GLPI Q2 2014 - EARNINGS PREP

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

Q2 2014 CONSENSUS ESTIMATES

  • Total revenues:  $162 million
  • Adjusted EBITDA:  $106 million
  • FFO:  $0.62/share
  • AFFO:  $0.65/share

MANAGEMENT GUIDANCE

Q2 2014:

  • Total Rental Income:  $476 million with ~$418 million from PENN, ~$13 million from Casino Queen, ~$48 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:  $162.1 million
  • Adjusted EBITDA:  $106.6 million
  • Net Income:  $44.1 million
  • Real Estate Depreciation:  ~$24 million
  • Non-real estate deprecation: ~$3 million
  • Funds From Operation:  $69.4 million
  • Adjusted Funds From Operation:  $76.8 million
  • Net Income, per diluted common share: $0.39
  • AFFO, per diluted common share:  $0.65

FY 2014:

  • Net Revenue:  $630.1 million
  • Adjusted EBITDA:  $416.1 million
  • Net Income:  $177.5 million
  • Real Estate Depreciation:  ~$93 million
  • Non-real estate deprecation: ~$12 million
  • Funds From Operation:  $271.1 million
  • Adjusted Funds From Operation:  $299.7 million
  • Net Income, per diluted common share:  $1.50
  • AFFO, per diluted common share:  $2.54

QUESTIONS FOR MANAGEMENT

  • What is the REIT investment community missing about the GLPI story?  Why as of June 30, 2015 did only five REIT/Real Estate funds own GLPI?  Why is the REIT investment community ignoring GLPI?  What steps is GLPI taking to expand ownership by the dedicated REIT/Real Estate funds?
  • Given Steven Snyder's comments at the Goodwin Proctor tax seminar in May regarding the IRGC ruling that the not-for-profit counterpart holds the gaming license and GLPI would not pursue additional acquisitions in Iowa, why is GLPI holding talk with ISLE -- when ISLE owns three casinos and more than 20% of ISLE EBITDA is from Iowa?
  • Update on the The Meadows Race Track & Casino acquisition - targeted closing date?  Interest and potential value by selling the operator license? How much equity needed to complete this transaction?
  • Argosy Casino Sioux Falls
    • Given Iowa Supreme Court and the closure on Wednesday, July 30th, what is the timing and amounts of changes analyst should be modeling pertaining to the closure/shutdown?  Do these changes include any assumptions or residual value -- machines/tables/boat?
    • What are the costs related to the removals of the boat?
    • Will historical numbers be restated to exclude Argosy Sioux Falls?
  • Any indications Casino Queen is attempting to refinance its $43 million term loan? 
  • 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?

RECENT MANAGEMENT COMMENTARY

Development Pipeline

  • Mahoning Valley Race Track - Planned budget $100 million, $25.9 million expended as of 12/31/2013, and $35.5 million spent as of 03/31/2014.
  • Dayton Raceway - Planned budget $89.5 million, $26.2 million expended as of 12/31/2012, and $39.1 million spent as of 03/31/2014.

Acquisition

  • On May 14, 2014, announced an agreement to acquire The Meadows Racetrack and Casino located in Washington, Pennsylvania, a suburb of Pittsburgh, Pennsylvania, from Cannery Casino Resorts, LLC for $465 million. The purchase price, which the Company intends to fund with a combination of equity and debt, represents approximately 9 times the property's 2013 EBITDA

Rent Escalator

  • Need to wait to get out and past the end of the second quarter, if PENN performs in line with their guidance, then the 2% rent escalator would be at risk.

New York

  • GLPI may look to backstop or support an (upstate gaming) applicant from a financing perspective, but there is 60 days (application deadline) until those issues will clarify.