Gaming and Leisure Properties Inc. Q1 2023 Earnings Call

Speaker 2: Greetings and welcome to the Gaming and Leisure Properties first quarter 2023 earnings conference call. At this time all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference.

Speaker 2: Please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jo Jafone. Please go ahead.

Speaker 3: Thank you, Stacey, and good morning everyone, and thank you for joining Gaming and Leisure Properties first quarter 2023 earnings call and webcast.

Speaker 3: The press release distributed yesterday afternoon is available on 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 disappear.

Speaker 3: 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 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.

Speaker 3: On this morning's call we are joined by Peter Carlino, Chairman and Chief Executive Officer at Gammian Leisure Properties.

Speaker 3: Also joining today's call are Brandon Moore, Chief Operating Officer, General Counsel and Secretary, Desiree Burke, Chief Financial Officer and Treasurer, Steve Ladney, Senior Vice President and Chief Development Officer, Matthew Demchick, Senior Vice President and Chief Investment Officer.

Speaker 3: With that, it's my pleasure to turn this call over to Peter Crowley. Now, Peter, please go ahead.

Speaker 4: Well, thank you Joe and good morning We are happy of course to report another very positive quarter

Speaker 4: as well.

Speaker 4: outlined in our releases yesterday. As always, I think our team has done a very thorough job of giving you all the information that you would want. It's very well encapsulated there. But I'll highlight a couple of things.

Speaker 4: then of course turn the floor over to Desiree and to Matthew.

Speaker 4: I'm happy to say that through this quarter, our stock...

Speaker 4: price hit its highest level ever.

Speaker 4: I expect we'll be back there soon. And our dividend was at an all-time high as well.

Speaker 4: So we've been very successful in achieving most of the goals that we've had. And this success has been accomplished against a backdrop of turmoil and pretty rough going for many in the market today.

Speaker 4: which I hope underscores what we've been saying for many, many years, that gaming revenues are incredibly stable.

Speaker 4: and that's reflected in our performance, even in tough times.

Speaker 4: There are a number of significant achievements this quarter, but I'm going to leave those to Desiree and Matthew to share.

Speaker 4: There are a number of significant achievements this quarter, but I'm going to leave those to Desiree and Matthew to share And then of course will be directed by your questions

Speaker 4: And I should say that while nothing is certain, I think that

Speaker 4: We believe that the balance of 2023 should prove to be a very good year for the company and for our shareholders. And with that, Desiree, you are on. Thanks, Peter. Good morning. We reported yet another quarter of record results for our first quarter of 2023, and our total income from real estate exceeded the first quarter of 2023.

Speaker 4: approximately $8 million, and the Tropp LV land lease created cash rental income of $2.6 million. The recognition of escalators and percentage rent increases on our leases also added $4.7 million of cash rent, and then we had a combination of higher non-cash revenue gross ups, investment in leases, and straight line rent adjustments, which drove a collective

Speaker 4: partially offset by a increase in depreciation expense primarily related to our recent transactions.

Speaker 4: We continue to see strong rent coverage across our leases and from a balance sheet perspective, during the first quarter we settled the forward agreement and issued 1.3 million shares, raising net proceeds of $64.6 million. We used these proceeds to partially fund the redemption of our 500 million 5 3 eighths notes, which were coming due in November of 23.

Speaker 4: Our leverage is now under five times EBITDA. Our $1 billion at the market program remains unused as of today. We've refined our full year guidance for 2023 for AFFO per diluted share and OP units to be ranging from $3.63 to $3.67 per diluted share and OP unit.

Speaker 4: Please note that this guidance does not include the impact of future transactions.

Speaker 4: With that, I will turn the call back to Peter.

Speaker 5: And I won't keep it for long, Matthew. Thanks Peter, and thanks to everyone for joining us this morning. It's certainly been interesting how increasingly unpredictable the macro environment has been. Amidst this backdrop, the stability of regional gaming cash flows continues to hold up while other real estate sectors are experiencing a

Speaker 5: meaningful secular and economic challenges.

Speaker 5: The relative track record continues and the institutionalization of our asset class is as justified as ever.

Speaker 5: At GLPI, we have worked hard to prepare for this environment. Our focus on stability and dependability continues to show in the consistency of cash flows, which we work tirelessly to protect and perfect.

Speaker 5: Nowhere is this more evident than in our Penn lease restructuring.

Speaker 5: We will continue to seek opportunities to improve the quality of our leases cash flow.

Speaker 5: In addition, after a few years of playing the long game with a focus on deleveraging, our balance sheet remains purposefully conservative.

Speaker 5: We respect its role as the foundation for all that we do. In addition to managing debt to EBITDA under the high force, we also managed a staggered maturity profile with our next maturity not due until September of 2024 and close to $1.7 billion of available liquidity.

Speaker 5: We continue to be positioned to pounce on attractive opportunities as we see them.

Speaker 5: Headwinds in the banking sector have set the stage for more robust and wide-reaching dialogue with potential counterparties.

Speaker 5: Lending costs and bank relationships that used to be more predictable could be less so over the coming months and years, and that reality is not lost in the folks that we talk to. We've always been a dependable capital partner.

Speaker 5: One that our partners can be confident can get to the finish line. And in the current backdrop, the value of that dependability has gone up substantially. And I make that comment for both our current tenant partners and also for new potential partners.

Speaker 5: GOPI is built to last, a reality that is widely appreciated.

Speaker 5: Our unique structure, including our access to multiple capital sources, makes us an ideal choice for counterparties that want not just a transaction, but a bespoke financing solution, which is our specialty.

Speaker 5: Our partners want not only to solve the current needs, but often to have a partner who can predictably continue to meet those needs well into the future.

Speaker 5: As we move forward with our strong and sound financial foundation, we remain focused on improving what we have and unearthing new opportunities for the prudent deployment of our shareholders capital.

Speaker 5: With that, I'll turn the call back to Peter.

Speaker 5: Thank you Matt, I think it says it pretty well. Stacy, would you open the floor to questions?

Speaker 2: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker 2: For participants using speaker equipment, it may be necessary to pick up your handset. First question, Greg McGinnis with Scotiabank. Please go ahead.

Speaker 2: using speaker equipment, it may be necessary to pick up your handset. First question, Greg McGinnis with Scotiabank. Please go ahead. Hey, good morning.

Speaker 6: So Peter, in your opening remarks, you touched on the stability of gaming revenues, but you kind of also saw rent coverage ratios decline across the board this quarter. In your view, are we seeing the beginning of a trend or maybe more of a normalization following the pandemic? And are there any leases where escalators might be more at risk?

Speaker 5: The quick answer is that the movement has been very, very small in a long, long way given our coverage from any threat to us. I mean, I guess the point I'd make kind of not so subtly is no matter what happens, we get paid.

Speaker 4: And so we see absolutely no threat on the horizon. Des, you wanted to comment? Yeah, our rent coverage ratios are still well above the 2019 pre-COVID levels, and so we feel they're still very strong for our collection of rent.

Speaker 5: And look, you're gonna have to hit disaster before we don't get paid. So for obvious reasons, don't get rent, you don't open the front door.

Speaker 5: I can't think of anything further from. And listen, the one point I'd make, and we do talk about this internally, I've been at this for a very long time, and I can tell you absolutely.

Speaker 5: I used to say in talking with many investors that gaming revenues were salt of the rock, but it would take an atomic attack to threaten our revenues. Well, we had that in the form of the equivalent of a neutron bomb that shut down the country.

Speaker 5: We, and our contemporary companies, all got paid. So I don't know what it takes to make clear that people just do not give up their entertainment. So enough said. I think the proof has been well identified.

Speaker 6: Okay, thanks. And then just a bit of a multi-part on development. Could you please provide an update on Hollywood Baton Rouge? We expect the total cost then to date. And then we also saw a news article on Bello Baton Rouge being approved for a $91 million renovation after a $35 million renovation was announced late last year.

Speaker 6: can support and justify those investments.

Speaker 4: So I'll start with Baton Rouge and we at GLTI have about $31 million in cash left to fund and with that I'm going to turn it over to Steve to talk about the other projects that you're asking of. Sure. Yeah, I think your second part of your question was with respect to the Bell Baton Rouge. We do own the land and building at the Bell and Casino Queen is our tenant there.

Speaker 7: We have had ongoing dialogue with them. They're also the tenant in the Hollywood Casino Baton Rouge property that you just asked about previously. So we have ongoing dialogue with them. We are always looking for ways to be supportive of not only them, but all of our tenants. And we're always looking for ways to be supportive of not only them, but also our tenants. So we're always looking for ways to be supportive of not only them, but also our tenants.

Speaker 7: you know we we're going to continue to have dialogue around that project and and you know we'll provide an update once we have something to definitively tell you. Yeah let me add that things are moving pretty well in the Hollywood Baton Rouge landslide project.

Speaker 7: There have been difficulties along the way in just getting materials which you we all are aware of on a national basis You know trying to get HVAC equipment for example is tough. All that being said I think we have visibility on a

Speaker 5: early, well, let's just say safely, we're targeting September .

Speaker 5: as a probable date barring any equipment that doesn't show on time. So that project is well along.

Speaker 5: as a probable date barring any equipment that doesn't show on time. So that project is well along and looks terrific by the way.

Speaker 7: With respect to depth of market in Baton Rouge, we feel very confident and comfortable with the marketplace there. It's obviously a city that has a government presence and a state university. And so it's actually a growing demographic. We feel very good about the longevity of the market there.

Speaker 6: Okay, sorry, Desiree, the total spend on Baton Rouge, that's still, well, I think 70 million last call.

Speaker 4: Yeah, it might be just a slight higher, but it's about $70 million, that's right.

Speaker 1: Thank you.

Speaker 2: Next question, Smead Rose with Citi. Please go ahead.

Speaker 8: Hi, thanks. I just wanted to ask you a little bit of as you assess potential opportunities in the marketplace. If you see any changes and who else is also looking and just in terms of competing with maybe more traditional sources of capital, do you think you might be at a relative advantage here just giving what's going on with some of the issues?

Speaker 5: The banking evolution in that environment has changed the availability and cost of funding. And if you look at the private equity folks that started to poke around, certainly their business model is not as robust as it was, and they're not as competitive as they were. And Peter's intro underscored we've got access not just to debt like others, but we've also got access to common equity, the OP units which we've used to good effect.

Speaker 5: So you put those things together and our total cost to capital relative to the competitors and we're in a lot stronger relative position now than a year or two years ago compared to other folks and I suspect if things stay the way they are we won't see a lot of new folks trying to push in to the space. The only wild card is some of the other public companies. We've certainly heard interest.

Speaker 5: verbalized from others for a little while now. But remember, if we've got the relationships we have and the leases we have as large as they are, we're the best buyer of assets for the tenants you see on our earnings release, if you look through the names. So we're well positioned and we hope to use that to find new opportunities.

Speaker 8: Yeah, and again, the risk of sticking my neck out. We've got a number of interesting things in the shop here that we're working on. You got to bring them over the finish line, but we think the market for us is in a pretty good place. In terms of just kind of overall, I mean, it sounds like you're assessing an unproportioned

Speaker 8: transaxon activity and I'm just kind of wondering if you guys are seeing that as well.

Speaker 7: It certainly hasn't cut enthusiasm for gaming. Steve, do you want to take that? Yeah, look, I think it goes without saying, large scale M&A has clearly slowed. The credit market impact, along with adjustment needed for valuations, has caused a little bit of a slowdown on that front. But

Speaker 7: With respect to strategic one-off type property transactions, those are still plentiful and people are still looking to enhance their portfolios, whether that means a divestiture of an asset to someone else or an addition of an asset that could be strategic. I think we're seeing plenty of deal flow, whether it be on the greenfield side.

Speaker 7: with respect to states like Illinois, Virginia, and New York, which are expanding, or even simply construction and redevelopment of existing properties like we've already announced with Penn and like we're doing in Hollywood Baton Rouge. So there continues to be plenty of deal flow.

Speaker 7: it just might be in slightly different buckets than it has been in years past. Thank you. Appreciate it. Next question. Todd Thomas with KeyBank Capital Markets. Please go ahead.

Speaker 5: environment. Have you changed your return hurdles at all when underwriting new deals? I mean how are you thinking about the appropriate spread that you need, the amount of accretion that you're looking for in new investments here? I mean we haven't changed our approach at all. We need an appropriate spread but that really varies by opportunity.

Speaker 5: I mean, it's a function of the risk of the specific opportunity, the market. So you should continue to watch us think about things the exact same way. And it may take different forms as we figure out how we, again, try and create solutions compared to banks or others not being there the way they used to be, but you'll have to stay tuned to see where we end. Okay. And then, um, I guess a quick,

Speaker 9: you can lock in your cost of capital, lock in that spread versus the risk of waiting to see where your cost of capital trends over the next several quarters. How do you sort of think about that and weigh your options?

Speaker 5: announcement, we raised enough equity to be able to have either path work from a debt to EBITDA perspective, so we've effectively pre-funded a majority of the transaction if you look at where our leverage is right now. I mean incrementally we've got locked in a term loan that we can effectuate a closing.

Speaker 4: So the actual cash would come from that in the large majority. Yeah, so the Bally's transaction, that transaction would actually have to be funded through our bank debt, through our credit agreements. We have a revolving facility that we've tagged a piece because we have allowed Bally's to guarantee our debt. If that is correct...

Speaker 4: we do that transaction. So I think the real answer to your question is probably, you know, we're at a wait and see. We'll see what the market rates drive. That is at our option. If for some reason our pricing did not look accretive for GOPI, we would make that assessment at the time, but assuming it is, we would be using our credit agreement in order to effectuate that transaction.

Speaker 9: Okay, great. All right. Thank you.

Speaker 2: Next question, Barry Jonas with Truist Securities. Please go ahead.

Speaker 6: Hey guys, good morning. WYNN just put out some details on its plans for the UAE. Curious to see if you have any thoughts on that market or maybe any other international markets where you could see potential future involvement for GLPI. Thanks.

Speaker 7: Steve, do you want to take that? Thanks for the question, Barry. I mean, we've obviously seen some transactions come across in Canada more recently. We do continue to look internationally. We have not taken a deep dive on the UAE. But with respect to each of these international opportunities, we do spend a bunch of time

Speaker 7: We will continue to look internationally. We have an interest in expanding internationally, but it's on a country-by-country basis in a deep dive of analysis.

Speaker 6: Got it. And then just as a follow up, wanted to touch on TROP. Not sure how much you could say, but the word is that the A's have selected another site for a baseball stadium. So is it sort of back to square one for large scale developments there, or are there still options being discussed?

Speaker 7: that you think could involve, you know, transformation of your asset there. We can't, yeah, just to be clear, we can't speak to what Bally does or doesn't intend to do with the site, and we've read the same articles that you're referencing with respect to the AAE's acquisition of some land from...

Speaker 2: with Capital One Securities. Please go ahead.

Speaker 6: Hi everyone, thanks for taking my questions. The first one's on the quarters live casinos. It looks like those casinos have been taking market share in their respective cities just based on state gaming data and also the allowance balances that you all have been reporting. Seems like they've found a recipe for what the new gaming generation wants.

Speaker 5: Then on the floor when David Cordes himself is

Speaker 5: on the floor for promotions and the like, basically giving away money, it is very impressive to see how personally involved he, his son's team are involved in their properties. It's incredible. Frankly, it is incredible. So,

Speaker 7: We think the opportunity is tremendous going forward. We stay very close with them. We want to do more with them and I think

Speaker 5: I can't speak for them, but I would hope and expect that they'd like to do much more with us as well. That's a very, very positive thing. They are terrific operators.

Speaker 10: Great, thank you. And then the second one is just – so only a few operators have reported, but there was some mention about some softness in Louisiana and Mississippi. You guys don't have that much exposure there, but there is some in the Pinnacle lease, and I really appreciate the coverage ratio disclosures by at least.

Speaker 10: but it does look like that's trended down slightly over the last few quarters. Any comments on what you think is going on there for those markets and how those will evolve over the next few years?

Speaker 7: Well, as you know, we don't get by-property information from the tenants, but in our dialogues with our tenants holistically, we're getting the sense that the market as a whole, the domestic US, has been holding up and relatively flat in line from a year-over-year perspective.

Speaker 7: I think that that might be a regional phenomenon that hit in one quarter. I don't get the sense from any of our tenant discussions that people are running for the hills or there's any type of hysteria around some of the quarterly trends. But I do feel like people feel very comfortable about the

Speaker 7: the state of the gaming market domestically. Great, thank you. Next question, Handel St. Just with Mizzouho, please go ahead.

Speaker 7: state of the gaming market domestically. Great, thank you. Next question, Handel St. Just with Mizzouho. Please go ahead. Hey, good morning out there.

Speaker 8: So, I found your comments earlier on the stability of gaming and mitigating balance sheet risk during this period of uncertainty interesting. So, I was hoping you could talk about risk, but more holistically and how you're thinking about managing risk in the current environment of more restrictive debt availability, the macro uncertainty and how that could be impacting not only how you're...

Speaker 8: thinking about managing the balance sheet, but incrementally risk your investments like development, maybe mez lending within gaming, and also potentially how you're considering investing potentially outside of gaming. Thank you.

Speaker 5: Well first I would say that every transaction is a one-off and looked at market to market, sponsor to sponsor, what you might do with one in a master lease, strong operator, might be different from something you do in a one-off in some other market. One advantage for us in this team is that we've been...

Speaker 5: in this business for a very long time. I'd like to think we have a pretty good understanding of the business, its risks, the competitive set, and so forth. So it's deal by deal. And our concern is the same that you've raised. Are we going to get paid? It's as simple as that. So Matt, do you want to add something to that? I mean, at a high level, you know, Handel, we've got really a commitment to investing with caution and focusing on a margin of safety.

Speaker 5: view of it and then everything else outside of gaming trading probably more expensively than it should. So things haven't lined up yet looking for adorable predictable cash flows outside of gaming but we keep looking we've got deep relationships and to the extent something makes sense we'll move forward on it and you know we continue to use tools too you look at what we've done to date

Speaker 5: We've got master leases that give us really protection from known unknowns when you think about either macro, micro risks, new licenses, et cetera, and also layering on corporate credit protections, operator selection, et cetera. We'll continue to use that same mentality as we assess new opportunities. That's helpful. Thank you.

Speaker 11: I'm curious, what's the current house view on investing in tribal and how would you get comfortable with that if you couldn't own the land?

Speaker 5: Well that's actually a good question. I mean look, we and probably everybody else in the gaming business has been looking at tribal for years. I'm going to let Brandon who's been silent so far speak a little bit about that. We spend a lot, a lot of time.

Speaker 5: underscore looking at tribal opportunities and giving thoughts of how can we protect ourselves to the degree we might get involved. Brandon, do you want to put some color? Yeah, I'm happy to. I mean, I think when we, when you think about tribal gaming, there's obviously two different types of tribal gaming. There's the commercial side and then there's the side that you focused on.

Speaker 12: where the land is held in trust with the government. And I think that has been the challenge for us and others that have sought to invest in tribal gaming on trust land. I think that over the course of the last decade or so, the protections in place for banks and others have become more routine and robust. And so I think that

Speaker 12: You have to look at those markets and look at those protections and see if you can port those over to the real estate, long-term real estate ownership model. I don't know that anybody's perfected that yet. I think it is possible. And I think it depends on the tribe. I mean, there are a lot of very unique tribal situations in trust land across the country and each of them...

Speaker 12: is a little different. And so I'm optimistic that that is a wheel we can round, but I don't think we've done it quite yet.

Speaker 11: That's helpful too, Brandon. I guess, since you've been looking into it, is there any historical data that you've been able to see? I'm curious, I think a lot of us are curious how tribal assets perform during economic downturn. Certainly understand the stickiness of the more regional gaming assets, but curious about the history of tribal.

Speaker 11: As well as, I guess I'm curious, is there any history between Penn? Has Penn ever really invested or had much relationships or history with tribal? Thanks. Well, Penn has bishop, he has verses from aounce, streamers, posts. Our

Speaker 12: If we start from the last question, you may recall that Penn did manage a facility for a tribe in Canada and that was a very successful relationship and operation. Penn had a less successful relationship with a tribe outside of San Diego with the Hamoul tribe where they developed a beautiful facility for that tribe several years ago. I think this goes back to depending on tribe by tribe and situation by tribe.

Speaker 12: around. So those really are the commercial facilities for the population densities in those states. And so from from what I have seen I think that their experiences were very similar to the commercial casinos that you see out here today. Great, helpful. Thank you.

Speaker 2: Next question, David Katz with Jefferies, please go ahead.

Speaker 13: Morning, everyone. Thanks for taking my questions.

Speaker 13: I wanted to just get a little broader color on what the opportunity set of deals is looking like. The presumption is last nine months, the world has changed, cost of capital has gone up. And specifically whether new developments are just far less.

Speaker 13: available and or whether there's shifts in the financing and refinancing market that may be bringing opportunities your way in some increasing numbers. That's just getting a sense of what your flow looks like.

Speaker 5: Let me suggest this, and this is my personal thing, we haven't talked internally. My sense is there is as much interest in developing gaming facilities today as there was at any other time. I have not noticed any sense, or have no sense of diminution of interest.

Speaker 7: Gaming, as I say again and again, is in a class by itself. And Steve, you're at this day-to-day. No, I think that's completely accurate. I mean, there are some, look, there are, of course, there are some development projects that seem like they've been kind of floating around for...

Speaker 7: years. That's not correlated to the state of the credit markets. That's correlated to the underwriting opportunity. So I think from a credit market perspective, I think Matt hit on it in his opening remarks. The traditional banks have tightened the purse strings.

the typical lender you could go to and end up with less than optimal rates. They're still around. The rates are even further less optimal. Then there became this middle open ocean area. What The

where anyone that has cost of capital and is willing to roll up their sleeves and try to underwrite might be able to play. And so I think we're no different than others that are sitting in the same seats as we are. I'm sure all of us are getting similar phone calls from folks.

that are trying to figure out how they can get their projects financed and off the ground. So we're seeing plenty of opportunities. Some are interested and some are not. And it all depends on a buy project, buy property underwriting process.

Perfect. Thank you.

Next question, Ronald Camden with Morgan Stanley . Please go ahead. Thanks so much. A couple quick ones. Starting just on the leverage, if you think about just how much castle the company is generating, where do you think you're going to end 2023 and going into 2024 on a leverage level?

because we can get to sort of the 47, 46's range. I'm curious where you guys are thinking. Yeah, given our current guidance and, you know, again, assuming no transactions, we still expect to end around the 48 range net leverage.

Great, and then on the guidance, can you be specific on what drove that one penny bump? Is it core and why? Is it interest income? Just what was the change there? Yes, so the average interest rate assumption that we used in our guidance on the low end —

came in better than what we had expected and then the average interest rate that we used on our high end it's not better than what's in our high end so it is really related to interest in general.

Excellent. And then the last one, just another one on the values transaction. I think two pieces to it. Number one, is there any sort of timing, any event that we should look for prior to that December 2024 deadline, that's going to let us know whether it's more or less likely.

is number one and then number two, given the events of the past sort of month, month and a half, in terms of getting the lender consent, does that, does anything change there? Is it more likely, less likely, like just trying to get a sense of how we should think about the impact of the past month and month and a half on potential scenarios here?

Thank you. Thank you. Steve, go ahead. Sure. With respect to the timing goes, look, I think we will continue on a quarterly basis to try to provide whatever updates we have available to us, and certainly we'll keep you apprised whenever we actually hear from them that there's an opportunity to effectuate.

that. With respect to the recent credit markets, how that may play into what's going on, look, I think the reality is they're most likely going to end up needing to refinance their credit facility to create an opportunity to remove the language that's prohibiting them from selling that asset. So,

I don't foresee the easier path being through a lender consent, but again, we're not involved in their dialogues with their lenders. There's discussions with either their current lenders or maybe future lenders if they were to pursue a refinancing. So we're kind of sitting here anxiously awaiting some kind of movement on that front, but that would be the...

question.

Matt, you had an interesting comment in your prepared remarks about some of the stress that other real estate asset classes are seeing, whether it's economic or secular or banking related. But it highlights Peter's point all the time.

how durable the gaming business is. So the broad question for whoever wants to take it is,

As we see stress in other real estate asset classes, are there any implications, good, bad, or indifferent for your business? And I realize that's kind of broad. So maybe the more specific question is, have people from outside of the gaming industry who need capital have been reaching out.

to you guys given your position or have you seen other pockets of institutional capital that haven't traditionally looked at gaming assets step in and have you kind of started to cross paths with maybe some additional competitors that are looking for new types of investments.

more or less players or any implications that you've seen yet? Well, a quick answer is look, a lot of people look enviously at where we are.

Can't say I blame them, but getting here is not as easy as some have found. Matt, do you want to address that one?

Yeah, look, we've now added a few years of track record and that's certainly something on a relevant basis that stands out compared to other asset classes in real estate. Coming back to financial crisis and how things got treated.

You know, banks very quickly recategorize how they look at real estate. They're licking their wombs and it's not a position where they're really aggressively lending into. And that tends to impact all real estate. So to the extent something like that happens again, it makes us that much more attractive of a solution.

because we've got money, it's pretty fairly priced in this environment and we're ready to go and you can count on us. So that should work to our benefit and yes there have been some incomings from folks we've talked to for a long time where the bid-ask gap has been incredibly wide.

around where we would be able to do something and want to do something and what they're looking for and And now it's tighter We're not there yet or you would have seen an announcement, but certainly we're being looked at as an alternative a lot more realistically Than we were historically for even things outside of gaming and for the development loans He talked about so the the world's moving in our direction in that sense

But I think we need to season this environment a little more too before you see a whole lot of volume. Everything's happened kind of quickly and things still are in a state of flux. So I don't think if someone's planning their business for the next 10 or 20 years that they're going to look at a spreadsheet and confidently plug in something and say, hey, we're going to use you because you're better than something. But we seem to be getting there. So let's watch over the next couple few quarters and see what falls into place.

That's good. Additional caller. Thanks, everybody. Thank you. Next question. John Masocha with Lattenberg-Salmon. Please go ahead.

additional color. Thanks everybody. Thank you. Next question, John Masocha with Lattenberg-Vallman. Please go ahead. Good morning.

Good morning, John . Maybe you can comment on bid-ask spread. I know you talked about it in terms of non-gaming assets. Has there been any kind of movement on bid-ask spread, if you will, for gaming investment opportunities over the last couple of months or quarters?

Go ahead, Steve. I think on the buyer side, yes, and on the seller side, not quite a yes. So look, I think people are still anchored into valuations that were, let's be honest, 12 months ago, right? Valuations were in a different place. Credit markets were in a different place. It hasn't been that long that the...

market cost into their math and in some cases people's equity prices are down too. So I do think there's a little bit of a disconnect and it really comes down to is there a strategic rationale that allows someone to kind of look beyond the short-term perspective and take a longer view. And in some cases that might come to fruition and others it might not.

So I think that's where we find ourselves at the moment. Okay, and then outside of Penn, where you obviously have a deal already in place, what is the broad appetite of either current tenants or even new partners for development funding at existing assets? And is that a major part of the investment conversation today or are your talks more focused on kind of de novo deals?

It's a constant ongoing dialogue. Many of our tenants are constantly doing projects. I would tell you that I feel like more of our tenants are starting to reinvest in their properties through capital improvements and focus on the properties they own, whether it be hotel remodel.

will finance the projects themselves. But that's an ongoing dialogue that has continued. And I actually think that people are starting to put more dollars to work into the properties in the recent months. Okay. I know it's kind of a spoke deal by deal, but is there kind of a broad some, you know, return hurdle difference between what you would do for those kinds of developments.

at existing assets versus straight acquisition saley specs.

No, look, I think we're trying to seek accretion in all transactions. So we, you know, we're not offering sweetheart, dilutive transaction pricing to folks for doing projects inside of buildings we already own. So we're constantly trying to make sure that we're being good stewards for our stakeholders and trying to earn an accretive return. Thanks a bunch.

It depending on the time of the market and where we sit our accretive financing may in fact be still appealing to where someone might have to go raise capital. Okay, that's it for me. Thank you very much. Thank you next question Chris darling with Green street. Please go ahead. Thanks good morning.

I'm hoping to get your perspective on the recent acquisition of Diamondjacks in Bozier City by Cordish. Is this a project you'd like to get involved with potentially in some capacity? And then additionally, just any thoughts you have on the market's ability to absorb the incremental supply over time.

I'm hoping to get your perspective on the recent acquisition of Diamondjacks in Bozier City by Cordish. Is this a project you'd like to get involved with potentially in some capacity? And then additionally, just any thoughts you have on the market's ability to absorb the incremental supply over time? Steve, I'm going to let you stick with that one.

Look, I think the Cordish, we've talked to Cordish about the project. They seem very excited about the project and the opportunity, so of course we wish them the best of luck with that. As far as the market goes, I think that marketplace did support that casino previously.

expansion in Texas. They are very bullish about this project. They genuinely are. We haven't talked about anything past that, but they are obviously committed. As I said earlier, they are terrific operators, so I would never bet against them. It's helpful. Speaking of, you know,

property. Yeah, so they're right at two times which is Maryland.

Oh, Maryland's three seven, sorry, Pennsylvania's two times. So they are actually performing better than what we underwrote at the time. But it's what we expect. There's nothing... We're happy with it, obviously, clearly. But we did underwrite the two properties, kind of looking at them together, the acquisition, the relationship with Cordes, not just one lease at a time.

Yeah, but we originally on a pro forma basis were looking at 2-6 if you recall. So this is a really strong outcome for that property. Fair enough, I appreciate your time. Thank you. Thank you. I would like to turn the floor over to Mr. Carlino for closing remarks. Well it sounds like we're at the end so I thank you all very much.

I hope you leave with the idea that we're pretty excited about what we see ahead this year and Hope that we can deliver some very positive news as we meet next quarter. So thanks again. Have a great day They operator

you leave with the idea that we're pretty excited about what we see ahead this year and Hope that we can deliver some very positive news as we meet next quarter. So thanks again. Have a great day take operator