A $22 million year-to-year jump in rental income fueled a strong second quarter for Gaming and Leisure Properties. The real estate investment trust posted increases in a key cash flow measure and revenue, both of which topped Wall Street forecasts.
In a statement Thursday, Pennsylvania-based Gaming and Leisure said it had adjusted funds from operations, which exclude one-time costs, of $203.8 million, or 87 cents per share, in the three months ended June 30, up from $180.6 million, or 84 cents per share, a year earlier.
The latest result topped the average 86-cents-per-share estimate of analysts surveyed by Zacks Investment Research. Funds from operation, which take net income and add back depreciation and amortization, are a closely watched fiscal yardstick for real estate investment trusts.
Net income for the quarter was $138.2 million, or 59 cents per share, up from $112.4 million, or 52 cents per share, a year earlier.
Revenue rose 21% to $317.8 million from $262 million to top the $299.8 million consensus estimate of Zacks-polled analysts.
Besides reaping rewards from the rent escalators, $11 million of the gain was tied to casinos in Ohio. Gaming and Leisure could reflect on acquisitions. In June, the REIT closed deals to buy the land and real estate assets of Tropicana Evansville (Indiana) from Caesars Entertainment Corp. and the Dover Downs hotel-casino (Dover, Delaware) from Bally’s Corp. for an aggregate $484 million in cash.
In April, Gaming and Leisure sold the Tropicana Las Vegas for $308 million to Rhode Island-based Bally’s Corp. The deal is to expected to close early next year.
Without naming names or detailing deals, Gaming and Leisure Chief Investment Officer Matthew Demchyk said the REIT is hunting for more.
“As we move forward with the strong and sound financial foundation, our focus is squarely on unearthing opportunities for the prudent deployment of our shareholders’ capital,” he said. “This is a unique, dynamic, and exciting time for the gaming industry and, especially, the gaming real estate industry.”
When asked whether the resurging coronavirus cases and the Delta variant could accelerate acquisitions talks or timelines, CEO Peter Carlino hardly flinched.
“The quick answer is no,” Carlino said. “As I said, there’s always a threat of an atomic attack down the road I suppose … but at the moment, no, I think we’re a good bit from that.”
And Carlino suggested that the gambling business has stayed its course, as Gaming and Leisure has, pandemic notwithstanding, partly because people need emotional release.
“Desperation is the word that comes to mind. … You’ve got my priority on the Maslow illustration, the hierarchy of needs,” Carlino said, answering a question from Loop Capital Markets’ Daniel Adam. “Business always went up when things — when the world — went down. … The people are desperate … they’ve been cooped up for a long period of time. They want to get out of masks. They want to get back to having fun living their lives doing those things.”
Gaming and Leisure shares fell 14 cents, or 0.29%, Friday to close at $47.34 on the Nasdaq. The share price has risen 20% in 2021.
Follow Matthew Crowley on Twitter @copyjockey
