Q2 2024 Gaming and Leisure Properties Inc Earnings Call
Greetings and welcome to the Gaming and Leisure Properties Inc. Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Operator: 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. Joe Trefoni, Investor Relations. Thank you, sir. You may begin. Thank you, Marianne. Good morning, everyone.
A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
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Joe Trifoni, Investor Relations. Thank you, sir. You may begin.
Joseph N. Jaffoni: And thank you for joining Gaming and Leisure Properties' second quarter 2024 earnings call and webcast. The press release distributed yesterday afternoon is available in the investor relations section on our website at www.glpropinc.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. Forward-looking statements may include those related to revenue, operating income, and financial guidance, as well as non-GAAP financial measures such as FFO and AFFO.
Speaker Change: Thank you, Marianne. Good morning, everyone, and thank you for joining Gaming and Leisure Properties' second quarter 2024 earnings call and webcast. The press release distributed yesterday afternoon is available in the Investor Relations section on our website at www.glpropinc.com.
Speaker Change: 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.
Speaker Change: Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today.
Speaker Change: Forward-looking statements may include those related to revenue, operating income, and financial guidance, as well as non-GAAP financial measures such as FFO and AFFO. As a reminder, forward-looking statements represent management's current estimates, and the company assumes no obligation to update any forward-looking statements in the future.
Joseph N. Jaffoni: As a reminder, forward-looking statements represent management's current estimates, and the company assumes no obligation to update any forward-looking statements in the future. We encourage listeners to review the more detailed discussions related to risk factors and forward-looking statements contained in the company's filings with the SEC, including its Form 10-Q and in the earnings release, as well as the definitions and reconciliations of non-GAAP financial measures contained in the company's earnings On this morning's call, we are joined by Peter Carlino, Chairman and Chief Executive Officer of Gaming and Leisure Properties.
Speaker Change: We encourage listeners to review the more detailed discussions related to risk factors and forward-looking statements contained in the company's filings with the SEC including its Form 10-Q and in the earnings release, as well as the definitions reconciliations of non-GAAP financial measures contained in the company's earnings release.
Joseph N. Jaffoni: Also joining today's call are Brandon Moore, Chief Operating Officer, General Counsel, and Secretary, Desiree Burke, Chief Financial Officer and Treasurer, Steve Ladny, Senior Vice President, Chief Development Officer, and Matthew Demchyk, Senior Vice President, and Chief Investment Officer. With that, it's my pleasure to turn the call over to Peter Carlino. Peter, please go ahead.
Peter M. Carlino: On this morning's call, we are joined by Peter Carlino, Chairman and Chief Executive Officer at Gaming and Leisure Properties.
Speaker Change: Also joining today's call are Brandon Moore, Chief Operating Officer, General Counsel and Secretary, Desiree Burke, Chief Financial Officer and Treasurer, Steve Ladny, Senior Vice President and Chief Development Officer, and Matthew Demchyk, Senior Vice President and Chief Investment Officer.
Speaker Change: With that, it's my pleasure to turn the call over to Peter Carlino. Peter, please go ahead.
Peter M. Carlino: Well, we've had a pretty eventful quarter, with good performance this quarter from portfolio companies, and the actualization of some of the various projects that we've been working on for actually some time. We are pretty well locked in the next couple of years of growth. Before anything else, we might succeed in creating.
Peter M. Carlino: Well thank you Joe and good morning everyone. Well we've had a pretty eventful quarter with good performance this quarter from portfolio companies
Peter M. Carlino: and the actualization.
Peter M. Carlino: of some of the
Peter M. Carlino: various projects that we've been working on for actually some time.
Peter M. Carlino: We pretty well locked in the next couple of years of growth before anything else we might succeed in creating.
Peter M. Carlino: You know that earlier this month, we announced an approximate $1.6 billion transaction with Bally's that we believe is a clear win-win for our company and for Bally's as well. I'll skip reading through the details of that since it's well documented in my written comments in our press release. And I suspect that what we might miss, you'll find a way of asking us anyway. So I'm going to let Desiree Burke highlight a few financial aspects. Items.
Peter M. Carlino: You know that earlier this month we announced an approximate $1.6 billion transaction with Bally's that we believe is a clear win-win for our company and for Bally's as well.
Peter M. Carlino: I'll skip reading through the details of that since it's well documented in my written comments on our press release.
Peter M. Carlino: And I suspect that what we might miss, you'll find a way of asking us anyhow. So I'm going to let Desiree Burke highlight a few financial...
Desiree A. Burke: Thanks, Des. Sure. Thanks, Peter. And good morning, everyone.
Desiree A. Burke: Items. Thanks, Des. Sure. Thanks, Peter. And good morning, everyone.
Desiree A. Burke: I'm going to hit the highlights of what we achieved in our P&L for the quarter, as I normally do. So for the second quarter of 2024, our total income from real estate exceeded the second quarter of 2023 by $24 million. That growth was driven by the Tioga Acquisition, which increased cash income by $3.6 million, and the Rockford Acquisition, which increased our cash rental income by $3.8 million, including the loan proceeds. The Casino Queen Marquette Acquisition and the Baton Rouge Landside Development increased cash income by $2.3 million.
Desiree A. Burke: I'm going to hit the highlights of what we achieved in our P&L for the quarter as I normally do. So for the second quarter of 2024, our total income from real estate exceeded the second quarter of 2023 by $24 million.
Desiree A. Burke: That growth was driven by the Tioga Acquisition, which increased cash income by $3.6 million, the Rockford Acquisition, which increased our cash rental income by $3.8 million, including the loan proceeds.
Desiree A. Burke: The Casino Queen Marquette acquisition and the Baton Rouge land site development increased cash income by $2.3 million. The strategic acquisition increased cash income by $1.2 million.
Desiree A. Burke: The Strategic Acquisition increased cash income by $1.2 million, and then the recognition of escalators and percentage rent adjustments on our leases, which added approximately $4.7 million in cash income. Lastly, we had the combination of non-cash revenue growth, investment and lease adjustments, and straight-line rent adjustments, which drove a collective year-over-year increase of approximately $8.4 million. Our operating expenses decreased by $31 million, primarily due to the non-cash decrease in the provision for credit loss, which is amended.
Desiree A. Burke: And then the recognition of escalators and percentage rent adjustments on our leases, which added approximately $4.7 million of cash income.
Desiree A. Burke: Lastly, we had the combination of non-cash revenue growth ups, investment and lease adjustments, and straight-line rent adjustments, which drove a collective year-over-year increase of approximately $8.4 million.
Desiree A. Burke: Our operating expenses decreased by $31 million, primarily due to the non-cash decrease in the provision for credit losses.
Desiree A. Burke: 10 Pinnacle and Boyd master leases had rent resets that occurred on May 1, 2024. These resets increased the percentage rent by $5.9 million annually. In addition, we received full escalation on these contingent leases, which resulted in $6.5 million of additional rent annually. Finally, the amended PEN master lease is subject to contingent escalation on November 1st of this year, and if obtained, we would get a full $4.2 million of additional annual rent. Included in today's release is our full year 2024 AFFO guidance ranging from $3.74 to $3.76 per diluted share and OB unit. Please note that this guidance does not include the impact of future transactions.
Speaker Change: are amended.
Desiree A. Burke: Penn Pinnacle and Boyd Master Leases had rent resets that occurred on May 1, 2024. These resets increased percentage rent by $5.9 million annually.
Desiree A. Burke: In addition, we received full escalation on these contingent leases, which resulted in $6.5 million of additional rent annually.
Desiree A. Burke: Finally, the amended PEN master lease is subject to contingent escalation on November 1st of this year, and if obtained, we would get a full $4.2 million of additional annual rent.
Desiree A. Burke: Included in today's release is our full year 2024 AFFO guidance ranging from $3.74 to $3.76 for diluted share and OB units. Please note that this guidance does not include the impact of future transactions.
Matthew J. Demchyk: The increase in guidance is primarily due to the closing of the strategic transaction. Our zero-coupon Treasury bill matures in August of 2024 at an implied yield of 5.32%, and our coverage ratios remain strong, ranging from 1.94% to 2.66% on our master leases as of the end of the prior quarter. With that, I'd like to turn it over to Matthew for comments. Thanks, Desiree. And thanks to everyone for joining us this morning.
Desiree A. Burke: The increase in guidance is primarily due to the closing of the strategic transaction.
Speaker Change: Our Zero Coupon Treasury Bill matures in August of 2024 at an implied yield of 5.32%.
Matthew: And our coverage ratios remain strong, ranging from 1.94 to 2.66 on our master leases as of the end of the prior quarter. With that, I'd like to turn it over to Matthew for comments.
Matthew J. Demchyk: History shows that periods of heightened volatility lead to opportunity for those who are prepared. Our thoughtfully constructed portfolio of safe and durable cash flows, combined with our continued commitment to balance sheet strength and liquidity, along with our track record of capital markets discipline, have set the stage for more opportunities. This past quarter, we again demonstrated our team's creativity to uniquely source and structure a multi-part, win-win transaction with the recently announced Bally Chicago, Kansas City, and Shreveport investments, along with the improvement of economics related to the Lincoln Call Rate.
Matthew: Thanks, Desiree, and thanks to everyone for joining us this morning.
Matthew: History shows that periods of heightened volatility leads to opportunity for those who are prepared.
Matthew: Our thoughtfully constructed portfolio of safe and durable cash flows, combined with our continued commitment to balance sheet strength and liquidity, along with our track record of capital markets discipline, have set the stage for more opportunity.
Matthew: This past quarter, we again demonstrated our team's creativity to uniquely source and structure a multi-part, win-win transaction with the recently announced Valley Chicago, Kansas City, and Shreveport investments.
Matthew: along with the improvement of economics related to the Lincoln Call Rate. Our development team's confidence and input in the Chicago project, combined with our creativity, to open the door to opportunity, as we offered another bespoke solution to Valleys.
Matthew J. Demchyk: Our development team's confidence and input in the Chicago project combined with our creativity to open the door to opportunity as we offered another bespoke solution of value. Over the course of the last six months, we've announced close to $2 billion of new investments with four different counterparties across the gaming world. We have done each of these deals with a healthy yield in an unpredictable macro environment. The strong market share of all gaming real estate investments that we have demonstrated of late has further solidified our position as the go-to landlord of choice within the gaming world. The Flywheel Effect has been to our benefit.
Matthew: Over the course of the last six months, we've announced close to $2 billion of new investments with four different counterparties across the gaming world. We have done each of these deals with a healthy yield in an unpredictable macro environment.
Matthew: With the strong market share of all gaming real estate investments that we have demonstrated of late, we have further solidified our position as the go-to landlord of choice within the gaming world. The flywheel effect has been to our benefit.
Peter M. Carlino: Our pipeline remains healthy. With each deal, we have new and interesting case studies that encourage more conversations with our pipeline of potential investment. We remain focused on protecting and perfecting our existing cash flows as we continue our efforts to unearth opportunities for the prudent and thoughtful deployment of our shareholders' capital. With that, I'll turn the call back to Peter. Well, thank you, Matthew. That was a pretty good summary of where we find ourselves today.
Matthew: Our pipeline remains healthy. With each deal, we have new and interesting case studies that encourage more conversations with our pipeline of potential investments.
Peter M. Carlino: We remain focused on protecting and perfecting our existing cash flows as we continue our efforts to unearth opportunities for the prudent and thoughtful deployment of our shareholders' capital. With that, I'll turn the call back to Peter.
Peter M. Carlino: Well, thank you, Matthew. That was a pretty good summary of where we find ourselves today.
Peter M. Carlino: You know, a couple of gratuitous comments if I may. Since the time of our spin, I get the question on the road all the time, where's your pipeline? What have you guys got?
Peter M. Carlino: A couple of gratuitous comments, if I may, we, at the time of our, since the time of our spin,
Speaker Change: I get the question on the road all the time, where's your pipeline? What have you guys got?
Peter M. Carlino: coming next. And I always say unapologetically, we don't have a pipeline, you know; it's something we create as we go, this last quarter and this last year. I think they underline the tremendous amount of work that we do, and just because we have a quarter, two quarters, even a year with no activity, if you look at what we've collectively done over these last years, it's been terrific. So we're quite proud of what we're accomplishing here. And with that, I'll pass it over to your questions. So Maria, please open the phone.
Speaker Change: Coming next, and I always say unapologetically, we don't have a pipeline, you know, it's something we create as we go. This last quarter and this last year,
Speaker Change: I think underscore the tremendous amount of work that we do, and just because we have a quarter, two quarters, even a year with no activity, if you look at what we've collectively done over these last years, it's been terrific.
Speaker Change: So we're quite proud of what we're accomplishing here and with that...
Speaker Change: We'll pass it over to your questions. So, Maria, please open the phones.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue.
Maria: 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 that your line is in the question queue.
Maria: You may press star 2 if you would like to remove your question from the queue. We ask that you limit your questions to one and a follow-up so that others may have an opportunity to ask questions.
Maria: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Maria: I'm going to pause while we poll for questions.
Operator: We ask that you limit your questions to one and a follow-up so that others may have an opportunity to ask questions. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Do you always pull for questions? Our first question comes from Brad Heffern with RBC Capital Markets. Please proceed with your question. Yes, thank you. Morning, everyone.
Maria: Our first question comes from Brad Heffern with RBC Capital Markets. Please proceed with your question.
Bradley Barrett Heffern: Obviously, a lot of capital commitments coming up between the valleys transactions, development funding deals, and debt maturity. So can you just walk through your expectations for how and when all that will be funded? Sure.
Bradley Barrett Heffern: Yeah, thank you. Morning, everyone. Obviously, a lot of capital commitments coming up between the valleys, transactions, development funding deals and debt maturity. So can you just walk through your expectations for how and when all that will be funded?
Brandon John Moore: So the funding needs for the transactions we recently announced with Bally's will be staggered over the next couple of years. As we've done historically, we intend to fund the transactions with a mix of debt and equity. Our balance sheet gives us a lot of flexibility with our leverage below 4.6 times and our billion 750 revolver currently undrawn. With our second quarter 10Q filed and the financial results announced, obviously, we'll be actively monitoring the capital markets to take advantage of any opportunities to lock in capital at attractive rates for both of these transactions, as well as other upcoming capital needs, including our debt maturities that we have coming due. Okay, I got it. Thank you.
Speaker Change: Sure. So the funding needs for the transactions we recently announced with Bally's will be staggered over the next couple of years.
Speaker Change: As we've done historically, we intend to fund the transactions with both a mix of debt and equity. Our balance sheet gives us a lot of flexibility with our leverage below 4.6 times and our billion 750 revolver currently undrawn.
Speaker Change: With our second quarter 10-Q filed and the financial results announced, obviously, we'll be actively monitoring the capital markets to take advantage of any opportunities to lock in capital at attractive rates for both of these transactions, as well as other upcoming capital needs, including our debt maturities that we have coming due.
Peter M. Carlino: And then Peter, you know, you've historically been somewhat bearish on the Illinois market. Obviously, you're making a very large investment there. Now, I'm just curious, what is it specifically about this asset?
Speaker Change: Okay, got it. Thank you. And then Peter, you know, you've historically been somewhat bearish on the Illinois market, obviously, you're making a very large investment there. Now, I'm just curious, what is it specifically about this asset? Or what changed in your thoughts around that market that make you comfortable with that?
Peter M. Carlino: Or what changed in your thoughts around that market that made you comfortable with that? Well, this is a big project that is going to be pretty impressive. I mean, obviously, we have some knowledge of what is planned there, and I think we've had some material impact, assisting the Strong Valleys team in coming up with something that makes a lot of sense. The key to any project like this is on budget and on time, and I think we've had a pretty good track record over the years of accomplishing that.
Peter M. Carlino: Well, this is a big time project that...
Speaker Change: is going to be
Peter M. Carlino: Pretty impressive. I mean, obviously, we have some knowledge of what is planned there, and I think we've had some material impact assisting the Strong Valleys team in coming up with something that makes a lot of sense.
Peter M. Carlino: The key to any project like this is on budget, on time, and I think we've had a pretty good track record over the years of accomplishing that.
Peter M. Carlino: Look, we've looked carefully at the market and the competition and so forth and and look despite that and and some of the more egregious things that in years past that uh our former governor Rod Burgoyne used to used to promulgate um things of you know look it's uh tax increases are not good but I think we feel pretty confident in this project we've spent a lot of time looking at it we'd like the sponsorship with Valley's we'll have a seat at the table and assisting and I hope hopefully, creating a project that is going to be successful. So we feel pretty good about it.
Peter M. Carlino: Look, we've looked carefully at the market and the competition and so forth and look despite that.
Peter M. Carlino: And some of the more egregious things that in years past that.
Peter M. Carlino: [inaudible]
Speaker Change: He used to promulgate.
Speaker Change: Things of, you know, look, it's, tax increases are not good.
Speaker Change: But I think we feel pretty confident in this project. We've spent a lot of time looking at it. We'd like the sponsorship with Bally's. We'll have a seat at the table and assisting and I hope helpfully.
Speaker Change: Creating a project that is going to be successful. So we feel pretty good about it. I think the range of outcomes, I think, in any case for us is very, very strong.
Peter M. Carlino: I mean, I think the range of outcomes, I think, in any case, for us is very, very strong. Okay, I mean, we're doing business in Illinois; our tenants are doing business in Illinois. Now, none of them have died.
Operator: So they're surviving. So, in any case, you know, business is being done. We're being supportive, as you know, of Penn with the landslide move with Joliet and Aurora, and pleased to do that. So we're not afraid to invest money in the state. Okay. I appreciate it.
Speaker Change: I mean, we're doing business and our tenants are doing business in Illinois now, none of them have died, so, I mean, they're surviving. So, in any case, you know.
Speaker Change: Business is being done. We're being supportive, as you know, for Penn with the Landside move with Joliet and Aurora. I'm pleased to do that, so we're not afraid to invest money in the state.
Speaker Change: Okay. Appreciate it.
Jay Bradley Kornreich: Our next question comes from Jay Kornreich with Wedbush Securities. Please proceed with your question. Hey, good morning.
Speaker Change: Our next question comes from Jay Kornreich with Wedbush Securities. Please proceed with your question.
Jay Bradley Kornreich: As we think about Bollies, as they continue to become a larger tenant for you, there was a headline yesterday that they just accepted a buyout offer from Standard General. And I wonder if you see that translating to any changes in plans or strategies you currently have with them or, you know, changes how you think about credit underwriting with them. Just any comments on that standpoint? I'm going to ask Brandon Moore to take that question, but he can't wait. Yeah, I was excited for this one.
Jay Bradley Kornreich: Hey, good morning.
Jay Bradley Kornreich: As we think about Bollies as they continue to become a larger tenant for you, there was a headline yesterday that they just accepted a buyout offer from Standard General.
Jay Bradley Kornreich: And I wonder if you see that translating to any changes that...
Speaker Change: Transcripts provided by Transcription Outsourcing, LLC.
Jay Bradley Kornreich: I'm going to ask Brandon Moore to take that question. He can't wait. I'm excited for this one.
Brandon John Moore: Look, I mean, I think first off, we should let you know. We know what you know about the Valleys Go private transaction, and we've known what you know. So we haven't been under the tent in that transaction at all, at all. But I will say, look, we are looking at that transaction. We're looking to understand more about it, but overall, I don't think it changes anything with Valleys today. So we have just made clear that we've not been approached by Valleys or Standard General to make any changes to our leases, to make any alterations to the existing documents we have in place. I'm not saying that might not happen, but it hasn't happened today.
Brandon John Moore: Look, I think first off, we should let you know, we know what you know about the Valley's Go private transaction.
Brandon John Moore: and we've known what you've known, so we haven't been under the tent in that transaction at all, but I will say, look, we look at that transaction, we're looking to understand more about it.
Brandon John Moore: But overall, I don't think it changes anything with VALES today. So we have not, just to make clear, we've not been approached by VALES or Standard General to make any changes to our leases, to make any alterations.
Brandon John Moore: to the existing documents we have in place.
Brandon John Moore: And so for us, it's business as usual, but we're waiting to carefully take a look at the control transaction structure when it's announced and it comes out. And I think we'll try to strike a balance between what's best for our shareholders and what's viable for the tenant as we continue to negotiate the definitive agreements that will ultimately spell out the transaction terms for the term sheet that we've announced. And so I think there'll be a lot more to come on that.
Brandon John Moore: I'm not saying that might not happen, but it hasn't happened to date. And so for us, it's business as usual, but we're waiting to carefully take a look at the control transaction structure when it's announced and it comes out.
Brandon John Moore: And I think we'll try to strike a balance between what's best for our shareholders and what's viable for the tenant as we continue to negotiate the definitive agreements that will ultimately spell out the transaction terms for the term sheet that we've announced. And so, I think there'll be a lot more to come on that, but we're optimistic. We work really hard here to get into transactions, not out of them. And we think that this will be a positive transaction, and we still think...
Brandon John Moore: But we're optimistic. We work really hard here to get into transactions, not out of them, and we think that this will be a positive transaction. And we still think that the path that we've we've set forth in the term sheet will be the one we'll ultimately take. But, obviously, there's a lot we have to learn at the same time you do. Yeah.
Brandon John Moore: that the path that we've, we've, we've, um,
Brandon John Moore: Set forth in the term sheet will be the one will ultimately take but but obviously there's a lot we have to learn
Matthew J. Demchyk: And our underwriting was very focused on having a good basis in the assets. I mean, we were aware of the public nature of the potential take-private at the time. And if you look at the coverage on the sale lease back, Tweedport and Kansas City being a 2-2 with a basis in Chicago being with some margin of safety relative to the construction cost. We're happy with that basis. We didn't rely on any greater support or anything else beyond those things to give us comfort.
Speaker Change: at the same time you do.
Speaker Change: In Shreveport and Kansas City being a 2-2 with a basis in Chicago being with some margin of safety relative to the construction cost. We're happy with that basis. We didn't rely on any greater support or anything else beyond those things to give us comfort.
Jay Bradley Kornreich: Okay, I appreciate that. And then maybe just maybe one more, you know, big picture on the transaction market as the Fed seems poised to lower rates, and we've seen the 10-year start coming down recently. Are you already seeing, I guess, increased interest and conversation from casino owners who have been on the sidelines the past year and maybe waiting for cap rates to come down? Or is it too early for that to start happening? You know, I don't think I'll take a shot at that. I don't think anybody's sitting on the sidelines.
Speaker Change: Okay, I appreciate that. And then just maybe one more.
Speaker Change: Big picture on the transaction market, as the Fed seems poised to lower rates, and we've seen the 10-year start coming down recently. Are you already seeing, I guess, increased interest and conversation from casino owners who have been on the sideline the past year and may be waiting for cap rates to come down? Or is it too early for that to start happening?
Speaker Change: You know, I don't think I'll take a shot at that. I don't think anybody's sitting on the sidelines. Every transaction has a reason for occurring. Sometimes it's an estate reason, sometimes it's a liquidity reason.
Peter M. Carlino: Every transaction has a reason for occurring. Sometimes it's an estate reason; sometimes it's a liquidity reason. Sometimes, you know, Lord knows what might drive somebody to make that choice.
Speaker Change: Sometimes, you know, Lord knows what might drive somebody to make that choice. I don't think anybody sitting in this, I'll go that far, sitting on the sideline waiting for a better day so they can move their asset.
Peter M. Carlino: I don't think anybody's sitting in this, I'll go that far, sitting on the sidelines, waiting for a better day so they can move their assets. These things evolve over time, as you've seen. We could never have foreseen the opportunity to own the Kansas City asset or the Shreveport asset or, you know, none of these things were foreseeable. They evolved out of other needs of our tenants. [inaudible] So, you know, it's been a term I think somebody here used to use, like hanging around the hoop.
Speaker Change: These things evolve over time, as you've seen.
Speaker Change: We could never have foreseen the opportunity to own the Kansas City asset or the Shreveport asset or, you know, none of these things were foreseeable. They evolved out of other needs of our tenants.
Speaker Change: Bally's, in this case, Bally's is a company on the move. Sue Kim is a creative and innovative guy who is focused on building a great company. We're thrilled to be his partner in these transactions.
Peter M. Carlino: That's what we have to do, and that's what we do. So I don't think there's anything special that has changed. These things just happen when they happen, and we always have something in the mix.
Speaker Change: So, you know, it's been better.
Speaker Change: The term I think somebody here used to use is like hanging around the hoop. That's what we have to do. And that's what we do do. So I don't think it's anything special that has changed. These things just happen when they happen and we always have something in the mix. So.
Peter M. Carlino: Wish I could be more precise, but that's pretty much the story. Okay, appreciate the thoughts. That's it for me.
Speaker Change: Wish I could be more precise, but that's pretty much the story.
Speaker Change: Okay, I appreciate the thoughts. That's it for me.
Barry Jonathan Jonas: Our next question comes from Barry Jonas with True Securities. Please proceed with your question. Hey guys.
Speaker Change: Our next question comes from Barry Jonas with True Securities. Please proceed with your question.
Barry Jonathan Jonas: Can you talk a little bit more about your level of input now in Chicago for construction and design? You know, how important is this for you? And is this a formal or informal role?
Barry Jonathan Jonas: Hey guys, can you talk a little bit more about your level of input now in Chicago for construction and design? You know, how important is this for you and is this a formal or informal role? Thanks.
Brandon John Moore: Thanks. Yeah, so we're in the process of negotiating the definitive agreements, including the development agreement on the Chicago project. But needless to say, we'll be taking an active role as that project continues. So we'll be, as we've said in that, financing or funding the construction of the improvements and owning the improvements. And as part of that process, we'll be keeping a close eye on the budget, the plans and specifications, the construction timeline, the construction documents, all those things. We expect Valleys to be on the front line of all those things, but we'll be very closely behind.
Speaker Change: Yeah, so we're in the process of negotiating the definitive agreements, including the development agreement on the Chicago project. But needless to say, we'll be taking an active role as that project continues. So we'll be, as we've said in that, we'll be financing or funding
Speaker Change: The Construction of the Improvements and Owning the Improvements, and as part of that process, we'll be keeping a close eye on the budget, the plans and specs, the construction timeline, the construction documents, all those things. We expect Valleys to be on the front line of all those.
Brandon John Moore: And I think we're aligned. And I think this is just another example of us providing a resource to them as someone that has done these projects before successfully. And we have internal resources that we can bring to bear to help ensure that the project's delivered on time and on budget.
Speaker Change: But we'll be very closely behind, and I think we're aligned, and I think this is just another example of...
Speaker Change: We provide a resource to them as someone that has done these projects before successfully, and we have internal resources.
Brandon John Moore: And we intend to do that. We would not have entered into this project if we weren't confident that we could have a front seat and make sure that it gets done along the timelines and budget that we've underwritten. And we're providing resources to do just that. Valley has a great team in place.
Speaker Change: that we can bring to bear to help ensure that the project's delivered on time and on budget. And we intend to do that. We would, I don't think we ever would have entered into this project if we weren't confident that we could have a front seat.
Speaker Change: and make sure that it gets done along the timelines and budget that we've underwritten. And we're providing resources to do just that. So, Valley has a great team in place.
Peter M. Carlino: We're adding to that with some of our skilled players as well. We have a terrific track record. I'm not going to move when I say that because every project is different. And we had a pretty significant hand in the redesign and development and structuring and programming of the project that you currently see. Yeah, I've reassembled some of my old team over across the street at Penn.
Speaker Change: We're adding to that with some of our skilled players as well. We have a terrific track record. I'm not going to move when I say that because every project is
Speaker Change: Brand new.
Speaker Change: but we feel pretty good about our ability to provide strong assistance in this case, both design assistance, construction.
Speaker Change: and so on and so forth. We've done it. Yeah, and I think as you probably saw in the deck that we put out in conjunction with the term sheet, the design of this project has changed dramatically from the project that we first looked at a long time ago to the project that we announced. And we had a pretty significant hand in the redesign and development and structuring and programming.
Speaker Change: of the project that you currently see.
Speaker Change: Yeah, I've reassembled some of my old team over across the street at Penn, and you all know that we have built many casinos from ground up, so this is not new territory for us.
Brandon John Moore: You all know that we have built many casinos from the ground up, so this is not new territory for us. We're putting some muscle on the front line here, so we feel pretty good about it. That that's great. And then, just for a follow-up, you know, M&A is currently happening with Bally and Casino Queen. And there's more M&A being speculated for some of your other tenants. So can you just remind us what our rights are in the event someone new assumes the lease, or else if a lease is broken up for new parties? I believe there's some specific criteria, but it might just be helpful to talk about it here. Yeah, I can do that.
Speaker Change: We'll put it to muscle on the front line here, so we feel pretty good about it.
Speaker Change: That's great. And then just for a follow up, you know, M&A is currently happening with Valley and Casino Queen and there's more M&A being speculated for some of your other tenants. So can you just remind us what your rights are in the event someone new assumes a lease or else if a lease is broken up for new parties? You know, I believe there's some specific criteria, but it might just be helpful to talk about it here.
Brandon John Moore: In general terms, our leases, if you want to break them up, will require the consent of GLPI. So if you want to take assets out of the lease or split the lease into multiple leases, or push them to new tenants, that will all require a conversation and approval by GLPI. The leases do have in them, generally speaking, some flexibility for tenants to transfer to what may be a discretionary transferee or an eligible transferee.
Speaker Change: Yeah, I can. In general terms, our leases, if you want to break them up, will require the consent of GLPI. So if you want to take assets out of the lease or split the lease into multiple leases,
Speaker Change: or push them to new tenants, that will all require a conversation and approval of GLPI.
Speaker Change: The leases do have in them, generally speaking, some flexibility for tenants to transfer to what may be a discretionary transferee or an eligible transferee. The defined terms tend to be a little bit different, but the point is...
Brandon John Moore: The defined terms tend to be a little bit different, but the point is, if their transferee meets certain pre-established thresholds, then we would not be able to withhold our consent to that. So I think the answer is, it depends. If you're not going to change the structure of our leases, the rent, the portfolio, and you're going to another large operator, you might not need our consent. If you want to do any of those things, you probably should.
Speaker Change: If their transferee meets certain pre-established thresholds, then we would not be able to withhold our consent to that. So I think the answer is it depends. If you're not going to change the structure of our leases, the rent, the portfolio, and you're going to another large...
Speaker Change: Operator, you might not need our consent. If you want to do any of those things, you probably do.
Speaker Change: Got it. Okay, thank you.
Barry Jonathan Jonas: Got it. Okay, thank you. Our next question comes from David Katz with Jefferies. Please proceed with your question. Hi, everyone. Good morning.
Speaker Change: Our next question comes from David Katz with Jefferies. Please proceed with your question.
David Brian Katz: Thanks for taking my questions. I think you answered the first part of what I wanted to ask about your seat at the table in Illinois. So I'd like to pivot to Tropicana Las Vegas.
David Brian Katz: Hi everyone. Good morning. Thanks for taking my questions. I think you answered the first part of what I wanted to ask about is with respect to your seat at the table on Illinois. So I'd like to pivot to Tropicana Las Vegas.
Speaker Change: You know, my impression is, you know, that Ballet is exploring alternatives as to how to, you know, create value out of that property.
David Brian Katz: You know, my impression is that Valley is exploring alternatives as to how to, you know, create value out of that property. And, you know, just common sense, you know, resources is them redeveloping it themselves, which seems a little reachy. And so I'd love for you to comment on your boundaries, you know, given that you've taken the step now of getting involved in Chicago in a new way. Just help us think through what could happen with Tropicana. Thank you. Yeah, I think the quick answer is that you really ought to talk to Bally's about that.
Speaker Change: And, you know, just common sense, you know, resources is them redeveloping it themselves.
Speaker Change: you know, seems a little reachy. And so I'd love for you to comment on your boundaries, you know, given that you've taken the step now of getting involved in Chicago in a new way. You know, just help us think through what could happen with Tropicana. Thank you.
Speaker Change: Yeah, I think the quick answer is that you really ought to talk to Bally's about that. They have taken a pretty active lead role now in the process. I'll call it the process there in Las Vegas.
Peter M. Carlino: They have taken a pretty active lead role now in the process. I'll call it the process there in Las Vegas. It's pretty clear to us that the stadium will likely be built and that the design will work in conjunction with what planning that BOWIES is doing at the site. We have provided some input there, and we do know a fair amount about what's going on, but I'm reluctant to comment on a project that is essentially theirs.
Speaker Change: It's pretty clear to us that the stadium...
Speaker Change: will likely be built and that the design will work in conjunction with what planning that BOWIES is doing at the site.
Peter M. Carlino: Now look, we've got a big seat at the table since we own the ground and want to see something long-term valuable place there, but I think they've assembled a team now Architects. Again, I'm very reluctant to comment, but I am happy with what they're now doing at that site. They've got a first-class team of architecture, design, land planning, and so forth, and I think I feel pretty good Brandon, do you want to add anything to that?
Speaker Change: We have provided some input there. We do know a fair amount about what's going on, but I'm reluctant to comment on a project that is essentially theirs. Now look, we've got a big seat at the table since we own the ground and...
Speaker Change: want to see something long-term valuable placed there.
Speaker Change: But I think they've assembled a team now.
Speaker Change: Architects, again, I'm very reluctant to comment, but I am happy with what they're now doing at that site. They've got a first-class team assembled, architecture, design, land planning, and so forth.
Speaker Change: And I think I'm feeling pretty good that that is going to head in a good direction. Brandon, do you want to add anything to that?
Brandon John Moore: Yeah, I'll just add that despite what people may be reading in some of the press, this project is still largely on schedule. So, as Peter said, Valley has developed a strong team of professionals that have a lot of experience in the Las Vegas market, which is crucial, and particularly on the Strip. If you're going to build a project that is going to be successful out of the gate, it's tricky.
Brandon John Moore: Yeah, I'll just add, I still think, despite what people may be reading in some of the press, that this project is still largely on schedule. So, as Peter said, Bally's has developed a strong team of professionals that have a lot of experience in the Las Vegas market, which is crucial, and particularly on the Strip.
Speaker Change: If you're going to build a project that is going to be successful, out of the gate.
Brandon John Moore: This is not the same as regional development, and when you put that in conjunction with a stadium site, this needs to be carefully planned. But I would say we're pretty confident in the team of professionals they've put together, but it is still too soon for us to know what kind of role we might want to play there. And so, as you look at Chicago, I think this is several steps behind and that it's too premature for us to really evaluate the project and determine for our shareholders whether or not it's prudent for us to invest capital in that project. But, you know, the A's are moving forward on their timeline at the moment.
Speaker Change: It's tricky. This is not the same as regional development. And when you put that in conjunction with a stadium site,
Speaker Change: This needs to be carefully planned, but I would say we're pretty confident in the team of professionals they've put together, but still too soon for us to know what kind of role we might want to play there. And so, as you look at Chicago, I think this is several steps behind, and that it's too premature for us to really evaluate the project.
Speaker Change: and determine for our shareholders whether or not it's prudent for us to invest capital into that project.
Brandon John Moore: They've had a lot of progress with the Stadium Authority and some very public meetings recently where they're clearly making progress. They're working simultaneously to get into their entitlement process and things. And so, while I think the timeline remains tight, and the A's will probably say that, you know, time is of the essence, I think, you know, this is still a project that can get delivered on time, and we're still optimistic about the potential. Yeah, look, I think Valley's primary focus was Chicago.
Speaker Change: The A's are moving forward on their timeline at the moment. They've had a lot of progress with the stadium authority and some very public meetings recently where they're clearly making progress. They're working simultaneously to get into their entitlement process and things.
Speaker Change: While I think the timeline remains tight, and the A's will probably say that, you know, time is of the essence, I think, you know, this is still a project that can get delivered on time, and we're still optimistic about the potential there.
Peter M. Carlino: Period. That is my sense. And it took a little while for them to turn their full attention to Las Vegas, but I know for certain that they've assembled a class A team of professionals. And I know sitting around this table, we feel a whole lot better about what they're working on. So I'd say stay tuned, talk to Valleys, and I'm sure they'll be happy to tell you kind of where they find themselves.
Speaker Change: Yeah, look, I think Valley's primary focus was Chicago. Period. That's just my sense. And it took a little while for them to turn their full attention to Las Vegas.
Speaker Change: But I know for certain that they've assembled a Class A team of professionals, and I know sitting around this table, we feel a whole lot better about what they're working on, so I'd say stay tuned, talk to Valleys.
Speaker Change: and I'm sure they'll be happy to tell you kind of where they find themselves.
David Brian Katz: Just one quick follow up, if I may ask. In the article, there was some reference to it being on schedule. Can you remind us what that schedule is or means? Well, I think we're on schedule at the moment. The demolition needed to be completed by, I think it was roughly April 25 or something. I think we're clearly on target for that. If you've been to Las Vegas recently, you'll see all the low-rise buildings are now gone.
Speaker Change: Just one quick follow-up, if I may. In there, there was some reference to it being on schedule. Can you remind us what that schedule is or means?
Brandon John Moore: They've stripped the towers, so that part of it is in line. The part of it that's a little more squishy is the entitlement process, and as you all know, if you've developed, that can go fast, or that can go slow. You have to get into the meat and potatoes of that to really know where they are. But I think they still believe where they sit today, that the way things are moving, they can still get started when they want to get started. So from our perspective, would they like to be moving faster?
Speaker Change: Well, I think on schedule at the moment, the demolition needed to be completed by, I think it was roughly April of 25 or something. I think we're clearly on target for that. If you've been out to Las Vegas, you'll see all the low-rise buildings are now gone.
Speaker Change: They've stripped the towers. So that part of it is in line. The part of it that's a little more squishy is the entitlement process and
Speaker Change: As you all know, if you've developed, that can go fast or that can go slow. You've got to get into the meat and potatoes of that to really know where they are. But I think they still believe, where they sit today, that the way things are moving, they can still get started when they wanted to get started.
Brandon John Moore: Yeah, I'm sure any developer would like to be moving faster, but progress is being made on the site. And clearly, if you've been out there, you would see that.
Speaker Change: From our perspective, would they like to be moving faster? Yeah, I'm sure any developer would like to be moving faster, but the progress is being made on the site. And clearly, if you've been out there, you would see that I guess it sounds to listening to our.
Peter M. Carlino: I guess it sounds from listening to our, to their team that the city is very supportive of this whole project and anxious to make it happen sooner rather than later. So I think there's a positive vibe out there around what's going on. And if there was any delay in the past, I think, frankly, that is now over, and it's full speed ahead. Understand. Thanks a lot.
Speaker Change: or to their team that the city is very supportive of this.
Speaker Change: whole project and anxious to make it happen sooner rather than later so I think it's a positive vibe out there around what's going on and if there was any delay in the past I think frankly that is now over and it's full speed ahead.
Speaker Change: Understood. Thanks a lot.
Haendel Emmanuel St. Juste: Our next question comes from Haendel St. Kitts from Zoom Security. Please proceed with your question. Hey there, just one for me.
Speaker Change: Our next question comes from Haendel St. Jude, Kinsism Security. Please proceed with your question.
Haendel Emmanuel St. Juste: My question, I guess, is on the underwriting of the Bali-Chicago project and what gives you, I guess, confidence in your two to two and a half times rent coverage projection for that asset? Looks like the temporary casino there has misnumbered the initial targets. Thanks. Yeah, look, this is Steve.
Speaker Change: Hey there, so just one for me. My question I guess is on the underwriting of the Valley Chicago project and what gives you, I guess, confidence in your two to two and a half times rent coverage projection for that asset? It looks like the temporary casino there has missed a number of the initial targets. Thanks.
Steven L. Ladany: Thanks for the question. I think we go through an extensive underwriting process on every transaction, whether it's a traditional set lease back transaction, like the other Kansas City Shreveport, part of this overall deal or a brand new development project. And so with respect to the brand new development project. Obviously, we have to get comfortable from a construction standpoint that we can bring the project on time and on budget. But more importantly, the budget is somewhat predicated on what's the ultimate profitability and the opportunity that exists in a market.
Speaker Change: Yeah, look, this is Steve. Thanks for the question. I think,
Steve: We go through an extensive underwriting process on every transaction, whether it's a traditional sale-leaseback transaction, like the other, you know, the Kansas City, Shreveport.
Steve: part of this overall deal, or a brand new development project. And so with respect to the brand new development project, obviously,
Steve: We have to get comfortable from a construction standpoint that we can bring the project on time and on budget, but more importantly, you know, the budget is somewhat predicated on what's the ultimate profitability.
Steven L. Ladany: And so every market, as you would have guessed, is different. In this particular instance, all of the underwriting that we've done, plus stuff we've done with third parties, all kind of triangulated to the point that we think this property can be very, very successful. And when we look at this, our takeaway is that rent coverage is probably going to be north of what we put in that presentation. But at the same time, I think we feel very, very comfortable that two times is a completely realistic and acceptable outcome here. And so that's really how we look at it. That's how we get comfortable.
Steve: , and the opportunity that exists in a market. And so every market, as you would have guessed, is different. In this particular instance, you know, all of our underwriting, you know, that we've done, plus stuff we've done with third parties,
Steve: All kind of triangulated to the point that we think this property can be very, very successful.
Steve: You know, when we look at this, you know, our takeaway is.
Steve: And I think the key here is that rent coverage is going to be, you know, probably north of what we put in that presentation. But at the same time, you know, I think we feel very, very comfortable that two times is a completely realistic and acceptable outcome here. And so,
Peter M. Carlino: It's somewhat how we dictate how much we're willing to or not willing to spend ultimately on the construction project. We have no desire, at the end of the day, building a project, to see rent coverage that is not adequate and insurance that's not adequate. So we want to provide long-term security and stability to our cash flows, and that's how we've gone about doing this. Yeah, let me add that we believe that this will be a landmark, and I use that advisedly, a landmark project in the city of Chicago, one of the great hotels, and one of the great casinos in the market by far.
Steve: That's really how we look at this. That's how we get comfortable. It's somewhat how we dictate how much we're willing to or not willing to spend.
Steve: Ultimately on the construction project. We have no desire at the end of the day.
Steve: building project to see a rent coverage that is not adequate, and the coverage that's not adequate. So we want to, you know, provide long term security and stability to our cash flows. And that's how we've gone about this.
Steve: Yeah, let me add that we believe.
Steve: that this will be a landmark, and I use that advisedly, a landmark project in the city of Chicago.
Peter M. Carlino: So we have, we see a tremendous opportunity here. And that's part of the skill that I think we add to the process that they're undergoing right now. I could tell you a lot more about it, but I think that better comes from from Valley.
Steve: One of the great hotels.
valleys: One of the great casinos in the market by far, so we see a tremendous opportunity here, and that's part of the skill that I think we add to the process that they're undergoing right now. I could tell you lots more about it, but I think that better comes from Bally's.
Peter M. Carlino: So, I underscore that again, the goal here is to create nothing less than a landmark project in the city of Chicago. Very helpful. Thank you. Our next question comes from Smedes Rose with Citi. Please proceed with your question.
Speaker Change: So, I underscore that again, the goal here is to create nothing less than a landmark project in the city of Chicago.
Speaker Change: Very helpful, thank you.
Speaker Change: Our next question comes from Smedes Rose with Citi. Please proceed with your question.
Smedes Rose: I just wanted to go back a little bit to one of the first questions talking about the capital commitments and the funding. I know you said it'd be staggered over the next couple of years. But could you just say, sort of, at the end of the day, kind of how you would like to see the mix of equity versus debt? And I guess, particularly on the equity side, I mean, since you will be issuing a lot of equity, presumably to fund over $2 billion of activity here, how do you think about it relative to at least consensus NAV or your internal NAV estimates? You know, you just issued some after the quarter that was below at least consensus NAV. There doesn't seem to be a forward equity program in place.
Smedes Rose: All right, thank you.
Smedes Rose: I just wanted to go back a little bit to one of the first questions talking about the capital commitments and the funding. I know you said it would be staggered over the next couple of years.
Speaker Change: Did you just say sort of at the end of the day, kind of how you would like to see the mix of equity versus debt? And I guess particularly on the equity side, I mean, since you will be issuing a lot of equity presumably to fund over $2 billion of activity here.
Smedes Rose: So maybe you could just talk a little bit more besides just, you know, that it will be staggered, but kind of how you think about perhaps flexing the balance sheet more in the near term if you're not getting the equity pricing you like, and just some color around that. And I think to answer your question, Smedes, it really depends on the capital markets and what we find attractive in both the debt and equity markets. Since our balance sheet is so strong, we have a lot of flexibility on which way we intend to raise capital.
Speaker Change: You know, how do you think about it relative to at least consensus NAV or your internal NAV estimates?
Speaker Change: You just issued some after the quarter that was below at least consensus, and there doesn't seem to be a forward equity program in place. So maybe you could just talk a little bit more.
Speaker Change: Besides just, you know, that it will be staggered, but kind of, you know, how you think about perhaps flexing the balance sheet more in the near term, if you're not getting the equity pricing you like and just some color around that.
Unknown Executive: And it really depends on the pricing that we're receiving and the ultimate spread that we're getting on the transactions that we've priced. Yeah, high levels Smedes. Our balance sheet philosophy remains the same, you know, over a long period of time, our goal is to be in the five to five and a half net debt EBITDA range, kind of hug the bottom of it over time, and that might be the sweet spot over the long term. But just expect us to be thoughtful, measured, and balanced as we have been historically, to use an old term, the poops in the pudding.
Smedes Rose: And I think to answer your question, Smedes, it, you know, really depends on the capital markets and what we find attractive in both the debt and equity markets. Our balance sheet is so strong. We have a lot of flexibility on which way we intend to raise capital. And it really depends on the pricing that we're receiving and the ultimate spread that we're getting to the transactions that we've priced.
Speaker Change: Yeah, high levels to me. Our balance sheet philosophy remains the same. You know, over a long period of time, our goal is to be in the five to five and a half net debt EBITDA range.
Speaker Change: We've kind of hugged the bottom of it over time, and that might be the sweet spot over the long term, but just expect us to be thoughtful, measured, and balanced as we have been historically.
Unknown Executive: And I think we've proved kind of our commitment to the kind of balance sheet that we want to have. You know, so I expect more of the same. Um, I just wanted to ask you two about the land purchase in Chicago. Do you have a sense of what the timing is on that? Or are there any particular hurdles that you need to overcome to finalize that transaction? I'd say Smedes cuts Mary's hurdles.
Speaker Change: To use an old term, the proof's in the pudding, and I think we've proved kind of what our commitment is to the kind of balance sheet that we want to have.
Speaker Change: You know, so you can expect more of the same.
Speaker Change: I just wanted to ask you two, on the land purchase in Chicago, do you have a sense of what the timing is on that, or are there any particular hurdles that you need to overcome to finalize that transaction?
Brandon John Moore: So by that, I mean typical due diligence, title survey, phase one, all that kind of stuff. So we have an agreement in place to acquire that land, and we're running through the hoops that we need to take ownership and title to that property. The Blue Owl team has been a good team to work with.
Speaker Change: I'd say Smedes cuts Mary Hurdle, so by that I mean typical due diligence, title survey.
Speaker Change: Phase One, all that kind of stuff. So we have an agreement in place to acquire that land and we're running through the hoops that we need to take ownership and title to that property.
Brandon John Moore: I will say, you know, very professional and helpful, and we appreciate the partnership we had with them and reaching an agreement to acquire the land. And as soon as we're able to do it, we will do it. But there's obviously a few hurdles you've got to jump through to acquire real estate of that nature. And we're working on that now. Okay, thank you.
Speaker Change: The Blue Owl team has been a good team to work with. I will say, you know, very professional and helpful, and we appreciate the partnership we had with them in reaching an agreement to acquire the land. And as soon as we're able to do it, we'll do it. But there's obviously a few hurdles you've got to jump through to acquire real estate of that nature, and we're working on that now.
Speaker Change: Okay, thank you.
Greg Michael McGinniss: Our next question comes from Greg McGinniss with Scotiabank. Please proceed with your question. We recognize rent coverage is still healthy at most of the casinos, but what are your thoughts on cash flow and profitability at Bally's, especially after going through transactions that add a bit more stress to that company's cash flows. Plus you got to take private by standard general, which might be adding even more debt.
Speaker Change: Our next question comes from Greg McGinniss with Scotiabank. Please proceed with your question.
Greg Michael McGinniss: Hey, good morning.
Greg Michael McGinniss: We recognize rank coverage is still healthy at most of the casinos, but what are your thoughts on cash flow and profitability at Bally's? Especially after going through transactions, adds a bit more stress to that company's cash flows.
Greg Michael McGinniss: Plus, you got to take private by standard general, which might be adding even more debt. So what are you thinking about cash flows there and potential options if the parent runs into a problem?
Greg Michael McGinniss: So what are you thinking about cash flows there and potential options if the parent runs into a problem? Yeah, look, I think we can't comment on the GoPrivate transaction. As we've stated, we have the same public information as everyone else.
Speaker Change: Yeah, look, I think we we can't comment on the on the go private transaction as we've stated we're
Brandon John Moore: With respect to general commentary around Bally's or any of our tenants, you can see in our press release where the rent coverage is for our existing Bally's mass release. It's significantly higher. It's in excess of two times.
Speaker Change: We have the same public information as everyone else. With respect to general commentary around Valleys or any of our tenants, you can see in our press release where the rent coverage is.
Brandon John Moore: So I think our, I guess, position, belief, underwriting, thought, and process historically has always been that we have comfort when we have assets underwritten in such a way that they're covering like that, that someone else, if not that tenant, would willingly step in and operate those assets and take that profitable position if, in fact, there was any issue. And I think that's not Bally's answer. That's an answer for any of our tenants and any of our leases.
Speaker Change: of our existing Valley's mass release, it's significantly covering, it's in excess of the two times. So I think, I think our, our
Speaker Change: I guess position, belief, underwriting, thought, and process.
Speaker Change: historically has always been.
Speaker Change: that we have comfort when we have assets underwritten in such a way.
Speaker Change: that they're covering like that, that someone else, if not that, that tenant would would willingly step in and operate those assets and take that profitable position.
Speaker Change: If, in fact, there was any issue. And I think that's not a valley's answer. That's an answer for any of our tenants and any of our leases.
Brandon John Moore: If our lease is underwritten and covers north of two times, we're very confident that someone will be happy to clip. In this broader transaction, you know, we had the same information as everyone else, that there was a go-private offer in the market when we underwrote this. And we decided that, based on the rank coverage and the profitability, we were very comfortable moving forward with the transactions that lied ahead.
Speaker Change: If our lease is underwritten and covering north of two times, we're very confident that someone will be happy to clip.
Speaker Change: [inaudible]
Brandon John Moore: It's one of the reasons, Matt, I know you've always wanted to emphasize four wall cover. Because again, these things in the end stand alone, they're not going anywhere, they're not going to close, irrespective of what could happen at a parent level.
Greg Michael McGinniss: So it's nice to feel good about what that individual property is doing. It'll always have a home. Right, and I guess in regards to rent coverage, those numbers have generally declined over the last several quarters. Is that representative of some natural give-back of margin gain during the pandemic, or are we seeing some broader shift from customers away from regional gaming where we've seen kind of some pressure on GGR. Yeah, I mean, they declined by a few basis points, nothing significant.
Brandon John Moore: We're not seeing a major issue in any market whatsoever, and I do think there's a little bit of give back still from the, you know, the highs after the COVID pandemic. But I, you know, look, we are operating at stronger margins than we had even before that. So in 2019. So the coverage ratios, we feel very confident in them, and yes, they're going to move a few basis points here and there. Some actually went up, most went down a few, but there were a few that went up. All right, thank you. The last one for me is just Lincoln.
Greg Michael McGinniss: That still still requires debt holders to approve that transaction, correct? And has there been any progress on that front with that property? Okay, thank you. Our next question comes from Daniel Guglielmo with Capital One Securities. Please proceed with your question. Hello, everyone.
Speaker Change: You'd have to ask valleys back well I think the answer to your first question is yes. The answer to your second question you'd have to ask valleys that my my guess is that the go private transaction that they just announced and what they've been working on could have some bearing on that I don't know, but for US we look at the timeline for the acquisition of <unk>.
Speaker Change: Property and the renegotiated purchase price for that property and we're pretty happy where we sit and we're confident by the end of 'twenty six that that valleys will have that sorted out in a manner that will permit us to own that property.
Speaker Change: Okay. Thank you.
Speaker Change: Yeah.
Our next question comes from Daniel Gleim with capital One Securities. Please proceed with your question.
Unknown Executive: Hello, everyone and thank you for taking my questions.
Daniel Edward Guglielmo: Thank you for taking my questions. The team always seems focused on risk-adjusted returns, and I was just curious, what are some of the main risks that you all think through when doing these high capital and longer-term deals? I'll start. First of all, you brought up timing. So what's the cost of money over time?
Unknown Executive: Team always seems focused on risk adjusted returns and I was just curious what are some of the main risks that you all think do when doing these high capital and longer term deals.
Speaker Change: Well I'll start is first of all you brought a timing so what's the cost of money over time.
Matthew J. Demchyk: Number two, when you're related to development, what's the timeline? What's the risk of that timeline shifting? What's the risk of the cost shifting?
Speaker Change: Number two when you related to development, what's the timeline, what's the risk of that timeline shifting with the rest of the cost shifting what's the risk in the market.
Speaker Change: I mean, hopefully you get the combination of our master leases with the valleys deal in Chicago, our involvement on the development side.
Speaker Change: And then having support from our Super structure of our leases helped mitigate these risks I mean, the vast majority of all of our assets are in master leases with strong coverage and it really comes back to appoint Peter made I mean these are mission critical assets for state budgets, especially in limited license states. So at the end of the day, if you get there.
Matthew J. Demchyk: What's the risk in the market? I mean, hopefully, you get the combination of our master leases with the values deal in Chicago, our involvement on the development side, and then having support from our superstructure of our leases to help mitigate these risks. I mean, the vast majority of all of our assets are in master leases with strong coverage. And it really comes back to the point Peter made.
Speaker Change: <unk> basis, which is incredibly important to us and the right rent level based on the long term productivity of the assets you've solved for the vast majority of the pieces that are important and it's not an easy thing to do I mean, you look at Chicago effectively instead of being a take out we moved up the value chain.
Matthew J. Demchyk: I mean, these are mission-critical assets for state budgets, especially in limited license states. So at the end of the day, if you get the right basis, which is incredibly important to us, and the right rent level, based on the long-term productivity of the assets, you've solved for the vast majority of the pieces that are important. And that's not an easy thing to do.
Speaker Change: And got involved early and were able to lock in to this transaction at very favorable basis, and given the population density and the opportunities for that asset in that market, we're very comfortable with our basis, there regardless of how the world plays out over the next many decades, that's the thought process, but it really comes down to having a margin of safety in each.
Matthew J. Demchyk: And given the population, the density, and the opportunities for that asset in that market, we're very comfortable with our basis there, regardless of how the world plays out over the next many decades. That's the thought process. But it really comes down to having a margin of safety in each piece of our structure to make sure it makes sense, and then making sure we've got the right spread to your point about our cost of capital, and then ultimately locking that in in a prudent, thoughtful, and balanced way over time.
Speaker Change: Piece of our structure to make sure. It makes sense and then making sure we've got the right spread to your point to our cost of capital and then ultimately locking that in a in a prudent thoughtful and balanced way over time.
Speaker Change: Okay.
Matthew J. Demchyk: I think in addition to that, you know, we do, and Matt touched on it, we do a pretty in-depth look at the markets. So this is a game of chess now in gaming, it's not checkers, you have to think about what's going to be happening in adjacent jurisdictions. And not only in adjacent jurisdictions but the jurisdiction you're in, quote, unquote, limited license states have shown a propensity to increase licenses.
I think in addition to that you know we do.
Matt: Matt touched on it you know we do a pretty in depth look at the markets. So these are this is a game of chess now in gaming. It's not checkers you you have to think about what's going to be happening in adjacent jurisdictions and not only in adjacent jurisdictions, but the jurisdiction you're in quote Unquote limited license states have shown a propensity to increase licenses.
Matt: So you have to be cognizant of those things and we're underwriting not for the five year time frame or a seven year time frame, but we're trying to do it for a 30 year time frame or a 40 year time frame and so we are trying to take it all information where you can get it.
Brandon John Moore: And so you have to be cognizant of those things. And we're underwriting not for a five year timeframe, or a seven year timeframe, but we're trying to do it for a 30 year timeframe or a 40 year timeframe. And so we're trying to take in all the information we can get about all those different things in the market and trying to underwrite a prudent transaction. And clearly, if you can do it as part of a master lease, or something like that, you've increased the level of safety you have over time.
Matt: All of those different things in the market and trying to underwrite a prudent transaction and clearly if you can do it as part of a master lease or something like that you've increased the level of safety you have over time, but but but it is an in depth research, we do and we do use outside vendors to look at those markets and things before we do any transaction, yeah and part of it too we can bring.
Brandon John Moore: But but but it is an in-depth research we do. And we do use outside vendors to look at those markets and things before we do anything. Yeah, and part of it too is that we bring our own skill and experience over many years of just understanding what the risks are, what the adjacencies that threaten us might be, and on and on. And we bring in, as Brandon says, outside resources to further give us the kind of data that helps us in that analysis. So look, it's not perfect; nothing's ever perfect.
Matt: Our own skill and experience over many years of just understanding what the risks are what the adjacencies that threaten us might be on and on and we bring in is Brandon says outside resources to further give us kind of data that helps us in that analysis. So look it's not perfect nothing's ever perfect.
Matt: But you know you apply your best are your best judgment.
Matt: And I think in addition to what you see in our transactions as you know as Matt touched on you know Theres a margin of safety, we tried to do healthy rent coverages, because we understand overtime tenants need the flexibility and the N b, our ability to grow and to build their business and we try not to put too much pressure on that with the rent right out of the gate.
Matthew J. Demchyk: But you know, you apply your best judgment. I think, in addition, what you see in our transactions is, as Matt touched on, there's a margin of safety; we try to do healthy rent coverages, because we understand that over time, tenants need the flexibility and the ability to grow and build their business. And we try not to put too much pressure on that with the rent right out of the gate. Great. Yeah, I really appreciate all that detail. And just as a quick follow-up, in general, do return hurdles for other potential deals go higher when you do have a full plate of capital commitments?
Speaker Change: Great Yeah, I really appreciate all that detail and just as a quick follow up in general do return hurdles for other potential deals go higher when you do have a full plate of capital commitments or do you try and make the funding work if a deal meet your standards.
Speaker Change: The ladder, we try to make the funding work if the deal makes their standards.
Daniel Edward Guglielmo: Or do you try and make the funding work if a deal meets your standards? The latter. We try to make the funding work if the deal meets their standards. We've spent a lot of time, some of these deals are many, many years of effort put in, so we wouldn't be able to walk into you guys. Great. Thank you. Appreciate it.
Speaker Change: We spent a lot of times. Some of these deals are many many years of effort put in so we wouldn't be able to walk and chew gum.
Matt: Yeah.
Speaker Change: Great. Thank you appreciate it.
Speaker Change: Our next question comes from Ronald Camden with Morgan Stanley. Please proceed with your question.
Ronald Kamdem: Our next question comes from Ronald Kamdem, of Morgan Stanley. Please proceed with your question. Hey, just two quick ones.
Ronald Kamdem: So going back to Lincoln and being able to sort of reduce the purchase price. Was that just a unique situation for this deal? Is that something that you guys have thought about before or could look to do in the future and in other situations? Just trying to get a sense of how much this is just idiosyncratic to this transaction versus, you know, could we see this happen in other parts of this market? I think with respect to Lincoln, look, it was part of a broader negotiation that related to Chicago.
Ronald Kamdem: Hey, just two quick ones, so going back to Lincoln and being able to sort of reduce the purchase price is that was that just a unique situation for this deal is that something that you can.
Speaker Change: Guys have thought about before or could look to do in the future and in other situations just trying to get a sense of.
Speaker Change: How much is just the studio Socratic to this transaction versus.
Speaker Change: You know could we see this happening in other parts of this market.
Speaker Change: I think with respect to Lake and look it was part of a broader negotiation that related to Chicago and I think over the course of time since we first entered into that transaction agreement, obviously cap rates in the world as it moves and so.
Brandon John Moore: And I think over the course of time, since we first entered into that transaction agreement, obviously, cap rates in the world have moved. And so we're still very interested in acquiring that property. That's a marquee asset in that market. But we were more comfortable doing it at an 8 cap rate at this point than we were at 7.6.
We're still very interested in acquiring that property, that's a marquee asset in that market.
Speaker Change: But we were more comfortable doing it at an eight cap rate at this point than we were at seven six and so it's part of the total package of the Chicago negotiations that was just part of it but we were in a unique circumstance there to better our position if we have circumstances and chances like that in the future with tenants sure we might do that but I don't think there's anything.
Brandon John Moore: And so, as part of the total package of the Chicago negotiation, that was just part of it. Is there any unique circumstance there to better our position? If we have circumstances and chances like that in the future with tenants, sure, we might do that. But I don't think there's anything necessarily on the horizon that we'd be seeking to renegotiate with any tenants. That was just unique to this transaction. Yeah And I don't want it to appear predatory or take an advantage of a situation.
Speaker Change: Necessarily on the horizon that we'd be seeking to renegotiate with any tenants that was just unique to this transaction and I don't want to appear predatory I've taken advantage of a situation.
Brandon John Moore: These relationships are holistic. And I think establishing a relationship with a tenant that is good for them and good for you. And having a tenant, by the way, who is mindful of what is good for our company at the same time and open-minded about a balanced transaction is hugely important, terrific. And we're very thankful that we're dealing with a partner like that in Valley.
Speaker Change #100: These relationships are holistic.
Speaker Change #101: And and.
Speaker Change #106: I think establishing a relationship with a tenant that is good for them and good for you and having attended by the way. He was mindful of what is good for our company.
Speaker Change #102: At the same time and open minded about a balanced transaction is hugely important terrific and we're very thankful that we're dealing with a partner like that.
Speaker Change #102: And valleys.
Speaker Change #103: Helpful. I guess my second one was just on the guidance range any chance any color on just the pieces of the raises and all the transaction anything changed on the financing side, just any broad strokes on just the comp.
Desiree A. Burke: Helpful, I guess my second one was just on the guidance range, any chance, any color on just the pieces of the raises, all the transaction, anything changing on the financing side, just any broad strokes on just decompacting that guidance raise, be hopeful. Thanks. Sure. I'm going to mostly talk about the high end of the range, but it's all due to the strategic transaction.
Speaker Change #104: D compacting that guidance raise would be helpful. Thanks, sure and mostly talk about the high end of the range, but it's it's all of the strategic transaction.
Desiree A. Burke: Clearly, we raised the ATM proceeds, and we'll invest that in cash and have some interest income. But that gets a little bit upset by the share count increase, obviously. So it's really on the high end related to those proceeds going up as well as mainly the strategic transaction. And then on the low end, it's the exact same thing. It's the strategic transaction as well as the proceeds being vested. And then also, we had different assumptions for the percentage rent adjustments on the low end than we did on the high end, as well as some different assumptions on interest expense.
Speaker Change #108: We may use the ATM proceeds and long standing cash net interest income, but that gets a little bit offset by the share count increase obviously, so it's really on the high end.
Speaker Change #105: To those proceeds are dialing up as well or that's just mainly the strategic transaction.
Speaker Change #107: And then on the low end, it's the exact same thing it's the strangest transaction as well as the protein being less food and then also we had different assumptions for the percentage of rent adjustment on the low end than we did on the high end as well as some different assumptions on interest expense.
Great. Thanks, so much.
Speaker Change #109: Our next question comes from Shaun Kelly with Bank of America. Please proceed with your question.
Desiree A. Burke: Great, thanks so much. Our next question comes from Sean Kelly with Bank of America. Please proceed with your question. Hey, good morning, everyone.
Shaun Kelly: Hey, good morning, everyone.
Sean Kelly: Peter, I wanted to build off of a comment you just made, and it goes back to, I think, Barry's question much earlier in the call. But a lot of the conversation here has been about M&A as it relates to Bali and the privatization offer. I'm curious about kind of the rest of the tenant base, and obviously, really, your major tenant, where there's been a lot of M&A speculation, too. So, you know, the big, big picture question is sort of how favorable or amenable are you to, let's call it, larger-scale consolidation, especially when it impacts GLPI? And then, you know, if one of these transactions would require, you know, particularly meaningful divestitures? Yeah, how are you kind of trying to protect GLPI's interest in a case like that?
Shaun Kelly: Peter I wanted to build off of a comment you just made and it goes back to I think Barry's question earlier in the call, but yeah, a lot of the conversation here, it's been about M&A as it relates to Kibali and and the privatization offer I'm curious about kind of the rest of the tenant base and obviously really your major tenant where theres been a lot of M&A speculation too so.
Speaker Change #111: Big Big Picture question is sort of how favorable or are amenable are you to lets call. It larger scale consolidation, especially when it impacts G. L. P. I and then you know if one of these transactions were to acquire particularly meaningful divestitures. Yeah. How are you kind of trying to protect your L. P is interest in a case like that.
Speaker Change #112: Well, let me say at the outset, it wouldn't surprise anybody that Ah I like it the way it is today.
Peter M. Carlino: Well, let me say at the outset that it wouldn't surprise anybody that I like it the way it is today. There are tenants, they're reliable, their business is highly profitable. Their operating business is highly profitable, and everything works.
Speaker Change #113: There are a tenant.
Speaker Change #113: They're reliable their business is highly profitable.
Speaker Change #112: Other operating businesses is highly profitable and everything works.
Peter M. Carlino: I would look with a jaundiced eye toward anything that could upset the apple cart of what we have here. We, like our..., cross collateralized leases, would be very reluctant to see anything change, and so I am not well disposed to it, but we'll do what we must look at in the end, and it'll be what's good for our company here, period, period, period, period. So we'll have to see
Speaker Change #112: So I would look with a jaundiced eye towards anything that could upset the applecart.
Speaker Change #114: What we have here are we we like our.
Speaker Change #115: Cross collateralized leases.
Speaker Change #116: <unk> would be very reluctant to see anything change and.
So I am not well dispose too.
Speaker Change #117: We'll do what we must look in the end it'll be what's good for our company here period.
Speaker Change #117: Period period period so.
Speaker Change #117: We'll have to see I'm, not going to speculate on what might or might not happen, but we would look.
Peter M. Carlino: I'm not going to speculate on what might or might not happen. But we would look speaking just for me, not particularly favorably, and anything would break up our beautiful arrangement.
Speaker Change #118: Speaking just for me.
Speaker Change #118: Not particularly favorably in anything but break up our beautiful arrangement.
Speaker Change #119: Yeah look I mean, I think what we're we don't know and we havent been approached by anybody presenting anything to us and what it is and I think if and when we see that as Peter said, we'll do what's in the best interest of our shareholders and our company and.
Brandon John Moore: Yeah, look, I mean, I think what we don't know, and we haven't been approached by anybody presenting anything to us, and what it is. And I think if and when we see that, as Peter said, we'll do what's in the best interest of our shareholders and our company, and we will have some opportunities if people want to break up leases. Could we transition that into something that's good for our shareholders? Absolutely. Yeah, absolutely.
Speaker Change #120: We will have some opportunities that people want to breakup leases could could we transition that into something that's good for our shareholders absolutely yeah, absolutely we might be able to do that and we'll look to do that if we're presented with that kind of situation than we do and we did that if you go back look historically at what happened when pinnacle was acquired by Penn.
Brandon John Moore: We might be able to do that, and we'll look to do that if we're presented with that kind of situation. And we did. And we did that. If you go back, look historically at what happened when Pinnacle was acquired by Penn. We were asked to separate assets out of existing leases. It didn't require our consent.
Speaker Change #120: We were as two separate assets out of existing leases that didnt require archon, saying and we did extract some value for that for our shareholders.
Speaker Change #121: Thank you all for entertaining that one and getting some detail.
Sean Kelly: And we did extract some value for our shareholders. Thank you all for entertaining that one and giving some detail. My follow-up would be going back to Chicago and appreciating that a lot of angles have been approached. But mine's pretty simple, which is, you know, obviously, I think part and parcel of this transaction is making sure that the project, as you structured it, is now fully funded as it relates to, you know, the overall or stated budget. Oftentimes, these urban developments, in particular, have a bit of a history of, you know, struggling with budget overages. And there are a lot more complicating factors when you're vertical and you're dealing with, I think, urban landscapes.
Speaker Change #122: Follow up would be going back to Chicago and I appreciate a lot of angles that they approach the mine's pretty simple, which is you know.
Speaker Change #123: Obviously, I think part and parcel of this transaction and making sure that the project as you structured it is now.
Speaker Change #124: Fully funded as it relates to you know the overall stated budget oftentimes. These urban developments in particular has a bit of a history of you know struggling with budget Overages and Theres a lot more complicated doctors when your vertical and you're dealing with I think urban landscapes. So the question is pretty simple if we were to run into bigger one.
Peter M. Carlino: So the question here is pretty simple. If we were to run into bigger overages on a budget that maybe you've experienced in other regional projects, you know, what's the make-hole for that? Where does that extra funding come from? And how protected are you if we kind of get to, you know, the latter stages of this? And, you know, again, there's material dollars here that still need to be found to get a project like this over the finish line and cash flow. And, Well, let me say at the outset that we're not obliged to provide it. And look, I spent a lot of years in the construction business, and I like to say that if a project doesn't make sense on paper, it certainly isn't going to make sense So having your advanced work done thoroughly, completely, and with as much certainty as possible is how you best protect yourself.
Speaker Change #125: Overages on a budget that maybe you've experienced in other regional projects.
Speaker Change #126: What's kind of the make whole for that where does that extra funding come from you know and how protected are you a if we kind of get to the latter stages of this and you know again, there's material dollars here, there's still need to be found to get a project like this over the finish line and casually.
Speaker Change #127: Well, let me say at the outset, we're not obliged to provide it.
Speaker Change #128: We're not obliged to provide it.
Speaker Change #128: And look.
Speaker Change #129: I spent a lot of use in the construction business and and I like to say that.
Jim Bohn: If a project doesn't make sense on paper it certainly isn't going to make sense. When you actually put it in the field so that that having your advance work done thoroughly completely and with as much certainty as possible is how you best protect yourself were involved right now and Jim bomb who's with us not on this.
Peter M. Carlino: We're involved right now, and Jim Baum, who's with us, not on this call, but I suspect is listening, was the head of construction at Penn, and he and I did a lot of projects together over time, all of which were on time and on budget. Jim is spending a fair amount of time; I haven't seen him around the office much because he's out in Chicago working on this project to make sure we get it right up front.
Jim Bobb: Call, but.
Jim: I suspect is listening.
Jim Bohn: As the head of construction and Penn and he and I did a lot of projects together over time, all of which were on time and on budget gymnast spending a fair amount of time I havent seen them around the office much cause he's out in Chicago.
Speaker Change #133: Working on this project to make sure we get it right upfront. So there is no certainty we recognize the difficulties and the challenges, but we're putting a lot of advanced work in to make sure that we know what we got.
Peter M. Carlino: So there is no certainty. We recognize the difficulties and the challenges, but we're putting a lot of advanced work in to make sure that we know what we have. Look, I think to maybe add to that, as Peter mentioned, we, in part of our transaction, negotiated that we were not responsible for any expansion of the budget. I will say there's obviously a $735 million solution that's available if there was, in fact, a budget problem, and Bally's was responsible for it. So, if you're not following what I'm saying, Lincoln can be acquired.
Speaker Change #134: Well it goes I think to maybe add to it as Peter mentioned, we in part of our transaction negotiated that we were not responsible for.
Speaker Change #135: And any expansion of the of the budget I will I will say, there's a there's obviously a $735 million solution. That's available. If there was in fact, a budget problem and valleys was responsible for it so.
Brandon John Moore: That's $735 million. So, we feel comfortable that there are adequate safety nets if, in fact, there was an issue. But I will also mention this, unlike some of the other urban projects, which have been retrofitted into an existing building, which is always fraught with unknowns, this is going to be a scrape site. So we do feel that that provides some additional comfort to us that we know what we're starting with. Thank you very much. And part of our job right now is to help Valley's make sure that they don't run into that problem.
Speaker Change #134: If you're not following what I'm, saying Lincoln can be acquired that's negotiated and $735 million. So we.
Speaker Change #134: We feel comfortable that there are adequate.
Speaker Change #134: Safety nets, if in fact, there was an issue, but I will also mention there's this unlike some of the other urban projects, which have been retrofits into an existing building which is.
Speaker Change #134: Always fraught with with the unknowns. This is gonna be a screen side. So.
Speaker Change #134: So we do feel the depth or is it some additional comfort to us that we know what we're starting with which is nothing.
Speaker Change #136: Thank you very much in part of our job right now is to help valleys make sure that they don't want it to two to that problem and that's why we're spending a lot of a lot of time right now in the design phase and the planning phase to make sure that.
Peter M. Carlino: And that's why we're spending a lot of time right now in the design phase and the planning phase to make sure that we know exactly what this is going to cost, what the products are going to look like. Yeah, and finally, I'll just add that when we underwrite this, there's quite a bit of contingency built into the numbers that we that we've underwritten. And so while that may not solve all ills, we have not been we've been cognizant of the fact that this will be a tricky project in a large metropolitan city.
Speaker Change #136: No exactly what what this is going to cost and what the product is going to look like.
Peter M. Carlino: And we've underwritten it that way. So while it is no certainty, we have thought about all the, Thank you very much. Our next question comes from Robin Farley with UBS. Please proceed with your question. Great, thank you. One of my questions has already been asked. I guess just taking a step back, and, you know, after, as you mentioned earlier, a lot of periods where you had to explain the lumpiness of, you know, transactions and that investors had to, you know, sometimes be a little more patient. Would you say that your plate is pretty full now in terms of, you know, do you have bandwidth? Or would you be looking to do additional transactions at this point?
Speaker Change #138: Yeah, and finally I'll just add in underwriting this there's quite a bit of contingency built into the numbers that we understood that we've underwritten and so well that may not solve all hills, we have not been we've been cognizant of the fact that this will be a tricky project in a large metropolitan city and when we've underwritten it that way so while no certainty.
Speaker Change #138: We have thought about all these things.
Speaker Change #137: Thank you very much.
Speaker Change #137: Our next question comes from Robin Farley with UBS. Please proceed with your question.
Robin Margaret Farley: Or would you really be sort of mostly focused on digesting a lot of the opportunities that are, some of which may not be announced yet, right, but maybe some of the things that are more obviously happening for you in this next sort of two-year period? If we need a bigger plate, Robin, we'll get a bigger plate. It's not remotely filled.
Robin Margaret Farley: Great. Thank you.
Robin Margaret Farley: Questions have been asked already I guess, just taking a step back and you know after as mentioned earlier a lot of periods, where you. How do you explain the lumpiness of transactions and that investors had to you know sometimes they're a little more patient would you say that your plate is pretty full now in terms of do you have.
Robin Margaret Farley: Done with or would you be looking to do additional transactions at this point or would you really be sort of mostly focused on digesting a lot of the opportunities that are some of which may not be announced it right, but maybe some of the things that are more honestly happening for you and.
Robin Margaret Farley: And this next two year period, if we need a bigger point Robyn will get a bigger played.
Peter M. Carlino: Not remotely filled. Look, each transaction stands on its own. We have announced a couple that we're more actively involved in as opposed to a straight-up acquisition. But no, I don't think so. We haven't seen the horizon yet. I don't know anybody else who has a comment about that.
Robyn: [laughter], it's not remotely filled that remotely felt look at each transaction stands on its own we have announced a couple of them were more actively involved in as opposed to a straight up acquisition, but no.
Speaker Change #140: Yeah, I don't think so we haven't seen that.
Speaker Change #140: I haven't seen the horizon, yet I don't want anybody else to hook up and about that.
Unknown Executive: The market remains strong. And, you know, we continue to look at and have lots of conversations. So while opportunity presents itself, we are inclined to grab the opportunity when we can, you know, in a thoughtful risk-adjusted way, and look to continue to climb forward for our shareholders and increase our dividend as we go. So we're looking to continue to grow creatively. But I emphasize we're kind of where you started Robin. There's, there's no rush. There's no transaction we have to do. I feel no pressure to do it, at least I don't.
Speaker Change #140: The market remains strong and we continue to look at and have lots of conversations so while opportunity presents itself. We are inclined to to grab the opportunity when we can in a thoughtful risk adjusted you know way and look to continue to.
Speaker Change #140: You know climb forward for our shareholders and increase our dividend as we go so we're looking to continue to grow accretively.
Speaker Change #140: But emphasize where kind of where you started robyn.
There's no rush Theres no transaction, we have to do we feel no pressure to at least I don't and I said that time and again to do anything there's no deal we have to do that.
Peter M. Carlino: And I've said that time and again, to do anything. There's no deal we have to do. We'll do it if it makes sense. I think it makes sense for our shareholders. It's as simple as that. Uncharmingly, as I have said, any moron can do a bad job.
Speaker Change #140: We will do it if it makes sense I think it makes sense for our shareholders, it's as simple as that.
Speaker Change #142: Is that right.
Speaker Change #144: Charmingly have said any moron can do a bad deal its not hard.
Peter M. Carlino: It's not hard. We don't want to be a meh group. Great, thank you for the color.
Speaker Change #142: We don't want to be on that route.
Speaker Change #142: Yeah.
Speaker Change #143: Okay. Thank you for that color.
Speaker Change #143: Yeah.
Speaker Change #145: Our next question comes from Chad Beynon with Macquarie. Please proceed with your question.
Robin Margaret Farley: Our next question comes from Chad Beynon with Macquarie. Please proceed with your question. Morning, Peter. Has anything changed in terms of non-gaming opportunities? As you just mentioned, your plate has certainly been full, and you've had some great announcements year to date. But I was wondering kind of where the conversation scale lies between gaming conversations with current and potential partners versus non-gaming.
Chad C. Beynon: Good morning, Thanks for taking my question Peter has anything changed in terms of a non gaming opportunities is as you just mentioned you're you're played has certainly been full and you've had some great announcements a year to date, but wondering kind of where the conversation scale lies between.
Speaker Change #147: Gaming conversations with current and potential partners versus non gaming. Thanks.
Peter M. Carlino: Well you know my answer hasn't really changed we would look at other things if anything matched kind of.
Chad C. Beynon: Thanks. Well, you know, my answer hasn't really changed. We would look at other things if anything matched kind of the value and the certainty and all the things we have in the gaming world. We're not close to that. We just haven't seen anything that grabs us. And that hasn't changed one bit.
Speaker Change #148: The the value and the certainty and all the things we have in the gaming World. We're not close to that we just haven't seen anything to grad CIS and that hasn't changed one wit and so long as we can keep doing the kind of transactions that we've announced that's the kind of yields that we're talking about will continue down that road.
Peter M. Carlino: And so long as we can keep doing the kind of transactions that we've announced, and that's really the same answers that I've been providing for the last decade. Okay, thanks. And then another kind of high-level follow-up.
iacocca: You know, it's it's it's really iacocca thing if you can find a better car buy it if I can find a better deal we'll take it but so far we're going to stick to our knitting.
iacocca: And that's really the same answers that I've been providing for the last decade.
Speaker Change #150: Okay. Thanks, and then another kind of high level follow up last night on one of your partners earnings calls they talked about.
Chad C. Beynon: Last night on one of your partners' earnings calls, they talked about, you know, doing some projects at some properties. Maybe these would have been done during the COVID time period, so they're slightly deferred. And that got us thinking that maybe there's a lot more out there just in terms of, you know, building additional hotels, convention centers, something adjacent to these properties. Do you think that this could be another wave of growth in the gaming space? You know, when you talk to your partners, is this something that maybe you could help to finance in the future?
Speaker Change #151: You know doing some projects at some properties. Maybe these would have been done during the Covid time period, so they're slightly deferred and that got us thinking that maybe.
Speaker Change #151: There's a lot more out there just in terms of you know building additional hotels convention centers something adjacent to these properties do you think that this could be.
Peter M. Carlino: Just kind of thinking out loud after hearing that comment last night. Thank you. It's a good question, and the answer is that we're already doing that. As you're seeing with Bally's and we're doing it with Penn, we're always ready, willing, and able to put money to work for a quality project. And there's a number of those that we're looking at and will undoubtedly do right now. So, yeah, no, I think it's terrific.
Speaker Change #151: Another wave of growth in the gaming space you know when you talk to your partners is this something that.
Maybe you.
Speaker Change #152: You could help help finance in the future just kind of thinking out loud after hearing about comment last night. Thank you.
Speaker Change #153: It's a good question and the answer is we're already doing that.
Speaker Change #154: As you're seeing with with valleys and we're.
Speaker Change #155: We're doing it with Penn, we're always ready willing and able to put money to work for a quality project and there's a number of those that we're looking at and will undoubtedly do right now.
Speaker Change #155: So yeah, no I think it's terrific.
Peter M. Carlino: Existing tenants are a good source of future business, and I know, for example, Penn has a number of announced projects, some pretty sizable projects in Las Vegas and Ohio and so forth, and Illinois, two big projects in Illinois, called Landside, as we've done very effectively in Louisiana.
Speaker Change #155: Existing tenants are a good source of future business and I know for example, Penn has a number of announced projects some pretty sizable projects in Las Vegas in Ohio, and so forth.
Speaker Change #155: And Illinois, two big projects in Illinois land side, as we've done very effectively and in Louisiana, but so.
Peter M. Carlino: I think it's a terrific opportunity for us. That's great. Thank you very much, guys. Thank you. Our next question comes from John DeCree with CBRE. Please proceed with your question. Good morning, everyone. Thanks for taking all the questions. Maybe just one, thinking a little further out about the New York City casino licensing process that's underway. And it seems like it's taking its time, but if we look at Chicago and the template for financing that you've provided there, Peter or anyone curious about your views on how you look at New York, if you would look at it similarly. Obviously, I think Bally's is in the mix. And so every market is different.
Speaker Change #155: I think it's terrific opportunity for us.
Speaker Change #156: That's great. Thank you very much guys.
Speaker Change #155: Yeah.
Speaker Change #155: Thank you.
Speaker Change #157: Our next question comes from Todd Decree with CBRE. Please proceed with your question.
John G. DeCree: Good morning, everyone.
John G. DeCree: And I think we're still waiting for some cards to turn over. But I was curious about your views on the New York process and potential appetite to participate in financing if an opportunity were to come up and maybe how active or aggressive you might be in that market. The appetite is huge, but I'm going to turn the answer over to Steve. We've had conversations with more than a handful of parties that are actively looking to potentially pursue licensing there.
John G. DeCree: Thanks for taking all the questions, but maybe just one.
John G. DeCree: I'm thinking a little further out about the New York City Casino licensing.
That's underway.
Speaker Change #159: And it seems like it's taking its time, but if we look at chick.
Chicago in the template for financing that you've provided there Peter.
Speaker Change #160: Peter or anyone curious on your views on how you look at New York, If you would look at it Similarly, obviously and I think valleys as is in the mix and so every market is different and I think we're still waiting for some cars to turnover, but curious your views on the New York process and potential appetite to participate in finance.
Speaker Change #162: If an opportunity were to come up and maybe how how active or aggressive you might be in that market.
Speaker Change #161: But the appetite is huge.
Speaker Change #161: Turning to answer over to Steve.
Steve: Yeah, we've we've had conversations with with more than a handful of.
Steve: Parties that are that are actively looking to potentially pursue.
Steve: Licensing there I think we continue to find the marketplace to be extremely interesting and intriguing and expect it to be very profitable for those that ultimately when the golden ticket. So.
John G. DeCree: I think we continue to find the marketplace to be extremely interesting and intriguing and expected to be very profitable for those that ultimately win the golden ticket. With that said, with respect to Bally's, which I think you had brought up early in that question, we do have a roofer in the state of New York.
Richard: With that said you know with respect to valleys. Richard I think you had brought up earlier in a question are we do have a room for in the state of New York, We've not had any intimate conversations around their their projects just just higher level Hum, but you know I think.
Steven L. Ladany: We've not had any intimate conversations around their project, just at a higher level. But I think, like I said, we've talked to a number of the people involved, and I think everyone's interestingly awaiting the green light to move forward. And we're happy to continue to have conversations with folks around it because we do think there's a huge opportunity in the state of New York. I mean, how soon in the process would you be asked or be willing to kind of, you know, provide something a little bit more substantial other than conversations in terms of financing?
Richard: Like I said, we've we've talked to a number of the people involved and I think everyone's interestingly.
Richard: We're awaiting the green light to move forward and we are happy to continue to have conversations with folks around it because we do think there's a huge opportunity in the state of New York.
Thanks, maybe a follow up I realize it's probably tough to answer but timing context that to the extent you can or would care to.
Speaker Change #164: Qualified or shovels in the ground pretty much ready at the facility in Chicago at this point I mean, how soon in a process would in New York might you be asked or be willing to kind of provide something a little bit more substantial other than the conversations in terms of financing I assume would have to probably wait for economics.
John G. DeCree: You know, I'd assume you'd have to wait for the economics to be released. But I was just curious if we'd look at Chicago as, you know, wait until a project is almost ready before your involvement, or could you get involved quite a bit earlier? I don't think I'll speak for myself. I don't think we have a good enough sense of timing in New York. You know, it continues to move and bob and weave.
Speaker Change #165: Be police, but just curious if we look at Chicago as you know wait wait until project is almost ready before you were involved in or could you get involved quite a bit earlier.
I don't think I'll speak for myself I I don't think we have a good enough sense of timing in New York.
John G. DeCree: And so I think I personally don't have a good understanding of kind of where that process will actually land, not where it's currently contemplated, but where it will actually land and what the ultimate licensing and permitting and zoning and all that fun stuff will curtail and what the timing will ultimately be. So I couldn't possibly even try to guesstimate when all those things would come together, and nor would I, or any other institution probably be able to with specificity know what the pricing on any type of thing would be.
Continues to move in and Bob and weave in and so I think.
Speaker Change #165: I personally don't have a good understanding of of kind of where that process will actually land.
Speaker Change #165: Not where it's where it is currently contemplated but where it will actually land and what the.
The ultimate licensing and permitting and zoning and all that fun stuff will will curtail in and what the timing will ultimately be so I couldn't possibly even try to guesstimate.
Speaker Change #167: When when all of those things would come together and nor would I or any other institution, probably would be able to with specificity no what pricing on any type of thing would be the gating factor for US is can we find a risk adjusted return that's attractive and the one thing that rise with Chicago is oftentimes that.
Steven L. Ladany: Yeah, the gating factor for us is, can we find a risk-adjusted return that's attractive? And the one thing that rhymes with Chicago is that oftentimes that comes from being the known entity and quantity and having dialogue earlier in the process versus showing up at the end. That's one of the ways we've been able to monetize some of the competitive advantage we bring to the situation. Let me say to the group, Maria, we're going to have to cut the call now at this hour.
Comes from being the known entity in quantity and having dialogue earlier in the process versus showing up at the end. That's one of the ways, we've been able to monetize some of the competitive advantage, we bring to situations. Let me say I'm Citigroup Maria we're gonna have to cut the call now if this out we have another.
Steven L. Ladany: We have another obligation. I would say to any who may have missed out on a question, please contact us here. Any one of us is available to speak with you, and we look forward to it. So, if we've cut this off at a time and left some people waiting, I apologize, but we're going to have to move on to another scheduled call. So, Maria, would you please arrange that?
Speaker Change #166: Obligation I would say to any who may have missed out on the question. Please contact us here any one of US is available to speak with you and we look forward to it so we've.
Speaker Change #166: If we cut this off at a time and left some people are waiting I apologize, but we're gonna have to move on to another scheduled.
Speaker Change #166: <unk>.
Speaker Change #166: So Maria would you please affect that.
Maria: Of course.
Operator: Of course, this now concludes our question and answer session. I would now like to turn the floor back over to Peter Carlino for closing comments. Well, that was it. And we thank you all for being here. And, from our point of view, we've got a lot of exciting stuff happening, and I hope we've shared a little bit of that, our feelings about it.
Maria: This now concludes our question and answer session I would now like to turn the floor back over to Peter Carlino for closing comments.
Peter M. Carlino: Well that was it and we thank you all for being here.
Peter M. Carlino: Thank you. See you next quarter. This concludes today's teleconference. You may disconnect your lines at this time.
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Maria: And.
Peter M. Carlino: From that point of view, we've got a lot of exciting stuff happened and I hope we've shared a little bit of that are feeling about that thank you see you next quarter.
Speaker Change #168: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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