WYOMISSING, Pa., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) today announced record financial results for the third quarter ended September 30, 2020.

Peter Carlino, Chairman and Chief Executive Officer of GLPI, commented, “Our record third quarter financial results highlight our ability to dynamically manage our leading, diversified portfolio of regional gaming assets and support our tenants throughout the pandemic to ensure the ongoing predictability of our rental cash flows. Year-to-date, we have collected over 99% of our contractual rents as our tenants have generated impressive financial results since re-opening and, in many cases, are generating higher cash flows from their properties leased from GLPI, thus increasing the longer-term visibility of our rental receipts. In addition, third quarter results benefited from the variable rent component of certain of our leases as well as strong post-reopening results at Hollywood Casino Baton Rouge and Hollywood Casino Perryville, the gaming properties we own and operate in our taxable REIT subsidiary.

“GLPI’s assets are managed by the industry’s top operators and they have taken prudent steps to fortify their liquidity positions through public market capital raises. At the same time, we also proactively enhanced our financial flexibility and liquidity thereby fortifying the sector’s only investment-grade balance sheet. During the third quarter, we issued an additional $200 million of 4.000% senior unsecured notes maturing in 2031 at an effective yield of 3.548% and applied the net proceeds to repay our Term Loan A-1 borrowings. As a result we have no debt maturities before May 2023. Today we announced a transaction with Twin River thereby adding another well-operated, publicly traded tenant relationship to our growing portfolio. In summary, we are confident that the consistent value and cash flows generated by our portfolio as well as our active management of all aspects of our operations and capital structure position us to consistently build value for shareholders.”

Recent Developments

• All of our tenants are current with respect to their rental obligations other than Casino Queen, from whom we are now collecting full rental payments and with whom we continue to work on a deferred rent agreement related to prior closed months. As such, to-date through October we have collected over 99% of our contractual rents.
• As of October 27, 2020, 45 out of our 46 properties, (including those we own and operate in our taxable REIT subsidiaries) have reopened with safety protocols and capacity constraints.
• On October 27, 2020, we entered into an Exchange Agreement with subsidiaries of Caesars Entertainment, Inc. (“Caesars”) (Nasdaq: CZR) that own, respectively, the Isle Casino & Hotel, Waterloo, Iowa (“Waterloo”) and the Isle Casino & Hotel, Bettendorf, Iowa (“Bettendorf”). Pursuant to the terms of the agreement, Caesars will transfer to us the real estate assets of the Waterloo and Bettendorf properties in exchange for the transfer by us to Caesars of the real property assets of Tropicana Evansville, plus a cash payment of $5.72 million. At the closing of the exchange transaction, which is expected by the end of 2020, the Waterloo and Bettendorf facilities will be added to the Caesars Amended and Restated Master Lease and the rent will increase by approximately $520,000 annually.
• On October 27, 2020, the Company entered into a series of definitive agreements pursuant to which a subsidiary of Twin River Worldwide Holdings, Inc. (“Twin River”) (NYSE: TRWH) will acquire 100% of the equity interests in the Caesars subsidiary that currently operates Tropicana Evansville and the Company will reacquire the real property assets of Tropicana Evansville from Caesars for a cash purchase price of approximately $340.0 million. In addition, the Company entered into a real estate purchase agreement with Twin River pursuant to which we will purchase the real estate assets of the Dover Downs Hotel & Casino, located in Dover, Delaware which is currently owned and operated by Twin River, for a cash purchase price of approximately $144.0 million. At the closing of the transactions which are expected in mid-2021, subject to regulatory approvals, the Tropicana Evansville and Dover Downs Hotel & Casino facilities will be added to a new master lease between us and Twin River (the “Twin River Master Lease”). The Company anticipates that the Twin River Master Lease will have an initial term of 15 years, with no purchase option, followed by four five-year renewal options (exercisable by Twin River) on the same terms and conditions. Rent under the Twin River Master Lease will be $40.0 million annually and is subject to an annual escalator of up to 2% determined in relation to the annual increase in the Consumer Price Index.
• Following regulatory approval late in the second quarter, on September 29, 2020 GLPI acquired Lumière Place Casino and Hotel and entered into a new lease (the “Lumière Place Lease”) with Caesars for this asset. The Lumière Place Lease has an initial term that expires on October 31, 2033 and has four separate renewal options of five years each, exercisable at the tenant’s option. The Lumière Place Lease rent is $22.8 million annually and is subject to an annual escalator of up to 2% if certain rent coverage ratio thresholds are met.
• Since re-opening in May and June, respectively, Hollywood Casino Baton Rouge and Hollywood Casino Perryville, the gaming properties we own and operate in our taxable REIT subsidiary, have generated strong financial results. Total third quarter net revenues and adjusted EBITDA from these properties exceeded prior year levels by $2.8 million and $3.3 million, respectively.
• The Company recently received approval from the Louisiana Gaming and Control Board to move the gaming operations of Hollywood Casino Baton Rouge to a landside facility. The project, expected to cost between $21 million and $25 million, will add 38,000 square feet and include a 250-seat entertainment venue and sportsbook. The expansion and land-based facility is expected to be completed in early 2022.

Recent Initiatives to Collaborate with Tenants, Address the Pandemic and Build Future Value

• On October 1, 2020, the Company completed the acquisition from Penn National Gaming, Inc. (“PENN”) (Nasdaq: PENN) of the land underlying its gaming facility under construction in Morgantown, Pennsylvania in exchange for $30.0 million in rent credits. The Morgantown land is being leased back to PENN for $3.0 million of annual cash rent, subject to escalation provisions following the opening of the property.
• The Company granted PENN the exclusive right until December 31, 2020 to purchase the operations of Hollywood Casino Perryville, in Perryville, Maryland, for $31.1 million. The closing of such purchase, provided PENN exercises its option, is subject to regulatory approval and is expected to occur during calendar year 2021 on a date selected by PENN with reasonable prior notice to the Company, unless otherwise agreed upon by both parties. Upon closing, the Company is expected to lease the real estate of the Perryville facility to PENN pursuant to a lease providing for initial annual rent of $7.77 million, subject to escalation provisions.
• On October 1, 2020, PENN exercised the next scheduled five-year renewal option under each of its two master leases with the Company. The terms of the master lease covering PENN’s Hollywood Casino at Penn National Racecourse, located in Grantville, Pennsylvania (the “PENN Master Lease”), are expected to be amended to provide the Company with protection from any adverse impact on the lease escalation provisions resulting from decreased net revenues from such facility as a result of the openings of PENN's facilities currently in development in Pennsylvania. The Company also granted PENN the option to exercise an additional five-year renewal term at the end of the lease term for each of the two master leases, subject to certain regulatory approvals.
• In light of the nationwide casino closures earlier this year, the Company does not expect any rent escalators for 2020. The Company's leases contain variable rent which is reset on varying schedules depending on the lease. In the aggregate, the portion of cash rents that are variable represented approximately 16% of GLPI's 2019 full year cash rental income. Of that 16% variable rent, approximately 27% resets every five years which is associated with the PENN Master Lease and the Casino Queen Master Lease, 42% resets every two years and 31% resets monthly which is associated with the PENN Master Lease (of which approximately 47% is subject to a floor or $22.9 million annually for Hollywood Casino Toledo). For the three-month period ended September 30, 2020, the percentage rent from the PENN Master Lease increased by $4.7 million compared to the same period last year due to strong reopening demand at Hollywood Casino Columbus and Hollywood Casino Toledo as well as the benefits experienced at Hollywood Casino Toledo as a result of the extended closures of competing casinos in Detroit, Michigan through August 5, 2020.
• The variable rent resets in the Boyd Gaming Corporation (NYSE: BYD) Master Lease and the Amended Pinnacle Master Lease reset for the two-year period ended April 30, 2020. As a result, reductions of $1.5 million and $5.0 million, respectively, will be incurred in annual variable rent on these respective leases through April 30, 2022. The Meadows Lease variable rent reset occurred in October 2020 and will result in a $2.1 million annual decline. As detailed later in this release, the Company's next variable rent reset on its portfolio of leases does not occur until May 2022.

Balance Sheet Update

• On June 25, 2020, the Company completed an amendment to its credit agreement, which: (i) extended the maturity date of $224.0 million of principal amount of the outstanding Term Loan A-1s from April 28, 2021 to May 21, 2023, which term loans would thereafter be classified as Term Loan A-2s and (ii) increased the principal of the Term Loan A-2s by $200.0 million in the form of incremental term loans.
• On August 18, 2020, GLPI issued an additional $200 million of 4.000% senior unsecured notes maturing on January 15, 2031 at a premium to par. The net proceeds of the borrowings were utilized to repay our Term Loan A-1 borrowings thereby increasing the duration of the Company's debt.
• The aggregate dividends paid on September 25, 2020 was comprised of $26.2 million in cash and $104.7 million in common stock (2,773,450 shares at $37.7635 per share).

Dividend

On August 6, 2020, the Company’s Board of Directors declared a third quarter dividend of $0.60 per share on the Company’s common stock, consisting of a combination of cash and shares of the Company’s common stock. The dividend was paid on September 25, 2020, to shareholders of record on August 17, 2020. It is anticipated that the portion of dividends to be paid in shares in the future will be limited to periods during which non-cash rents are realized by the Company.

The Company expects the dividends to be taxable to shareholders, regardless of whether a particular shareholder received a dividend in the form of cash or shares. The Company reserves the right to pay future dividends entirely in cash, and the composition of future dividends with respect to cash and stock will be made by the Board of Directors on a quarterly basis.

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 September 30, 2020, GLPI’s portfolio consisted of interests in 46 gaming and related facilities, including approximately 35 acres of real estate at Tropicana Las Vegas and the Company's wholly-owned and operated Hollywood Casino Baton Rouge and Hollywood Casino Perryville, which are referred to as the “TRS Properties”, the real property associated with 32 gaming and related facilities operated by PENN (excluding the Tropicana Las Vegas), the real property associated with 6 gaming and related facilities operated by Caesars, the real property associated with 4 gaming and related facilities operated by Boyd Gaming Corporation, 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 24.1 million square feet of improvements.

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.