“We are, of course, pleased to present another strong quarter.” So began Gaming & Leisure Properties Inc.’s (GLPI) fourth-quarter earnings call, in the words of CEO Peter Carlino.
Gaming was, Carlino said, “the best vehicle to determine long-term and rock-solid cash flow.” That cash flow, added CFO Desirée Burke, was up $22 million, thanks to the acquisition of Tioga Downs, the leasing of Hard Rock Rockford, and the land under Bally’s Chicago.
The fourth-quarter results reflect, according to COO Brandon John Moore, “a conservative financial approach.” Thanks to a proactive approach to 2024, he continued, the groundwork was laid for a strong 2025.
Moore pointed to the partnership with the Ione Miwok Tribe as “proof that our strategy is working.” Also, gaming assets are “still a relative newcomer in the real-estate world.”
The GLPI executives quickly turned to questions from Wall Street stock analysts. The first query addressed $400 million in capex allocations, mostly for Chicago. “These projects are underway,” said Carlino. “They’re committed. I just can’t tell yet what the pace is going to be.”
Regarding Bally’s Corp.’s acquisition of the Casino Queen assets, Carlino opined, “It’s all positive, a huge success.” Added Moore, “Ultimately, our relationship with Bally’s and the CQ folks is as good as it’s ever been.”
Analysts sought news of activity in the merger-and-acquisition pipeline. “Those conversations haven’t picked back up,” Moore explained, “due to the rate environment.” Operators are, he said, focused on their own properties at this point.
Carlino denied that the rise of igaming was scaring casino companies away from talks with GLPI. “Timing is everything,” he said. “You’ve got to have a seller.”
Possibly alluding to the Venetian, the CEO recalled an asset whose owner turned down GLPI several times, because “I have so much cash, I don’t know.” He later made a deal elsewhere — perhaps with GLPI arch rival Vici Properties.
A newer GLPI partner is Cordish Gaming. “We continue to have very good dialogue with Cordish,” reported Moore, including equity participation. “Our long-term goal is to own real estate.” Added Carlino, “It’s a relationship we want to continue and it’s been very good.”
One Cordish project in which GLPI will not be participating is a New Hampshire horse-racing track. Moore explained that Cordish already had a joint-venture partner in the Granite State. “We haven’t had conversations around that project,” he continued, saying that he believed it would be successful. “They have one of the best locations.”
Boyd Gaming’s recent renewal of its master lease with GLPI was shrugged off by Burke. “It’s simply an extension,” she said. “There’s nothing special about it.”
GLPI execs made light of recent and deep cuts in federal staffing and budgets. One remarked that layoffs and outright firings could be a drag on state budgets, potentially opening the door to gaming receptivity in state legislatures, creating opportunities for the REIT.
Moore did allow that some non-domestic suppliers for Bally’s Chicago were altering their bids to reflect new federal tariffs or the prospect of them. An anti-diversity lawsuit aimed at Bally’s minority set-aside, however, was waved off as a potential problem.
The CFO said GLPI was committed for $940 million and it was too early to discuss investment more. The minority investors, he continued, represent only $100 million of the budget.
That public offering “is a very creative to get a lot of folks in the community involved.” But Moore concluded, if it were invalidated in court, it wouldn’t blow a big hole in the Bally’s Chicago budget.
The ongoing saga of the Sacramento Athletics’ potential stadium provided fodder for discussion. “Vegas is proceeding as we would have expected,” but planning of a Bally’s-branded megaresort was still unclear. Still, Carlino assured investors, “They’re engaged on the issue.”
At least four Penn Entertainment capex projects have been tentpoles of GLPI’s development slate, although little of the available money has been drawn so far. “In one perverse sense,” joked Carlino, “I’m delighted they have the cash flow to be patient. They’re financially very strong.”
Like executives at rival Vici, GLPI’s said that the emphasis in gaming was on capex redevelopment. Of Penn specifically, Moore remarked, “They’ve started dialogue around a number of projects. Most gaming operators are” doing so, as renovations and replacements (Boyd’s new version of Treasure Chest, in Louisiana, was cited) are driving business.
Referring to Penn, Carlino said, “I would guess that they’ll wait and see how some of the hotel development unfolds. They’re not afraid to invest capital in bricks and mortar, which is pleasing to us.”
Another client, Hard Rock Rockford, recently renegotiated its loan from GLPI at more-favorable terms. Moore explained that the casino had opened on budget and on time. “It’s performing exceedingly well.” So well, in fact, that loan-servicing competition had sprung up. For the sake of its relationship with the casino, GLPI had chosen to take a lower interest rate and a longer loan maturity.
With regard to GLPI’s new venture into tribal gaming, the executives were asked what the total addressable market (TAM) might be. “The TAM is what we expected it to be,” responded Moore without elaboration.
“We’ve had a lot of discussions with tribes over the last couple of months. We’ve entered into a number of NDAs.” But Moore continued, it’s too early to predict how many deals would happen or how big they would be. “There is a lot of interest in the tribal community.”
The investment in the Ione band “did receive a lot of attention and that has led to additional conversations and credibility. The more tribes GLPI meets, Moore related, the more credence it gains. “Not every tribe would be a tribe that we’d be willing to underwrite,” he allowed, “and not every tribe would be willing to engage with us on trust land.”
Unlike Vici, GLPI execs professed little interest in diversification. “We look at stuff [outside gaming],” said Carlino. “We look at everything. I’ve never found a reason to go elsewhere. It’s not that we don’t look. The gaming space is terrific. The revenues are as close to bulletproof as you can find in the United States.”
