Gaming and Leisure Properties, the casino industry’s first real estate investment trust, said its third quarter from operation declined from a year ago and missed Wall Street forecasts.
The Wyomissing, Pennsylvania REIT, which closed its deal for Tropicana Entertainment’s assets last month, said in a statement Thursday, adjusted funds from operation, which exclude nonrecurring items, were $164.1 million, or 76 cents per share, in the three months ended Sept. 30. The figure down from $170.5 million, or 79 cents per share, a year earlier.
Funds from operation are a closely watched fiscal yardstick for real estate investment trusts; they take out net income and add back depreciation and amortization.
The latest result fell short of the 77-cents-per-share funds from operation forecast by analysts polled by Zacks Investment Research. The REIT has topped Zacks analysts’ forecasts just once in the past four quarters.
GLPI said it had net income of $104.8 million, or 49 cents per share, up 7.2 percent from $97 million, or 45 cents per share, a year earlier. Quarterly revenue fell 3.9 percent to $254.1 million from $244.5 million and missed Zacks’ consensus estimate of $255 million.
Credit Suisse gaming analyst Cameron McKnight said he sees GLPI to continue acquisition-led growth.
“Our views remain largely unchanged,” McKnight said. “We see regional gaming revenues as extremely stable and defensive, with industry revenues troughing 4 percent below the 2007 peak, and revenues today 6 percent above the trough. The capital intensity of regional gaming is low, and an ageing population is arguably a five-to-10-year tailwind.”
SunTrust gaming analyst Barry Jonas described GLPI as a “compelling valuation story.” He noted triple-net REIT results are typically stable with “little variability” because of the lease structure.
“GLPI trades at a material discount to peers despite very secure rent streams and healthy estimated 2019 dividend growth,” Jonas said.
GLPI spun off from Penn National Gaming in 2013. In April joined Eldorado Resorts in buying Tropicana Entertainment for $1.85 billion from corporate raider Carl Icahn’s Icahn Enterprises.
In the deal, GLPI paid $1.21 billion for five properties — Tropicana Atlantic City; Tropicana Evansville, in Indiana; Tropicana Laughlin in Nevada; Trop Casino Greenville in 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 GLPI for 15 years at $110 million a year, followed by four five-year renewal periods.
Also in the deal, Gaming and Leisure made a $246 million mortgage loan to Eldorado to finance its acquisition of the real estate assets of Lumiere Place in St. Louis.
The combined properties include 350,000 square feet of casino space, 7,416 slot machines, 237 table games and 4,993 hotel rooms.
Gaming and Leisure CEO Peter Carlino spent Thursday’s quarterly conference call touting the REIT’s five-year growth. Since its spinoff from Penn National, he said, Gaming and Leisure has closed deals worth $6.8 billion, has increased its real estate revenue by more than $580 million annually and has boosted its annual dividend by 31 percent.
As part of Penn National Gaming’s $2.8 billion acquisition of Pinnacle Entertainment – GLPI owns the Pinnacle real estate and the operations are leased back to Penn – Boyd Gaming acquired the operations of four Pinnacle properties to alleviate anti-trust concerns. The deal gave GLPI and new operations partner.
Gaming and Leisure Properties CEO Peter Carlino spent the company’s quarterly conference call touting the REIT’s five-year growth. Since its spinoff from Penn National, he said, GLPI has closed deals worth $6.8 billion, has increased its real estate revenue by more than $580 million annually and has boosted its annual dividend by 31 percent.
“In the process, our portfolio has grown from 20 assets in 12 states to 46 assets in 16 states,” Carlino said. “We’ve expanded our tenant base from one to four. And to fund these acquisitions, we’ve successfully issued approximately 90 million shares of common stock and completed $3.5 billion in note offerings.”
On Oct. 15, the Reading Eagle newspaper reported that Penn National and GLPI will enter a $250 million deal for a sale and leaseback of the Plainridge Park Casino in Plainville, Massachusetts.
GLPI declared a 68 cents-per-common-share dividend payable Dec. 28 to shareholders of record Dec. 14.
The company’s shares rose 47 cents, or 1.42 percent, Friday to close $33.57 on the New York Stock Exchange. The shares have fallen 8.6 percent in 2018.
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