Q4 2020 Gaming and Leisure Properties Inc Earnings Call

Away from those discussed today.

Looking statements May include those related to revenue operating income and financial guidance as well as non-GAAP financial measures such as <unk> and F. F. L. As a reminder, forward looking statements represent managements current estimates and the company assumes no obligation to update any forward looking statements and the future.

We encourage listeners.

And the more detailed discussions related to the risk factors and forward looking statements contained in the company's filings with the SEC, including its 10-Q the earnings release and definitions of reckless reconciliations of non-GAAP financial measures contained on the Companys earnings release.

On this morning's call. We are joined by Peter Carlino, Chairman and Chief Executive Officer of gaming.

The nature of properties and Peter has joined by Deseret Burke Senior Vice President and Chief Accounting Officer, and Treasurer, Brandon Moore Executive Vice President General Counsel and Secretary, Steve Ladny, Senior Vice President and Chief Development Officer, and Matthew Dam check the senior Vice President and Chief Investment Officer.

With that it's now my pleasure to turn the call.

Over to Peter Carlino of your host Peter Please go ahead.

Well, Thank you Joe and welcome to all who have dialed in this morning.

Let me start by saying that I'm fine.

2020 was of bizarre year, I think for all of us and I'm just glad to be on this side of the.

Uh huh.

And of a brand new year.

But there's some good things that came out of last year for for the company.

We are in many respects had one of the most successful if not the most successful year, we have had a in the since our spin into G. L. P. I.

I think part of the good news is.

Is that we have proved what we've been saying all along that the real strength of gaming is and the regions not and Las Vegas.

We've always and the regional area sold at a discount.

Look I get it the winners.

For the spectacular property loved the on it but I'd rather have frankly, if we're interested and.

On the investment.

Kind of properties that we build the pen and the kind of properties that are in the G. L. P I portfolio.

We will.

And did and collect 100% of our rents this year.

Which is terrific.

And in the worst of times, which is what we have said all along with.

And would be the case.

And.

We did a number of things as well too along with some of them disclose by the way to strengthen relationships with each of our tenants, notably as you know we.

Provided the ability with the.

And return on it too.

Help.

And at the time, we're in the Navy Solvency was the question that move has proven to be spectacularly successful obviously, great for us because our tenant is stronger by leaps and bounds, but Moreover, you can see what's happened with them. So we have the field.

And particularly good we acted swiftly we acted early and there were a lot of questions about that at the time, but we thought it was the right thing to do.

And the long run and boy is that proved to be a great great result.

Along the way let me just highlight a couple of things because of the things as I look at the summary here in front of me, but.

And Chris so far back in 'twenty, and 'twenty I almost forgot that have occurred.

Hum.

I'll remind you that we did enter into of membership.

Interest purchase agreement with Penn.

For the Hollywood Casino in the Prairie Bill.

You know with Caesars just quickly go through a couple of these things we.

The Tropicana master lease with Caesars to remove variable rent components provide of fixed escalation and permit and the placement of Tropicana, Evansville and or Greenville at the time.

As well as the removal of Bell of Baton Rouge complex and difficult things, but we got that accomplished for them.

The amendment, we exchanged Tropicana Evansville for the other.

The all casino hotel and Waterloo, the Iowa Casino Hotel and Bettendorf.

We entered into a repurchase.

Agreement, which is very very cool to pick up the Evansville property again, it was dawn and.

And we're thrilled.

We got it back.

<unk>, which was not a foregone conclusion.

And in the lease with valleys.

And formulary Twin River Holdings, and then the we permitted the transfer of Bell of Baton Rouge to Casino Queen which is owned by the Standalone standard juggle.

Douglas.

Moving on quickly.

We entered into a membership purchase agreement to sell operations of Hollywood Casino Baton Rouge, We agreed to the terms of the new Master lease.

Between the Hollywood Casino Baton Rouge, and Casino Queen.

And finally, we entered into an agreement provided of $4 million of recovery.

Unsecured loan pre pre visit previously written off part of the company with Casino Queen.

With valleys and into agreement to acquire Dover's down and Delaware terrific. We're excited about that reach of the charge for the new master lease with <unk>.

Food, Dover Downs, and the Tropicana Evansville and we.

And so you know helps us broaden our are kind of things further which is always an objective for us miscellaneous stuff on it almost forgot and weird.

Wired Lumiere place and St. Louis.

We converted from an unsecured loan.

That's the way back but that was the massive accomplishment more than you might.

The we're quite excited about we acquired the Bella Terra property and Cincinnati from Boyd gaming and satisfaction of alone.

We also notably and received approval to go land side with our Hollywood Casino properties in Baton Rouge, and we're working on that right now.

And I will say it would appear to us of G. L. P.

Guess, the only REIT to announce the sign of real estate acquisition. Following the Covid announcement last year. So.

As I look back on this it was a pretty strong year for us.

Whereas hungry and interested in.

The hard working now and the effort if I can get the commercial and what has to feel pretty good about the regional.

And I as gaming business and the regional.

Weak business as well.

With that.

Because I've already said more than I use the likes to say on Friday I'm looking at desert right out of and I asked her to make for highlight a few points and she thought you should be aware of thanks, Peter and good morning, everyone and thank you for taking the time to join our call ebb and flow.

And the layer with guidance. We're ahead of all of our key metrics compared to the fourth quarter of 2019 did and the fact that we fully collected the casino paying rent and the fourth quarter and complains of net rent deferral agreement of $4 $6 million and in addition, we had several noncash items that are included in our P&L and then I thought I should highlight.

Yes.

And I'm sure. The Peter mentioned, we had the Caesars and exchange transaction, where we exchanged batten, we exchanged them for that Tropicana, and Evansville and received and dark from Waterloo and return.

And he had to recognize noncash gain of $41 $4 million and our income statement.

And some straight line rent adjustments and the corner and.

And so the Dar we're just deferring less rent as a result of the accounting rules and what we had and the path for more information on that note 14, and our 10-K has a lot of details about how we will recognize that rental are all over the next several years.

And percentage rent reset for meadows occurred on October 1st and the rent.

The plant was down by 500000 for the quarter or for $2 1 million for a full year isn't there lots of percentage rent reset until 2022, obviously and splitting the Ohio percentage rent for casino, Columbus, and Toledo, which as we've described to me that was done of rents for $22 9 million and.

Additionally.

Rent reading our true Trs properties continue the strong results for net revenue and adjusted EBITDA were both up 1.3, and $2 4 million compared to a year ago. We continue to see strong spend per visit which is more than offsetting the reduced attendance levels.

Net income and that's what that way and peso and adjusted EBITDA for the fourth quarter were all ahead of the prior.

As shown here, which is detailed throw out everything.

And with that I'll turn it over.

Yeah, and Matthew and add a few thoughts as well. Please sure yeah first turning to our balance sheet just after the third quarter call. We completed the successful equity raise the pre fund or valleys of transaction.

Living on the promise of prudent.

And shoot management and theirs.

As a result of our balance sheet is characterized by robust liquidity and thoughtful language and addition of long dated unsecured debt yields continue the trade materially inside those of our peers and this is a valuable validation by the debt markets of the 60 inherent in our business model and a clear benefit for the weighted average.

Cost of capital that we utilize for transaction base.

Based on the strength of our position the.

Theme for 'twenty and 'twenty, one of G O P I doubt of being offensive posture.

As we navigate opportunities.

Main prudently disciplined and our focus on achieving a margin of safety and our appetite remains of duration.

And our teams decade deep relationships across the gaming sector and our unique track record of being creative and structuring win win solutions for Counterparties growth stand to be competitive advantages and our team is committed to making the most of the opportunity set in 'twenty and 'twenty one.

And I wrap up I'd like to take a step back.

Perspective more than a decade ago before we are asset classes, just at the global financial crisis tested cash flow of resilience across the economy and the real estate World real estate of asset classes, where newer quickly became battle tested new winners and losers became evident and the times contrary to traditional.

For all the expectations and the.

Many years since pricing trends and institutional interest just come to reflect the durability demonstrated most of the midst challenges as the old saying goes the hammer shatters glass for the steel of late the entire world has been subject to the rest of the new and different hamburgers and unique and challenging.

And I have dropped presented by COVID-19 has resulted in yet another significant tests for a broader economy and across the spectrum of real estate assets, and thus far and triple net gaming assets, especially regional ones like sound and our portfolio have collectively prove and far more resilient and the vast majority.

Any of it really is currently considered to be of institutional quality. While the case study is still being written and it will undoubtedly serve as an important signpost on the path towards institutionalization and multiple compression for gaming real estate.

For expansion forgive me.

And with that I'd like to hand, the call back to Peter.

Thanks, Brad.

And so in summary, I think the 'twenty and 'twenty was of great year for G. L. P I.

And I can't say on them.

Sad about leaving it as you move into 'twenty and 'twenty, one, but it was a very impactful year, so with that we will open.

I'll open the floor of the questions and perhaps would create the opportunity to hear from the rest.

All of our team present today. So operator would you. Please go ahead.

Yeah.

And if he would like to ask a question. Please press star one on your telephone keypad and confirmation tone will indicate your line is and the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment.

Maybe the necessary to pick up your handset before pressing the star of he is our first question is from Barry Jonas with truly Securities. Please proceed.

Hey, guys good morning, and.

Hey.

Let's just start with the current M&A environment, and I would love to get any updates there with.

And it looks like and any notable changes over the past 90 days.

Why don't I I'm looking across at its Steve Ladny.

And look there's life out there, but I'll leave it to Steve to tell you what he feels again.

Sure.

Good morning, Barry.

And I think from a from a technical perspective.

Perspective, as far as the M&A landscape in front of us on the non gaming side, we continue to see the myriad of opportunities coming across our desk as you'd imagine gaming has held up wonderfully during the COVID-19 experience, but.

On gaming areas of the leisure space et cetera, and not so theres a number of opportunities and continue to come across our desk calibre.

As Peter has said many times before we continue to believe the gaming presents us with the best opportunity for outsized returns.

Other than the risk reward basis, so and.

And as much as we are looking at other opportunities the M&A landscape in the gaming space continues to be very active.

And there are a number of discussions we continue to have with the number of parties, both existing and potential new operators.

Great great.

That's really helpful. And then just as a follow up can you give us the status on the bell of the Baton Rouge, and I know Caesars sold of two casino Queen and it was removed from your master lease with no adjustments of the rent I'm just curious what your if you guys still own it or what the status is there and if there's any opportunity for incremental.

And so on the club brand and you take the part of that regulatory.

That transaction has not yet closed so I think they've announced the Caesars has agreed to sell the bulk of Baton Rouge operations.

Two the standard General Casino Queen team, but that's subject to regulatory approval by the Louisiana, The gaming control Board still arent.

Our intention is to continue to own that properties. So currently the property is still in the Caesars leads if that transaction is approved and Louisiana will remove it from the lease and put it in a separate lease with the new standard general team, but our but our intention at the moment or to continue on that property and.

There is no adjustment to the Caesars Master lease.

And if that transaction does occur and that property comes out.

Got it Okay, I guess, the wait and see alright. Thank you so much guys.

Right.

Yeah.

Our next question is from Greg Mcginniss with Scotiabank. Please proceed.

Hey, good morning.

And Peter we've been getting a lot of questions from investors regarding the C. I O and C. D. C. D O rules, because they seem a bit duplicitous could you. Please walk us through the need for creating both of those roles and responsibilities the split between the two.

Yeah.

We've had a couple of questions.

Great and along the way, but look it's actually in our minds pretty pretty straightforward.

Steve jobs, primarily is the source.

Opportunity within the gaming world with what he's quite familiar and Matt I'm simplifying this is to look at it.

It's it's place and their portfolio its valuation, it's financing and all of the elements that relate to well if we have an interest in and of property. What does it look like how do we fit and their balance sheet and we pre finance so you've seen some evidence of that already that's mats and fluids. So.

And.

And so I appreciate the confusion, but they're really two different roles and the guy out on the road if you will.

By phone or in person is Steve.

The guy on the phone if you will who works. This is Matt so but look the two work together our team works together and the phone.

Actually frankly, it's worth.

Working fine.

Okay. Thank you.

And then for follow up the questions. On these calls are so often focused on the acquisition pipeline and I don't really feel like breaking tradition. This morning.

Are there any casino assets that currently for sale and the market day.

And marketed right now.

And if so what line.

Kind of EBITDA do those assets generate.

Just to clarify the question was are there currently casinos being marketed.

Yeah right yeah.

I mean, there's there there are many opportunities, obviously, where we're under NDA, but I can give you and I could give you a sense.

I mean, there there are there are some that are not so private debt there'd been public leaks.

The large scale assets that are for sale.

On the Las Vegas strip, but there's also individual smaller single property assets that exist as well and and in between those two are our port.

Portfolio.

Trades that could occur with multi properties I mean, I think one of the things that we're seeing is debt with the margin improvement of these properties.

Thank the sellers are trying to figure out where they are in fact going to land as far.

And the.

And it's part of the complication on the buyer side as well as the new operator is if in fact it's of wholesale.

Transaction needs to also contemplate where they believe margins will settle in.

Alright, thank you.

Yeah.

The answer that clearly it's.

There's always activity of one sort of another actual activity is another matter. So we and our job as I've said for many many years is to we look at everything and it's alive and breathing and you've heard me say this many times before you can imagine.

Imagine we're looking at it.

What's doable and there's always another matter and when you get the sellers interest of line I mean, if you were to go out now and say what's for sale well I don't know I think I can find the property or sell and the strip and you could probably buy but you know these things evolve as they do and our job frankly is just to be ready.

Preparing for the ancillary that's about the big role that plays and of course to make sure that we're as as he said earlier offensively posture.

To be ready as opportunity appears so I mean that that we are.

And I can appreciate that Peter Thank you.

Our next question is from James core Rich with S.

S. M D C. Please proceed.

Hey, good morning.

And I guess just sticking with.

Sticking with the acquisition pipeline.

Can you just provide any update on your dialogue with all of these either around potential sale leasebacks within their current casino portfolio.

Further expansion with you.

Steve sure I mean.

Valleys is no different than our other tenants and that we talked to them very frequently about different opportunities whether they are within their current existing portfolio for.

For potential opportunities.

We're fine.

I think I think the the world has come to recognize the did they had been growing pretty rapidly and looking at expansion. So we are we're constantly talking to them about what opportunities exist what markets. They may be interested in and what things we can help them shake loose.

And so yeah, we're in constant dialogue.

To the.

Look they're hungry and buyers I think as Steve said they are very angry.

And we want to be their partner of choice. So we work at that very hard.

Okay and.

And then I guess, the moving tenants casino Queen which was your troubled tenants and now given the aster at least with them they pay back the deferred rent.

And all of the loan and you have this ROE for agreement can you maybe just provide an update on their performance and is this and operator that you'd like to expand further with.

And went to take that Steve.

Alright.

Oh sure so.

I think one clarification and I would make is.

For many master lease would exist.

Post the acquisition of our of our Trs properties. So currently that's still in the single asset at least.

You know I think the we are very comfortable with the the management team.

The day of their experience they've worked.

The third and very competitive marketplaces like the Vegas locals markets and so I think we're comfortable that day.

The talent and necessary and required to continue to manage these properties and and get the most out of the performance and as far as the interest in growing and I think it's very similar to what you've heard.

Working with respect of valleys I mean, I think they're there they're interested in acquiring assets expanding their footprint and.

And I think that will continue to look to.

And enhance the reach especially on the sports betting and I gaming side, as well, which you've seen with the renaming of the casino Queen of asset to grant and teams.

Yeah.

Okay.

Thanks, very much that's it for me.

Thank you.

Our next question is from Daniel Adam with Loop capital. Please proceed.

Hi, Good morning, Thanks for taking my question good morning.

So this is I believe is the first earnings call and where.

Ken's market.

Okay.

The larger than G. L. P is roughly 80% larger.

Peter I'm, just curious what do you make of that dynamic if anything.

Great.

Terrific.

Look it's always likes to have of tenants that are that is.

Capitalized and it and at this time and clearly is look I mean, I found and Penn and so as you well know and <unk> seen it grow and and.

And do what it has been able to do.

And it's been transformative is quite remarkable and by the way I ask the question has some.

And as well, but it's an opportunity for me to sort of jump right to it and that is this.

I think what they're doing with the barstool brand isn't enormous enhancement to the bricks and mortar property that we own.

And I feel very confident about that Penn is committed to two buildout barstool things.

And so these are and its properties I think that that rollout has begun now people of social animals, I think youre going to find whatever else is done on.

And on the Internet and that's the Guy place of the better the football game on a Saturday morning, and his driveway youre going to find a tremendous.

Tremendous lift I'm utterly satisfied in the properties that we own as.

As well and it's going to help change the demographics of who comes in place of these facilities and so forth. So.

I couldnt be more excited about what's going on and pen I think it's a huge plus for us of G. L. P. I.

And.

You know.

And it's Brandon.

Brand and that's gonna say, well I'd, just say well, it's it's and it's exactly why we did what we did when Covid hit and early early 'twenty and 'twenty was to assist our largest tenants and ensuring their long term success and I think what's happened with them since that transaction that we did for Tropicana Las Vegas.

And the would help them out and the time of need.

It has benefited them greatly and therefore benefited us greatly and I think they're going to prove the ability to be profitable.

And our well before any other player and the field and that's a huge advantage that they expect to capitalize on so look the company is well run.

And the ambitious goals.

It's I couldn't feel better about what what's happening with bad debt at all and doors to our benefit and.

Having a strong well capitalized tenants.

Okay, great that makes a lot of sense, and then I guess related to that.

And any update on.

On the timing and level of interest and a pause.

The sale of the Trump and Vegas.

Yeah look there are others I mean.

He's a lot closer to it than I am all of that also has had contact with people.

And there has been a shocking number to my mind I'll use that word of people.

And out of the woodwork sign an NDA is to take a look out of it now a lot of them I will say and what I call. The dollar down dollar of wheat crowd.

[laughter] transactions that Wouldnt interest for us at all because of the cat, we're not we're not intending to take any risk whatsoever. We're looking for a cash buyer it's possible we could.

The participate and something but never to put our capital at risk and never I can't underscore that enough. So there's some pretty good activity out there it's a.

Who knows I get and got a caveat that with who knows what will.

Get to the sign of line, but I would say that.

It's been pretty impressive.

People come in one of the comment.

Yeah, I would just said we have a very we have there's a few parties that have shown very strong interest.

And so we continue to work on that but I would also add debt the coke transaction.

And it just occurred at the front and Blue we view as a very positive signal.

For.

And for our ability to exercise our sales process.

And thank you would you want to add anything Matt and he thought the one other thought that's relevant and is just we're seeing signs of a little loosening of the debt markets for developments, which is the another encouraging development and that and that market and.

And I'll just.

To remind everyone that every potential buyers looking at meaningful redevelopment plan there.

To help maximize the potential of the assets. So that's going to be an important element for anyone who buys it and I'll remind everyone. We were and the balance sheet position, but we don't have to do anything so we're going to wait until may of a good deal and have the if and when we'll move forward.

That.

So look weird and never wanted to promote stuff.

The stuff that frankly.

Mislead you and any way at all.

And until we know the certainly.

Its not certain but I will tell you and in all honesty, we're on kind of art and by the level of activity has picked up as we have gotten into 'twenty and 'twenty one.

Curious buyers. So that's what we can report today.

Great Alright.

Encouraging okay. Thanks, guys.

Thank you and our next question is from Thomas Allen with Morgan Stanley. Please proceed.

Hey, good morning curious up to us.

With some of your on your dividend.

And you know unites and the release of you're going to go back to being a full cash dividend per but just kind of of how youre thinking about it medium to long term. Thank you for.

And we're thinking about it a lot of.

But I'm going to give you a half and answer because unfortunately, the timing is just not worked out well for us.

So on behalf of a board meeting next week to discuss the dividend in fact, I think I'm looking at the general counsel, we should be prepared to get and announcement out of next week Brandon. So do not for the next year. We expect the well look we have said cash dividend 'twenty and 'twenty one.

And you can count on that the precise amount we've also.

We're not going backwards. So the goal of course is to move forward.

But we can't get ahead of the board and.

And Oh I can say is by the end of next week, you should have and answer look.

You recall I am the first and foremost of shareholder and this company and my thoughts are completely aligned with.

Said would ask for shareholders I want to move the highest possible dividend at the earliest possible time consistent with prudence and just good sense. So we're going to look at it carefully.

And and remember the goal is to build value to build dividend.

Over the years, we've done that all along and we'll.

We're back to that just how far how fast we can push it.

We will let you know shortly.

You can expect the cash dividend.

Going forward.

Perfect. Thanks, and then and just a clarification on casino Queen and so you've gone back to risk.

But $3 $6 million of quarter of rent.

There was just catch up payment and the fourth quarter for what wasn't paid and the third and second and then once the Baton Rouge, the old closes and it goes to the $21 4 million dollar run rate is that is that right.

Yes, so and yes, you're correct, we collected for 6 million of deferred rent and the fourth quarter, so and rent as of 2020th fully collected.

<unk> closed in 2021, and so we have the small bets are all that well.

We expect the collapse of 2021 the salary.

The Baton Rouge property.

It's finalized and yes. Your number is correct for that it goes to the knee.

And the increase trend once the deal close the yeah, it's tied to the other transaction with certainty so they will get paid.

Hopefully they'll remain open.

All of us going for it but even if they don't we still get paid.

But for the next couple of quarters until the deal close and should it should be three and 6 million of rent, but then given the close for a period of time, maybe it's slightly lower on the short term of that what I'm hearing.

Yes, yes, it's about $2 million of rent that was.

And it's hard for January and February, but then and I'll go back the cash since they reopened and.

The property.

And that 2 million, we expect to collect the work in 2020, when we close on the transaction, but in any case, we will collect where certain debt. Okay. Yeah got it and just wanted to make sure we're modeling.

And correctly. Thank you.

Our next question is from David Katz with Jefferies. Please proceed.

Hi, good morning, everyone.

And on boarding.

So the.

And your comments are quite clear about you know the.

The.

Las Vegas strip and.

And you know a preference elsewhere within the regional gaming square within regional gaming.

And I'm just trying to think through other avenues of growth on the margin, where there might be regional properties, such as the hotel or retail.

And you know element.

Right outside of just owning the casino for walls, and whether those kinds of opportunities are out there and interesting and some way.

David They certainly are interesting and they are out there.

We are we.

We continue to talk with the Pan.

I think we've brought that up before about the hotel and say Columbus.

And some other development the that could occur.

Some of our I think some of our open property undeveloped property has had the interest recently for different kinds of uses and we certainly had offers to sell some.

But as I like to say, we're not really and the sale of business.

We're in the.

And the income business and that's not to say, we wouldn't sell for some <unk>.

<unk> price, we might have to the suck it up and take the money, but our real goal is to build revenue overtime and yes, we.

We are actually looking at a variety of things and.

And time will tell.

And just to follow that up if we were the sort of qualify between you know the owning sort of a new hotel right or you know participating and I think you've said no participating and.

Development of.

Any kind right, that's sort of putting capital at risk so you'd be sort of owning the real estate on normalized on mature.

Assets, rather than sort of newish ones is that fair, we feel of new property with the credit.

And tenant I mean, we're not taking the risk and the rest is kind of go elsewhere. So somebody's got a step up of who is going to be able to support it.

And again I've long said it on the Penn side, you'll remember I love, saying it again, we're not and the gambling business our customers might be but we are not in and out of that debt leverage.

And.

We don't take risks.

That we can avoid.

I understand.

Thanks very much.

<unk>.

Our next question is from RJ Milligan with Raymond James. Please proceed.

Hey, good morning, guys I.

Got it and if he could just walk us through how we should think about both of the escalators and the variable rent components and 'twenty, one and 'twenty two given were coming off such a low EBITDA year on 2020.

Desert and we're looking at in your direction for that right. So if you look at the release, we have the table.

And the release that.

Yeah, that'd be adjusted revenue run rate here for.

And then and it describes how the escalation.

And in fact, it did occur and like it.

And is at least slightly.

And what you expect to happen in 2021.

I would say that.

We're not expecting escalators and 2021 for the most part.

And we couldn't be surprised I mean I'm on.

Looking at information that is related to 2020, and the projections for all of our tenants and how they perform and the cheap funding.

2021 is just the unknown at the time, but as.

As far as variable rent resets for such rent resets were done with those for 2021, there are no percentage rents and if that's the next one of the current developments.

22, and we have a lot of data together for them.

Know what else to reset for like.

Yeah, you know I should have started with it just of a brief comment.

Tom and I wanted to get into the commercial for our financial and our legal team here that.

We've always prided ourselves on our releases that the.

It provided an enormous amount of detail and it's as we put as much in that as you can possibly.

Taking the time to read so there is a.

A lot of the detail and hopefully that can answer it.

Okay, Yeah from the tables helpful. Thank you.

Thank you.

Our next question is from Shaun Kelley with Bank of America. Please proceed.

Hi, Good morning, everyone I just wanted to get.

And some thoughts on maybe the depth and we're thinking about the the buyer pool and the M&A environment broadly I think on.

Yeah, we're starting to see some new people arrive on the operating front as well and specifics.

Specifically wanted to get your kind of take on that.

Some of the native American operators looking at you know the Opco.

Transactions and and what that might mean for the broader depths of the kind of buying and selling marketer of the transaction market. If if anybody had any thoughts there.

Well, it's the good thing.

And we have entertained conversations with some folks over time nothing at the moment of actionable, Steve you would add.

Shall I talk to that.

Sure So I.

I think we're going to continue to see the trend I think for a number of the native American.

And gaming Enterprises R. R.

Well capitalized and looking for areas to reinvest their capital Inc.

And that they're comfortable with which at this point is definitely gaming so I.

I think it's I think it's something that we're going to continue to see.

I think I think there's also a number of instances with some of the casino expansion, that's been proposed and different jurisdictions, like Alabama, and Nebraska, where.

Some of that.

It could also come into play so its.

It's an area we're focused on and we're looking at and we continue to try to build out relationships. There because I think it is an opportunity for growth going forward.

Great and.

Steve My and my other question and I had referred to something you mentioned earlier about.

Some of the challenge and underwriting.

And enjoys this the flux debt sort of the margin profile of a number of kind of kind of casinos find themselves in and hopefully largely of good thing, but I just wanted to get your thoughts on what do you think like the long term implication on valuation is from you know the state.

Many people are viewing as a bit of a structural change in margin and.

And sort of just thinking.

Will this result in on.

Potentially higher overall valuations and and similar metrics or could it result in higher rent coverage ratios or just kind of how are you thinking it might actually start to play out.

Well I don't have my Crystal ball, but if I had to guess.

I.

I would suggest it probably for the for new transactions of Jive.

I'm, assuming that's what you're asking me about so on the new potential transaction I don't think it necessarily changes the rent coverage that is underwritten by a landlord and a tenant and I don't think of it necessarily changes the valuation net the landlord or the tenant.

Would pay on a multiple basis I think what changes is that the now there's more cash flow and therefore, when you multiply the the larger EBITDA times all of those factors Youre, just going to get to a higher total valuation. So I think that's the main driver I mean separate from that I think of lot of value is going to be determined by the.

The opco and Thats going to be driven right now by whether there is the sports betting or other gaming on the on the forefront in that jurisdiction or did the property already cut skin deals and there is no opportunity or is it wide open and and the operator that acquired the asset now has at market access so.

We think those are some of the variables that'll continue to drive some of the evaluation.

[noise] anomalies.

And let me squeeze and one thought about that.

This is still early days and we all see these margins reduced occupancies higher margin. It's it's it's a bizarre.

I kind of anomaly of very positive one and I think it's going to be much sustainable is it completely sustainable low crime and it's gonna have to tell so from a buyers perspective.

By and off numbers today.

And probably involve some level of risk or judgment or however, you might.

And what to look at it but I.

And I do think because I get that question a lot is the sustainable I think they're not going back to where they where they found that they can operate these operating companies much more efficiently.

But is it going to remain where it is and that's still in early on the.

My view.

Thank you very much.

Our next question is from David Gallagher with Green Street. Please proceed.

Good morning, everyone. Thanks for taking my question, just a follow up on and off.

Obviously, the market cap growth over the last years and tremendous and and.

Certainly there and a much healthier liquid.

Liquidity position now the pay a year ago and moving forward with that relationship does that change how you rank coverage at all and understanding of these are obviously long term leases and and.

Property level of dynamics are important the does that change how you view and temperature.

Everybody one of them.

Opine on that.

And just cover just specific to the lease on the property and that's been the least so no that would not have an impact on what we would expect for rent coverage on the lease.

Yes, I think just to clarify what I meant is I would say would you be willing to take on.

Coverage, yes, given the core.

The stronger I think of that is where you're going yeah.

Maybe.

And the best most of the I can say, but.

Maybe but not much I mean, I think we're comfortable of the range. We are Matt what do you think it's not our intention to take less I mean, we have and I looked at the corporate.

But level of coverage, we've been focused on the four wall coverage for all of the right and says.

So I think going forward, you'll see us continue to focus on four wall coverage because at the end of the day, it's a duplicate of benefit right you've got to get the greater of the corporate coverage for the asset coverage and as we've moved forward and I think that discipline on the services.

<unk> is well well, even though the rate of the master lease I think we've always looked at four wall coverage some of our competitors of bit of less little less vigorous and that area.

But we prefer to have four wall coverage that we feel good about yeah. Ultimately the corporate coverage really speaks to the multiple that the cash flow should trade at right. Because this is a very senior lean.

And the capital stack, but at the end of the day negative view of it as a business unit like everyone else would and when it comes up for renewal, it's going to depend on how profitable those assets are and that's why we have the highest four wall coverage and we focused on that out of our peer set.

Got it that makes sense and just a quick follow up the.

Right of first refusal of FERC casinos.

Can you give us the maybe some potential opportunities that could arise with that relationship between them clean and that right of first refusal.

And it's hard to say at this point to be to be totally honest.

I think it's a I think they are focused on closing out the two transactions that they've announced.

So the big Leap signed one one with us and one with seizures and.

And so I think they continue to look to try to find areas to grow but.

But I don't have a good sense to be able to give you any guidance around what that means.

On a quantitative I.

I do get the sense and talking with the principles of that.

They are committed to doing more business with us that is for a variety of reasons and I think it's pretty clear that's the intent. So we're.

We're staying tuned with what they're up to and anxious to help if and when we can.

Yeah.

Got it. Thank you everyone happily theyre very aggressive price now it's great.

Good to have a hungry partner.

Our next question is from John Best of Soda with Ladenburg Thalmann. Please proceed.

Good morning.

Good morning.

So what is your view on guidance going forward is that something you would feel comfortable providing again after.

After some of these outstanding deals close or might that be somewhat more contingent on a normalized operating environment, given how that impacts escalators you know that's that's the.

That's a very fair question and it's one where the.

I'll kick it around hot and heavy here and it'll be a board discussion shortly as well.

Well look while we have the Trs is out there kind of in limbo not sure when precisely they're going to close and and that obviously would have some big impacts. We just don't think it's and investors' best interest to have us put something out there that could be wildly depending upon timing of closings and so forth wrong, when and where.

Free and of close those transactions and we're down on the pure REIT operations I think that's something we could well considered and I'm looking at desert raise I think shaking their head and the positive way. So what do they agree and right now we have the bally transaction on that which would be $10 million a quarter and range right.

Not knowing the timing of the sale of the Trs operations not knowing the timing of.

And the closing of the balance of this action.

And we just thought it better to get more clarity around the acquired reconsider and guidance.

That kind of kind of the yeah, right, but when I think of Jewish of serious look.

At it post these transactions.

And it makes plenty of sense.

And then building on Greg's question earlier and the call. There is one of kind of traditional C level position. If you will that you don't have failed and the company.

And I guess as you think about the expertise and that you have been kind of the CIO CIO CTO position.

I think you need the hire of CFO at the point.

Well the quick answer is and the.

Proof of it is the place we have and because we don't we really don't need such of personnel look we're gonna have to fill that role at some point along the way we've put that issue on hold and I mean, right now and we function is kind of the office of CFO.

And with with Deseret, Matt and Steve.

Totally capable and the rest of our team internally of doing as you can see everything that needs to be done. There is no lack of talent capability of anything you can run the company like this forever.

But it looks like a whole of the program and we got a pop.

The name in there at some point and we will but we're not under any pressure to do it and I think the proofs and the Buda and you're looking at it today I mean, we pride ourselves on the precision with what we present over all of the years that I've been in this business and.

And our team has been together for a pretty long time so.

And that's really the best answer I can.

Provide.

When you have as much talent as we have here, we interviewed some very capable people but.

Yeah.

It almost has to be the this team looks across the table. It says Wow you got Harry It and you've got Georgia, you got but it has to be somebody is so compelling that exceeds the capability.

And then we've got here and so for the moment, we're kind of kind of play with the office of the CFO, We havent announced that publicly that way, but it might help for you to note for the moment of at least that's how we're thinking about it.

Okay, and I mean, you're thinking about the asset classes of pretty.

Easily manageable asset class and he said you have.

So on and people around you mean CFO.

CFO is an extra cost and it's not a huge extra kasprzak of coffee.

And is there any thoughts of maybe just either not feeling it at all or just the changing of title in order to kind of.

And you know not out of the extra G&A, if you will the.

Answer is yes, and maybe I got it okay.

And we're actively thinking about that right now, but I think you know and you can see that we have all of the capability of this company that we need to do what we do.

And then just a quick modeling question with regards to casino Queen I know you put them on cash accounting and <unk> are they back on on accrual basis today and.

And the script for through 'twenty.

No theyre still on cash accounting basis once you lap this.

And with that and they are on cash accounting.

So that's that repayment that $4 7 million any of that that is.

He's going to get back out again and for and starting the <unk> 'twenty one.

You would not.

Expect another $4 6 million and for Q2, 'twenty and 'twenty, one and that's right because there will not be for 6 million of deferred rent at that time as we said earlier, there's about 2 million that will be deferred out.

Out of the first quarter and that we expect the clocks sometime during 2021, but it's not for six nine.

And if I think about the relative impact, though from for the 20 to one and 221 of them is that $6 million of from.

Oh of rent and give them, what they paid and for Q and given what they're not going to pay and <unk> and the fact is all cash.

Yeah, that's correct you and.

For 2006 million that you collected.

The quarter plus the normal rent that was in the fourth quarter, you would not expect to see it all and the first quarter other than another a million two for March.

Okay.

That's it for me. Thank you all very much. Thank you.

As a reminder, the star one.

Telephone keypad, if he would like to ask a question. Our next question is from John decree with the Union Gaming. Please proceed.

Good morning, everyone. Thanks for taking my question good morning, Peter.

And I think in an earlier comment you've mentioned that a lot of folks have kind of come by and.

And at the peak of Tropicana, but really not serious buyers are just perusing I'm curious if you're seeing that on the sell side as well for stuff that youre looking at are there really motivated sellers or are people just kind of putting a.

Assign out hoping that they did they catch of lofty price and arent, particularly.

Motivation.

Yeah look on it by the way and that's the correct one point on the.

The the folks that are looking at trop and its not that there are serious buyers and they just don't have serious cash.

And that's that's the difference I think they are quite serious about wanting the asset just not on terms that were willing to accept so.

So hit on a look there's not a whole lot of stuff falling off the trees and the gaming world right now.

I'm not surprised and Theres some things that we look at look we've eked out some we had a great year last year and a year that we wouldn't of imagine what would be the case.

There are things, we're looking at but you know you got to dig.

It's a.

I mean, it's the the as I like to say, there's not a lot of the easy pickings here and when I started and this business and it was in the and 1994 and and for Penn National Gaming out of a little race track and Harrisburg, Pennsylvania.

<unk>.

And they were.

And somebody who's galore, all over the place because it was the early days and the and the riverboat business as you know and companies left and right and we swept up a lot of them and fact between.

And we own most of the good ones and the Penn portfolio are many of them for sure.

And the regional World those arent out there in.

Were those numbers, so you're seeing a lot of one off opportunities, but it's all timing. There. There are people that have assets single assets and we'd love to have and our portfolio, but until they're really ready or have a need or for the state reasons. You know all you can do is really kind of hang clothes on.

The former CFO Bill Clifford you used to have a line and I kind of liked it a lot.

And I, so I quote him and credit them and that is this you know.

Our guys writing down the road and the rides by your house and he looks out the window and says Wow that is a beautiful looking house and it goes jumps.

The pulse is calling for the currently runs up to the front door of bags and the door you come to the door and he says he's got a beautiful.

Beautiful house, and I really want a habit and you say, but it's not for sale and.

And he says, but what you don't get it I I you know I really.

Really really want it and he goes for the again, it's not for the shale well, maybe if that little iteration of went back and forth for a while there is the price at which you would read and the backroom and Brad for your keys and say here. It is.

But by and.

Laura it's all a matter of timing and our job is to stay close to the opportunity.

True to reach that moment when it may appear and also frankly to cultivate the people who say we wanted to work with pet and our with the with G. L. P. I cause those guys have their act together they can do the tough complex.

Multiparty transactions etcetera, etcetera, so that's kind of the way we look at it.

But it's not like those deals will take a look at last year, how many sales gartside.

Besides what we did not.

And that much. So you Gotta make you got to fight for it you got of scratch for it every day and I'm not trying to be overdramatic, but that's pretty well.

Well characterized as what we are charged with doing.

Understood. That's helpful. Peter if I can ask one more you know Matt I think it was earlier you'd mentioned that there's a lot of the folks that are looking at Tropicana and considering our redevelopment plans and so I just wanted to confirm that comment and then my question.

Question of of the folks that seem to be most interested are you seeing interest from casino companies traditional casino companies is it financial sponsors and third party real estate developers like we've seen perhaps it and return and at the strip get involved before just kind of curious on where you're seeing the most interest.

And so I'll take the.

Part first and the answers all of the above and then we've got diverse set of interest from from folks from a lot of different.

Specialties and the key thing I'd point out is you've got 35.1 acres that are some of the most strategic acres on the strip right now that are prime for redevelopment and.

But what the coke folks are doing.

And then and what we will see happen on the strip over the next decade really this is an important piece of that and so yes, everybody is looking at redevelopment I mean, there's so much underutilized the acreage there and there's so much upside of the operations from taking more market share I think everyone's thinking about how to make it most relevant for the upcoming decade or two and as you see the benefits of the.

Secondly, the raiders field, not far away and and that end of the strip coming to life and I think youre going to see something really interesting happened there and we've been privy to some of the what the plans might look like and and they're all interesting and compelling yeah look and it's it's likely a multi use development.

And you would imagine from residential.

The the whole.

The enhanced casino et cetera, et cetera, so it's the kind of folks who would do that that our.

Most serious about this opportunity.

Got it thanks, so much for all the color and.

Thanks again.

Thank you.

How are we doing.

For a read them was we have time for one or two more questions. We have one of my last switches rod and bar.

Lee with UBS. Please proceed.

Great. Thanks for saying and most of my questions have been answered, but just going back to your earlier comment about potential transactions you mentioned the strength.

And it seemed like it was more than just the trough you were referring to.

Is there and interest out there from buyers and kind of working with you to do something with an existing strip operation not a redevelopment opportunity, but but just more typical of the type of transaction.

And I've done.

Steve do you want to take that on.

Certainly so look at different points in time there'd been different interested operators and and obviously the the market has continued to evolve I think there's there are some some you know highly integrated destination resorts the debt.

And sit on the script that are.

And at any one point and time.

Being marketed and you know of.

As we as we think through those and have discussions with potential operators. You know we were always interested and willing to look at transactions and you know the different times, we've had different folks that have come forward and and we pursued.

The thing with them. So yeah, we will look at we will look at anything and we constantly talk to current and and new potential operators about possible transactions.

Yeah look we I and maybe I should make clear we're not anti strip I mean, it's a wonderful properties there.

Uh huh.

And you just have to be on underwritten differently, you've got a whole different cost structure and one of those hotels for example are empty and they are empty and and.

And you've got an enormous cost drag and so forth, it's not let's say of property.

And in Toledo, Ohio, where you don't even have a hotel our cost structures and so entirely different.

And the ability to make money and so much simpler it's just more complex. So we're up for anything and we would do anything but why don't you just have a different view of how you put it together.

Okay, great. Thank you very much.

Thank you Robyn.

And that.

Desk or a question and answer session I would like to turn the call back over to management for closing remarks, operator, and thank you very much and thank you all for dialing in today.

As we said last year was the was surprisingly successful year for us.

We're charging ahead of in 'twenty and 'twenty one.

Hoping we get through.

Through Covid and and get out of the other side. So we're optimistic about this year and look forward to talking with you next quarter. Thanks again.

Yeah.

Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

How do we do this and we'll do a little recap.

Okay.