Gaming and Leisure Properties posts Street forecast-topping revenue in third quarter

October 31, 2023 11:02 AM
Photo: Shutterstock
  • Matthew Crowley, CDC Gaming Reports
October 31, 2023 11:02 AM
  • Matthew Crowley, CDC Gaming Reports

Gaming and Leisure Properties touted business that widened its portfolio, including a new 99-year ground lease for the Hard Rock Casino in Rockford, Illinois, and the land under Casino Queen Marquette in Iowa, along with third-quarter cash flow that met Wall Street forecasts and revenue that topped them.

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In a Securities and Exchange Commission filing, the Wyomissing, Pennsylvania, real estate investment trust also cited its previously announced deal with Bally’s and Major League Baseball’s Oakland Athletics to build a new casino on the 35-acre site of Tropicana Las Vegas that will host a  30,000-seat Las Vegas stadium for the team. The stadium portion would occupy 9 acres, according to news reports.

In the statement, Gaming and Leisure Properties, which has interests in 61 gaming and related properties in 18 states, said its funds from operation were $254.4 million, or 94 cents per share, for the three months ended Sept. 30, up from $232.8 million, or 88 cents per share, a year earlier.

Adjusted funds from operation, which exclude one-time costs, were 92 cents per share, in line with the consensus estimate of analysts surveyed by Seeking Alpha. Funds from operation are a closely watched fiscal yardstick for real estate investment trusts that takes net income and adds back depreciation and amortization.

Adjusted earnings before interest, taxes, depreciation, and amortization, another cash-flow measure that also excludes one-time costs, rose 5.9% to $327.1 million from $308.8 million.

Revenue rose 7.7% to $359.6 million from $333.8 million and topped the $357.3 million consensus forecast of Seeking Alpha-polled analysts.

For the Oakland A’s stadium project, Gaming and Leisure said it will commit up to $175 million of funding for construction costs and may provide more construction financing “under certain circumstances.” A letter of intent said the stadium deal hinges on approvals, including a vote by Major League Baseball owners on or before Dec. 1 to move the team.

ESPN reported that baseball’s owners will discuss the Athletics’ potential move at their annual meeting, running Nov. 14 to Nov. 16 in Dallas. The A’s have said they hope to break ground on the Tropicana site by April 2025 and have the stadium ready for the 2028 season. Their lease at the Oakland Coliseum in California expires at the end of the 2024 season.

Meanwhile, in a Friday conference call with analysts and journalists, Gaming and Leisure CEO Peter Carlino said the ground lease on the Rockford project will yield $8 million in rent and the Marquette project will add $2.7 million annual rent increase to its Queen master lease with a commitment of at least $12.5 million for new construction.

Chief Investment Officer Matthew Demchyk called the Rockford lease a payoff from patience. He said the deal wouldn’t have been possible a year ago, when banks and other providers of capital were much more aggressive and might have passed on such a “bite-sized” project.

“We’ve in effect waited for the world to come our way and it’s beginning to. Over the past year, we’ve been comfortable waiting to be throwing strikes. Rockford was a strike.”

Also during the call, Gaming and Leisure Chief Financial Officer Desiree Burke said the REITs first-quarter $635 million deal for the property assets of Bally’s Tiverton in Tiverton, Rhode Island, and Hard Rock Hotel & Casino Biloxi, in Biloxi, Mississippi, added $12 million in cash flow income.

Gaming and Leisure updated its full-year 2023 adjusted funds from operation guidance to $1.003 million to $1.006 million, or $3.68 to $3.69 per diluted share, up from previous guidance of $994 million and $999 million, or $3.66 to $3.68 per diluted share.

Gaming and Leisure Properties shares fell 42 cents, or 0.94%, Monday to close at $44.17 on the Nasdaq Stock Market.