Real estate investment trust Gaming and Leisure Properties told investors Monday it withdrew more than $530 million from its revolving credit line to provide the company with additional cash as the company manages the closures of its casinos due to the COVID-19 coronavirus pandemic.
The drawdown was announced after the markets closed with another 600-point decline in the Dow, which continued last week’s slide that as considered Wall Street’s worst week since 2008.
Still, the stock prices of nearly 20 gaming companies, including GLPI, increased in price by the time the markets closed. Shares of GLPI, which declined 74% in less than a month, closed Monday at $19.74, on the Nasdaq, up 61 cents or 3.19%.
Pennsylvania-based GLPI, which leases the operations of 42 of its 44 gaming properties in 16 states to Penn National Gaming, Eldorado Resorts, and Boyd Gaming, told investors it was withdrawing its 2020 financial guidance that was provided last month.
In a statement, GLPI said its properties reported gaming revenue in January and February “that exceeded its internal projections.” However, once casinos closed either voluntarily or through mandates by governors and state regulatory agencies, the financial guidance was tossed aside.
GLPI said in a statement it “is currently monitoring ongoing events to better understand the timeline and geographic footprint of interruptions to the operations of properties.”
The American Gaming Association said Monday all of the nation’s 465 commercial casinos will be closed by Wednesday in an effort to halt the coronavirus spread, which has now touched every state.
GLPI operates two of its casinos, Hollywood Casino Baton Rouge in Louisiana and Hollywood Casino Perryville in Maryland. The casinos are closed along with the company’s leased properties.
In a note to investors last week, Macquarie Securities gaming analyst Jordan Bender said GLPI leadership, speaking to the Macquarie Securities Consumer Conference, said it had taken out $615 million in debt to offset any lost rent payments from casino closures.
“The fear of possible tenant bankruptcy is driving GLPI’s multiple to all-time lows,” Bender told investors.
GLPI Chairman and CEO Peter Carlino said the company’s management team has experienced operating a company during challenging market conditions.
“As the properties in our portfolio begin to open and start the process of returning to normalized operations, our geographically diversified portfolio stands to play an important role in the recovery process, providing a significant source of employment and an equally significant source of state tax revenue generation,” Carlino said.
The stock prices of GLPI’s gaming REIT competitors had mixed results Monday. MGM Growth Properties closed at $16.56, up 3.18%, while VICI Properties closed at $11.74, down 4.63%.
The major casino operators all saw increases in their stock value Monday. MGM Resorts, which changed CEO’s over the weekend, increase 0.44% to $9.15. Las Vegas Sands was up 0.32% to $43.45. Wynn Resorts was up 10.78% to $57.57.
Eldorado Resorts and Caesars Entertainment both had double-digit increases; Eldorado grew 18.37% to $10.44 and Caesars was up 10.64% to $6.03.
Penn National increased 24.21% to $9.80, Boyd Gaming increased 4.91% to $12.17 and Red Rock Resorts grew 6.95% to $7.54.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
