Gaming and Leisure Properties tops Wall Street first-quarter forecasts

April 30, 2023 6:18 PM

Gaming and Leisure Properties tops Wall Street first-quarter forecasts

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  • Matthew Crowley, CDC Gaming Reports
April 30, 2023 6:18 PM
  • Matthew Crowley, CDC Gaming Reports

Gaming and Leisure Properties Chief Executive Officer Peter Carlino said Friday that he used to tell investors that gaming revenue was so solid, only an atomic attack could threaten it. Then COVID put this assertion to the test.

“Well, we had that (attack), in the equivalent of a neutron bomb, that shut down the country,” Carlino said during a first-quarter conference call with analysts and journalists. “We and our contemporary companies all got paid. So I don’t know what it takes to make clear that people just do not give up their entertainment.”

Buoyed by the thirst for entertainment at its tenant casino properties, real estate investment trust Gaming and Leisure posted Wall Street forecast-topping cash flow and revenue for its first quarter.

In a statement, Wyomissing, Pennsylvania-based Gaming and Leisure said funds from operation were $253.8 million, or 92 cents per share, for the three months ended March 31, up from $180.3 million, or 71 cents per share, a year earlier.

Adjusted funds from operation, which exclude one-time costs, were 92 cents per share, topping the 90-cent-per- share consensus forecast 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.

Adjusted earnings before interest, taxes, depreciation, and amortization, a different cash-flow measure that also excludes one-time costs, rose 10.2% to $323.1 million from $293.3 million.

Revenue rose 12.8% to $355.2 million from $315 million and topped the $346.9 million consensus forecast of Seeking Alpha-polled analysts.

Early in the quarter, Gaming and Leisure closed its purchase of the property assets of Bally’s Tiverton in Tiverton, Rhode Island, and Hard Rock Hotel & Casino Biloxi, Mississippi, for $635 million. After the deal closed on Jan. 3, Gaming and Leisure added the properties to its existing master lease with Bally’s. The initial rent for the lease was increased by $48.5 million annually, subject to contractual escalations based on the Consumer Price Index.

Gaming and Leisure retains the option to acquire the property assets of Bally’s Twin River Lincoln Casino Resort in Lincoln, Rhode Island, for $771 million before Dec. 31, 2024. If the deal is consummated, it would yield $58.8 million in additional rent.

The REIT awarded a first-quarter dividend of 72 cents per share, up from 69 cents a year earlier. Shareholders also received a special earnings and profit dividend of 25 cents per share related to Gaming and Leisure’s sale of the Tropicana Las Vegas building.

Gaming and Leisure forecast adjusted funds from operation of $984 million-$997 million, or between $3.63 and $3.67 per diluted share, for the year ending Dec. 31, 2023.

Analysts have been mixed on the stock. Raymond James on Jan. 9 downgraded Gaming and Leisure to “outperform” from “strong buy” and cut its price target to $55 from $57. But on Jan. 11, Truist upgraded the REIT to “buy” from “hold” and raised its price target to $60 from $54.

Gaming and Leisure Properties shares rose 54 cents, or 1.05%, Friday to close at $52 on the Nasdaq Stock Market.

Follow Matthew Crowley on Twitter @copyjockey.