Gaming & Leisure Properties(GLPI) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The second quarter results showed an increase in income from real estate by $22 million compared to the prior year, primarily due to higher percentage rent from Penn's Master Lease [13][14] - The REIT segment experienced an increase in expenses of $6.4 million compared to the second quarter of 2020, mainly due to non-cash items such as land rights and ground lease expense [15] - The TRS segment reported net revenues and adjusted EBITDA exceeding prior year levels by $33.7 million and $14.3 million respectively [16] Business Line Data and Key Metrics Changes - Rental income from the new Bally's lease was $3.1 million, and an increase related to Casino Queen was $3.4 million due to a full quarter of rent collection in 2021 [14] - The anticipated full escalator on the Penn Master Lease effective November 1st will increase annualized rent by $5.6 million [16] Market Data and Key Metrics Changes - The company noted that regional gaming real estate is increasingly attractive compared to other investment opportunities, especially as institutional capital seeks safe and durable incomes [23] Company Strategy and Development Direction - The company aims to enhance its growth profile and long-term intrinsic value per share by focusing on prudent capital deployment [21] - There is an ongoing exploration of opportunities outside of gaming, although the company remains cautious and focused on its core regional gaming assets [102] Management's Comments on Operating Environment and Future Outlook - Management expressed surprise at the strong recovery in the gaming industry, with many properties hitting record top-line numbers despite occupancy limits [54][56] - The company anticipates that the operational strength and stronger tenant base will translate to greater value for its portfolio and shareholders [22] Other Important Information - The company raised over $70 million through its at-the-market equity issuance program, indicating a strong balance sheet [19] - Management has decided not to pursue a CFO search at this time, as the current team is effectively managing operations [36][108] Q&A Session Summary Question: Expectations for achieving rent escalators with other leases - Management expects to achieve escalators primarily with the Penn lease, while the Meadows lease remains uncertain due to performance [27] Question: Interest in regional assets from institutional capital - There is a moat in limited license states that makes it less direct for capital to enter, but the company believes capital will find the best risk-adjusted returns [29] Question: Update on discussions with Bally's - The company maintains a strong relationship with Bally's and continues discussions for potential future transactions [35] Question: Update on CFO search - Management has abandoned the CFO search as the current team is effectively handling responsibilities [36] Question: G&A related to TRS assets - G&A expenses related to TRS assets are expected to be split evenly, with half remaining until the sale of Baton Rouge [44] Question: Strength of regional markets post-pandemic - Management noted that the entire industry has shown surprising strength, with many properties achieving record numbers [54] Question: Expansion into non-gaming experiential real estate - The company is open to exploring non-gaming investments but remains cautious due to the strength of its current gaming category [58] Question: Will operators move to an asset-light model? - There is a cautious approach among operators, but recognition of the value that REITs bring is increasing [65] Question: Impact of rising COVID cases on discussions - Currently, there is no influence from rising COVID cases on discussions or timelines [70] Question: Cap rate compression and institutional capital - The company is well-positioned to benefit from cap rate compression while continuing to source attractive deals [76] Question: Opportunities for funding expansions with current tenants - Management is hopeful for significant expansions with tenants over the next 12 months [86] Question: Profitability sustainability post-pandemic - Management expects that about half of the profitability gains will be retained long-term [117]