Debt restructuring for Gaming and Leisure Properties helped lift the real estate investment trust’s second-quarter funds from operations. In turn, the result increased earnings per share and meet analysts’ forecasts in the three-month period.
In a statement Wednesday, the Wyomissing, Penn., based REIT said funds from operations was $169.2 million, or 79 cents per share, for the quarter than ended June 30. The figures are adjusted from nonrecurring items.
Funds from operation, a key profitability measure for real estate investment trusts, takes net income and adds back items such as depreciation and amortization.
The latest earnings per share matched the consensus estimate of analysts polled by Zacks Investment Research.
Gaming and Leisure Properties said net income dipped 4.4 percent to $92 million, or 43 cents per diluted share, from net income of $96.3 million, or 45 cents per diluted share, a year earlier.
The company said $9.6 million in corporate overhead costs — some related to the retirement of Bill Clifford as chief financial officer in April — combined with net interest and loss extinguishment to drive down net income. Clifford helped found Gaming and Leisure Properties when it was spun off from Penn National Gaming in 2013. He served as Penn National’s finance chief for more than 12 years.
Adjusted earnings before interest, taxes, depreciation and amortization, a measure of cash flow, rose 1.3 percent to $225.1 million.
Quarterly revenue rose 4.4 percent to $254.2 million from $243.4 million. The latest result matched the forecast of Zacks-polled analysts.
“We have addressed all 2018 debt maturities through our new debt financing transactions,” company CEO Peter Carlino said in a statement accompanying the earnings. “We now have a well-laddered maturity schedule with no more than $1 billion of debt maturing in any calendar year with no maturities until November 2020.”
Carlino added that the company amended its revolving credit line to extend its maturity to 2023 and increase its capacity to $1.1 billion.
“The new revolver will afford us substantial flexibility for financing future acquisitions while also significantly reducing our refinancing risk,” he said.
Carlino said the company continued to move toward closing major transactions. In April, the GLPI said it will 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, Nevada and New Jersey.
Also, Penn National Gaming is working to close its acquisition of Pinnacle Entertainment.
“(The deal closures) will add eight new properties to our portfolio with an annual rent of approximately $156 million at a very attractive blended cap rate,” Carlino said during the conference call that accompanied the results. “Interestingly, for me at least, things moved quickly.”
Gaming and Leisure owns more than 4,400 acres of land and about 15 million square feet of building space, which was fully occupied as of June 30. The company owned real estate associated with 38 casinos.
Trends seem to augur well for GLPI. As the Motley Fool reported this month, deal making in the casino REIT market is hot. Nine transactions have closed in the last 12 months for $6.2 billion in total value.
And, as Contrarian Outlook investment strategist Brett Owens wrote, Carlino and Clifford combined to buy 125,000 Gaming and Leisure shares for more than $4.1 million in January. Owens said the move signaled confidence that the company can achieve its 2018 guidance.
Morgan Stanley last week upgraded its rating on the Gaming and Leisure Properties stock from “equal weight” to “overweight.”
“I think we still think we are underappreciated,” Carlino said during the conference call. “So let’s get these transactions to closing. I’m excited about what it does for me as a shareholder, just personalizing it. And hopefully, the market will recognize a little bit more value.”
Nevertheless, Seeking Alpha noted Wednesday that the REIT has lowered its full-year forecasts for 2018, projecting 12-month revenue of $1.019 billion down from $1.021 billion and 12-month adjusted funds from operation of $666.1 million down from $675.9 million.
Gaming and Leisure shares were trending down before the closing bell; falling $1.25, or 3.44 percent, to hit $35.07 at 10 a.m. PDT. Tuesday’s $36.32 closing price matched the closing price on Jan. 2, when 2018 trading opened.
