Gaming & Leisure Properties(GLPI)2019-08-08 19:26Financial Data and Key Metrics Changes - The company reported record net income from real estate of nearly $256 million for the quarter, exceeding previously issued EBITDA and AFFO guidance [8][19][20]. Business Line Data and Key Metrics Changes - The Penn master lease saw operations cease at the Tunica resorts facility, leading to accelerated depreciation and amortization, but this will not impact lease income [9]. - The Boyd master lease realized the full escalator as of its anniversary date, indicating strong performance [13]. - Casino Queen's coverages deteriorated, but management is optimistic about improved operating performance in the current quarter [15][16]. Market Data and Key Metrics Changes - The Illinois gaming expansion is viewed as a net positive for Casino Queen, which will benefit from new opportunities such as sports betting [14][63]. - The company is monitoring the impact of new competitors in Atlantic City on the performance of assets under the Eldorado master lease [12]. Company Strategy and Development Direction - The company continues to evaluate potentially accretive transactions to enhance its portfolio of 46 properties [7]. - Management is focused on maintaining a strong balance sheet, with 85% of debt as fixed rate and gross leverage at 5.62 times [19]. - The company is actively looking for modest transactions that can drive growth, particularly in light of the Caesars and Eldorado merger [24][25]. Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the operating environment in Illinois, citing instability and uncertainty about how new gaming facilities will impact existing operations [64]. - There is optimism about the potential for short-term benefits from sports betting while acknowledging that operators may bear the brunt of long-term impacts from increased supply [69]. Other Important Information - The company has tightened its guidance range based on tenant performance, with the potential for escalators in the Penn master lease being a key factor [20]. - The secured loan related to Casino Queen has been sold to a strategic investor, which may positively impact performance [16]. Q&A Session Summary Question: What does the acquisition pipeline look like? - Management is closely monitoring the market for potential acquisition opportunities arising from the Caesars and Eldorado merger, while also looking at smaller transactions [24][25]. Question: How long does the company plan to operate TRS properties? - The company prefers to maintain its involvement in operations but is open to opportunities for multi-property transactions [26]. Question: How does the company view the mix of its portfolio? - Management acknowledges the volatility of Las Vegas Strip properties compared to regional properties and is cautious about underwriting such assets [31][32]. Question: What is the outlook for Casino Queen? - Management is optimistic about recovering some loan rolled off last quarter, but it remains uncertain [40]. Question: How does the company view the Illinois gaming expansion? - Management sees it as a net positive for Casino Queen but expresses concerns about the overall impact on the operating environment [63][64]. Question: What are the thoughts on potential M&A activity? - Management is focused on creating its own value rather than pursuing M&A with other REITs at this time [44]. Question: How does the company manage its balance sheet in the current interest rate environment? - The company is actively monitoring interest rates and considering options for refinancing to lock in lower rates [82].