Gaming and Leisure Properties closes deals, but first-quarter results are mixed

May 1, 2022 4:53 PM
  • Matthew Crowley, CDC Gaming Reports
May 1, 2022 4:53 PM
  • Matthew Crowley, CDC Gaming Reports

Gaming and Leisure Properties continued expanding its portfolio in the first quarter, closing deals for the land and real estate assets of four Bally’s casinos and the Live! Casino Philadelphia and Live! Casino Pittsburgh from Cordish Companies. The real estate investment trust posted a key first-quarter cash-flow measure that missed Wall Street forecasts, although revenue for the period topped them.

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In a statement, Wyomissing, Pennsylvania-based Gaming and Leisure said funds from operation were $180.3 million, or 71 cents per share, for the three months ended March 31, down from $183.6 million, or 79 cents per share a year earlier.

The latest per-share result fell short of the average 84-cents-per-share estimate of analysts surveyed by Seeking Alpha. Funds from operation, a closely watched fiscal yardstick for real estate investment trusts, takes net income and adds back depreciation and amortization.

Net income was $121.7 million, or 48 cents per share, down from $127.2 million, or 54 cents per share, a year earlier.

First-quarter revenue rose 4.5% to $315 million from $301.5 million and topped the $304 million average estimate of Seeking Alpha-polled analysts.

On April 1, Gaming and Leisure completed its previously announced deal for the land and real estate assets of Bally’s Quad Cities Casino in Rock Island, Illinois, and Bally’s three Black Hawk casinos in Black Hawk, Colorado, for $150 million.

Gaming and Leisure added the properties to its Bally’s master lease, for which the rent increased by $12 million annually. The rent is subject to Consumer Price Index-linked contractual escalations; there’s a 1% floor and a 2% ceiling, subject to the index meeting a 0.5% threshold.

Also on March 1, Gaming and Leisure closed its deal to acquire the land and real estate assets of the Live! Philadelphia and Live! Pittsburgh hotel-casinos from Cordish Cos. for $689 million. The deal followed the fourth-quarter 2021 deal in which Gaming and Leisure acquired Live! Maryland’s land and real estate assets from Cordish Cos. and created a seven-year partnership with the Baltimore-based company for future casino developments and potential financing arrangements.

“When we commenced our spin(-off from Penn National Gaming) in 2011, we did so with 24 properties,” Gaming and Leisure Chief Executive Officer Peter Carlino said in a conference call with analysts and journalists. “That number has grown today to 55 and we intend to keep adding to that as we have consistently over the years.”

During the question and answer period, Jeffries analyst David Katz mentioned Cordish Cos. and Caesars Entertainment Corp.’s plans to redevelop 222-acre redevelopment of Pompano Park in Florida into a mixed-use development. He asked whether Gaming and Leisure would venture beyond its core casino focus.

“There’s nothing we turn our nose up at all,” Carlino said. “If it makes economic sense and good use of our capital, good for them, perhaps, and also for us, absolutely. We would do nongaming things. … The nongaming question comes up all the time. … I don’t think a week goes by that we don’t consider something nongaming. The problem is we’re in such a terrific sector today that finding its equivalent or even near equivalent is very tough.”

Gaming and Leisure on Feb. 24 declared a first-quarter dividend of 69 cents per common share, paid March 25 to shareholders of record on March 11. The company also completed a special earnings and profits dividend of 24 cents per share on the company’s common stock related to its sale of the operations of Hollywood Casino Baton Rouge (Louisiana) and Hollywood Casino Perryville (Maryland). This dividend was paid Jan. 7 to shareholders of record on Dec. 27.

Gaming and Leisure shares fell $1.83, or 3.96%, Friday to close at $44.38 on the Nasdaq. The shares rallied after hours, rising $2.07, or 4.66%, to settle at $46.45.

Follow Matthew Crowley on Twitter @copyjockey.