After a dizzying fourth quarter that included closing deals to acquire real estate for six casinos and lease the real estate for five of them, real estate investment trust Gaming and Leisure Properties posted fourth quarter funds from operation that matched Wall Street forecasts.
In a statement Wednesday, the Wyomissing, Pennsylvania-based Gaming and Leisure said it had funds from operations of $181.6 million, or 84 cents per share, in the three months ended Dec. 31, matching the estimate of three analysts polled by Zacks Investment Research.
A year earlier, the REIT, which has interests in 46 gaming and related facilities covering about 23.5 million square feet of building space across 16 states, had $165.3 million in funds from operations, or 77 cents per diluted share. Funds from operation takes net income and adds back items such as depreciation and amortization.
The earnings news sent Gaming and Leisure’s stock down on the Nasdaq Wednesday. GLPI shares closed at $37.60, down 242 cents or 0.63 percent.
Zacks noted that Gaming and Leisure’s funds from operation have topped Wall Street forecasts only once in the past four quarters. Gaming and Leisure’s share price has risen 12.8 percent in the past 12 months.
“GLPI shares are off today despite in-line earnings and a still meaningfully disjointed, relative to gaming peer, valuation,” Deutsche Bank gaming analyst Carlo Santarelli told investors. “We believe investor pushback today relates to GLPI’s ability to grow the business, relative to peers, given the absence of tenant drop downs and a higher cost of equity capital.”
Gaming and Leisure’s net income in the quarter was $45.9 million, or 21 cents per diluted share, down from net income of $93.3 million, or 43 cents per diluted share, a year earlier.
Fourth-quarter revenue rose 26 percent to $303.3 million from $240.7 million. The latest result missed the $304.9 million Zacks Consensus Estimate.
“GLPI once again delivered operating results relatively in line with its established financial guidance,” Stifel gaming analyst Steven Wieczynski told investors. “Furthermore, the company’s initial 2019 financial outlook appears to be largely in line with prevailing consensus expectations.”
In a statement accompanying the earnings, Gaming and Leisure CEO Peter Carlino said the REIT completed $1.5 billion in investments, added two tenants and eight new properties and boosted annual real estate revenue by $155 million.
“Our growing diversified portfolio of regional gaming assets is managed by the top operators in the industry and continues to produce one of the triple-net REIT sector’s most stable cash flow streams,” Carlino said. “Throughout 2019, we will remain focused on identifying and pursuing portfolio enhancing accretive transactions and prudently managing our balance sheet and capital structure.”
In the fourth quarter, Gaming and Leisure, spun off from Penn National Gaming in 2013, closed deals in which it and Eldorado Resorts bought Tropicana Entertainment for $1.85 billion from corporate raider Carl Icahn’s Icahn Enterprises.
Gaming and Leisure paid $1.21 billion for five properties — Tropicana Atlantic City in Atlantic City, New Jersey; Tropicana Evansville, in Evansville, Indiana; Tropicana Laughlin, in Laughlin, Nevada; Trop Casino Greenville in Greenville, Mississippi; and the Belle of Baton Rouge in Baton Rouge, Louisiana.
Reno-based Eldorado Resorts paid $640 million and will operate the Tropicana properties and lease the real estate from Gaming and Leisure for 15 years at $110 million a year, followed by four five-year renewal periods.
All of those deals closed in the fourth quarter. Also, as promised in October, Gaming and Leisure closed a $250 million deal for a sale and leaseback of the Plainridge Park Casino in Plainville, Massachusetts, with Penn National.
Gaming and Leisure also issued a mortgage loan to a Boyd Gaming Corp. affiliate that agreed to buy the real estate associated with the Belterra Park racetrack in Cincinnati for about $57.7 million.
During the fourth quarter, Gaming and Leisure had a $59.5 million goodwill impairment charge related to its operations at Hollywood Casino Baton Rouge in Louisiana. The REIT said deterioration in the Baton Rouge market and a smoking ban in East Baton Rouge Parish casinos that took effect in 2018’s second quarter sparked the charge.
Gaming and Leisure may soon get to grow in West Virginia, as legislators consider a bill to allow current operators to open nearby satellite casinos.
Gaming and Leisure operates slots and table games at Hollywood Casino at Charles Town Races in Ranson, one of just five properties, all racetracks, so far allowed to do so in West Virginia.
For the 12 months ended Dec. 31, Gaming and Leisure posted $339.5 million, or $2.17 per share in funds from operation, up from $380.6 million, or $2.26 per share, a year earlier.
Full-year revenue rose 8.7 percent to $1.06 billion from $971.3 million.
Follow Matthew Crowley on Twitter @copyjockey
