{"id":328794,"date":"2024-08-25T03:00:33","date_gmt":"2024-08-25T08:00:33","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=328794"},"modified":"2024-08-25T01:26:08","modified_gmt":"2024-08-25T06:26:08","slug":"gaming-and-leisure-properties-bonds-sturdy-says-research-firm","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/gaming-and-leisure-properties-bonds-sturdy-says-research-firm\/","title":{"rendered":"Gaming and Leisure Properties Bonds Sturdy, Says Research Firm"},"content":{"rendered":"

Debt issued by casino landlord Gaming and Leisure Properties (NASDAQ: GLPI) looks appealing despite a recent spate of new issuance.<\/p>\n

\"Gaming
A slide from a Gaming and Leisure Properties presentation. A research firm is bullish on the company’s corporate debt. (Image: Seeking Alpha<\/em>)<\/figcaption><\/figure>\n

In a new note to clients, GimmeCredit analyst Kim Noland acknowledged that it\u2019s been a brisk summer for the real estate investment trust (REIT) as it\u2019s engaged in a variety of transactions that support long-term growth, but also resulted in the need to issue some new bonds. Some of those proceeds will be directed to paying for maturing issue that comes due next month.<\/p>\n

In addition to agreeing to finance $110 million for the Belle of Baton Rouge to come ashore, GLPI announced in July that it\u2019s providing Bally\u2019s (NYSE: BALY) with $2.07 billion in financing<\/a> that, among other objectives, will help the regional casino operator complete its permanent gaming venue in Chicago.<\/p>\n

The provision of construction financing to tenants has become an important part of GLPI\u2019s growth initiatives,\u201d wrote Noland. \u201cIn addition to the July deal, it already agreed to provide Bally\u2019s with construction financing for a sports stadium that complements Bally\u2019s gaming resort in Las Vegas. While construction financing is somewhat riskier than the more usual propco\/opco transactions of existing properties, the higher interest income is helping to expand GLPI\u2019s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).\u201d<\/p><\/blockquote>\n

Bally\u2019s and Penn Entertainment (NASDAQ: PENN) are GLPI\u2019s two largest tenants, though the REIT counts other casino operators among its clients.<\/p>\n

GLPI Bonds Could Be Supported By Bally\u2019s Rent<\/h2>\n

In addition to the Chicago financing, GLPI said it\u2019s acquiring the real estate of Bally\u2019s Kansas City and Bally\u2019s Shreveport for a total of $395 million. The combined annual rent on those properties will be $32.2 million, \u201crepresenting an 8.2% initial cash capitalization rate.\u201d<\/p>\n

\n

That brings more rental income in for the landlord and those contracts typically come with escalators that gradually increase rent over time, meaning more cash flow to support GLPI\u2019s debt servicing efforts. Additionally, the REIT gained rights to purchase the real estate of Bally\u2019s Twin River casino in Lincoln, RI before the end of 2026 for $735 million. That\u2019s a reduction from the previously discussed purchase price of $771 million and assuming that deal is executed, the REIT would bring in another $58.8 million in annual rent.<\/p>\n<\/div>\n

Financing to clients to enhance venues already owned by REITs is a new growth avenue for GLPI and rivals<\/a> because, as Noland pointed out, that\u2019s not the typical operating methodology in triple-net leases.<\/p>\n

\u201cSecond quarter financial results included consolidated total revenue of $381 million (+7%) and adjusted EBITDA was $340 million, a 4.6% increase from $325 million in the prior year period,\u201d said the GimmeCredit analyst. \u201cWhile annual interest expense has increased to near $350 million (on a pro forma basis), capex is modest since the leases require the tenants to maintain the properties.\u201d<\/strong><\/p>\n

Cash Flow, Rates Could Boost GLPI Bonds<\/h2>\n

REITs, including casino owners such as GLPI, are sensitive to changes in interest rates<\/a>. That explains the group\u2019s laggard performance over the past couple of years and why some investors believe real estate equities could rally should the Federal Reserve lower borrowing costs in September.<\/p>\n

In rating GLPI debt maturing in 2027 and 2030 \u201coutperform,\u201d GimmeCredit\u2019s Noland highlighted the REIT\u2019s cash flow and strong competitive advantages.<\/strong><\/p>\n

\u201cThe gaming REIT has good cash flow visibility; its business model benefits from high barriers to entry due to limited supply and a significant regulatory environment for gaming operator tenants,\u201d she concluded. \u201cWhile GLPI\u2019s rental income is still weighted toward PENN (see recent PENN report dated August 21) newer tenants such as leading gaming companies Caesars, Boyd Gaming and Bally reduce the risk of individual tenant underperformance.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Debt issued by casino landlord Gaming and Leisure Properties (NASDAQ: GLPI) looks appealing despite a recent spate of new issuance. In a new note to clients, GimmeCredit analyst Kim Noland acknowledged that it\u2019s been a brisk summer for the real estate investment trust (REIT) as it\u2019s engaged in a variety of transactions that support long-term […]<\/p>\n","protected":false},"author":46,"featured_media":288012,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,33810],"tags":[81903,81898],"acf":[],"yoast_head":"\nGaming and Leisure Properties Bonds Sturdy, Says Research Firm<\/title>\n<meta name=\"description\" content=\"Gaming and Leisure Properties Bonds Sturdy, Says Research Firm.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/gaming-and-leisure-properties-bonds-sturdy-says-research-firm\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Gaming and Leisure Properties Bonds Sturdy, Says Research Firm\" \/>\n<meta property=\"og:description\" content=\"Gaming and Leisure Properties Bonds Sturdy, Says Research Firm.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/gaming-and-leisure-properties-bonds-sturdy-says-research-firm\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2024-08-25T08:00:33+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-08-25T06:26:08+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/09\/GLPI3.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1055\" \/>\n\t<meta property=\"og:image:height\" content=\"433\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/gaming-and-leisure-properties-bonds-sturdy-says-research-firm\/\",\"url\":\"https:\/\/www.casino.org\/news\/gaming-and-leisure-properties-bonds-sturdy-says-research-firm\/\",\"name\":\"Gaming and Leisure Properties Bonds Sturdy, Says Research Firm\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/gaming-and-leisure-properties-bonds-sturdy-says-research-firm\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/gaming-and-leisure-properties-bonds-sturdy-says-research-firm\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/09\/GLPI3.png\",\"datePublished\":\"2024-08-25T08:00:33+00:00\",\"dateModified\":\"2024-08-25T06:26:08+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Gaming and Leisure Properties Bonds Sturdy, Says Research Firm.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/gaming-and-leisure-properties-bonds-sturdy-says-research-firm\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/gaming-and-leisure-properties-bonds-sturdy-says-research-firm\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/gaming-and-leisure-properties-bonds-sturdy-says-research-firm\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/09\/GLPI3.png\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/09\/GLPI3.png\",\"width\":1055,\"height\":433,\"caption\":\"A slide from a Gaming and Leisure Properties presentation. 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