A new master lease with seven Penn Entertainment properties and the closure of its $635 million deal for two Bally’s Corp. hotel-casinos gave Gaming and Leisure Properties plenty to discuss in its fourth-quarter earnings announcement. The real estate investment trust could also celebrate that a key cash-flow measure and revenue both topped Wall Street forecasts.
In a statement, Wyomissing, Pennsylvania-based Gaming and Leisure reported funds from operation of $258.8 million, or 97 cents per share, for the three months ended Dec. 31, up from $178 million, or 74 cents per share, a year earlier.
Adjusted funds from operation, a cash-flow measure excluding one-time costs, were 89 cents per share, topping the consensus 87 cents-per-share forecast of analysts surveyed by Seeking Alpha.
Funds from operation, a closely watched fiscal yardstick for real estate investment trusts, take net income and add back depreciation and amortization.
Adjusted earnings before interest, taxes, depreciation and amortization, a different cash-flow measure that also excludes one-time costs, rose 12.6% to $312 million from $277.2 million.
Quarterly revenue rose 12.8% to $336.4 million from $298.3 million and topped the $335.2 million forecast of Seeking Alpha-polled analysts.
Gaming and Leisure also said it increased its quarterly dividend to 72 cents from 70 cents per share and declared a 25-cent-per-share dividend related to the sale of the Tropicana Hotel-Casino building in Las Vegas.
In the statement, Gaming and Leisure said it closed the deals for the property assets of Bally’s Tiverton in Rhode Island and Bally’s Biloxi in Mississippi on Jan. 3 and added them to the company’s existing master lease with Bally’s. The initial rent for the lease was increased by $48.5 million annually, subject to Consumer Price Index-linked escalations. Connected with the deal, Gaming and Leisure recouped a $200 million deposit and a $9 million transaction fee.
Gaming and Leisure said it retains to right to buy the property assets of Bally’s Lincoln in Rhode Island by Dec. 31, 2024, for $771 million and additional initial rent of $58.8 million.
In December, Gaming and Leisure entered a new continuous equity offering under which it may occasionally sell up to $1 billion of its common stock. During the fourth quarter, the REIT sold 3.2 million shares of common stock, raising $156 million, and raised another $64.6 million by settling a forward-sale agreement and issuing 1.3 million shares.
On Oct. 10, Gaming and Leisure created a new master lease for seven of Penn’s current properties and signed a deal to finance Penn’s moves of riverboat properties to land in Aurora, Illinois and Joliet, Illinois, provide long-term funding for a new Penn hotel in Columbus, Ohio, and support Penn’s building of a second hotel tower at the M Resort in Henderson, Nevada.
“Consistent with the leases in our portfolio, this new master lease includes attractive rent and financing terms for both parties under a proven structure that offers GLPI downside protection, while positioning us to benefit from Penn’s long-term growth,” Gaming and Leisure Chief Executive Officer Peter Carlino said in a statement.
Gaming and Leisure estimated adjusted 2023 funds from operation will be $980 million to $997 million.
For full-year 2022, Gaming and Leisure had $887.3 million in funds from operation, or $3.40 per share, up from $765.7 million, or $3.24 per share, a year earlier. Full-year revenue rose 8.3% to $1.3 billion from $1.2 billion.
Gaming and Leisure shares rose 27 cents, or 0.51%, on Friday to close at $52.77 on the Nasdaq Stock Market. The shares slid 34 cents, or 0.64%, after hours to close at $52.43.