  • Real Estate Depreciation:  ~$23 million
  • Non-real estate deprecation: ~$3.5 million
  • Funds From Operation:  $67.1 million
  • Adjusted Funds From Operation:  $74.2 million
  • Net Income, per diluted common share: $0.72
  • AFFO, per diluted common share:  $0.71

FY 2014:

  • Net Revenue:  $630.8 million
  • Adjusted EBITDA:  $432.6 million
  • Net Income:  $181.1 million
  • Real Estate Depreciation:  ~$92 million
  • Non-real estate deprecation: ~$14 million
  • Funds From Operation:  $272.8 million
  • Adjusted Funds From Operation:  $301.8 million
  • Net Income, per diluted common share:  $1.59
  • AFFO, per diluted common share:  $2.65

 

QUESTIONS FOR MANAGEMENT

  • Argosy Casino Sioux Falls
    • Given IRGC ruling the property is to closed by July 1, how should revenue and expense assumptions be revised? 
    • Why did GLPI guidance include a full year of operation for Argosy Sioux City when the GLPI S-1A indicated:  "GLPI also includes rental income of $5.2 million for the entire period related to Penn's Sioux City casino which, based on recent events, may be forced to close as early as July 2014"
  • If the acquisition pipeline is so vast ($10 billion by some reports) and the company has little competition for transactions, why have we not see press releases announcing acquisitions?  And, if the pipeline is so full, why the need to hire a SVP of Corporate Development, who has corporate finance/investment banking history?
  • Would the company consider a large portfolio/transformative acquisition that would require a concurrent issuance of equity either to the seller or into the open market? 
  • Discuss the current valuation gap between potential sellers and buyers of gaming assets?
  • Thoughts on diversifying tenants.  Would you consider sale/leasebacks with BYD, PNK, or even an MGM?
  • With weak regional trends, are you comfortable with maintaining the current levels of rental payments.

 

RECENT MANAGEMENT COMMENTARY

Development Pipeline

  • Mahoning Valley Race Track - Hollywood themed facility with up to 1,000 video lottery terminals as well as various restaurants and amenities. To be managed by Penn National Gaming, with expected opening in the fall of 2014.   Planned budget $100 million, $25.9 million expended as of 12/31/2013
  • Dayton Raceway - Hollywood themed facility with
    up to 1,500 video lottery terminals as well as various
    restaurants and amenities. To be managed by Penn
    National Gaming, with expected opening in the fall
    of 2014. Planned budget $89.5 million, $26.2 million expended as of 12/31/2012

Acquisition

  • During January, the Company completed the acquisition of Casino Queen in East St. Louis, Illinois for $140 million. GLPI also provided Casino Queen with a $43 million, five year term loan at 7% interest, pre-payable at any time, which, together with the sale proceeds, completely refinanced and retired all of Casino Queen's outstanding long-term debt obligations. GLPI leased the property back to Casino Queen on a triple net basis for approximately $14 million in rent per year.

Balance Sheet

  • The Company had $285.2 million of unrestricted cash on hand
  • No balance outstanding under the $700 million unsecured credit facility revolver

Other

  • The Company owned the real estate associated with 21 casino facilities, including two facilities currently under development in Dayton and Youngstown, Ohio and leases, or expects to lease with respect to Dayton and Youngstown, 19 of these facilities to Penn. Two of the gaming facilities, located in Baton Rouge, Louisiana and Perryville, Maryland, are owned and operated by a subsidiary (GLP Holdings, LLC) of GLPI.

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