Question time for executives of Gaming & Leisure Properties Inc. (GLPI) was almost over before it began. A technical snafu at the 19-minute mark prompted some scrambling to resolve the issue.
The interruption was brief and the call returned to GLPI’s confidence in its abilities and the stability of its financial results. CEO Peter Carlino established that tone at the outset, saying, “This has been a steady quarter for us. We’re working on a lot of transactions … highly complex.”
Although Wall Street analysts repeatedly attempted to pry specifics out of Carlino, he stayed mum regarding the details. “I don’t think there’s any shortage of opportunities” was a characteristic elaboration.
“We’re looking at some modest deals,” said the CEO, returning to the subject later. “I call them inflation fighters. And we’re working on some larger deals.” One that’s still hanging fire is Bally’s Lincoln in Rhode Island.
Asked whether the possible revival of a Mashpee Wampanoag tribal casino in Massachusetts would affect GLPI’s desire to buy the Lincoln casino, Chief Development Officer Steven Ladany was sanguine. “We’ll see if that does come to fruition or not,” he replied, calling Bally’s Lincoln “a premier property that we want to own.”
Speaking of the wider deal-making environment, Carlino said, “I never think we compete with anybody. Most of our transactions are bespoke. We’re not always the cheapest. The winner of an auction often loses.” Clients, he said, “do business with us, because they like us and they have confidence in us.”
Taking another tack, one analyst asked what GLPI’s best use of cash on hand would be. “It’s all of the above,” riposted Carlino. Added Ladany, “If I told you every thought in my head, some of that’s not going to happen,” while other opportunities are as yet unforeseen.
Still another approach was to ask Carlino whether GLPI was interested in developing new casinos. “Our interest is very high, as you might guess,” he responded. “We’ve built a ton of casinos. If it’s alive or breathing, you can imagine we’re looking at it.”
Asked whether interest rates were affecting deal making, Carlino’s patience appeared to fray. “The cost of capital hasn’t affected anything we’ve done. The challenge is that all of these things take time,” he said, referencing the Tioga Downs deal as an example of a purchase that didn’t close as quickly as anticipated.
Would GLPI step in to save Bally’s Corp.? “The Chicago project is a complicated analysis,” offered COO Brandon Moore, who added that GLPI didn’t have much insight into it at present. Should the $1 billion-plus megaresort turn out to be a good opportunity, GLPI will invest in it, he said. “But we’re looking at it.”
As for another Bally’s property, GLPI execs were queried about the timing of the Tropicana Las Vegas closure and whether it was, as rumored, cash-flow negative. “It was positive,” replied Carlino. Continued operation “just wasn’t part of the long-term strategy of the property.” Added Ladany, “I don’t think we had any expectation that it was going to be open any longer than it was.”
CFO Desirée Burke walked investors through the first-quarter minutiae, explaining that revenue increases were driven by the acquisitions of Casino Queen Marquette, Tioga Downs, and Hard Rock Rockford. Senior Vice President of Investments Matthew Demchyk added that GLPI was facing no unsecured-debt maturities until next year.
Burke also mentioned that GLPI had taken out a Treasury bill. She explained that this was to supplement the company’s cash on hand and help retire a $400 million debt maturity.
Pressed one last time on why GLPI hadn’t made more deals, Carlino responded, “I don’t know that we feel any headwinds,” other than the usual complications. “We have a lot of capacity. We’re hungry. We’re not scared of anything.”
Concluded the CEO, “If we have something of scale to do, we’re very confident we can raise the capital.”
