Gaming & Leisure Properties(GLPI) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The financial statements reveal increased revenues but decreased net income due to credit losses, with asset and liability reductions from debt repayment and investment maturities Condensed Consolidated Balance Sheets Total assets decreased to $12.49 billion from $13.08 billion, driven by investment maturities, while liabilities fell to $7.56 billion due to debt reduction Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $12,492,068 | $13,075,949 | | Cash and cash equivalents | $604,164 | $462,632 | | Real estate investments, net | $8,054,559 | $8,148,719 | | Held to maturity investment securities | $— | $560,832 | | Total liabilities | $7,558,758 | $8,430,425 | | Long-term debt, net | $6,892,308 | $7,735,877 | | Total equity | $4,933,310 | $4,645,524 | Condensed Consolidated Statements of Operations and Comprehensive Income Q2 2025 saw real estate income rise to $394.9 million, but net income fell to $151.4 million due to a $53.7 million credit loss provision Q2 & H1 2025 vs 2024 Performance (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total income from real estate | $394,876 | $380,626 | $790,111 | $756,590 | | Income from operations | $242,064 | $293,429 | $500,898 | $551,035 | | Net income attributable to common shareholders | $151,439 | $208,250 | $316,623 | $382,714 | | Diluted EPS | $0.54 | $0.77 | $1.14 | $1.41 | - A key driver for the decline in operating and net income was the provision for credit losses, which was a $53.7 million expense in Q2 2025 versus a $3.8 million benefit in Q2 2024[10] Condensed Consolidated Statements of Cash Flows Operating cash flow increased to $545.9 million, investing activities provided $500.4 million from investment maturities, while financing used $904.7 million for debt and dividends Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $545,867 | $509,957 | | Net cash provided by (used in) investing activities | $500,353 | $(604,757) | | Net cash used in financing activities | $(904,688) | $(494,689) | | Net increase (decrease) in cash | $141,532 | $(589,489) | Notes to the Condensed Consolidated Financial Statements Notes detail the company's triple-net lease REIT business, significant credit loss provisions, $850 million debt redemption, and a new $1.25 billion ATM equity program - The company's primary business is acquiring, financing, and owning real estate leased to gaming operators in triple-net arrangements, with a portfolio of interests in 68 gaming and related facilities as of June 30, 2025[21][22] - The company recorded net provisions for credit losses of $82.2 million for the six months ended June 30, 2025, primarily driven by a sequential deterioration in the third-party forward-looking economic outlook[68] - During the six months ended June 30, 2025, the company redeemed its $850 million, 5.250% senior unsecured notes due June 2025 using cash on hand[94] - On May 2, 2025, the company launched a new $1.25 billion "at the market" (ATM) equity offering program and settled a forward sale agreement, issuing 8.17 million shares for net proceeds of $404.0 million[121][124] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A attributes Q2 2025 revenue growth to acquisitions, while net income declined due to a $57.5 million credit loss provision, yet AFFO and Adjusted EBITDA increased - The increase in total income from real estate for Q2 2025 was primarily due to recent acquisitions, which added $17.5 million in cash rental income, and $4.4 million from lease escalations[178] - The primary reason for the increase in total operating expenses was a $57.5 million increase in the provision for credit losses in Q2 2025 compared to the prior year, driven by a more pessimistic forward-looking economic forecast[178] Non-GAAP Financial Measures Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $156,165 | $214,412 | $326,519 | $393,938 | | Funds from operations (FFO) | $224,914 | $279,189 | $459,672 | $523,592 | | Adjusted funds from operations (AFFO) | $276,057 | $264,375 | $548,053 | $522,990 | | Adjusted EBITDA | $361,483 | $340,446 | $721,601 | $673,872 | - The company believes its cash from operations, cash on hand, available credit, and ability to raise capital will be adequate to meet its debt service, funding commitments, capital expenditures, and dividend requirements for the next twelve months and beyond[219] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate exposure on its $6.96 billion debt, mitigated by $6.03 billion in fixed-rate notes, with variable-rate debt subject to hedging - As of June 30, 2025, the company had $6.96 billion in total debt, with $6.03 billion consisting of fixed-rate senior unsecured notes, mitigating exposure to rising interest rates[223] - The company's variable rate debt, totaling $932.5 million, exposes it to interest rate fluctuations which could increase borrowing costs[225] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2025, the company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective[226] - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[227] PART II. OTHER INFORMATION Legal Proceedings The company is involved in routine legal proceedings, but does not anticipate a material adverse effect on its financial position, with most matters indemnified by tenants - The company does not expect the outcome of current legal proceedings to have a material adverse effect on its consolidated financial position or results of operations[110] Risk Factors No material changes to the company's risk factors have occurred since those disclosed in its most recent Annual Report on Form 10-K - There have been no material changes in the company's risk factors from those previously disclosed in its Annual Report[229] Other Information In May 2025, SVP Steven Ladany and CFO Desiree Burke entered into or amended Rule 10b5-1 stock sale plans for future common stock sales - On May 16, 2025, SVP Steven Ladany amended his Rule 10b5-1 stock sale plan for shares to be sold between December 31, 2025, and January 30, 2026[233] - On May 8, 2025, CFO Desiree Burke entered into a new Rule 10b5-1 stock sale plan for shares to be sold between January 2, 2026, and December 31, 2026[235] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, officer certifications, and Inline XBRL financial data