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

Held to maturity investment securities Other assets Total assets$ $ LiabilitiesAccounts payable and accrued expenses$ $ Accrued interest Accrued salaries and wages Operating lease liabilities Financing lease liabilities Long-term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts Deferred rental revenue

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

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

()

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

()

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Gaming and Leisure Properties, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)


Three months ended March 31,	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	()	()
Accretion on held to maturity investment securities	()
Non-cash adjustment to financing lease liabilities



Stock-based compensation
Straight-line rent adjustments and tenant improvement amortization	()	()

Losses on debt extinguishment

Provision (benefit) for credit losses, net		()

(Increase), decrease
Other assets	()	()
Increase, (decrease)
Accounts payable and accrued expenses	()
Accrued interest		()
Accrued salaries and wages	()	()
Other liabilities


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


Investment in leases, financing receivables	()
Acquisition of real estate, net		()
Originations of real estate loans	()
Acquisition 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	()	()
Costs paid on senior unsecured note redemption		()
Net cash used in financing activities	()	()
Net decrease in cash and cash equivalents	()	()


	Balance at December 31, 2022	Change in Allowance		Ending Balance at March 31, 2023
Maryland Live! Lease	$	$	()	$
Pennsylvania Live! Master Lease		()
Totals	$	$	()	$

() ()%

During the three months ended March 31, 2024, the Company recorded a provision for credit losses, net of $22.2 million on the Investment in leases, financing receivables. This 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 the actual and long term projections of the Commercial Real Estate Price Index which, as of March 31, 2024 have declined relative to December 31, 2023. Commercial real estate prices are anticipated to remain at low levels for several quarters based on the third party economic forecast the Company utilizes to calculate its reserve for credit losses. Additionally, a provision for credit losses of $1.1 million was recorded during the three months ended March 31, 2024 on the Company's real estate loans and related loan commitment (See Note 5 for further details).

During the three months ended March 31, 2023, the Company recorded a benefit for credit losses, net of $ million. The majority of this benefit was the result of the underlying casino operations in the Pennsylvania Live! Master Lease outperforming the budgeted expectations that were utilized in the reserve calculation at December 31, 2022.

The reason for the higher allowance for credit losses as a percentage of the outstanding investment in leases for the Rockford Lease and the Pennsylvania Live! Master Lease compared to the Maryland Live! Lease and the Tioga Downs Lease is primarily due to the significantly higher rent coverage ratio on the Maryland Live! Lease compared to the Pennsylvania Live!

Table of Contents

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

million of the $ million commitment was drawn as of March 31, 2024. The Rockford Loan has a % interest rate and a maximum outstanding period of up to years ( initial term with a extension).

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

)Change in allowance()Ending balance at March 31,2024$()

The Rockford Loan is subject to CECL, which is described in Note 3. The Company recorded provision for credit losses of $0.7 million for the three month period ended March 31, 2024 on the Rockford Loan. Additionally, the Company recorded a provision of $0.4 million during the three month period ended March 31, 2024 on the Rockford Loan for the associated $ million unfunded loan commitment. The reserve for the unfunded loan commitment was recorded in other

Table of Contents

$ 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

Lease Expense

Operating lease costs represent the entire amount of expense recognized for operating leases that are recorded on the condensed consolidated balance sheets. Variable lease costs are not included in the measurement of the lease liability and include both lease payments tied to a property's performance and changes in an index such as the CPI that are not determinable at lease commencement, while short-term lease costs are costs for those operating leases with a term of 12 months or less.

The components of lease expense were as follows (in thousands):

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

(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 landlords by the Company's tenants. Although GLPI 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.

Financing Lease Liabilities

In connection with the acquisition of the real property assets of Live! Casino & Hotel Maryland, the Company acquired the rights to land subject to a long-term ground lease which expires on June 6, 2111. As the Maryland Live! Lease was accounted for as an Investment in lease, financing receivable, the underlying ground lease was accounted for as a financing lease obligation within Lease liabilities on the Condensed Consolidated Balance Sheets. In accordance with ASC 842, the Company records revenue for the ground lease rent paid by its tenant with an offsetting expense in interest expense as the Company has concluded that as the lessee it is the primary obligor under the ground leases. The ground lease contains variable lease payments based on a percentage of gaming revenues generated by the facility and has fixed minimum annual payments. The Company discounted the fixed minimum annual payments at 5.0% to arrive at the initial lease obligation.

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

million revolver$ $

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 three months ended March 31, 2024, the Company sold million shares of its common stock under the 2022 ATM Program which raised net proceeds of $ million. As of March 31, 2024, the Company had $ million remaining for issuance under the 2022 ATM Program.

Non-controlling interests

As partial consideration for the closing of various real property assets over the past few years, the Company's operating partnership has issued OP Units. The OP Units are exchangeable for common shares of the Company on a one-for-one basis, subject to certain terms and conditions. As partial consideration for the closing of the real property assets under the Tioga Downs Lease that occurred on February 6, 2024, the Company’s operating partnership issued newly-issued OP units to an affiliate of Tioga Downs which were valued at $ million. As of March 31, 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 month periods ended March 31, 2024 and March 31, 2023, respectively.

Dividends

First Quarter 2024March 29, 2024$2023February 22, 2023March 10, 2023Common Stock$First Quarter 2023March 24, 2023$February 22, 2023March 10, 2023Common Stock$First Quarter 2023March 24, 2023$(in thousands)

(in thousands)

(1) Current year amount includes $0.1 million of tenant improvement allowance amortization.

Net income, FFO, AFFO and Adjusted EBITDA were $179.5 million, $244.4 million, $258.6 million, and $333.4 million for the three months ended March 31, 2024, respectively. This compares to net income, FFO, AFFO and Adjusted EBITDA of $188.7 million, $253.8 million, $248.6 million and $323.1 million for the corresponding period in the prior year. The decrease in net income of $9.1 million was primarily attributable to increased operating expenses by $30.0 million (which was driven by the increase in provision for credit losses of $28.9 million) partially offset by an increase in total revenues of $20.8 million and lower other expenses of $0.2 million.

The decrease in FFO for the three months ended March 31, 2024 was 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 ended March 31, 2024 and 2023 were as follows (in thousands):


	Three Months Ended March 31,						Percentage
	2024		2023		Variance		Variance
Rental income	$	330,582	$	317,968	$	12,614	4.0	%

Interest income from real estate	44,305		37,246		7,059		19.0	%
Interest income from real estate loans	1,077		—		1,077		N/A
Total income from real estate	$	375,964	$	355,214	$	20,750	5.8	%

Total income from real estate

•Total income from real estate increased by $20.8 million to $376.0 million for the three months ended March 31, 2024 compared to $355.2 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 $7.9 million for the three months ended March 31, 2024. Additionally, the three months ended March 31, 2024 benefited by $4.8 million compared to the corresponding period in the prior year from escalations on our leases. The Company also recognized higher accretion of $2.4 million on its Investment in leases, financing receivables and favorable straight-line rent adjustments of $7.0 million compared to the corresponding period in the prior year. Finally, the Company had unfavorable variable rent of $1.3 million for the three months ended March 31, 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.

Details of the Company's income from real estate for the three months ended March 31, 2024 was as follows (in thousands)


Three Months Ended March 31, 2024	Building base rent		Land base rent		Percentage rent and other rental revenue		Interest income on real estate loans		Total cash income		Straight-line rent adjustments (1)		Ground rent in revenue		Accretion on financing leases		Total income from real estate
Amended PENN Master Lease	$	53,090	$	10,759	$	6,519	$	—	$	70,368	$	4,952	$	569	$	—	$	75,889
PENN 2023 Master Lease	58,913		—		(107)		—		58,806		5,622		—		—		64,428
Amended Pinnacle Master Lease	60,277		17,814		7,164		—		85,255		1,858		2,063		—		89,176
PENN Morgantown Lease	—		784		—		—		784		—		—		—		784
Caesars Master Lease	16,022		5,932		—		—		21,954		2,196		330		—		24,480
Horseshoe St. Louis Lease	5,918		—		—		—		5,918		399		—		—		6,317
Boyd Master Lease	20,068		2,946		2,566		—		25,580		574		432		—		26,586
Boyd Belterra Lease	709		473		472		—		1,654		151		—		—		1,805
Bally's Master Lease	25,893		—		—		—		25,893		—		2,689		—		28,582
Maryland Live! Lease	19,078		—		—		—		19,078		—		2,160		4,529		25,767
Pennsylvania Live! Master Lease	12,573		—		—		—		12,573		—		311		2,273		15,157
Casino Queen Master Lease	7,905		—		—		—		7,905		38		—		—		7,943
Tropicana Las Vegas Lease	—		2,678		—		—		2,678		—		—		—		2,678
Rockford Lease	—		2,000		—		—		2,000		—		—		498		2,498
Rockford Loan	—		—		—		1,077		1,077		—		—		—		1,077
Tioga Downs Lease	2,212		—		—		—		2,212		—		1		584		2,797
Total	$	282,658	$	43,386	$	16,614	$	1,077	$	343,735	$	15,790	$	8,555	$	7,884	$	375,964

(1) Current year amount includes $0.1 million of tenant improvement allowance amortization.


Three Months Ended March 31, 2023	Building base rent		Land base rent		Percentage rent and other rental revenue		Interest income on real estate loans		Total cash income		Straight-line rent adjustments		Ground rent in revenue		Accretion on financing leases		Total income from real estate
Amended PENN Master Lease	$	52,049	$	10,759	$	7,685	$	—	$	70,493	$	(3,274)	$	595	$	—	$	67,814
PENN 2023 Master Lease	58,043		—		(16)		—		58,027		6,492		—		—		64,519
Amended Pinnacle Master Lease	59,095		17,814		7,164		—		84,073		1,858		2,005		—		87,936
PENN Morgantown Lease	—		773		—		—		773		—		—		—		773
Caesars Master Lease	15,824		5,932		—		—		21,756		2,394		378		—		24,528
Horseshoe St. Louis Lease	5,844		—		—		—		5,844		472		—		—		6,316
Boyd Master Lease	19,675		2,946		2,566		—		25,187		574		349		—		26,110
Boyd Belterra Lease	695		473		472		—		1,640		152		—		—		1,792
Bally's Master Lease	25,115		—		—		—		25,115		—		2,916		—		28,031
Maryland Live! Lease	18,750		—		—		—		18,750		—		2,113		3,287		24,150
Pennsylvania Live! Master Lease	12,500		—		—		—		12,500		—		322		2,157		14,979
Casino Queen Master Lease	5,557		—		—		—		5,557		84		—		—		5,641
Tropicana Las Vegas Lease	—		2,625		—		—		2,625		—		—		—		2,625

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 March 31, 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 March 31, 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.

April 25, 2024	By:	/s/ DESIREE A. BURKE
		Desiree A. Burke
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)

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

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