Gaming & Leisure Properties, Inc. - Quarter Report: 2024 September (Form 10-Q)

Operating lease liabilities Financing lease liabilities Long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts Deferred rental revenue Other liabilities Total liabilities Commitments and Contingencies (Note 9)Equity

Preferred stock ($ par value, shares authorized, shares issued or outstanding at September 30, 2024 and December 31, 2023)

Common stock ($ par value, shares authorized, and shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively)

Additional paid-in capital Accumulated deficit()()Total equity attributable to Gaming and Leisure Properties

Noncontrolling interests in GLPI's Operating Partnership ( units and units outstanding at September 30, 2024 and December 31, 2023, respectively)

Total equity Total liabilities and equity $ $

See accompanying notes to the condensed consolidated financial statements.

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Gaming and Leisure Properties, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)


	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Revenues
Rental income	$	$	$	$

Income from investment in leases, financing receivables
Income from sales-type leases
Interest income from real estate loans


Total income from real estate

Operating expenses


Land rights and ground lease expense
General and administrative
Gains from dispositions of property	()	()	()	()
Property transfer tax recovery		()		()
Depreciation
Provision for credit losses, net
Total operating expenses
Income from operations

Other income (expenses)
Interest expense	()	()	()	()
Interest income
Losses on debt extinguishment				()
Total other expenses	()	()	()	()

Income before income taxes
Income tax expense
Net income	$	$	$	$
Net income attributable to non-controlling interest in the Operating Partnership	()	()	()	()
Net income attributable to common shareholders	$	$	$	$

Earnings per common share:
Basic earnings attributable to common shareholders	$	$	$	$
Diluted earnings attributable to common shareholders	$	$	$	$

See accompanying notes to the condensed consolidated financial statements.

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Gaming and Leisure Properties, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

(in thousands, except share data)

(unaudited)

Common Stock

Additional
Paid-In
Capital

Accumulated
Deficit

Noncontrolling Interest Operating Partnership

Total
Equity

Amount

Balance, December 31, 2023

()

Issuance of common stock, net of costs

—

Restricted stock activity

()

—

()

Dividends paid ($ per common share)

—

()

—

()

Issuance of operating partnership units

—

Distributions to non-controlling interest

—

()

Net income

—

Balance, March 31, 2024

()

Restricted stock activity

—

Dividends paid ($ per common share)

—

()

—

()

Distributions to non-controlling interest

—

()

Net income

—

Balance, June 30, 2024

()

Issuance of common stock, net of costs

—

Restricted stock activity

—

Dividends paid ($ per common share)

—

()

—

()

Distributions to non-controlling interest

—

()

Net income

—

Balance, September 30, 2024

()

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Common Stock

Additional
Paid-In
Capital

Accumulated
Deficit

Noncontrolling Interest Operating Partnership

Total
Equity

Amount

Balance, December 31, 2022

()

Issuance of common stock, net of costs

—

Restricted stock activity

()

—

()

Dividends paid ($ per common share)

—

()

—

()

Issuance of operating partnership units

—

Distributions to non-controlling interest

—

()

Net income

—

Balance, March 31, 2023

()

Issuance of common stock, net of costs

—

Restricted stock activity

—

Dividends paid ($ per common share)

—

()

—

()

Distributions to non-controlling interest

—

()

Net income

—

Balance, June 30, 2023

()

Issuance of common stock, net of costs

—

Restricted stock activity

—

Dividends paid ($ per common share)

—

()

—

()

Distributions to non-controlling interest

—

()

Net income

—

Balance, September 30, 2023

()

See accompanying notes to the condensed consolidated financial statements.

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Gaming and Leisure Properties, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

))


Nine months ended September 30,	2024	2023

Operating activities
Net income	$	$
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Amortization of debt issuance costs, bond premiums and original issuance discounts
Accretion on financing receivables	()	()
Net accretion on held to maturity investment securities	()
Non-cash adjustment to financing lease liabilities
Gains from dispositions of property	()	()


Stock-based compensation
Deferred rent and tenant improvement amortization	()	()

Losses on debt extinguishment

Provision (benefit) for credit losses, net
Change in operating assets and liabilities
Other assets	()	()
Accounts payable and accrued expenses	()	()
Accrued interest		()
Accrued salaries and wages	()	()
Other liabilities

Net cash provided by operating activities
Investing activities
Capital project and maintenance expenditures	()	()

Return of contingent consideration from previous acquisition

Investment in leases, financing receivables	()	()
Acquisition of real estate, net	()	()
Fundings for the Tropicana Las Vegas Lease	()
Originations of real estate loans	()	()
Acquisition of held to maturity investment securities	()
Maturities of held to maturity investment securities
Net cash used in investing activities	()	()
Financing activities
Dividends paid	()	()

Non-controlling interest distributions	()	()
Taxes paid related to shares withheld for tax purposes on restricted stock award vestings	()	()
Proceeds from issuance of common stock, net
Proceeds from issuance of long-term debt
Financing costs	()	()
Repayments of long-term debt	()	()

Net cash provided by (used) in financing activities		()
Net decrease in cash and cash equivalents	()	()

$()$ ()%

During the three and nine months ended September 30, 2024, the Company recorded a provision for credit losses, net of $ million and $ million, respectively (inclusive of the reserve for real estate loans and reserves on the unfunded loan

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million and $ million, respectively. The provision for credit losses recorded for the three months ended September 30, 2023 was the result of the initial establishment of $6.2 million of reserves on the Rockford Lease and Rockford Loan (See Note 5) which was partially offset by a benefit of $4.6 million on the Maryland Live! Lease and Pennsylvania Live! Master Lease as the result of an improved Commercial Real Estate Price Index forecast compared to the forecast utilized as of June 30, 2023. The provision for the nine months ended September 30, 2023, was primarily due to a decline in the estimated real estate values underlying the Company's Investment in leases, financing receivables. These values are estimated based on long term projections of the Commercial Real Estate Price Index which, as of September 30, 2023, declined relative to December 31, 2022.

The reason for differences in the allowance as a percentage of outstanding financing receivable for leases originated in each calendar year in the table above depends on various factors for the leases such as expected rent coverage ratios and loan to value ratios. Future changes in economic probability factors, changes in the estimated value of our real estate property and earnings assumptions at the underlying facilities may result in non-cash provisions or recoveries in future periods that could materially impact our results of operations.

$ Building and improvements Construction in progress Total real estate investments Less accumulated depreciation()()Real estate investments, net$ $

The Land and improvements change from year end represents the acquisition of the land for the Bally's development project in Chicago, Illinois which is partially offset by the reclassification of the Tropicana Las Vegas Lease to a sales type lease from an operating lease due to the reconsideration event from the change in rent terms for the demolition funding provided by GLPI. Construction in progress primarily represents development funding on The Belle along with its related capitalized interest. See Note 1 for details on this project.

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million commitment was drawn as of September 30, 2024. The Rockford Loan has a % interest rate and a maximum outstanding period of up to years ( initial term with a extension). The Company also entered into the Ione Loan for up to $ million, of which $ million was drawn as of September 30, 2024.

$ Less: Allowance for credit losses$()$()Real estate loans, net$ $

)Change in allowance()Ending balance at March 31, 2024$()Change in allowance$()Ending Balance at June 30, 2024$()Change in allowance$()Ending Balance at September 30, 2024$()

Real estate loans are subject to CECL, which is described in Note 3. The Company recorded provision for credit losses of $ million and $ million for the three months and nine months ended September 30, 2024 on real estate loans. Additionally, the Company recorded a benefit of $ million and $ million during the three month and nine months ended September 30, 2024 on unfunded loan commitments. The reserve for the unfunded loan commitment was recorded in other liabilities on the Condensed Consolidated Balance Sheets and totaled $ million and $2.6 million at September 30, 2024 and December 31, 2023, respectively. The Company's borrowers are current on their loan obligations as of September 30, 2024.

$ Land rights, net Right-of-use assets and land rights, net$ $

Land Rights

The land rights are amortized over the individual lease term of the related ground lease, including all renewal options, which ranged from years to years at their respective acquisition dates.

$ Less accumulated amortization ()()Land rights, net$ $

2025 2026 2027 2028 Thereafter Total$

Operating Lease Liabilities

2025 2026 2027 2028 Thereafter Total lease payments$ Less: interest()

Present value of lease liabilities

$ $ $ Variable lease cost Amortization of land right assets Total lease cost$ $ $ $

Amortization expense related to the land right intangibles, as well as variable lease costs and the Company's operating lease costs are recorded within land rights and ground lease expense in the condensed consolidated statements of income.

Supplemental Disclosures Related to Leases

yearsWeighted average discount rate - operating leases%

Supplemental cash flow information related to the Company's operating leases was as follows:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
	(in thousands)		(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	$	$	$

(1) The Company's cash paid for operating leases is significantly less than the lease cost for the same period due to the majority of the Company's ground lease rent being paid directly to the ground lessors by the Company's tenants. Although the Company expends no cash related to these leases, they are required to be grossed up in the Company's condensed consolidated financial statements under ASC 842.

2025 2026 2027 2028 Thereafter Total lease payments$ Less: Interest()Present value of finance lease liabilities$

million revolver$ $

$ $ $ 2025 2026 2027 2028 Thereafter Total$ $ $ $

The table above presents the cash rent the Company expects to receive from its tenants, including adjustments to recognize this rent on a straight-line basis over the lease term. The Company also includes the future non-cash revenue it expects to recognize from the fixed portion of tenant paid ground leases in the table above. See Note 3 for the future contractual cash receipts to be received by the Company under its Investment in leases, financing receivables, net. The table above excludes contractual rent payments under the Bally's Chicago Land Lease since the project is under development.

11.

Assumed conversion of restricted stock awards

Assumed conversion of performance-based restricted stock awards

Dilution attributable to equity forward contract Diluted weighted-average common shares outstanding

$ $ $ Less: Net income allocated to participating securities()()()()Net income for earnings per share purposes$ $ $ $ Weighted-average common shares outstanding Basic EPS$ $ $ $ Calculation of diluted EPS: Net income attributable to common shareholders$ $ $ $ Diluted weighted-average common shares outstanding Diluted EPS$ $ $ $ Antidilutive securities excluded from the computation of diluted earnings per share

12. Equity

billion of its common stock from time to time through a sales agent in "at the market" offerings (the "2022 ATM Program"). Actual sales will depend on a variety of factors, including market conditions, the trading price of the Company's common stock and determinations of the appropriate sources of funding. The Company may sell the shares in amounts and at times to be determined by the Company, but has no obligation to sell any of the shares in the 2022 ATM Program. The 2022 ATM Program also allows the Company to enter into forward sale agreements. In no event will the aggregate number of shares sold under the 2022 ATM Program (whether under any forward sale agreement or through a sales agent), have an aggregate sales price in excess of $ billion. The Company expects, that if it enters into a forward sale contract, to physically settle each forward sale agreement with the forward purchaser on one or more dates specified by the Company prior to the maturity date of that particular forward sale agreement, in which case the aggregate net cash proceeds at settlement will equal the number of shares underlying the particular forward sale agreement multiplied by the relevant forward sale price. However, the Company may also elect to cash settle or net share settle a particular forward sale agreement, in which case cash proceeds may or may not be received or cash may be owed to the forward purchaser.

In connection with the 2022 ATM Program, the Company engaged a sales agent who may receive compensation of up to % of the gross sales price of the shares sold. Similarly, in the event the Company enters into a forward sale agreement, it will pay the relevant forward seller a commission of up to % of the sales price of all borrowed shares of common stock sold during the applicable selling period of the forward sale agreement. During the nine months ended September 30, 2024, the Company sold million shares of its common stock under the 2022 ATM Program which raised net proceeds of $ million.

During the third quarter and subsequent to September 30, 2024, the Company entered into forward sale agreements to sell 8,170,387 shares for a net sales price of $409.3 million. No amounts have been or will be recorded on the Company's balance sheet with respect to these forward sale agreements until settlement. Reflecting the impact of these forward sale agreements, the Company has $ million remaining for issuance under the 2022 ATM Program.

The forward sale agreements require the Company to, at its election prior to one year from the commencement of each forward sale agreement, physically settle the transactions by issuing shares of its common stock to the forward counterparty in exchange for net proceeds at the then applicable forward sale price specified by the forward sale agreements. The forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor and will decrease by other specified fixed amounts.

Until settlement of the forward sale agreements, earnings per share dilution resulting from the forward sale agreements will be determined under the treasury stock method. Share dilution occurs when the average market price of the Company's common stock is higher than the average forward sales price (which is reduced by the maximum specified fixed amounts in the contracts).

newly-issued OP units to an affiliate of Tioga Downs which were valued at $ million. As of September 30, 2024, the Company holds a % controlling financial interest in the operating partnership. The operating partnership is a VIE in which the Company is the primary beneficiary because it has the power to direct the activities of the VIE that most significantly impact the partnership's economic performance and has the obligation to absorb losses of the VIE that could be potentially significant to the VIE and the right to receive benefits from the VIE that could potentially be significant to the VIE. Therefore, the Company consolidates the accounts of the operating partnership, and reflects the third party ownership in this entity as a non-controlling interest in the Condensed Consolidated Balance Sheets. The Company paid $ million and $ million in distributions to the non-controlling interest holders concurrently with the dividends paid to the Company's common shareholders, during the three and nine month periods ended September 30, 2024, respectively. The Company paid $ million and $ million in distributions to the non-controlling interest holders concurrently with the dividends paid to the Company's common shareholders, during the three and nine month periods ended September 30, 2023, respectively.

Dividends

First Quarter 2024March 29, 2024$May 20, 2024June 7, 2024Common Stock$Second Quarter 2024June 21, 2024$August 28, 2024September 13, 2024Common Stock$Third Quarter 2024September 27, 2024$2023February 22, 2023March 10, 2023Common Stock$First Quarter 2023March 24, 2023$February 22, 2023March 10, 2023Common Stock$First Quarter 2023March 24, 2023$June 1, 2023June 16, 2023Common Stock$Second Quarter 2023June 30, 2023$August 30, 2023September 15, 2023Common Stock$Third Quarter 2023September 29, 2023$Outstanding at September 30, 2024

14.

$ $ $ Cash paid for interest$ $ $ $

Noncash Investing and Financing Activities

In connection with the rental term changes on the Tropicana Las Vegas Lease during the three months ended September 30, 2024, the Company reclassified this lease from an operating lease to a sales type lease which resulted in a non-cash gain of $3.8 million which represented the fair value of the land at the reassessment date in excess of the carrying value of the land and the additional funding under the lease of $274.7 million.

On May 16, 2024, the Company recorded a non-cash increase to Investment in leases, financing receivables and Financing lease liabilities of $6.1 million associated with the acquisition of certain real estate assets of Strategic. See Note 15 for further details.

On February 6, 2024, as partial consideration for the closing of the real property assets under the Tioga Downs Lease, the Company’s operating partnership issued newly-issued OP units to an affiliate of Tioga Downs which were valued at $ million for accounting purposes at closing and assumed debt of $ million that was repaid after closing with the offsetting increase to Investment in leases, financing receivables, net.

On January 3, 2023, as part of the consideration for the land and real estate assets of Bally's Biloxi and Bally's Tiverton, the Company issued OP Units to affiliates of Bally's that were valued at $ million for accounting purposes at closing. The Company also recognized a right of use asset and liability of $37.1 million on a ground lease which

was subsequently remeasured due to a renegotiation and reduced the right of use asset and lease liability to $18.4 million for the

year ended December 31, 2023.

15.

million acquisition of the land on which Bally's permanent casino in Chicago, Illinois will be constructed. The Company will also fund construction costs of up to $ million for certain real property improvements of the casino. Rental income being received on the land is being deferred and will be recognized once the development project is substantially complete and ready for its intended use.

On May 16, 2024, the Company acquired the real estate assets of Silverado, DMG, and Baldini's for $ million, plus an additional $ million that was funded at closing to reimburse the tenant for capital improvements. Simultaneous with the acquisition, the Company and affiliates of Strategic entered into two cross-defaulted triple-net lease agreements, each for an initial -year term with renewal periods. The transaction was accounted for as a failed sale leaseback and the purchase price allocation of these assets and liabilities based on their respective fair values at the acquisition date are summarized below (in thousands).


Investment in leases, financing receivables
Financing lease liabilities			()
Total purchase price

million which comprised of cash, assumed debt that was repaid after closing, and OP Units. Simultaneously with the acquisition, the Company entered into the Tioga Downs Lease. The transaction was accounted for as a failed sale leaseback and as such the purchase price, along with incremental transaction costs, was allocated to Investment in leases, financing receivables in the amount of $176.4 million.

Prior year acquisitions

On January 3, 2023, the Company closed its previously announced acquisition from Bally's of the real estate assets of Bally's Biloxi and Bally's Tiverton. The properties were added to the Bally's Master Lease and annual rent was increased by $ million.

Building and improvements Total purchase price$

At closing, the Company was credited its previously funded $ million deposit that was recorded in other assets at December 31, 2022 as well as a $9.0 million transaction fee that was recorded against the purchase price. The Company continues to have the option, subject to receipt by Bally's of required consents, to acquire the real property assets of Bally's Lincoln prior to December 31, 2026 for a purchase price of $ million (subsequently updated to $ million as discussed in Note 16) and additional annual rent of $ million.

On August 29, 2023, the Company acquired the land associated with a development project in Rockford, IL, from an affiliate of 815 Entertainment. Simultaneously with the land acquisition, the Company entered into the Rockford Lease. The transaction was accounted for as a failed sale leaseback and as such the purchase price was allocated to Investment in leases, financing receivables in the amount of $100.2 million.

On September 6, 2023, the Company acquired the land and certain improvements at Casino Queen Marquette for $ million. The property was added to the Casino Queen Master Lease and annual rent was increased by $ million. The purchase price allocation of these assets based on their fair values at the acquisition date are summarized below (in thousands).


Land and improvements			$
Building and improvements
Total purchase price			$

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Operations

GLPI is a self-administered and self-managed Pennsylvania REIT. GLPI was incorporated on February 13, 2013, as a wholly-owned subsidiary of PENN Entertainment, Inc., formerly known as Penn National Gaming, Inc. (NASDAQ: PENN) ("PENN"). On November 1, 2013, PENN contributed to the Company, through a series of internal corporate restructurings, substantially all of the assets and liabilities associated with PENN’s real property interests and real estate development business, as well as the assets and liabilities of Hollywood Casino Baton Rouge and Hollywood Casino Perryville (which are referred to as the "TRS Properties") and then spun-off GLPI to holders of PENN's common and preferred stock in a tax-free distribution (the "Spin-Off"). The assets and liabilities of GLPI were recorded at their respective historical carrying values at the time of the Spin-Off in accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 505-60 - Spinoffs and Reverse Spinoffs ("ASC 505").

The Company elected on its U.S. federal income tax return for its taxable year that began on January 1, 2014 to be treated as a REIT and GLPI, together with its indirect wholly-owned subsidiary, GLP Holdings, Inc., jointly elected to treat each of GLP Holdings, Inc., Louisiana Casino Cruises, Inc. (d/b/a Hollywood Casino Baton Rouge) and Penn Cecil Maryland, Inc. (d/b/a Hollywood Casino Perryville) as a taxable REIT subsidiary ("TRS") effective on the first day of the first taxable year of GLPI as a REIT. In connection with the Spin-Off, PENN allocated its accumulated earnings and profits (as determined for U.S. federal income tax purposes) for periods prior to the consummation of the Spin-Off between PENN and GLPI. In connection with its election to be taxed as a REIT for U.S. federal income tax purposes, GLPI declared a special dividend to its shareholders to distribute any accumulated earnings and profits relating to the real property assets and attributable to any pre-REIT years, including any earnings and profits allocated to GLPI in connection with the Spin-Off, to comply with certain REIT qualification requirements.

On July 1, 2021, the Company sold the operations of Hollywood Casino Perryville to PENN and leased the real estate to PENN pursuant to a standalone lease. On December 17, 2021, the Company sold the operations of Hollywood Casino Baton Rouge to The Queen Casino & Entertainment Inc., formerly known as CQ Holding Company, Inc., ("Casino Queen") and leased the real estate to Casino Queen pursuant to the Second Amended and Restated Casino Queen Master Lease as described below. On December 17, 2021, GLPI declared a special dividend to the Company's shareholders to distribute the accumulated earnings and profits attributable to these sales. In 2021, subsequent to the sale of the operations of the TRS Properties, GLP Holdings, Inc. was merged into GLP Capital, L.P., the operating partnership of GLPI ("GLP Capital").

During 2020, the Company and Tropicana LV, LLC, a wholly owned subsidiary of the Company that held the real estate of the former Tropicana Las Vegas Casino Hotel Resort ("Tropicana Las Vegas"), elected to treat Tropicana LV, LLC as a TRS. In September 2022, Bally's Corporation (NYSE: BALY) ("Bally's") acquired both the building assets from GLPI and PENN's outstanding equity interests in Tropicana Las Vegas. GLPI retained ownership of the land and entered into a ground lease with Bally's. In connection with this transaction, Tropicana LV, LLC was merged into GLP Capital. GLPI paid a special earnings and profits dividend of $0.25 per share in the first quarter of 2023 related to the sale of the building assets to Bally's.

As partial consideration for the transactions with The Cordish Companies ("Cordish") described below, GLP Capital issued 7,366,683 newly-issued operating partnership units ("OP Units") to affiliates of Cordish. OP Units are exchangeable for common shares of the Company on a one-for-one basis, subject to certain terms and conditions. Such issuance of OP Units to Cordish in exchange for its contribution of certain real property assets resulted in GLP Capital becoming treated as a partnership for income tax purposes, with GLPI being deemed to contribute substantially all of the assets and liabilities of GLP Capital in exchange for the general partnership and a majority of the limited partnership interests, and a minority limited partnership interest being owned by Cordish (the "UPREIT Transaction"). In advance of the UPREIT Transaction, the Company, together with GLP Financing II, Inc. jointly elected for GLP Financing II, Inc. to be treated as a TRS effective December 23, 2021. On January 3, 2023, the Company issued 286,643 OP Units to affiliates of Bally's in connection with its acquisition of Bally's Hard Rock Hotel & Casino Biloxi ("Bally's Biloxi") and Bally's Tiverton Casino & Hotel ("Bally's Tiverton"). On February 6, 2024, the Company also issued 434,304 OP Units in connection with the acquisition of the real estate assets of Tioga Downs Casino Resort ("Tioga Downs") from American Racing & Entertainment LLC ("American Racing"). There were 8,087,630 OP Units outstanding as of September 30, 2024.

GLPI’s primary business consists of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements. As of September 30, 2024, GLPI’s portfolio consisted of interests in 66 gaming and related facilities, including the real property associated with 34 gaming and related facilities operated by PENN, the real property associated with 6 gaming and related facilities operated by Caesars Entertainment, Inc. (NASDAQ: CZR) ("Caesars"), the real property associated with 4 gaming and related facilities operated by Boyd Gaming Corporation (NYSE: BYD) ("Boyd"), the real property associated with 9 gaming and related facilities operated by Bally's and 1 facility under development

for Bally's in Chicago, Illinois, the real property associated with 3 gaming and related facilities operated by Cordish, the real property associated with 4 gaming and related facilities operated by Casino Queen, 1 gaming facility managed by a subsidiary of Hard Rock International ("Hard Rock"), 3 gaming and related facilities operated by Strategic Gaming Management, LLC ("Strategic") and 1 gaming and related facility operated by American Racing. These facilities, including our corporate headquarters building, are geographically diversified across 20 states and contain approximately 29.3 million square feet. As of September 30, 2024, the Company's properties were 100% occupied. GLPI expects to continue growing its portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators under prudent terms.

The majority of our earnings are the result of the rental revenues we receive from our triple-net master leases with PENN, Boyd, Bally's, Cordish, Casino Queen and Caesars. In addition to rent, the tenants are required to pay the following executory costs: (1) all facility maintenance, (2) all insurance required in connection with the leased properties and the business conducted on the leased properties, including coverage of the landlord's interests, (3) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor) and (4) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.

Additionally, in accordance with ASC 842, we record revenue for the ground lease rent paid by our tenants with an offsetting expense in land rights and ground lease expense within the Condensed Consolidated Statements of Income as we have concluded that as the lessee we are the primary obligor under the ground leases. We sublease these ground leases back to our tenants, who are responsible for payment directly to the landlord.

PENN 2023 Master Lease and Amended PENN Master Lease

As a result of the Spin-Off, the Company owns substantially all of PENN’s former real property assets (as of the consummation of the Spin-Off) and leases back most of those assets to PENN for use by its subsidiaries pursuant to a unitary master lease (the initial form of such lease the "Original PENN Master Lease"). The Original PENN Master Lease was a triple-net lease, the term of which was scheduled to expire on October 31, 2033, with no purchase option, followed by three remaining 5-year renewal options (exercisable by the tenant) on the same terms and conditions extending to October 31, 2048.

On October 10, 2022, the Company announced that it agreed to create a new master lease with PENN for seven of PENN's properties (the "PENN 2023 Master Lease"). The companies also agreed to a funding mechanism to support PENN's pursuit of relocation and development opportunities at several of the properties included in the PENN 2023 Master Lease. Pursuant to this agreement, the Original PENN Master Lease was amended (the "Amended PENN Master Lease") to remove PENN's properties in Aurora and Joliet, Illinois; Columbus and Toledo, Ohio; and Henderson, Nevada. The properties removed from the Original PENN Master Lease were added to the PENN 2023 Master Lease. In addition, the existing leases for the Hollywood Casino at The Meadows in Pennsylvania (the "Meadows Lease") and the Hollywood Casino Perryville in Maryland (the "Perryville Lease") were terminated and these properties were transferred into the PENN 2023 Master Lease. Both the Amended PENN Master Lease and the PENN 2023 Master Lease are triple-net operating leases, that became effective on January 1, 2023, the terms of which expire on October 31, 2033, with no purchase options, followed by three remaining 5-year renewal options (exercisable by the tenant) on the same terms and conditions extending to October 31, 2048.

The Company agreed to fund up to $225 million for the relocation of PENN's riverboat casino in Aurora at a 7.75% cap rate and, if requested by PENN, will fund up to $350 million for the relocation of the Hollywood Casino Joliet, as well as the construction of a hotel at Hollywood Casino Columbus and the construction of a second hotel tower at the M Resort Spa Casino at then current market rates.

Amended Pinnacle Master Lease, Boyd Master Lease and Belterra Park Lease

In April 2016, the Company acquired substantially all of the real estate assets of Pinnacle Entertainment, Inc. ("Pinnacle") for approximately $4.8 billion. The Company originally leased these assets back to Pinnacle, under a unitary triple-net lease, the term of which expires April 30, 2031, with no purchase option, followed by four remaining 5-year renewal options (exercisable by the tenant) on the same terms and conditions (the "Pinnacle Master Lease"). On October 15, 2018, the Company completed its previously announced transactions with PENN, Pinnacle and Boyd to accommodate PENN's acquisition of the majority of Pinnacle's operations, pursuant to a definitive agreement and plan of merger between PENN and Pinnacle, dated December 17, 2017 (the "PENN-Pinnacle Merger"). Concurrent with the PENN-Pinnacle Merger, the Company amended the Pinnacle Master Lease to allow for the sale of the operating assets of Ameristar Casino Hotel Kansas City, Ameristar Casino Resort Spa St. Charles and Belterra Casino Resort from Pinnacle to Boyd (the "Amended Pinnacle Master Lease") and entered into a new unitary triple-net master lease agreement with Boyd (the "Boyd Master Lease") for these properties on terms similar to the Company’s Amended Pinnacle Master Lease. The Boyd Master Lease has an initial term of 10 years (from the original April 2016 commencement date of the Pinnacle Master Lease and expiring April 30, 2026), with no

purchase option, followed by five 5-year renewal options (exercisable by the tenant) on the same terms and conditions. The Company also purchased the real estate assets of Plainridge Park Casino ("Plainridge Park") from PENN for $250.0 million, exclusive of transaction fees and taxes, and added this property to the Amended Pinnacle Master Lease. The Amended Pinnacle Master Lease was assumed by PENN at the consummation of the PENN-Pinnacle Merger. The Company also entered into a mortgage loan agreement with Boyd in connection with Boyd's acquisition of Belterra Park Gaming & Entertainment Center ("Belterra Park"), whereby the Company loaned Boyd $57.7 million (the "Belterra Park Loan"). In May 2020, the Company acquired the real estate of Belterra Park in satisfaction of the Belterra Park Loan, subject to a long-term lease (the "Belterra Park Lease") with a Boyd affiliate operating the property. The Belterra Park Lease rent terms are consistent with the Boyd Master Lease. The annual rent is comprised of a fixed component, part of which is subject to an annual escalator of up to 2% if certain rent coverage ratio thresholds are met, and a component that is based on the performance of the facilities which is adjusted, subject to certain floors, every two years to an amount equal to 4% of the average annual net revenues of Belterra Park during the preceding two years in excess of a contractual baseline.

Third Amended and Restated Caesars Master Lease

On October 1, 2018, the Company closed its previously announced transaction to acquire certain real property assets from Tropicana Entertainment Inc. ("Tropicana") and certain of its affiliates pursuant to a Purchase and Sale Agreement dated April 15, 2018 between Tropicana and GLP Capital, which was subsequently amended on October 1, 2018 (as amended, the "Amended Real Estate Purchase Agreement"). Pursuant to the terms of the Amended Real Estate Purchase Agreement, the Company acquired the real estate assets of Tropicana Atlantic City, Tropicana Evansville, Tropicana Laughlin, Trop Casino Greenville and the Belle of Baton Rouge ("The Belle") (the "GLP Assets") from Tropicana for an aggregate cash purchase price of $964.0 million, exclusive of transaction fees and taxes (the "Tropicana Acquisition"). Concurrent with the Tropicana Acquisition, Eldorado Resorts, Inc. (now doing business as Caesars) acquired the operating assets of these properties from Tropicana pursuant to an Agreement and Plan of Merger dated April 15, 2018 by and among Tropicana, GLP Capital, Caesars and a wholly-owned subsidiary of Caesars and leased the GLP Assets from the Company pursuant to the terms of a new unitary triple-net master lease with an initial term of 15 years, with no purchase option, followed by four successive 5-year renewal periods (exercisable by the tenant) on the same terms and conditions (the "Caesars Master Lease").

On June 15, 2020, the Company amended and restated the Caesars Master Lease (as amended, the "Amended and Restated Caesars Master Lease") to, (i) extend the initial term of 15 years to 20 years, with renewals of up to an additional 20 years at the option of Caesars, (ii) remove the variable rent component in its entirety commencing with the third lease year, (iii) in the third lease year, increase annual land base rent and annual building base rent, (iv) provide fixed escalation percentages that delay the escalation of building base rent until the commencement of the fifth lease year with building base rent increasing annually by 1.25% in the fifth and sixth lease years, 1.75% in the seventh and eighth lease years and 2% in the ninth lease year and each lease year thereafter, (v) subject to the satisfaction of certain conditions, permit Caesars to elect to replace the Tropicana Evansville and/or Trop Casino Greenville properties under the Amended and Restated Caesars Master Lease with one or more of Caesars Gaming Scioto Downs, The Row in Reno, Isle Casino Racing Pompano Park, Isle Casino Hotel – Black Hawk, Lady Luck Casino – Black Hawk, Isle Casino Waterloo ("Waterloo"), Isle Casino Bettendorf ("Bettendorf") or Isle of Capri Casino Boonville, provided that the aggregate value of such new property, individually or collectively, was at least equal to the value of Tropicana Evansville or Tropicana Greenville, as applicable, (vi) permit Caesars to elect to sell its interest in The Belle and sever it from the Amended and Restated Caesars Master Lease (with no change to the rent obligation to the Company), subject to the satisfaction of certain conditions, and (vii) provide certain relief under the operating, capital expenditure and financial covenants thereunder in the event of facility closures due to pandemics, governmental restrictions and certain other instances of unavoidable delay. The effectiveness of the Amended and Restated Caesars Master Lease was subject to the review and approval of certain gaming regulatory agencies and the expiration of applicable gaming regulatory advance notice periods which conditions were satisfied on July 23, 2020.

On December 18, 2020, the Company and Caesars amended and restated the Amended and Restated Caesars Master Lease (as amended and restated, the "Second Amended and Restated Caesars Master Lease") in connection with the completion of an Exchange Agreement (the "Exchange Agreement") with subsidiaries of Caesars in which Caesars transferred to the Company the real estate assets of Waterloo and Bettendorf in exchange for the transfer by the Company to Caesars of the real property assets of Tropicana Evansville, plus a cash payment of $5.7 million. In connection with the Exchange Agreement, the annual building base rent and the annual land base rent were increased.

On November 13, 2023, the Company and Caesars amended and restated the Second Amended and Restated Caesars Master Lease (as amended and restated, the "Third Amended and Restated Caesars Master Lease") in connection with Caesars selling its interest in The Belle to Casino Queen with no change in rent obligation to the Company.

Horseshoe St. Louis Lease

On October 1, 2018, the Company entered into a loan agreement with Caesars in connection with Caesars acquisition of Lumière Place Casino, now known as Horseshoe St. Louis, whereby the Company loaned Caesars $246.0 million (the "CZR loan"). The CZR loan bore interest at a rate equal to (i) 9.09% until October 1, 2019 and (ii) 9.27% until its maturity. On the one-year anniversary of the CZR loan, the mortgage evidenced by a deed of trust on the Horseshoe St. Louis property terminated and the loan became unsecured. On June 24, 2020, the Company received approval from the Missouri Gaming Commission to own the real estate assets of the Horseshoe St. Louis property in satisfaction of the CZR loan. On September 29, 2020, the transaction closed and the Company entered into a new single property triple net lease with an affiliate of Caesars (the "Horseshoe St. Louis Lease") the initial term of which expires on October 31, 2033, with four separate renewal options of five years each, exercisable at the tenant's option. The Horseshoe St. Louis Lease was amended on December 1, 2021 to adjust the rent terms such that the annual escalator is now fixed at 1.25% for the second through fifth lease years, increasing to 1.75% for the sixth and seventh lease years and thereafter increasing by 2.0% for the remainder of the lease.

Bally's Master Lease

On June 3, 2021, the Company completed its previously announced transaction pursuant to which a subsidiary of Bally's acquired 100% of the equity interests in the Caesars subsidiary that currently operates Tropicana Evansville and the Company reacquired the real property assets of Tropicana Evansville from Caesars for a cash purchase price of approximately $340.0 million. In addition, the Company purchased the real estate assets of Dover Downs Hotel & Casino (now Bally's Dover Casino Resort) from Bally's for a cash purchase price of approximately $144.0 million. The real estate assets of these two facilities were added to a new triple net master lease (the "Bally's Master Lease") the annual rent of which is subject to contractual escalations based on the Consumer Price Index ("CPI") with a 1% floor and a 2% ceiling, subject to the CPI meeting a 0.5% threshold. The Bally's Master Lease has an initial term of 15 years, with no purchase option, followed by four 5-year renewal options (exercisable by the tenant) on the same terms and conditions.

The Company completed the acquisitions of the real estate assets of Bally's Black Hawk and Bally's Quad Cities on April 1, 2022 and Bally's Biloxi and Bally's Tiverton on January 3, 2023. The Bally's Master Lease was amended to add these properties with annual rent increases that are subject to the escalation clauses described above.

In connection with GLPI’s commitment to consummate the Bally’s Biloxi and Bally's Tiverton acquisitions, the Company also agreed to pre-fund, at Bally’s election, a deposit of up to $200.0 million, which was funded in September 2022. This amount was credited to the Company along with a $9.0 million transaction fee payable at closing which occurred on January 3, 2023. The Company continues to have the option, subject to receipt by Bally's of required consents, to acquire the real property assets of Bally's Twin River Lincoln Casino Resort ("Bally's Lincoln") prior to December 31, 2026 for a purchase price of $735.0 million and additional rent of $58.8 million. The Company has also been granted a call right, subject only to regulatory approval, beginning on October 1, 2026 to ensure that the Company has the opportunity to acquire the property prior to the expiration of the current option period.

On July 12, 2024, the Company announced that it entered into a binding term sheet with Bally’s pursuant to which the Company intends to acquire the real property assets of Bally’s Kansas City Casino (“Bally’s Kansas City”) and Bally’s Shreveport Casino & Hotel (“Bally’s Shreveport”) as well as the land under Bally’s planned permanent Chicago casino site, and fund the construction of certain real property improvements of the Bally’s Chicago Casino Resort (“Bally’s Chicago”) for aggregate consideration of approximately $1.585 billion. The term sheet represents a binding agreement between the Company and Bally's unless or until superseded by long-form definitive documents reflecting mutually agreed transaction terms and conditions in further detail.

The Company intends to fund construction hard costs of up to $940.0 million for Bally's Chicago, with the remainder to be funded by Bally’s with the sale leaseback proceeds related to Bally’s Kansas City and Bally’s Shreveport along with other funding sources such as Bally’s Chicago’s planned initial public offering and cash flows from operations. Funding is expected to occur through December 2026. The Company would own all funded improvements, which would be leased to Bally’s with rent commencing as advances are made.

On September 11, 2024, the Company assumed the ground lease between the existing third party and Bally's for approximately $250 million. The ground lease was amended such that GLPI receives initial annual rent of $20 million (the "Bally's Chicago Land Lease"). The Bally's Chicago Land Lease is cross-defaulted with the construction development funding agreement. The parties anticipate entering into a new Bally's Chicago Land Lease to conform certain lease terms to be consistent with what was agreed upon between the Company and Bally's that were disclosed in the binding term sheet

mentioned above. Upon completion of the improvements, the Company expects to own substantially all of the real estate land and improvements related to the Chicago casino and hotel for a total investment of $1.19 billion. Rental income on the land and development funding is being deferred until the project is substantially completed and ready for its intended use.

The Company intends to purchase the real property assets of both Bally’s Kansas City and Bally’s Shreveport for total consideration of $395 million. The two properties would be in a new Bally’s Master Lease that would be cross-defaulted with the existing Bally’s Master Lease with initial cash rent pursuant to the agreement for the two new properties of $32.2 million. The Company expects to close on the proposed Bally’s Kansas City and Bally’s Shreveport sale leaseback transactions as early as the fourth quarter of 2024, subject to customary regulatory and other approvals.

The contemplated transactions are subject to several conditions as well as certain third-party consents and regulatory approvals. Key conditions include but are not limited to: (a) the final structure and pro forma capitalization of Bally’s following the proposed acquisition of Bally's by Standard General, or similar transaction, in the event any agreement is reached with the board of directors of Bally’s; (b) completion of customary due diligence; and (c) receipt of all necessary gaming regulatory and other third party approvals.

Tropicana Las Vegas Lease

On April 16, 2020, the Company and certain of its subsidiaries closed on its previously announced transaction to acquire the real property associated with the former Tropicana Las Vegas from PENN in exchange for $307.5 million of rent credits which were applied against future rent obligations due under the parties' existing leases during 2020.

On September 26, 2022, Bally’s acquired both the Company’s building assets and PENN's outstanding equity interests in Tropicana Las Vegas for an aggregate cash acquisition price, net of fees and expenses, of approximately $145 million. GLPI retained ownership of the land and concurrently entered into a ground lease for an initial term of 50 years (with a maximum term of 99 years inclusive of tenant renewal options). All rent is subject to contractual escalations based on the CPI, with a 1% floor and 2% ceiling, subject to the CPI meeting a 0.5% threshold. The ground lease is supported by a Bally’s corporate guarantee and cross-defaulted with the Bally's Master Lease (the "Tropicana Las Vegas Lease").

On May 13, 2023, the Company, Tropicana Las Vegas, Inc., a Nevada corporation and wholly owned subsidiary of Bally’s, and Athletics Holdings LLC (“Athletics”), which owns the Major League Baseball team currently known as the Oakland Athletics (the “Team”), entered into a binding letter of intent (the “LOI”) setting forth the terms for developing a stadium that would serve as the home venue for the Team (the “Stadium”). The Stadium is expected to complement the potential casino resort redevelopment envisioned at our 35-acre property in Clark County, Nevada (the “Tropicana Site”), owned indirectly by GLPI through its indirect subsidiary, Tropicana Land LLC, a Nevada limited liability company and leased by the Company to Bally’s pursuant to the Tropicana Las Vegas Lease. The LOI allows for Athletics to be granted fee ownership by the Company of approximately 9 acres of the Tropicana Site for construction of the Stadium. The LOI provides that following the Stadium site transfer, there will be no reduction in the rent obligations of Bally’s on the remaining portion of the Tropicana Site or other modifications to the Tropicana Las Vegas Lease, and that to the extent the Company has any consent or approval rights under the Tropicana Las Vegas Lease, such rights shall remain enforceable unless expressly modified in writing in the definitive documents. Bally's and the Company agreed to provide the Stadium site transfer in exchange for the benefits that the Stadium is expected to bring to the Tropicana Site. The LOI provides that Athletics shall pay all the costs associated with the design, development, and construction of the Stadium and Bally’s shall pay all costs for the redevelopment of the casino and hotel resort amenities. The Company is expected to commit to up to $175.0 million of funding for hard construction costs, such as demolition and site preparation and build out of minimum public spaces needed for utilization of the Stadium. The LOI provides that during the development period, rent will be due at 8.5% of what has been funded, provided that the first $15.0 million advanced for the costs of construction of the food, beverage and retail entrance plaza shall not be subject to increased rent. The Company may have the opportunity to fund additional amounts of the construction under certain circumstances. In addition, the LOI provides that the transaction will be subject to customary approvals and other conditions, including, without limitation, approval of a master plan for the site, and certain approvals by the Nevada Gaming Control Board and Nevada Gaming Commission.

In late August 2024, the Company funded $48.5 million to Bally's that was used to pay for the demolition costs of the Tropicana Las Vegas as part of the development plans for the Stadium and annual rent was increased by $4.1 million as a result. The change in rent terms resulted in a lease reconsideration event. The lease is now classified as a sales type lease which resulted in a $3.8 million gain that was recorded in gains from dispositions of property on the Condensed Consolidated Statement of Operations.

Morgantown Lease

On October 1, 2020, the Company and PENN closed on their previously announced transaction whereby GLPI acquired the land under PENN's gaming facility under construction in Morgantown, Pennsylvania in exchange for $30.0 million in rent credits that were utilized by PENN in the fourth quarter of 2020. The Company is leasing the land back to an affiliate of PENN for an initial term of 20 years, followed by six 5-year renewal options exercisable by the tenant. On the opening date of the gaming facility and on each anniversary thereafter for each of the following three lease years rent increased by 1.5% annually (on a prorated basis for the remainder of the lease year in which the gaming facility opened) and commencing on the fourth anniversary of the opening date and for each anniversary thereafter, (i) if the CPI increase is at least 0.5% for any lease year, the rent for such lease year shall increase by 1.25% of rent as of the immediately preceding lease year, and (ii) if the CPI increase is less than 0.5% for such lease year, then the rent shall not increase for such lease year (the "Morgantown Lease"). Hollywood Casino Morgantown opened on December 22, 2021.

Third Amended and Restated Casino Queen Master Lease

On November 25, 2020, the Company entered into a definitive agreement to sell the operations of its Hollywood Casino Baton Rouge to Casino Queen for $28.2 million (the "HCBR transaction"). The HCBR transaction closed on December 17, 2021. The Company retained ownership of all real estate assets at Hollywood Casino Baton Rouge and simultaneously entered into a triple net master lease with Casino Queen, which includes the Casino Queen property in East St. Louis that was leased by the Company to Casino Queen and the Hollywood Casino Baton Rouge facility (the "Second Amended and Restated Casino Queen Master Lease"). The lease has an initial term of 15 years with four 5-year renewal options (exercisable by the tenant) on the same terms and conditions. The annual rent increases by 0.5% for the first six years. Beginning with the seventh lease year through the remainder of the lease term, if the CPI increases by at least 0.25% for any lease year then annual rent shall be increased by 1.25%, and if the CPI increase is less than 0.25% then rent will remain unchanged for such lease year. Additionally, the Company's landside development project at Casino Queen Baton Rouge was completed in late August 2023 and the rent under the Second Amended and Restated Casino Queen Master Lease was adjusted upon opening to reflect a yield of 8.25% on GLPI's project costs of $77 million. The Company then entered into an amendment to the Second Amended and Restated Casino Queen Master Lease, in connection with the acquisition of the land and certain improvements at Casino Queen Marquette for $32.72 million as of September 6, 2023 and annual rent was increased by $2.7 million for this acquisition. Additionally, the Company anticipates funding certain construction costs for an amount not to exceed $12.5 million, for a landside development project at Casino Queen Marquette. The rent will be adjusted to reflect a yield of 8.25% for the funded project costs. The Second Amended and Restated Casino Queen Master Lease was subsequently amended and restated on November 13, 2023 to include the real estate assets of The Belle (the "Third Amended and Restated Casino Queen Master Lease").

On June 3, 2024, the Company announced that it has agreed to fund and oversee a landside move and hotel renovation of The Belle for Casino Queen. GLPI has committed to provide up to approximately $111 million of funding for the project (of which $15.0 million has been funded as of September 30, 2024), which is expected to be completed by September 2025. The casino will continue to operate during the construction period except while gaming equipment is being moved to the new facility. GLPI will own the new facility and Casino Queen will pay an incremental rental yield of 9% on the development funding beginning a year from the initial disbursement of funds, which occurred on May 30, 2024 and rent will be deferred until the facility is ready for its intended use.

Maryland Live! Lease and Pennsylvania Live! Master Lease

On December 6, 2021, the Company announced that it agreed to acquire the real property assets of Live! Casino & Hotel Maryland, Live! Casino & Hotel Philadelphia, and Live! Casino Pittsburgh, including applicable long-term ground leases, from affiliates of Cordish for aggregate consideration of approximately $1.81 billion, excluding transaction costs at deal announcement. The transaction also includes a binding partnership on future Cordish casino developments, as well as potential financing partnerships between the Company and Cordish in other areas of Cordish's portfolio of real estate and operating businesses. On December 29, 2021, the Company completed its acquisition of the real property assets of Live! Casino & Hotel Maryland and entered into a single asset lease for Live! Casino & Hotel Maryland (the "Maryland Live! Lease"). On March 1, 2022, the Company completed its acquisition of the real estate assets of Live! Casino & Hotel Philadelphia and Live! Casino Pittsburgh for $689 million and leased back the real estate to Cordish pursuant to a new triple net master lease with Cordish (as amended from time to time, the "Pennsylvania Live! Master Lease"). The Pennsylvania Live! Master Lease and the Maryland Live! Lease each have initial lease terms of 39 years, with a maximum term of 60 years inclusive of tenant renewal options. The annual rent for both leases has a 1.75% fixed yearly escalator on the entirety of rent commencing on the leases' second anniversary.

Rockford Lease

On August 29, 2023, the Company acquired the land associated with a casino development project in Rockford, IL, that opened in late August 2024 and is managed by a subsidiary of Hard Rock, from an affiliate of 815 Entertainment, LLC ("815 Entertainment") for $100.0 million. Simultaneously with the land acquisition, an affiliate of GLPI entered into a ground lease with 815 Entertainment for a 99 year term. The initial annual rent for the ground lease is $8.0 million, subject to fixed 2% annual escalation beginning with the lease's first anniversary and for the entirety of its term (the "Rockford Lease").

In addition to the Rockford Lease, the Company has also committed to providing up to $150 million of development funding via a senior secured delayed draw term loan (the "Rockford Loan"). Borrowings under the Rockford Loan are subject to an interest rate of 10%. The Rockford Loan has a maximum outstanding period of up to 6 years (5-year initial term with a 1-year extension). The Rockford Loan is prepayable without penalty following the opening of the Hard Rock Casino in Rockford, IL ("Hard Rock Casino Rockford"), which occurred in late August 2024. As of September 30, 2024, $150 million was advanced and outstanding under the Rockford Loan. Additionally, the Company also received a right of first refusal on the building improvements of the Hard Rock Casino Rockford if there is a future decision to sell them.

Tioga Downs Lease

On February 6, 2024, the Company acquired the real estate assets of Tioga Downs in Nichols, NY from American Racing for $175.0 million. Simultaneous with the acquisition, an affiliate of GLPI and American Racing entered into a triple-net lease agreement for an initial 30 year term followed by two renewal options of 10 years each and a third renewal option of approximately 12 years and ten months. The initial annual rent is $14.5 million and is subject to annual fixed escalations of 1.75% beginning with the first anniversary which increases to 2% beginning in year fifteen of the lease through the remainder of its initial term (the "Tioga Downs Lease").

Strategic Gaming Leases

On May 16, 2024, the Company acquired the real estate assets of Silverado Franklin Hotel & Gaming Complex ("Silverado"), the Deadwood Mountain Grand ("DMG") casino, and Baldini's Casino ("Baldini's") from Strategic for $105 million, plus an additional $5 million that was funded at closing for reimbursement for capital improvements. Simultaneous with the acquisition, GLPI and affiliates of Strategic entered into two cross-defaulted triple-net lease agreements, each for an initial 25-year term with two ten-year renewal periods. The initial aggregate annual cash rent for the new leases is $9.2 million and is subject to a fixed 2.0% annual escalation beginning in year three of the lease and a CPI-based annual escalation beginning in year 11 of the lease, at the greater of 2% or CPI capped at 2.5% (the "Strategic Gaming Leases").

As part of the transaction, the Company also secured a right of first refusal on the real estate related to future acquisitions until Strategic's adjusted EBITDAR related to GLPI's owned assets reaches $40 million annualized.

Ione Loan

In September 2024, the Company entered into a $110 million delayed draw term loan facility with the Ione Band of Miwok Indians ("Ione") (the "Ione Loan") to provide the tribe funding on a new casino development near Sacramento, California. Ione has an option at the end of the Ione Loan term to satisfy the loan obligation by converting the outstanding principal into a long-term lease with an initial term of twenty five years and a maximum term of forty five years. These agreements were entered into subsequent to receiving a declination letter from the National Indian Gaming Commission approving the transaction documents, including the long-term lease. As of September 30, 2024, $13.7 million was advanced and outstanding under the Ione Loan which has a 5-year term and an interest rate of 11%.

Executive Summary

Financial Highlights

We reported total revenues and income from operations of $385.3 million and $271.4 million, respectively, for the three months ended September 30, 2024, compared to $359.6 million and $268.3 million, respectively, for the corresponding period in the prior year. We reported total revenues and income from operations of $1,141.9 million and $822.5 million, respectively, for the nine months ended September 30, 2024, compared to $1,071.4 million and $773.4 million, respectively, for the corresponding period in the prior year.

The major factors affecting our results for the three and nine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023, were as follows:

•Total income from real estate increased by $25.8 million to $385.3 million for the three months ended September 30, 2024 compared to $359.6 million for the corresponding period in the prior year. The reason for the increase was primarily due to our recent acquisitions which in the aggregate increased cash rental income by $13.5 million for the three months ended September 30, 2024. Additionally, the three months ended September 30, 2024 benefited by $5.0 million compared to the corresponding period in the prior year from escalations on our leases. The Company also recognized higher accretion of $1.3 million on its Investment in leases, financing receivables and favorable straight-line rent adjustments of $5.7 million compared to the corresponding period in the prior year. Finally, the Company had favorable variable rents of $0.3 million for the three months ended September 30, 2024 compared to the corresponding period in the prior year.

•Total income from real estate increased by $70.6 million to $1,141.9 million for the nine months ended September 30, 2024 compared to the corresponding period in the prior year. The reason for the increase was due to our recent acquisitions which in the aggregate increased cash rental income by $32.3 million for the nine months ended September 30, 2024. Additionally, the nine months ended September 30, 2024 benefited by $14.7 million compared to the corresponding period in the prior year from escalations on our leases. The Company also recognized higher accretion of $4.9 million on its Investments in leases, financing receivables and favorable straight-line rent adjustments of $19.8 million compared to the corresponding period in the prior year. Finally, the Company had unfavorable variable rent of $1.2 million for the nine months ended September 30, 2024 compared to the corresponding period in the prior year primarily related to the trailing 5-year reset on the Amended PENN Master Lease that occurred on November 1, 2023 which was negatively impacted by the casino closures during the COVID-19 pandemic.

•Total operating expenses increased by $22.6 million for the three months ended September 30, 2024 as compared to the corresponding period in the prior year. The provision for credit losses, net, increased by $26.1 million during the three months ended September 30, 2024. The provision increased due primarily from the initial establishment of reserves on the Tropicana Las Vegas Lease which is now classified as a sales type lease due to a lease reconsideration event that occurred during the period (See Note 1 for further details). Additionally, land rights and ground lease expense decreased by $0.6 million due primarily due to the purchase of land that was previously subject to a land lease. Additionally, general and administrative expenses decreased by $0.1 million and depreciation expense decreased by $1.1 million for the three months ended September 30, 2024 as compared to the corresponding period in the prior year due to certain assets being fully depreciated. The three months ended September 30, 2024 also had a gain of $3.8 million on the reclassification of the Tropicana Las Vegas Lease to a sales type lease in connection with a lease reconsideration event which occurred during the period (See Note 1 for further details). The three months ended September 30, 2023 had a property transfer tax recovery of $2.2 million related to a successful appeal initiated by our tenant.

•Total operating expenses increased by $21.5 million for the nine months ended September 30, 2024 as compared to the corresponding period in the prior year. The provision for credit losses, net, increased by $23.2 million during the nine months ended September 30, 2024. The provision increased due primarily from the initial establishment of reserves for the Tropicana Las Vegas Lease. General and administrative expenses increased by $2.5 million due primarily to higher stock based compensation costs, franchise taxes, and transaction costs. Additionally, land rights and ground lease expense decreased by $0.9 million due primarily to the purchase of land that was previously subject to a land lease. Finally, depreciation expense decreased by $1.7 million for the nine months ended September 30, 2024 as compared to the corresponding period in the prior year due to certain assets being fully depreciated. The nine months ended September 30, 2024 also had a gain of $3.8 million on the reclassification of the Tropicana Las Vegas Lease to a sales type lease in connection with a lease reconsideration event which occurred during the period (See Note 1 for further details). The nine months ended September 30, 2023 had a property transfer tax recovery of $2.2 million related to a successful appeal initiated by our tenant.

•Other expenses increased by $2.3 million for the three months ended September 30, 2024, primarily due to higher interest expense of $15.9 million associated with the Company's increased borrowings to fund our recent acquisitions. These items were partially offset by higher interest income of $13.6 million as compared to the corresponding period in the prior year because of higher average interest earning balances and higher rates earned on these balances during the current year.

•Other expenses increased by $2.6 million for the nine months ended September 30, 2024, primarily due to higher interest expense of $28.5 million associated with the Company's increased borrowings to fund our recent acquisitions. These items were partially offset by higher interest income of $25.4 million as compared to the corresponding period in the prior year because of higher average interest earning balances and higher rates earned on these balances during the current year. The nine months ended September 30, 2023 also included debt extinguishment charges of $0.6 million.

•Net income increased by $0.8 million and $45.9 million for the three and nine months ended September 30, 2024, as compared to the corresponding periods in the prior year, primarily due to the variances explained above.

Critical Accounting Estimates

We make certain judgments and use certain estimates and assumptions when applying accounting principles in the preparation of our consolidated financial statements. The nature of the estimates and assumptions are material due to the levels of subjectivity and judgment necessary to account for highly uncertain factors or the susceptibility of such factors to change. We have identified the accounting for leases, investment in leases, net, allowance for credit losses, income taxes, and real estate investments as critical accounting estimates, as they are the most important to our financial statement presentation and require difficult, subjective and complex judgments.

We believe the current assumptions and other considerations used to estimate amounts reflected in our condensed consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations and, in certain situations, could have a material adverse effect on our consolidated financial condition.

For further information on our critical accounting estimates, see Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and the Notes to our audited consolidated financial statements included in our most recent Annual Report. There has been no material change to these estimates for the three and nine months ended September 30, 2024.

Results of Operations

The following are the most important factors and trends that contribute or may contribute to our operating performance:

•We have announced or closed numerous transactions in recent years and expect to continue to grow our portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators under prudent terms.

•Several wholly-owned subsidiaries of PENN lease a substantial number of our properties and account for a significant portion of our revenue.

•Risks related to economic conditions, including stress in the banking sector, high inflation levels (that have been negatively impacted by the armed conflict between Russia and Ukraine as well as conflicts in the Middle East) and the effect of such conditions on consumer spending for leisure and gaming activities, which may negatively impact our gaming tenants and operators and the variable rent and certain annual rent escalators we receive from our tenants as outlined in the long-term triple-net leases with these tenants.

•The ability to service or refinance our significant levels of debt at attractive terms and obtain favorable funding in connection with future business opportunities.

•The fact that the rules and regulations of U.S. federal income taxation are constantly under review by legislators, the Internal Revenue Service and the U.S. Department of the Treasury. Changes to the tax laws or interpretations thereof, with or without retroactive application, could materially and adversely affect GLPI and its investors.

The consolidated results of operations for the three and nine months ended September 30, 2024 and 2023 are summarized below:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)







Total revenues	$	385,341	$	359,560	$	1,141,931	$	1,071,363







Total operating expenses	113,897		91,256		319,452		297,935
Income from operations	271,444		268,304		822,479		773,428
Total other expenses	(80,829)		(78,515)		(236,877)		(234,274)
Income before income taxes	190,615		189,789		585,602		539,154
Income tax expense	515		482		1,564		1,040
Net income	$	190,100	$	189,307	$	584,038	$	538,114
Net income attributable to non-controlling interest in the Operating Partnership	(5,406)		(5,297)		(16,630)		(15,123)
Net income attributable to common shareholders	$	184,694	$	184,010	$	567,408	$	522,991

FFO, AFFO and Adjusted EBITDA

Funds From Operations ("FFO"), Adjusted Funds From Operations ("AFFO") and Adjusted EBITDA are non-U.S. generally accepted accounting principles ("GAAP") financial measures used by the Company as performance measures for benchmarking against the Company’s peers and as internal measures of business operating performance, which is used as a bonus metric. These metrics are presented assuming full conversion of limited partnership units to common shares and therefore before the income statement impact of non-controlling interests. The Company believes FFO, AFFO and Adjusted EBITDA provide a meaningful perspective of the underlying operating performance of the Company’s current business. This is especially true since these measures exclude real estate depreciation and we believe that real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time.

FFO, AFFO and Adjusted EBITDA are non-GAAP financial measures that are considered supplemental measures for the real estate industry and a supplement to GAAP measures. The National Association of Real Estate Investment Trusts defines FFO as net income (computed in accordance with GAAP), excluding (gains) or losses from dispositions of property, net of tax and real estate depreciation. We define AFFO as FFO excluding, as applicable to the particular period, stock based compensation expense; the amortization of debt issuance costs, bond premiums and original issuance discounts; other depreciation; amortization of land rights; accretion on investment in leases, financing receivables; non-cash adjustments to financing lease liabilities; property transfer tax

recoveries and impairment charges; straight-line rent and deferred rent adjustments; losses on debt extinguishment; capitalized interest; and provision (benefit) for credit losses, net, reduced by capital maintenance expenditures. Finally, we define Adjusted EBITDA as net income excluding, as applicable to the particular period, interest, net; income tax expense; real estate depreciation; other depreciation; (gains) or losses from dispositions of property, net of tax; stock based compensation expense; straight-line rent and deferred rent adjustments; amortization of land rights; accretion on Investment in leases, financing receivables; non-cash adjustments to financing lease liabilities; property transfer tax recoveries and impairment charges; losses on debt extinguishment; and provision (benefit) for credit losses, net.

FFO, AFFO and Adjusted EBITDA are not recognized terms under GAAP. These non-GAAP financial measures: (i) do not represent cash flows from operations as defined by GAAP; (ii) should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating, investing and financing activities; and (iii) are not alternatives to cash flows as a measure of liquidity. In addition, these measures should not be viewed as an indication of our ability to fund our cash needs, including to make cash distributions to our shareholders, to fund capital improvements, or to make interest payments on our indebtedness. Investors are also cautioned that FFO, AFFO and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures reported by other real estate companies, including REITs, due to the fact that not all real estate companies use the same definitions. Our presentation of these measures does not replace the presentation of our financial results in accordance with GAAP.

The reconciliation of the Company’s net income per GAAP to FFO, AFFO, and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
Net income	$	190,100	$	189,307	$	584,038	$	538,114
Gains from dispositions of property, net of tax	(3,790)		(22)		(3,790)		(22)
Real estate depreciation	64,289		65,155		193,943		195,494
Funds from operations	$	250,599	$	254,440	$	774,191	$	733,586
Straight-line rent and deferred rent adjustments (1)	(14,682)		(8,942)		(46,262)		(26,445)

Other depreciation	482		691		1,450		1,637
Provision (benefit) for credit losses, net	27,686		1,613		47,194		24,012
Amortization of land rights	3,276		3,699		9,828		10,278
Amortization of debt issuance costs, bond premiums and original issuance discounts	2,803		2,406		8,172		7,312
Stock based compensation	5,463		5,139		19,010		17,959
Losses on debt extinguishment	—		—		—		556
Accretion on investment in leases, financing receivables	(7,093)		(5,813)		(21,753)		(16,806)
Non-cash adjustment to financing lease liabilities	112		122		358		347
Capitalized interest	(857)		—		(857)		—
Property transfer tax recovery	—		(2,187)		—		(2,187)
Capital maintenance expenditures	453		(17)		(99)		(25)
Adjusted funds from operations	$	268,242	$	251,151	$	791,232	$	750,224
Interest, net	80,047		77,835		234,697		231,707
Income tax expense	515		482		1,564		1,040
Capital maintenance expenditures	(453)		17		99		25
Amortization of debt issuance costs, bond premiums and original issuance discounts	(2,803)		(2,406)		(8,172)		(7,312)
Capitalized interest	857		—		857		—
Adjusted EBITDA	$	346,405	$	327,079	$	1,020,277	$	975,684

(1) Current year amount includes $0.1 million and $0.2 million for the three months and nine months ended September 30, 2024, respectively, of tenant improvement allowance amortization.

Net income, FFO, AFFO and Adjusted EBITDA were $190.1 million, $250.6 million, $268.2 million, and $346.4 million for the three months ended September 30, 2024, respectively. This compares to net income, FFO, AFFO and Adjusted EBITDA of $189.3 million, $254.4 million, $251.2 million and $327.1 million for the corresponding period in the prior year. The increase in net income of $0.8 million was primarily attributable to an increase in total revenues of $25.8 million, partially offset by increased operating expenses of $22.6 million (which was driven by the increase in provision for credit losses of $26.1 million) and higher other expenses of $2.3 million.

Net income, FFO, AFFO and Adjusted EBITDA were $584.0 million, $774.2 million, $791.2 million, and $1,020.3 million for the nine months ended September 30, 2024, respectively. This compares to net income, FFO, AFFO and Adjusted EBITDA of $538.1 million, $733.6 million, $750.2 million and $975.7 million for the corresponding period in the prior year. The increase in net income of $45.9 million was primarily attributable to an increase in total revenues of $70.6 million, partially offset by higher operating expenses of $21.5 million (which was a result of an increase in provision for credit losses of $23.2 million) and higher other expenses of $2.6 million.

The increases in FFO for the three months and nine months ended September 30, 2024 were due to the items described above, excluding gains from dispositions of property and real estate depreciation. The increases in AFFO and Adjusted EBITDA were due to the items described above, as well as the adjustments mentioned in the tables above.

Revenues

Revenues for the three months and nine months ended September 30, 2024 and 2023 were as follows (in thousands):


	Three Months Ended September 30,						Percentage
	2024		2023		Variance		Variance
Rental income	$	333,244	$	321,206	$	12,038	3.7	%

Income from investment in leases, financing receivables	47,503		38,332		9,171		23.9	%
Income from sales-type leases	1,240		—		1,240		N/A
Interest income from real estate loans	3,354		22		3,332		N/A
Total income from real estate	$	385,341	$	359,560	$	25,781	7.2	%


	Nine Months Ended September 30,						Percentage
	2024		2023		Variance		Variance
Rental income	$	996,641	$	958,410	$	38,231	4.0	%


	Nine Months Ended September 30,				Percentage
	2024	2023	Variance		Variance
Land rights and ground lease expense	35,446	36,312	(866)		(2.4)	%
General and administrative	45,209	42,689	2,520		5.9	%
Gains from dispositions	(3,790)	(22)	(3,768)		17,127.3	%
Depreciation	195,393	197,131	(1,738)		(0.9)	%
Property transfer tax recovery	—	(2,187)	2,187		(100.0)	%
Provision for credit losses	47,194	24,012	23,182		96.5	%
Total operating expenses	319,452	297,935	$	21,517	7.2	%

Land rights and ground lease expense

Land rights and ground lease expense includes the amortization of land rights and rent expense related to the Company's long-term ground leases. The land rights and ground lease expense declines for the three and nine months ended September 30, 2024, as compared to the corresponding period in the prior year was primarily due to the acquisition of certain land that was previously subject to ground leases.

General and Administrative Expense

General and administrative expenses include items such as compensation costs (including stock-based compensation), professional services and costs associated with development activities. General and administrative expenses decreased by $0.1 million and increased by $2.5 million for the three and nine months ended September 30, 2024 as compared to the corresponding period in the prior year. The reason for the increase for the nine month period ended September 30, 2024 was primarily due to higher stock based compensation costs, franchise taxes and payroll costs.

Gains from dispositions

Gains from dispositions for the three and nine months ended September 30, 2024 of $3.8 million was due to the lease reconsideration event for the Tropicana Las Vegas Lease which resulted in the lease being reclassified from an operating lease to a sales type lease. See Note 1 for further discussion.

Depreciation

Depreciation expense decreased by $1.1 million and $1.7 million for the three and nine months ended September 30, 2024 as compared to the corresponding period in the prior year due to certain assets being fully depreciated.

Property transfer tax recovery

During the three and nine months ended September 30, 2023, the Company recorded a property transfer tax recovery of $2.2 million related to a successful appeal initiated by our tenant.

Provision for credit losses

The Company recorded a provision for credit losses of $27.7 million for the three months ended September 30, 2024 compared to a provision for credit losses of $1.6 million for the corresponding period in the prior year. As described in Note 3, the Company follows ASC 326 “Credit Losses”, which requires that the Company measure and record current expected credit losses, the scope of which includes our Investments in leases, - financing receivables, net as well as the Company's real estate loans and related loan commitment.

The reason for the significant provision during the three months ended September 30, 2024 was due primarily to the establishment of the initial reserves associated with the Tropicana Las Vegas Lease. During the nine months ended September 30, 2024, the Company recorded a provision of $47.2 million compared to $24.0 million for the corresponding period in the prior year. The primary reason for these provisions was due to the aforementioned reserves associated with the Tropicana Las Vegas Lease as well as declines in the estimated real estate values underlying the Company's Investment in leases, financing receivables. These values are estimated based on long term projections of the Commercial Real Estate Price Index which, as of September 30, 2024 and September 30, 2023, have declined compared to the year end levels at December 31, 2023 and December 31, 2022, respectively.

Future changes in economic probability factors, changes in the estimated value of our real estate property and earnings assumptions at the underlying facilities may result in non-cash provisions or recoveries in future periods that could materially impact our results of operations.

Other income (expenses)

Other income (expenses) for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):


	Three Months Ended September 30,						Percentage
	2024		2023		Variance		Variance
Interest expense	$	(95,705)	$	(79,788)	$	(15,917)	19.9	%
Interest income	14,876		1,273		13,603		1,068.6	%

3.1	Amended and Restated Articles of Incorporation of Gaming and Leisure Properties, Inc. (Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on June 15, 2018).
3.2	Second Amended and Restated Bylaws of Gaming and Leisure Properties, Inc. (Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on December 13, 2023.)
4.1	Thirteenth Supplemental Indenture, dated as of August 6, 2024, among GLP Capital, L.P. and GLP Financing II, Inc. as Issuers, Gaming and Leisure Properties, Inc. as Parent Guarantor, and Computershare Trust Company, N.A. as successor to Wells Fargo Bank, National Association, as Trustee (Incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed on August 12, 2024).
4.2	Fourteenth Supplemental Indenture, dated as of August 6, 2024, among GLP Capital, L.P. and GLP Financing II, Inc. as Issuers, Gaming and Leisure Properties, Inc. as Parent Guarantor, and Computershare Trust Company, N.A. as successor to Wells Fargo Bank, National Association, as Trustee (Incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed on August 12, 2024).
4.3	Form of 2034 Note (Included in Exhibit 4.1 above)
4.4	Form of 2054 Note (Included in Exhibit 4.2 above)
10.1	Binding Term Sheet, dated July 11, 2024, by and between GLP Capital, L.P. and Bally's Corporation (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 12, 2024).
22.1 *	List of Subsidiary Issuers of Guaranteed Securities
31.1*	Principal Executive Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
31.2*	Principal Financial Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
32.1**	Principal Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2022.
101	The following financial information from Gaming and Leisure Properties, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Changes in Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to the Condensed Consolidated Financial Statements.
104	The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL and contained in Exhibit 101.

* Filed herewith

** Furnished herewith

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	GAMING AND LEISURE PROPERTIES, INC.

October 24, 2024	By:	/s/ DESIREE A. BURKE
		Desiree A. Burke
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)

Gaming & Leisure Properties, Inc. - Quarter Report: 2024 September (Form 10-Q)

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