GLPI reports first quarter increases in net income, revenue

April 26, 2018 2:15 AM
  • CDC Gaming Reports
April 26, 2018 2:15 AM
  • CDC Gaming Reports

Gaming and Leisure Properties, the casino industry’s largest real estate investment trust, reported increases in first-quarter funds from its operations and revenue compared with a year earlier.

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In a statement, the Wyomissing, Pa.,-based company said funds from operations, which  takes net income and adds back depreciation and amortization, was $121.9 million, up from $119 million a year earlier.

At the end of March, GLPI owned the real estate associated with 38 casinos and leased 20 of the properties to Penn National Gaming, 15 to Pinnacle Entertainment, Inc., and one to Casino Queen in East St. Louis, Ill. Two casinos, located in Baton Rouge, La., and Perryville, Md., are owned and operated by a subsidiary of GLPI, GLP Holdings, Inc.

Earlier this month, GLPI said it agreed to join Eldorado Resorts in buying Tropicana Entertainment for $1.85 billion from corporate raider Carl Icahn’s Icahn Enterprises. In the deal, GLPI will pay $1.21 billion and acquire six properties, which are in Indiana, Louisiana, Missouri, Mississippi, and the Tropicana resorts in Laughlin, Nev., and Atlantic City. Reno-based Eldorado will pay the remaining $640 million, operate the Tropicana properties, and lease the real estate from GLPI for 15 years at $110 million a year, followed by four five-year renewal periods.

GLPI was spun off in 2013 from Penn National and has grown from its original portfolio of 21 properties. GLPI will add two more casinos once Penn completes its acquisition of Pinnacle later this year. When the deals close, GLPI will be the nation’s third-largest publicly traded triple-net-lease REIT, with 46 casinos.

In a triple-net REIT, the tenants agree to maintain and insure the properties and pay real estate taxes on them.

“GLPI’s background and experience in regional casino operations has proven to be advantageous in executing deals at attractive valuations,” Union Gaming Group analyst John DeCree said in a note to investors. “With a more favorable outlook on regional gaming, we believe GLPI has been more nimble in rent coverage targets with potential OpCo partners, perhaps gaining some favor.”

In the quarter, GLPI’s net income was $96.8 million, or 45 cents per share, up from net income of $94 million, or 45 cents per share, a year earlier. Revenue rose 0.6 percent to $244.1 million from $242.7 million. The latest revenue figure missed the $251.3 million forecast of analysts polled by Zacks Investment Research.

GLPI owned 4,400 acres of land and approximately 15 million square feet of building space, which was fully occupied as of March 31.

“We are pleased to report another quarter of rental income that is in-line with expectations,” GLPI CEO Peter Carlino said in a statement accompanying the results. “Our portfolio of rental assets continues to consistently produce reliable cash flow for our shareholders.”