Gaming and Leisure Properties Inc. (GLPI), after a Q2 record, in which both revenue and profit increased from year to year.
The group revenue in real estate for Q2 was $6.7% higher than the 356.6m reported in the second quarter of last year by GLPI.
GLPI reported that recent acquisitions had a positive impact on the Q2 cash rental revenues, which grew by an additional $11m. Total rental revenue for the quarter was $332.8m. This is an increase of 4.3%.
The revenue from leasing and financing receivables grew by 23%, to reach $46m. GLPI also benefited from interest revenue of $1.8m from loans for real estate.
GLPI reported a 5.6% rise in AFFO in Q2, which equated to $264.4m. AFFO stands for funds from operations, which is net income excluding gains and losses on dispositions of real property. This includes tax depreciation but excludes various factors. Stock-based compensation expenses, land rights amortisation, property transfer taxes recovered, impairment charges and other factors are included.
Peter Carlino, GLPI’s chairman and CEO said: “We benefited by the expansion of our portfolio and rent escalations as well as our discipline in managing liquidity and capital structure.”
The success of our portfolio expansion and our work with tenants in finding new exciting ways to strengthen our relationships is also a clear demonstration of our flexible approach.
Profit up by 33.9% for Q2
Operating expenses for the third quarter were reduced by 26.3%, to $87.2m. The main reason for this is the sharp decline in net credit losses. This was $28.1m in Q2 last year; GLPI, however, allowed for a gain of $3.8m.
Net finance costs in other countries were up only marginally, from $78.1m to $80.6m. This was due to an increase in interest income that almost entirely offset the rise of interest expenses.
The pre-tax result was $214.8m. This is a 34.1% increase. GLPI had to pay $412,000 income tax, and $6.2m profit was noted from a noncontrolling interest of an operating partnership. This amount has been deducted.
The net profit reached $208,3m for the third quarter, an increase of 33.9% from last year’s $155.6m. EBIDTA adjusted increased by 4.6%, to $340.4m.
The same story is told in H1 of GLPI
In terms of how the Q2 impacted GLPI’s year to date, revenues for six months ended 30 June were $756.6m. This is an increase of 6.3% over $711.8m in last year.
The total rental revenues increased by 4.1%, to $663.42m. Revenue from leases and financing receivables also increased by 21.1%, to $90.3m. GLPI reported $2.9m of interest revenue from real estate loan.
Finance expenses increased only marginally, from $156.0m to $205.6m.
Profit before tax increased by 13.1% to $395.0m. GLPI has paid $1m tax, and has discounted the $11.2m profit of non-controlling interests. The bottom line net profit was $382.7m. This represents a 12.9% increase.
The adjusted EBITDA for the first half of 2018 increased 3.9%, to $673.9m.
GLPI predicts more growth in the full-year target as GLPI increases
The group raised some forecasts for this year. The main focus is on AFFO. GLPI estimates that AFFO will be in the range of $1.054bn to $1.059bn for the 12-month period ending 31 December 2024. The previous guidance was $1.042bn to $1.051bn.
Carlino stated that “as we continue to look at the remainder of 2024 we will be sure to keep our promises to investors to act as a good steward for their capital investment.”
Windy City wins for GLPI
GLPI has also released an update regarding its recent agreement reached with Bally’s Chicago. GLPI announced earlier in the month that it would provide $2,07bn to Bally’s for its new casino in Chicago.
Rent will be set at $20m per year for the first $940m covered under an amended master leasing agreement. The agreement also allows GLPI, in return for an initial rent of $32.2m per year, to lease certain real estate interests underlying Bally’s Kansas City and Bally’s Shreveport.
Bally’s also expects to amend the contribution agreement it has with GLPI, and reaffirms its intent to lease and sell back to GLPI its Twin River Lincoln Property in Rhode Island. The payment is expected to be made before 2026, and it will generate approximately $735m.
Carlino stated during the post-Q2 results call that “this is a major project which will be quite impressive”. The key to a project of this size is to stay on budget and on time. I believe we have a good record in achieving that over the years.
We’ve looked at this for a long time. Bally’s sponsorship is good. The sponsorship with Bally’s is great. We can help and hopefully create a successful project. We feel good about this. “I think that the possibilities of our outcomes are very, very good.”
