Gaming and Leisure Properties Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
July 25, 2025

Key Takeaways

  • Positive Sentiment: GLPI reported a record year-over-year increase in revenue, AFFO and adjusted EBITDA for Q2 2025 and reaffirmed its strong calendar year 2025 outlook.
  • Neutral Sentiment: Cash rent rose by over $22 million year-over-year from acquisitions and contractual escalations, partially offset by an $8.2 million decrease from non-cash lease adjustments.
  • Negative Sentiment: A sizable provision for credit losses was recorded due to a more pessimistic economic forecast, though all tenant rent payments remain current.
  • Positive Sentiment: Full-year 2025 AFFO guidance of $3.85 to $3.87 per diluted share remains unchanged and includes approximately $508 million of committed funding for development projects.
  • Positive Sentiment: The development pipeline is active with the Chicago casino construction on track, Penn’s Joliet and Aurora landside relocations underway, and advanced discussions on tribal financing deals.
AI Generated. May Contain Errors.
Earnings Conference Call
Gaming and Leisure Properties Q2 2025
00:00 / 00:00

There are 16 speakers on the call.

Operator

Greetings, and welcome to the Gaming and Leisure Properties Inc second quarter twenty twenty five earnings conference call and webcast. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. It is now my pleasure to introduce your host, Joe Jaffoni, Investor Relations. Thank you.

Operator

You may begin.

Speaker 1

Thank you, Shimali, and good morning, everyone, and thank you for joining Gaming and Leisure Properties' second twenty twenty five earnings call and webcast. The press release distributed yesterday afternoon is available in the Investor Relations section on our website at www.glpropinc.com. On today's call, management's prepared remarks and answers to your questions may contain forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. Forward looking statements may include those related to revenue, operating income and financial guidance as well as non GAAP financial measures such as FFO and AFFO.

Speaker 1

As a reminder, forward looking statements represent management's current estimates and the company assumes no obligation to update any forward looking statements in the future. We encourage listeners to review the more detailed discussions related to risk factors and forward looking statements contained in the company's filings with the SEC, including its Form 10 Q and in the earnings release as well as the definitions and reconciliations of non GAAP financial measures contained in the company's earnings release. On this morning's call, we are joined by Peter Carlino, Chairman and Chief Executive Officer, Gaming and Leisure Properties. Also joining today's call are Brandon Moore, President and Chief Operating Officer Desiree Burke, Chief Financial Officer and Treasurer and Steve Ladney, Senior Vice President and Chief Development Officer. With that, it's my pleasure to turn the call over to Peter Carlino.

Speaker 1

Peter, please go ahead.

Speaker 2

Well, you, Joe and good morning everyone. We're pleased to announce another good quarter where most everything that we're working on has been moving according to plan. I promised you last quarter that we would achieve and should achieve a very strong year in calendar year '25. That's still the case. Timing unfortunately doesn't always align with our four quarterly calls.

Speaker 2

So stay tuned, we still stand by that. In the meantime, in this seemingly quiet quarter, we achieved a record year over year revenue, AFFO adjusted EBITDA and so lots of good stuff happening, which we're excited to report as this year unfolds. With that, I'm gonna quickly move to Desiree Burke, and Desiree, please go ahead.

Speaker 3

Sure. For the second quarter of twenty twenty five, our total income from real estate exceeded the 2024 by over $14,000,000 This growth was driven by increases in cash rent of over $22,000,000 resulting from acquisitions and escalations. So we have Valley Chicago Land, 5,000,000, the Tropicana Funding, 1,000,000, Kansas City and Shreveport $8,000,000 Rockford loan $1,000,000 Strategic acquisition $1,000,000 ION loan $600,000 and the recognition of escalators and percentage rent adjustments added $4,900,000 of cash income. The combination of non cash revenue gross such investment and lease adjustments and straight line rent adjustments partially offset these increases driving a collective year over year decrease of approximately 8,200,000.0. Our operating expenses increased by $65,600,000 primarily resulting from a non cash adjustment in the provision from credit losses due to a more pessimistic forward looking economic forecast that is used in the estimation.

Speaker 3

It

Speaker 4

should

Speaker 3

be noted that all our rent payments are current from all of our tenants. For the company's development properties, just a reminder that we continue to capitalize interest and defer all rent during a development for financial reporting purposes. However, we do add back that rent and deduct that interest in deriving at AFFO. In today's release, our full year 2025 AFFO guidance is ranging $3.85 to $3.87 per diluted share in OP units. Please note that our guidance does not include future transactions.

Speaker 3

However, it does include our anticipated funding of $130,000,000 for the Joliet relocation project, as well as $375,000,000 for development projects with approximately $338,000,000 remaining to fund during the second half of twenty twenty five. Our rent coverage ratios range from 169 to two seventy two on our master leases as of the end of the prior quarter end. With that, I'll turn it back to Peter.

Speaker 2

Thanks, Desiree. And with that, we'll move to questions. Operator?

Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue.

Operator

For participants using speaker equipment, it may be necessary to pick up their handset before pressing the star keys. One moment please while we poll for a question. Our first question comes from the line of John Kulchowski with Wells Fargo. Please proceed with your question.

Speaker 5

Hi. Good morning. Just wanted to start by revisiting your interest in the leak in call option at the end of next year.

Speaker 2

It still remains and something we're counting on. What what can we tell you about that?

Speaker 5

Well, I I'm just getting a fair bit of interest on my end from investors, and I I wanted to get your thoughts on this and really as Vale's as a tenant. Fitch recently downgraded them to ratings watch negative based on negative free cash flow assumptions for 2025 and 2026.

Speaker 2

So it seems like

Speaker 5

the only way to plug that funding gap would be with that sale leaseback capital. So I just want to hear about how you think about growing with them as an operator when one of their only solutions to keep them out of the default is to kind of grow exposure to them.

Speaker 2

Brandon?

Speaker 6

Yes. Well, thanks, John. I mean, I think that when it comes to Lincoln and as it relates to Valley, everybody knows, currently own a large portion of the Valley's real estate portfolio as it is. So the question for us is, in my mind, is Lincoln an asset we'd like to own at that cap rate in that price in that market? So we have to evaluate that asset and say, is it an asset we'd like to own and add to that portfolio?

Speaker 6

And does it make that portfolio stronger? What does it do to that portfolio? And as that opportunity becomes available to us, we are doing market studies and market research and taking a fresh look at that property to make sure that the economics that we've negotiated are still something that we think is accretive and good for the portfolio we own. So we recognize the challenges that people have with valleys and our exposure to valleys in Chicago and Las Vegas and the various projects we're working on. But we're looking at Lincoln on a property level and determining whether that's a property we think is value additive to our portfolio.

Speaker 5

Very helpful, thank you.

Operator

Thank you. Our next question comes from the line of Brad Heffern with RBC Capital Markets. Please proceed with your question.

Speaker 7

Yes. Hi, everybody. Thanks. On Valley's Bronx, the Valley stock cited a 2,500,000,000 commitment from GLPI. I know that specific project has a pretty uphill battle to approval, but given what you were talking about, about the risk reward of Lincoln, is significantly smaller, I guess, how do you think about the risk reward balance for that type of commitment to BALYs for this project or any others just given the leverage and funding concerns?

Speaker 8

You want to take that, Steve? Sure. Yeah, look, I think with respect to all of the New York projects, we've had a number of conversations with various parties and remain interested across the wide array of projects and would be open to dialogue with multiple parties. I think the reality is right now where that process sits in the state of New York, your guess is as good as ours as far as which properties ultimately get the license and then how a location next door to you might impact your particular property or not. So once we know where everything's going, I think we'll have a better sense.

Speaker 8

I think the way the process worked, most parties have asked for highly confident type of letters and from whether it be banks or real estate financing partners or any type of financing partners. So I think with respect to our relationship with Valleys in New York, as you know, we have the ROFR that still exists in the state of New York for all of New York, not just for downstate. And so with that, we're well positioned to be able to provide and evaluate real estate opportunities and financing opportunities there. So look, we're open to discussions not only with Valleys, but with other parties, and we've had many of those. It just so happens in this particular instance versus others, they elect it to use our name in their application versus using a bank's.

Speaker 2

Let me add and highlight something Brandon said earlier, and that is that we look at these projects on a property by property, project by project basis and underwrite them in a freestanding sense so that they have to stand on their own merits. And I think we ask ourselves, is this a property we we've went back it under any circumstance, is it strong enough? So we look at it one at a time.

Speaker 7

Okay, got it. And then on the Casino Queen lease combination, can you give some insight into the give and take there? I assume you would have preferred to keep the Bally's corporate guarantee, but then you were able to get this incentive for them to keep the leverage below 5.5x. So I guess, how do you see those changes netting out?

Speaker 3

Yeah, I'll start there because I do think there's some confusion with our wording in the press release. Bally's Master Lease two, we still have the parent guarantee. It is on the Casino Queen lease that we took the East St. Louis property and the Baton Rouge property out of that lease and moved it to Bally's Master Lease two. So it is really only that residual lease of Casino Queen which leaves the Bell project as well as Marquette that is without the parent guarantee.

Speaker 3

But it does have a guarantee from Bally's entities underneath. And the reason that we did that was to accommodate Bally's and we had proposed to do that because it was in an unrestricted group versus a restricted group within their credit facility.

Speaker 7

Okay. Thank you.

Speaker 2

You. Our

Operator

next question comes from the line of Barry Jonas with Truist Securities. Please proceed with your question.

Speaker 4

Hi, this is Jeremy on for Barry. Thanks for taking our questions. Curious how you guys think about the pending interlot transaction and how that changes Bally's credit profile? Thanks.

Speaker 2

I'll give that to Steve.

Speaker 8

Sure. Thanks for the question. So look, think from our perspective, I think there are probably two major potential benefits that Valleys will receive from the GameSys Intralot transaction. One is from a liquidity perspective, obviously there's a large amount of proceeds that would come back to Valleys and they've indicated to the world that the intent was to pay down secured debt. So I think from our perspective, I think that liquidity infusion allows for debt pay down and ultimately it provides better collateral coverage for whatever secured debt remains in place thereafter.

Speaker 8

I think from our GLPI perspective, I think we believe that with the material pay down occurring, it probably does make it an easier path to removing the prohibition on the Lincoln sale leaseback, which would in turn provide $735,000,000 of total proceeds to Valley's provided that deal got done. So I think there are a number of benefits. Another one I would highlight probably is just that the refinancing risk on their secured debt, which I think was an overhang for the company in 2026 is now reduced by the material pay down. So I think from our perspective, we view it as a positive outcome.

Speaker 4

Got it. That's super helpful. And then just one quick follow-up. Peter, curious to get your thoughts on the big beautiful bill and implications for REITs as well as your tenants. Thanks.

Speaker 2

Boy, I'm not sure I'm the best person at this table to answer that question. I don't think we've gotten really around to getting a grasp on the full impact of that. Bez, what do you

Speaker 3

Well, there's discussions about how it impacts rates, but for GLPI, it will have very little impact on GLPI. And I really haven't spoken to any of our tenants about how they're viewing the bill for themselves. But clearly the tax rate remaining lower from a corporate perspective is a positive.

Speaker 2

I haven't heard any negatives. I think So we all feel likewise.

Speaker 9

Thank you.

Operator

Thank you. Our next question comes from the line of Robin Farley with UBS. Please proceed with your question.

Speaker 10

Great. Thanks. I wanted to go back to the provision for credit losses in the quarter. You know, it's a large one relative to what you've done historically. You mentioned that nobody's delayed on payments.

Speaker 10

I think in your annual filings it looks like a lot of the provisions for credit loss is based on commercial real estate price index changes and I don't know if they've released Q2 data yet. So I don't know if you could give us some color on that provision, that expense this quarter. Thanks.

Speaker 3

Sure, so we use Oxford Economics and we use a very detailed model that is done by a third party called TREP. But the GDP forecast that is in that Oxford economic assumptions declined from the prior quarter. So they give you a base case, a downside case, and an upside case. The upside case and the base case weren't too bad. But the downside case, and they reference the uncertainty caused by tariffs as a reason for their downside case showing a decrease in GDP growth.

Speaker 3

As well as they're showing the CRE index growth declining from what it looked like prior quarter. It was still increasing, but it was a decline quarter over quarter, which caused the charge. Look, anything can happen in the next quarter, but these are all based on assumptions of where the economy is and where it's going in the future. And not necessarily based on whether or not we're receiving our cash rent, is why I added that statement in.

Speaker 2

Yeah, it's an unfortunate requirement, I'll say. It's not a real number. It's not gonna, not anything to be taken with any great fear. But it's a requirement, we do it, but I don't take it seriously.

Speaker 10

No, that's fine. I just wanted to understand that if it's this outside, the assumptions of an outside economic troop rather than something that you're seeing fundamentally. Great, thank you.

Speaker 2

Yes, it is actually Thanks, guys. Thank you.

Operator

Our next question comes from the line of Anthony Alone with JPMorgan. Please proceed with your question.

Speaker 11

Great, thank you. Peter, you started off talking about how things are moving according to plan. And so can you talk about just progress towards maybe a tribal deal this year? So I think you've talked about that in the past as maybe something that's in the cards.

Speaker 2

Happy to as much as we can say, but I'll turn that over to Brandon. Yeah,

Speaker 6

I will say that we are in advanced discussions with a couple of tribes. I caution that only because any deal that we strike with a tribe will require that to be reviewed by the NIGC and the timing of the NIGC and therefore any announcement of a concrete transaction, definitive transaction will depend on that process. But we have visited with tribes in Oklahoma, California, New York, in Connecticut, we've sort of been around the tour. We have a lot of interest. We're having preliminary discussions with a whole subset of other tribes.

Speaker 6

And so I think so far the education process, the type of financing we're willing to provide and what we can offer to tribes and the circumstances under which we can offer it is becoming more well known among the tribal communities. And we're getting a lot of positive feedback. But as we said earlier in the year, when this came out, this is going to take quite a bit of time. I think that we are seeing some fruits from our labor, but whether or not we can actually get that across the finish line with a couple of these tribes, we'll probably find out in the next few months.

Speaker 11

Okay. And so would you announce it and then take it through that process or you'd have to go through the process before you even announce it? Like how would that work?

Speaker 6

It's fair question. It's a fair question. I think in some ways it depends on the tribe and the operator, if there's a third party operator and their motivation. So for example, if somebody else wants to put it out there, we will indicate that we are part of it in our role in it. I guess if we had our way, we probably would wait until we had a concrete transaction through the NIGC to roll it out to the market just so we don't get people stirred up in one direction and then ultimately have to back off of it.

Speaker 6

So I think it will depend on the facts and circumstances of the project and whether or not that project is going to be public anyway.

Speaker 8

Would add, this is Steve. I would add though, I agree with everything Brandon said. The one thing I would preface our thinking is I don't think there's a scenario right now where GLPI would fund any portion of a transaction absent the NIGC final approval in hand. So that is one nuance. Know that some other deals have gotten announced recently where NIGC approval was pending, but fundings went ahead.

Speaker 8

I don't think that's something we're looking to do.

Speaker 11

Okay, I understand. And then just my other question for Desiree maybe, just over the next eighteen months, any thoughts on just how you think about refinancing debt? You did a couple of of 100,000,000 of the swaps in the quarter. I'm just trying to think about how early you want to address those or any other types of approaches to it.

Speaker 3

Yep. So you're absolutely right. We started with the $200,000,000 in hedges, right, towards the $9.75. And we are internally reviewing our options and looking at the markets and the pricing and the spreads. The spreads happen to be pretty tight right now, which is good.

Speaker 3

But there's nothing I can really signal that we're doing at the moment. But know that we are on it and we are well aware of our future commitments.

Speaker 11

Okay, thanks for the time.

Operator

Thank you.

Speaker 2

That's all you could.

Operator

Our next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.

Speaker 12

Hi, thanks. First, I just wanted to follow-up on that last question actually. Desiree, when did the forward interest rate swaps commence? And are there additional interest rate swaps being considered? Or are you currently comfortable with where your variable rate debt exposure is today?

Speaker 3

Yes. So the swaps that I am talking about are forward starting swaps. So they are actually hedging the future bond issuance. They are not typical interest rate swaps. And they are effective at any point if we pull a bond down next month, let's say they would be placed against that bond.

Speaker 3

And it would reduce the interest rate that we would receive based on where the tenure is today. I am I considering more? It really depends on where rates are and there's a lot of economic news that comes out next week. So we will be paying close attention to determine whether or not we want to do any additional swaps depending on what happens in the market next week.

Speaker 2

Yeah, let me add just a gratuitous comment that look, we have a lot of things on the horizon. We're very mindful of our requirements and spend a great deal of time sort of trying to noodle out where we can best head down that path. So we're very attuned to what our requirements are going to be and we're going to be as ahead of it as we possibly can. Nobody's asleep around that issue.

Speaker 12

Okay, that's helpful. And then I also, I wanted to ask about the management changes that were recently announced and disclosed. Going back, the company went without a Chief Financial Officer for a little while before Desiree was appointed to that seat and you now are eliminating the Chief Investment Officer role. I realize you have a lot of activity in the works and it sounds like the pipeline is active, you commented on tribal deals, but I'm just curious if there are broader implications to how we should think about that decision at all as it pertains to the broader investment landscape and opportunities that you see emerging over the next several years.

Speaker 2

The quick answer is no. There's really no change in our thinking or our behavior. But we operate in a pretty flat basis as you pointed out before Desiree was appointed. We have kind of an office of four and there's certainly no financial decision made that everybody that is at the table isn't involved with. Steve is really pointing at all the gaming related stuff.

Speaker 2

Matt had joined us, I think pretty effectively early on with the idea of bringing up an investor's perspective, an outside perspective of what it takes to be a REIT and serve our shareholders well. And I think he did that quite well. His internal work and his agreement with that title was really for non gaming things. Obviously, we have a great gaming team here. We were hoping that there might be opportunity to do more outside of gaming things, which as it turns out never really materialized simply because we find ourselves in such a terrific space.

Speaker 2

We've not find anything better and so it goes. So this really makes this just involves no change at all for the team. We wish Matt well, we thank him for the things he did for us over in the early days. And that's really all we can really say about it.

Speaker 12

Okay, all right, thank you.

Operator

Thank you. Our next question comes from the line of Haendel St. Juice with Mizuho Securities. Please proceed with your question.

Speaker 13

Hey, guys. Good morning. Desiree, wanted to follow-up, guess, on the capital deployment outlook for the back half of the year. You outlined, I think, there's another $338,000,000 still expected to be deployed in the second half of year. So I'm curious how much of that is tied to Valley's versus other projects like the Bell and I think I own and what's the risk of some of that slipping into next year?

Speaker 13

Thanks.

Speaker 3

Yes. So as you know, we didn't change the number for this year. So we're still at $3.75 for the full year. And yes, we only funded 25,000,000 or so in the second quarter. The majority of it is definitely Bally's.

Speaker 3

I will tell you that since the bell is opening in the fourth quarter or at the end of the year, that will likely be fully funded. But the majority of that remainder to be funded is mainly Valley Chicago project and we feel good about the number.

Speaker 13

Okay, fair enough. And then maybe a follow-up on Valley's but from a different perspective. Curious, we're getting some questions from investors on the lack of a guarantee there. So I guess your thoughts on why the Bally's Chicago lease does not have a guarantee considering the Bally's credit profile and the inherent development risk of that project? Then maybe some color on how you're underwriting potential inflation and tariff headwinds tied to construction costs at that project?

Speaker 13

Thanks.

Speaker 6

Haendel, I can take the this is Brandon. I can take the guarantee piece. So when we negotiated Chicago, Chicago development is in the Valley's credit unrestricted group. And so that prevents them providing a parent guarantee on that project. There are, and they've disclosed this in their eight ks filing around the development agreement.

Speaker 6

There is a path to adding that Chicago property to the parent guarantee and the restricted group, but that will come upon completion of that development property and certain other hurdles. I think what you see there is Bally's, Captiti, Marquette, The Bell, Chicago, all of their development projects that are not currently generating cash flow in that unrestricted group. There are other assets in that unrestricted group that we got comfortable with. But overall, I would say with Chicago, it's not unlike the rest of these. We've underwritten that project that if in the unlikely circumstance that Valley's has to sell that project or something happens to Valley's corporate, that project is still a great project.

Speaker 6

We know a number of different tenants that would be more than happy to be in that location in Chicago. And so when we look at that risk associated with having that in the unrestricted group, We're not terribly concerned about that at the moment, but that's why it's there.

Speaker 2

Yeah, let me make a couple of comments. First, the Bell is a terrific project. You know how successful the Queen was in Baton Rouge and the Bell is moving along extraordinarily well and it's gonna be a very cool project. It will be successful. I have no worries about that at all.

Speaker 2

In Chicago, we're much involved. Jim Baum, our head of construction is out there several days a week, every week. And we have a team of people, the Cumming Group, that whose sole responsibility is to track cost, approve bills, invoices, work in place, and so forth. And then finally, can say with some enthusiasm, the project's moving along pretty quickly. Over a 100 people working that site every day right now, more to come and we feel pretty good about that.

Speaker 2

So at the moment, things are looking good and I think I've committed and we'll try to get it out next week to start with quarterly newsletter, if you will, that kind of lays out progress at the Chicago site, maybe including some photographs, let people recognize this is a real project moving along very, very well, and that we're pretty excited about it.

Speaker 6

Yeah, it might be an opportunity too for us to clear up a little bit of confusion that there's been around the Chicago development agreement that was recently filed. There was some confusion that there had been a change in economics or terms associated with that. The reality is that that is the development agreement, the first version of that development agreement that was signed after the binding term sheet. So there have been no changes in the economics. We've finally agreed to certain terms related to that project and that was the filing of the document.

Speaker 6

So there was no change, that wasn't an amendment, and there was some confusion around the cap rate on the leased property that was originally 8%, it's still 8%. The improvements are at 8.5% cap rate, but there were no changes in the economics on that transaction either.

Speaker 2

And that's also the reason why we haven't had any draws under that contract to date until all that was signed and done and committed and that'll follow shortly. Got it. Got it. Appreciate the color.

Operator

Thank you. Our next question comes comes from the line of Ronald Kamsey with Morgan Stanley Investment Management. Please proceed with your question.

Speaker 14

Hey, good morning. It's Jenny on for Ron. Thanks for taking my question. I just want to follow-up on properties that you transferred to Ballast Master Lease two. I'm just curious, can you talk a little bit about the four wall coverage of those two specific transferred properties compared to the other Ballast properties in your profile?

Speaker 14

Thank you.

Speaker 2

We can send it out.

Speaker 3

Actually, we do not receive individual property coverage. We only get it lease by lease. So there's really nothing I can add there. But as we move forward and reporting occurs, we will be updating you with where the forward four wall coverage is in Valley's master lease too.

Speaker 14

Got it. Okay. Sounds good. I think that I'm actually really interested in the potential financial commitment you guys going to put in New York's downstate casinos. Do you have a number or budget on your mind now for the total commitment of each of the projects?

Speaker 14

Do you have a preference, say in your ideal world, if you win both simultaneously, you have a priority? Would you prioritize either of the properties? Thank you.

Speaker 8

Guess it's never say never. But I think based on the recent news around valleys, I'm not sure that that project has an ability to go forward, at least based on the current voting that has occurred. If, look, I think if the bottom line is if the properties are constructed to the right size for the addressable market from a diligence perspective, we get comfortable that there's adequate coverage. And by adequate, I mean well north of two times coverage on the new development. And we're getting adequate spread to our cost of capital, I feel pretty comfortable saying we would probably look at any of the projects in New York, and we'll be happy to engage in those discussions.

Speaker 8

I think our level of commitment, I'll use that word with an asterisk around it, I think our level of commitment varies based on every project. We're more than happy to engage in discussions and have detailed back and forth and try to help people find solutions. But I think where the dollars come from ultimately, if these projects were to be awarded, it may or may not come from us, think is a pretty fair way to describe it. There's a long distance between where we sit today, the application process, the approval process, decision process, and ultimately somebody financing it. So whether we're the person sitting with them at end of that race is hard to tell.

Speaker 6

Be hard to be

Speaker 2

hard to money. Not to make money, unless you overspend. Mean, you can do something colossally stupid, but if you build to the market, as Steve highlighted, it'd be a nice problem to have. But I think we have a realistic sense of what the prospects are there.

Speaker 14

Makes sense. Thanks so much.

Operator

Thank you. Our next question comes from the line of Daniel Gujelamo with Capital One Securities. Please proceed with your question.

Speaker 4

Hi, everyone. Thank you for taking my questions. Based on state revenue data and operator commentary, regional gaming trends have been strong this quarter. Do those positive trends change the way you think about your business as the owner of regional properties? Does risk appetite increase or the willingness to be more aggressive to go after deals?

Speaker 4

Any commentary?

Speaker 2

I don't think it makes us want to be more aggressive. I think we underwrite these things the same way regardless. Is there an appropriate spread to our cost of capital? Can we make, and how secure is that particular property now and for the long term that we're gonna be involved with it? So we do underwrite this with that long term view in mind.

Speaker 2

But no, we're gratified. Look, I have said many times, many of you know, that I have described gaming revenues as bulletproof, and I stand by that. They've been bulletproof for the many, many, many years that I've been in and around this business. And so I think we're gratified to see that these companies are doing very well.

Speaker 3

I would say underwriting wise, we don't look at one quarter, We look at history, go back three, four, five years to see how a property has performed. So one quarter wouldn't change our bullishness per se. But obviously it helps the rent coverage that we would be looking at at a point in time, but we even consider that in anything that we would bid on.

Speaker 2

Yeah, if you take it, looking across the street at the Penn Entertainment Building, it's the company is doing extraordinary well with its brick and mortar properties. We all know what caused the overhang on its stock value, but that has nothing to do with the properties that we own. They're doing terrifically well and we're happy that that's the case.

Speaker 4

Great. Yeah, I really appreciate all that color. And then this one's a little more high level. But do you think the focus for the stock has shifted too much towards what can go wrong instead of the positives and what can go right? And then on that, what are the team's goals for the second half of this year to maybe try and help shift that focus?

Speaker 2

Well, is a totally good question in the sense I'm glad you asked it. No, I don't think we get credit for the consistently good things that we have done here at this company. And I've never heard it expressed quite that way, that people focusing on what could go wrong rather than what could go right. I think that is the case. Look, in fairness, Chicago raises some questions.

Speaker 2

I think Valley's credit, not unfairly, raises some questions. We're sensitive to that. But as I think we said earlier, we look at these projects on unit by unit basis. And we're satisfied that if everything develops as we plan, that things will be fine. We're happy with kind of where we find ourselves.

Speaker 2

Let me address one other point too. We get questions about quote development. We're not out of the sale leaseback business by any means at all. I think you'll see some transactions evolve shortly. We hope so between now and the end of the year that answer that question.

Speaker 2

We're just willing because we are capable of doing the development kind of stuff ground up, because that is the business that we all come out of, this group around the table. We're willing to do that and I think it opens another avenue, but just one of several that we will pursue. Our business is putting money to work at an appropriate spread. And we'll do it in any way we think we can.

Speaker 8

Yeah, think some goals for the back half of the year would be try to get one of these tribal transactions that Brandon mentioned earlier, try to get one of those over the line and announced and obviously try to continue to expand our relationship with current tenants. I think there's opportunities to continue to do things. You've seen us announce things in the past with them with respect to their properties or expansion projects they've worked on. And I think we're going to continue to try to push those processes forward. And we're always out trying to create new tenant relationships.

Speaker 8

So I expect this to be very active through the rest of the year.

Speaker 4

Thank you, appreciate it.

Operator

Thank you. Our next question comes from the line of Rich Hightower with Barclays. Please proceed with your question.

Speaker 9

Hey, good morning, everybody. Obviously, I think a lot of my questions have been asked and answered, but definitely appreciate the additional color on the Valleys II master lease. I think that was helpful for everybody here. But I think maybe just more globally, as we think about your position effectively as a creditor to tenant base using Valleys as a great example, what is the value of a parent guarantee in situation where you do have a balance sheet constrained operator? And I'm also thinking in the context of iGaming and online sports stealing share, evidently I'm thinking I'm looking at Pennsylvania and Michigan but there are other examples.

Speaker 9

What's the value of a parent guarantee if sort of total system revenues which would include some of those alternate gaming forms could contribute to the security of the lease? Just how do you think about the moving pieces on the chessboard there and how should we think about it?

Speaker 6

There's a multi loaded question there. I'll start with the top of how we think about the parent guarantee. I think we don't look at the parent guarantee and work our way down, right? A parent guarantee is nice to have, and we believe it's important to have so that things like iGaming revenue and other things can be used to support our leased property and our rental income. That being said, we are very careful to underwrite each property on its own merits and look at the portfolio on a four wall coverage basis, which we've said in the past.

Speaker 6

And therefore, the parent guarantee doesn't end up having value because the parent gets themselves in trouble, we're hyper focused on making sure that these assets are a portfolio of assets that other tenants could come in and operate because it has the appropriate coverage. We haven't allowed the rents to outpace the revenue in a way that makes that lease a weak lease. We're hyper focused on those things. And that's why when you hear us talk about Chicago and other markets, Lincoln, we're looking at the asset, the quality of the asset, the quality of its cash flows, risk to adjacent growth, supply growth within the state. We're looking at all those things because we don't rely solely on that parent guarantee.

Speaker 6

So I don't want to discredit it as something that's not important. Think it's important to have. And as the parent generates more capital and cash flow through things like iGaming, that parent guarantee has value because then all the revenues from those sources of income can be used to support our rent. But we don't rely on that in our underwriting as a threshold matter.

Speaker 8

Said differently, the tenant had a 1.1 times rent coverage, but had a massive valuable business that sit outside of our property that caused the parent guarantee to be very valuable and overall corporate coverage to look great, we wouldn't feel any better about our position because the person could turn around and hand us the keys back at some point because the asset that we have association with is not all that valuable to their overall enterprise. When we look at things, if we say, well, they're making the equal amount of rent, they're making equal amount of EBITDA as we're making rent, then they're incented to try to make it work and continue to operate our business, regardless of what's happening outside of that. And that's why that four wall coverage is so critically important. Because at the end of the day, whether someone or some company gets themselves into hot water because of investments they've done away, or leverage issues, or whatever it may be, if the core business is strong, whether it's that tenant or a new tenant will want to run that business.

Speaker 2

Yeah, I mean Those are to highlight something that you would remember well, in the Apollo TPG, Harris acquisition, I like to point out, I mean, the sponsors had a problem. But the properties were fine. They continue to operate, operate to this very day and did so profitably. So that's why we look at property by property, as I think both Brandon and Steve have highlighted. We think that's where the value lies.

Speaker 2

Is this property worth what we're paying for it or exactly?

Speaker 6

I think on iGaming, we're keenly aware of the expansion of iGaming. We are in a state where iGaming was one of the first states to be introduced here in Pennsylvania prior to COVID. So we have many years of runway on iGaming here in Pennsylvania and we own properties in Pennsylvania. And what we've seen is, has it had an impact on the growth of the bricks and mortar? Yes, it's impacted the growth, but it hasn't resulted in deterioration as far as we're seeing.

Speaker 6

And so you have a somewhat mature iGaming market here in Pennsylvania. The tenants that are participating in that market are getting fairly robust revenues from that source, but it isn't reaching a level where we are concerned about the viability of the bricks and mortar. So we're cautious, but I think if you look at that as a data point, for us, it gives us a little bit of comfort. But we still are very focused on the growth and proliferation of iGaming in different jurisdictions.

Speaker 9

Very, very helpful guys. I really appreciate it. I guess, let me ask it another way just to sort of put things in a vacuum. If you agree to shift two assets out of a master lease or whatever the arrangement was in order to cater to a tenant's other creditors, what is GLPI get in return? How should we think about that sort of more in isolation, if that's the right way to think about it?

Speaker 6

I'm not sure I would necessarily agree with the characterization that we agreed to cater to the creditors. I think Valleys came to us with a proposed merger with Standard General, some of which we had a right to say yes or no to. Other pieces of it we did not under the terms of our legal documents with them. Their request to move assets that are not generating income and keep them in the unrestricted group is something we agreed to as part of the overall transaction. And we were comfortable in doing so because of some of the things that Peter described, where we believe that the land side moves of those properties will generate a significant amount of additional EBITDA and revenue such that we're comfortable with those few properties being in an unrestricted group.

Speaker 6

So I would say that was at the request of our tenant, but we didn't feel as though on the whole, we were having any detriment in the quality of what we have.

Speaker 2

Yeah, and look, we have a relationship now with Bally's that we are good partners. And as a result, I think we feel very strongly that they're committed to us as we are to them, as we are to all of our tenants, as the sensible friendly source of financing as time goes on. So we think that we got a lot of benefit from that allowance.

Speaker 9

Thank you very much.

Speaker 2

Excuse me, got a cold one.

Operator

Thank you. Our next question comes from the line of Chad Beynon with Macquarie. Please proceed with your question.

Speaker 6

Morning. Thanks for taking my question. It appears that some of these barge to land based moves have proven to receive pretty strong returns. We heard this from one of your tenants last night on their earnings call, and we're excited to see Penn's upcoming opening here. So given that regional gaming revenues, particularly in the second quarter, have looked pretty good and there's still some opportunities out there, do you think the opportunity of these barge land based moves will grow and how will GLPIs funding opportunities kind of participate in this potential growth?

Speaker 6

Thanks.

Speaker 2

I think it will grow there because I think states recognize that riverboats are an anachronism and we can all benefit from going land side. I think you're gonna be quite excited about what Penn will do in Joliet and Aurora as well. I think it's gonna be terrific. And again, I expect great results out of Baton Rouge for Valleys with the Bell. So I think that's a trend that's gonna continue.

Speaker 6

Yeah, I think what you're seeing in regional gaming is the regional gamer values the additional amenities that can be added by these landside moves. So when you're gaming on a boat, you have multi level of gaming with low ceilings and stairs and other challenges, and adding amenities to the floor is difficult. So you bring these things landside and you add an entertainment venue and a sports book and more food and beverage outlets. I think you're seeing a big lift in some of these things. So overall, I think these are good for regional gaming.

Speaker 6

And as we think about iGaming versus bricks and mortar, as these things turn into more entertainment destinations, as opposed to just floating slots. I think it's a value add to our to our portfolio and to gaming in general.

Speaker 2

Plus, Penn is investing in, other bricks and mortar, amenities, a hotel in Columbus, an expansion that they've long needed in in at the end. So there's some pretty cool stuff happening that we think will prove to be very successful.

Speaker 6

Great, thank you. And then just in terms of international opportunities, I know this quarter we saw a record setting EBITDA result from a company that's in a pretty good position in Singapore. So not specifically looking at Singapore, but it sounds like international EBITDA for this industry still has a long way to grow. So what's your appetite at this point to look outside of United States and Canada? Thank you.

Speaker 2

We've looked

Speaker 8

at things in the past and whether it be South America or Australia, We've looked at some European things, but I think the reality is it all comes back to what the tax treaties are and how you bring the money back and what that costs you because the IRS excuse me, the REIT is an IRS tax code and therefore we get the same tax benefits in some jurisdictions. So we have to consider that with respect to our cost of capital when we look at anything and the same in Canada. So that's just an extra amount of diligence that goes into looking at anything, but we're clearly open entertaining the idea. But at this point, I'd say we're a little more focused on The US and the tribal aspects.

Speaker 2

Yeah, and to be clear, we have looked at a numbers of things over time, but just again, never found anything that worked for us.

Speaker 6

Thank you, both.

Operator

Thank you. Our next question comes from the line of David Katz with Jefferies. Please proceed with your question.

Speaker 15

Morning, everybody. Thanks for working me in. Look, I just wanted to go back to the gaming side and ask Steve a question, which is, you know, we're seeing a lot of the opportunity set coming from existing tenants. In our travels, it does feel as though there's a bit of a divide between those that have a philosophical willingness to either be or not be tenants. Do you find in your travels that there are operators or prospective tenants that are on the fence?

Speaker 15

And I guess, said it different ways, is there a pipeline of new tenants within the land based gaming world that we could see adding three to five years?

Speaker 8

Yeah, thanks David. I think the key to your question was the three to five years, not necessarily five. But I think if you were saying, hey, in the next twelve months, how do you take a sole proprietor and convince them that not only do they wanna now no longer own their real estate, but maybe they wanna exit completely. So I think you're right that there is a little bit of I'm in on the idea and I like it or I'm out and I've never really considered it. I think that that ice cube melts as time goes on.

Speaker 8

In the conversations we've had, I think that the landscape of the gaming non current REIT tenant folks is predominantly sole proprietors and family owned businesses. There are plenty of those out there. And I think that there's an education and a comfort level that has to be built and that takes time. And I think we are getting traction. I mean, I think if you had asked this question three years ago, I don't know that we would have said we thought Cordish was going to ultimately sell their real estate and become a tenant.

Speaker 8

And they've done it and they're a huge fan of what it's done for them and they're a huge proponent. Then we've had them talk to other tenants that we now have in our roster who were considering it. So I think as we move forward, there is a continued opportunity to win people over one at a time. They have to be in the right mindset. They have to be looking for the right solution.

Speaker 8

And we have to have a relationship with them such that we are the provider of that solution.

Speaker 6

I think, David, as you've seen, relationships are extremely important. And we spend a lot of time here at GLPI cultivating both new and existing relationships. And so we don't take any of those things for granted. And as Steve said, and I, we are like ships passing in the night sometimes because folks are out visiting with people and making sure that they understand we're interested. We're not twisting anybody's arm, but we do feel as though when the right time comes for some of these proprietors to think about monetizing some of what they have, we hope that GLPI is the first name they think of, and the way to do that is to cultivate these relationships over time.

Speaker 6

And we think we do a

Speaker 2

pretty good job at that. Yeah. Look, I've said for many, many years, people do business with people they like. So being a landlord of choice and with the benefits that I think the sale leaseback arrangement offers is something that people have to come around to. And I think Steve's answer, Brandon's answer was perfect as they could get, frankly.

Speaker 4

Thank you

Speaker 9

very much.

Speaker 6

Yep, thank you.

Operator

Thank you. Our next question comes from the line Nadesse Rose with Citi. Please proceed with your question.

Speaker 4

Hi. Thanks. You've obviously covered a lot of territory here, but I just wanted to ask you one question on the development of the ballpark in Las Vegas. Is there any kind of update there and maybe any change around your thinking in terms of your commitment to the Bally's Casino Hotel that I guess eventually will be built there as well.

Speaker 2

There's a lot of finger pointing at the table here as to who wants to take that. But we have an answer. Brandon, we'll look at you. You take it.

Speaker 6

A decent amount of time out there these days. Look, I think we're pretty excited about what's happening on the site. I'll say that from the get go. Steve and I were out at the groundbreaking a few weeks ago. A lot of excitement in that town, both from the LBCVA, from the County Commission, from local businesses, I think people are very excited about what the A's are going to bring to Las Vegas.

Speaker 6

That being said, we are still working with Valleys on the remainder of the site and how a resort development with a combination of entertainment and gaming and retail can best compliment the product that the A's are delivering. And I think Valley's is coming close to a more final product there. I know that they've shared that both with us and with various politicians there in Las Vegas, and everyone is pretty excited about what they're seeing. As it relates to our future investment in the site, as you know, we've committed $175,000,000.50000000 of which we have spent through the demolition, dollars 125,000,000 remains. We are committed to funding that $125,000,000 Where it goes in the site is up for some negotiation because there's something we'd like to own for the $125,000,000 There are a lot of different opportunities.

Speaker 6

And I think as we see the full financing of the site and the build out of the site and the amenities and the third party vendors that are coming in, there is an opportunity for us to invest more into that site. Whether or not we capitalize on that opportunity will depend on what the opportunity is, how the financing of that property shapes up. And at that time, we'll figure out whether or not more investment in that property by us makes sense for us and for Valleys, quite frankly. Valleys needs to decide how they want to fund and finance that site. And if they don't need any more capital from us, that's fine too.

Speaker 6

But I think overall, there's a lot of excitement about that site and what it will bring to that corner in Las Vegas.

Speaker 2

Yeah, we I think did a good thing in connecting Valleys with the Marnell organization, who have done a terrific job of planning out the balance of the site. But I think Brandon's correct. What happens next is gonna be in Valleys Court. And we stand by encouraging, but the final script has not been written. Great, thank you.

Speaker 2

Maybe suffice it to say, we're not gonna do anything stupid. We're not gonna jump off any bridges.

Speaker 4

That's reassuring. Thank

Speaker 2

you. Thank you. How's that time? We've got maybe one more question.

Operator

Sure. Our last question comes from the line of Greg McGinnis with Scotiabank. Please proceed with your question.

Speaker 4

Hey. Hey. Good morning. In the discussions with Penn on their request for the $130,000,000 on Joliet, did those conversations also touch on the other potential investments? And I understand that these items won't be included in guidance until there's a signed agreement, But what's your confidence that they could call on that what could be up to $600,000,000 in additional funding?

Speaker 3

Well, the $225,000,000 for Aurora is a definitive obligation that GLPI has. So that one I can tell you for sure will happen. The other ones remain, the only two that remain now would be the M and the Columbus Hotel. Those are really up to Penn to request their funding.

Speaker 4

Okay, thank you. And then I just wanted to clarify on that proposal. Did you make, there is a $2,500,000,000 commitment from GLPI if they get one of the licenses?

Speaker 8

Yes, there is a piece of paper from GLPI that says that we would consider a commitment. It is not, well, yes, we would consider committing financing to owning land and funding building improvements depending on diligence, where the licenses are awarded and a myriad of other terms and conditions which have yet to be discussed or determined?

Speaker 6

I think globally, I would think about it like this. The downstate licenses present a tremendous potential opportunity. We would like to be a part of those opportunities should we have counterparties that would like for us to be a part of those opportunities. I think the Valley script at that location is largely unwritten. We haven't seen plans and specs and budget and all the kinds of things that would be required for GLPI to commit a fixed dollar amount to that site.

Speaker 6

We're supportive of Valleys. We're supportive of the project. Just like Steve said, we will probably be supportive of many other projects in Downstate New York. Do we think $12,000,000,000 is the right number? Probably not.

Speaker 6

Is $2,000,000,000 the right number? That may be great. I think it all depends on how these unfold. And all I think you're seeing is that GLPI has indicated a willingness to use our balance sheet to fund what we think will be very accretive cash flow in Downstate New York under the right circumstances.

Speaker 4

Okay, thank you.

Speaker 2

Okay. Thank you. Any other comment from around the table? You want to do that, Steve? Yeah.

Speaker 2

A little discussion around the table about some statistics and information around the Chicago project. I think we'll wait until we issue a press release around that issue just to bring people up to date and to be highly transparent with what's going on at that site and with that project. So stay tuned, we'll get something out to you. So with that, I thank you all for dialing in today. We're kind of happy with where we are, except for I think our stock price, but that aside, we're doing fine.

Speaker 2

So thank you, see you next quarter.

Operator

Thank you. This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

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