GLPI - Earnings call transcript Q3 2017 | Gaming and Leisure Properties, Inc.

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Operator

Greetings, and welcome to the Gaming and Leisure Properties’ Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] I would now like to turn the conference over to your host, Hayes Croushore. Thank you.

begin. now may You

Hayes Croushore

Relations press and joining everyone. and us XXXX webcast. third Sherry, is this thank our Private statements available forward-looking the Leisure of management’s in www.glpropinc.com. the like you quarter call, Litigation website as On Reform XXXX. contain The Investor in and remarks call for questions and today may earnings at today’s distributed Securities Act prepared answers good you, section earlier on to your We’d morning morning to Properties’ release Thank for defined Gaming

to Forward-looking results and statements address discussed matters that from differ that are today. actual subject cause risks may those uncertainties to

Forward-looking guidance, and FFO, statements income AFFO operating as related such and revenue, as as EBITDA. include financial non-GAAP those to well financial measures

General Accounting release. Executive and Financial earnings are and and by and the forward-looking future. financial represent related detailed assumes Chairman Peter the non-GAAP forward-looking Clifford, a and On Officer; Senior measures company current Chief update Senior the Vice SEC of review estimates the Inc. to contained Counsel Snyder, President, are definitions statements forward-looking Steve company’s Secretary. obligation contained in Desiree and and conference As to more management’s no and reconciliations this listeners Chief the Carlino, Brandon we the Development; company’s in call, to in the Chief any Leisure statements filings discussions with Gaming Burke, Officer joined joining these of encourage Bill Properties Officer; morning’s statements We Also Vice of President reminder, Moore,

to Peter. call Now I’d Peter? over like to the turn

Peter Carlino

everyone. you, Thank and Hayes, morning, good

We down all this we good once quarter happy are business. is thing like received report paid a which our to do escalators We debt, good that. our again a of in and We quarter. some to

unless as our I attention encapsulated I release usual press the And all something. call to get going paragraph Bill so questions, to your I wants might well make very very think in to we’re comments are of that. the I add to think opening our style quickly

Bill Clifford

I have nothing.

Peter Carlino

go Okay. to going Then operator, to we’re Q&A. straight

Operator

from Okay, Our state great. [Operator Wieczynski your question with Please question. Steve first Stifel. Instructions] is

Steve Wieczynski

Hey, good doing both you well. morning. guys Hope

if won’t a you question know answer. don’t or here’s I you’ll answer So

a instance, Let’s what probably this would tenants if go for say and of have I say, where kind type were to of merger, you in of know explore think two some who you with to proceedings? in to hope those market need operator And guys your a would to restrictions, property, sense. certain certain then, for that the a ownership process? lead was market any other if there makes I new find or that

Peter Carlino

that’s avoid. the the seen I we’d right seen. same at think Look, have question But to that. things like we’ve you get that we’ll Well,

such things things light our for precisely occur. use We with would that to… good our we like – are where it. line, shareholders us, or for do thing any approved for to the always what’s such for and only it involvement period. here. want would what take the it but That’s And certainly, is our you guiding Bill GLPI Brandon bottom the be the So frankly such have you tenants going they at talk know I to moment are. each rights to would Bill way significant other. thing But is with begin We occur, should hesitate word the to frankly, a

Bill Clifford

any come Penn the else between is anything’s and newspaper two a to But we of are these the Bloomberg say discussion been those and information of says there about there where for talking of between the terms where our lease. lease on terms in out lease if our what we might Sure. for in gaming to for either leases relative in that ability the was because Pinnacle. parties the we’re go everybody what extract if because obviously, to able in speculating have required agreed one FTC. – have a the combination was hypothetical properties – we of that would we wouldn’t or or would – of sales think Listen, And is be what’s article has totally certain I and to be of in rights wondering and any I totally either by disposal there our they the the don’t benefit by can basically, rights that regulator

that to done, emphasize our our tenants as there’s – partners that. of to be come get So and our things, think that’s we And we part want of play. want to that a successful landlord would would of do supportive that’s and our I we anybody any be tenants tenants we where our who is I big say of supportive to into rights with to if that certainly to tenants to want what basically would we’re because a be try want be things want

look However, we to interest the obviously, of at and foremost, first shareholders. for our best have

we we rumors certain that floating around are But hypothetical, would comes that that. before rights believe the within theoretical have So proposed the we – certainly, leases out to there.

at I Yes. probably I’ll it think So leave that.

think it’s job. our I with with we And can’t we go said you So to to emphasize period. Farther tenants be most think and you’ve that but will, what thing work partnership But beneficial a I first probably – than is shareholders enough. and end, does the the important foremost, is that them. to be seamless that good I premonition our is to it pretty our in preferred will our in

So can say, in that’s us. of don’t – to I front – all we frankly, answer there’s have that’s we would nothing because or the hope

Steve Wieczynski

No. color. great That’s

thought. more said I than You probably

So that was great.

Peter Carlino

No, we we’re too. say thought going to

Steve Wieczynski

No.

Peter Carlino

a that’s question. of frankly And thoroughness testament to your the

Steve Wieczynski

out of you as it’s Peter In be I job give will outside kind and to actually there – good universe and well? us do you environment acquisition try to or Bill, as on straightforward of terms around you a potential very of universe possible. the can gaming Anyway, what the in every both, like be what question, of Thanks. much second as the maybe update more in on dance looks going then, see kind gaming or maybe it generic. quarter

Peter Carlino

you of may actionable? about what’s there may don’t what not kind why be Steve, talk or out and

Steve Snyder

have Good in morning, Steve. other I disagree call robust. activity commented the that. seems pretty I be with earnings had Others M&A either they’ve don’t the or that can’t say, in to call

assured assets. so operators recently presentation extreme, we think, in I a disagree produce new our look driven of, longer separation from try entity quite out valuations to terms which perspective do are now in with everything real right operating expectations touch as GLPI, what we I little yesterday would the runway of seem stay other of terms probably at to that their and a does and not for there from heard opportunities in heard most estate opportunities But for And everything, in we’ve with assets shareholders. we be our rest of accretive there. and a touch the transactions our from right

Bill Clifford

looking remains line My lies Yes. you EBIT, over much same, on it pretty count is can on been it. us at the the the but years and

I finding two for and shareholders patience often So be focus the be It’s a shareholders a make that’s right that We’d that one, us transactions deal make and we’re thing. unaware, are and remains tough deal. but accretive as three. bad like said, to a going rather not it do seems for to right

So those line of the followed over years. – that that’s you’ve who mantra that much our I pretty for before. us who know several heard

Steve Wieczynski

the guys. color. Appreciate Thanks

Operator

UBS. Please Farley with next is question state Robin from Our question. your

Arpine Kocharian

in question Hi, was thanks. looking to that behalf a that the is same at of you’re slightly then, leverage just term? on the imminent asked have in question, This different times on you’ve Is Arpine near given anything in looking your way. given us Maybe that transaction updates at do And make actually you asking that of could there end-year, of terms we’re any market QX Kocharian price my your Robin. before? the second guys target kind sense

Peter Carlino

imminent we there but the Bill nothing talk aware that we want nothing we’re is about of that mean there the meaning do look off, Look, in stuff at, imminent, I to… is you full imminent.

Bill Clifford

is whole think transaction are quarter all, Yes. fourth by nothing we closed get there nothing I – there the out the to we listen even just well, get year I timeline close where is so are if did approval no with for that I given think happen there mean, going that could first this regulatory the of of to people number the sure.

end be projecting So, that leverage basis. question. year to times on under right The of we’re leverage that the hopefully a now answers X.X

roughly X. target of a think million will paydown leverage I debt. that $XXX to is to throw-off continue flow cash free we And our obviously use level year

below leverage that that below on as going that We’re transaction the we remaining the below in we would in going X we we for X.X extend stated equity pre-funding interm, X do with leverage clearly take opportunities, pre-funding X. – our would to we equity back if that below basically we’re potential it X where is to new a it the as to transaction as would before view take rest

the an higher over levels So would not before. might transaction do we that kind acquisition same bit the effectively we’ve leverage indicated which of but still little taking have

Arpine Kocharian

Thank you. great. That’s

Bill Clifford

you. Thank

Operator

Morgan your is of Our next state question from Please question. Allen Thomas Stanley.

Thomas Allen

good morning. Hey,

XXXX? you in about are thinking late the X-year entries how question, PENN First that out

Peter Carlino

official guidance. haven’t November that’s we clearly Well, of next given year, really

we a understand properties I’ll those well obviously acknowledge think Chalmersgatan, couple Lorensberg I National things. of we both would that and both affected from Penn and and as primarily been years by We competition that several then Harbor. two know ago, have Live Maryland say Lorensberg as from of are

there to at So expect of the will adverse and the we do of us reset year, October to expect be be when to do that a next we end happens have reduction. revenue rent –

payout that However, at period. be will that dividend we believe through the with our the forward flat still ratio or rent XX% looking

but the having affect be to And get impact see as So think in increases at obviously, it transaction out. it today And certainly dividend. we we is any it down, we transaction we don’t project obviously dividend see helpful able reset for dividend on as any flat. won’t dividend period accretive these But will an about this getting the increases. we could the to without stay least adverse through revenue

Thomas Allen

you. Thank Helpful.

Operator

Greff is Joe state next JPMorgan. with question. from Please Our question your

Joe Greff

going absolute be [indiscernible]. would to ask who’s Manager – or comment on the would answered. Good there you basis. morning the have on any one be last next dividend I willingness Most to respect increase an acquisitions of the guys. my The dividend inclination question the could absent of an with been questions you, Maybe to

Peter Carlino

I down. ratio, because go terms of in mean the obviously that’s increasing payout

be our I to to transactions done. getting of foreseeable anticipation continue for and future think expectation debt the would paydown

times will where our We’re think to will we not ability on despond there acquisition use be done, anyway will able we to in there capital transactions an get opportunities be that in to put basis. and

would I I some a So zero. at to where but the leverage maybe get I can take say point we’ll to for think now, obviously point

at the dividend. our some we obviously use that. think So attention not it in equity as increasing point period the pre-funding to would be interm would But about

Bill Clifford

the Look at the transaction? what shareholders So question is to increase new a is value more it’s best gives always Or we’ll our and the answer the is time. dividend? same, it where be

Peter Carlino

favor continual the I I think, in equity personally stable ratio taking flow if obviously, cash I more also payout and nice problem what in pattern – with people about discussions, our because mean, personally I but I the increasing with had than one off I honestly, thing out is be think buying excess of a story the dividend. like dividend around stability rather

adverse taking XX% off interest to back potentially the buying of the around ratio investors shares what for. to I of transaction. think do if So turning one, Then payout our that then a be and would take are our the many you

Joe Greff

Thank you. Excellent.

Operator

Our Scholes from your Robinson question. next state Humphrey. SunTrust with question Please is Patrick

Patrick Scholes

EBITDA morning promotional impact an the part that future this pulling to to spend, Hi, My the future. of target escalators? does back for you margin morning. is Can you. folks get some how is way question good Thank related put potential via out there

Peter Carlino

– the increased happens year, several on into escalator so another Obviously, that in cusp, certainly, be month we’ve will into coverage last the translate ratios and That’s of good obviously, good, lease. to of obviously Penn Certainly, projection. to been this margin translate the Actually over will escalators. likelihood years, we’ve rent a which improved therefore EBITDA full XX% will ratio and – hitting as of increase has, improvement again course words, continually of the XX% XX% what right wait see got the evidenced we’re the October. through should

less, which might if that offset a be with is that less good. revenue, of those marketing have So they negative improvements to the to potentially The on basis negative if be would obviously, that’s were the all only reductions, we’d sum slightly net EBITDA escalators.

it’s if business for their they intent. don’t calculation. good of revenue for their not terms do to programs that’s I cause that but In volumes that’s actually drop the marketing good EBITDA, think

reduce I think out how their marketing. figure intent to is to

And our giving sometimes, to can revenue enhancements you reduce because that’s free out coin. marketing actually less you’re

So around you up cost have you net might and simply the to budget, people they increase their out to all constrained less on not coin net time don’t could see a the they may and actually be therefore, so use revenue. coins, enough free free turn give device because by your

Patrick Scholes

you. Thank Interesting.

Operator

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

Shaun Kelley

morning. good Hi,

thing could the reset bit a if to see wanted want the Penn. the we possibility for – touch to just dividend with around more further little I Just on

the – anything thinking assumptions that payout then come way you’re up? but other coming, the dividend you would numbers numbers to more maintain you the is the hold Bill, than with sort in? ratio here can clarification flat right be but XX that it, payout are would around of actually current way modeling of or Or So just a a are or it it ratio else, can the about goes

Bill Clifford

It’s to the XX today, we’re we’re mean, ratio don’t hold so nominally. that dividend. above above in maintain would that payout that. And increase But I in than going it will our it able to go might we I it fact, I put see think we ratio. closer – the than not like XX. let’s to are we order going be better the expectation way, XX.X. mean, to be XX,

the and but dependent a little on we’re we obviously the Penn all and does dividend. how well going Ohio the well how XX how of do So the the we’re for basis, well kind a – bit we and and doing switches maintain above it. conservative here, Meadows properties’ with talking and of still it’s feeling not rest economy But on

Shaun Kelley

way calculation calculation, right? this Understood. actually It’s trailing Bill the it’s remind I – year us, a believe. rolling works, just like five a

down of a grind sort not wold of a step a slow function based it’s kind cannibalization when properties of So it’s have those on down, occurred? the

Bill Clifford

year. down Well, calculation a a the years, November X of last average it’s the is starting over step five but next it

that, coverage the the November following improve, an year, based have payment in so make level, lower lower negative they a to that’s So negative, year, but I to And reduction there rent of of the would the is certainty previous that rent following math obviously the kind I would would a the getting – that, likelihood – escalator of spinning in but improve X. a following would not improve, amount in just when a following we in getting trying acknowledge year, rent a it on just escalator sort do escalator the Not the rent of – a certainty want of so the then that’s the – into calculation year, rent starting to year. by due spin to rent positive, getting then a in the of a that of of the so extent

Shaun Kelley

And landscape, to us I’ll try which the Understood. back it’s ask then for to M&A difficult anyways. the always just sort to but about, go of

it from are, are seller six OPI. months, what’s is on that the there with given serious let’s some there perceived picture think to good is discussion and actually expectations big your be whether are based will the of Or basic testing that’s the going or XX what – market transact or values? really the on Just sellers as next could people here the things sense you say, that away do just over out

Peter Carlino

Shaun, Steve this is again.

I think you’re to right. some degree,

because might of there transactions the think be no But next to simply value-driven. terms things of expect sort some sellers standardize in public market you’ll by we’re of universe can the seeing values circumstances way transactions. are across over testing seeing. translate really couple I some quarters and of of what do the there’s into I are the not some private market that see that if prints

Shaun Kelley

you very much. Thank

Operator

your Dan Ladenberg next with Our Thalmann. question is question. Instructions] [Operator state from Donlan Please

Dan Donlan

I just you at the Hollywood sold good you what property was? Thank Rouge morning. that the and curious was unused Baton

Bill Clifford

– That was the land there was housed and XX.XX] a of – that think.[ I formally was piece HR,

Steve Snyder

Yes, it Katrina, business after quite frankly, was was It operation served integral several facility. was there were It the of because to any no down volumes miles road. it that down useful the used, the nothing had extreme longer was purpose. so back so the

Bill Clifford

I’m I original loss. there be it that acquisition And might back. XX That’s proper to talking allocating we about original the That because that Penn. they a we the in Remember, did by way, way reacting was way, value. actually in the took the of not ago. purchased fact purchase, fact That years we’re sure. – dates land job think was land the a

So lands of had. the they that all terms between in

believe at that that so to the – And land depreciated I sold because had the the recognized that don’t was we end of the – day for loss. level a we

amount However, books the where sold it. accounting for and obviously, the we on sitting books. it the than And what on we less the is. was that’s was is And what sold we’re for it

Dan Donlan

that like [indiscernible], was more I curious contiguous. it sure. less Sure, developed something wasn’t and just you because or what, it or mean, I could’ve that’s sounds

So...

Bill Clifford

of the dilapidated roof contiguous. also with caving fine it. wasn’t kinds and a in had other attributes. other structure on It It A building

Peter Carlino

saying we’re That’s rid we’re it of why glad to get

Dan Donlan

maybe have leases been if that if properties if could of then And negotiations down just Okay. may to your those their Penn could how however outside and properties be have the – any leases. could if structure master those Pinnacle – would master any you change, interest you some many curious of – the And get of you but type or be line of change? something and

Bill Clifford

properties have suppose, there’s Kansas I interest. property One dog X, potentially that They I that mean, for well, would also – that have in they Tropicana. biggest in have would Penn, couple of the have X of in – be venture their track Ohio main behind They has have a a I think, could a joint I Plainridge; they a be Antonio. be also, interest. value us. particular San but transaction. that track interest with the a also they’ve Pinnacle, we spin in a in Pinnacle for track has left a Penn don’t that track partial Houston. has the to of Relative a in joint venture And think as Massachusetts in part race

those there all – the are legislation So pass kind stuff obviously, potential I – has the some Texas authorizing opportunities. mean, to gaming. be involve would last of to

I future. the far think in that’s quite

Dan Donlan

Okay.

Bill Clifford

But would such course. answer we of is, be things? The interested in

Dan Donlan

Okay, for because I just the just to ask I want And yet. level was non-gaming or curious, then perfect. didn’t appetite lastly, properties. interest just it

in than I there, that But think that in you maybe you gaming. the good closer looks just said runway have if curious, gotten for still the you’ve maybe past thoughts past. your

about your curious Just XX.XX

Peter Carlino

quick business. We generally, the what’s on that. no look, remain look would out We REIT crossed going focused open be has we’re the through but on to it. nothing attractive. to basis closer home, that desk answer monthly a we’re our still world see think remotely I this is, At on republications to in the

answer. So that’s the really straight the – that’s

Dan Donlan

you. Okay, thank

Operator

[Operator Instruction] Okay.

session. remarks. closing of our over hand question-and-answer conference to the We the for like I to management end reached would have back

Peter Carlino

you much. And to thank you who in of this Okay, dialed morning. very all have thanks operator,

look forward talking quarter. We with Thanks again. will next you to

Operator

concludes this Thank conference. you, today’s

this participation. at Thank lines You may your your you disconnect your for time. at

Gaming and Leisure Properties (GLPI) 26 Oct 172017 Q3 Earnings call transcript