Business context and reporting period
Gaming & Leisure Properties, Inc. (GLPI) filed this Form 10-K for the fiscal year ended December 31, 2021. It is a Pennsylvania REIT whose primary business is owning and leasing gaming real estate under long-term triple-net leases; tenants generally pay property maintenance, taxes, insurance and utilities. The filing provides annual results, not a standalone fourth-quarter income statement.
At year-end, GLPI reported interests in 51 gaming and related facilities across 17 states, with 100% occupancy. Its leases generated most revenue. Penn, Caesars and Boyd accounted for approximately 75%, 11% and 10%, respectively, of 2021 income from real estate.
Financial performance and liquidity
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Total revenue | $1,216.4 million | $1,153.2 million | +5.5% |
| Income from operations | $841.8 million | $809.3 million | +4.0% |
| Net income | $534.1 million | $505.7 million | +5.6% |
| Basic / diluted EPS | $2.27 / $2.26 | $2.31 / $2.30 | Lower per share |
| Operating cash flow | $803.8 million | $428.1 million | +$375.7 million |
Rental income was $1,106.7 million, up 7.3%; gaming, food, beverage and other revenue was $109.7 million, up 6.5%. Calculated operating margin was approximately 69.2% versus 70.2% in 2020; net margin was approximately 43.9% in both years. Adjusted EBITDA, a non-GAAP measure, was $1,096.6 million versus $1,035.5 million; AFFO was $812.0 million versus $757.4 million.
Cash and cash equivalents were $724.6 million at year-end. Gross long-term debt was $6,599.7 million; balance-sheet debt, net of issuance costs and related adjustments, was $6,552.4 million. Debt included $6,175.0 million of senior unsecured notes and $424.0 million under the term loan facility. No revolver borrowings were outstanding, and $1,174.6 million of revolving capacity was available. Management reported compliance with debt covenants. Cash paid for interest was $273.5 million.
Investing activities used $1,030.8 million, largely for the Bally’s real estate acquisitions and the Maryland Live! transaction. Financing activities provided $443.1 million, including $795.0 million of debt proceeds and $662.3 million of net common-stock proceeds, partly offset by debt repayments and dividends. Capital expenditures were $16.2 million, including $2.3 million of maintenance spending. Regular 2021 dividends were $2.66 per share; a $0.24-per-share special dividend was also declared, for $2.90 per share in total.
Material changes versus 2020
- Real estate income rose $56.5 million, reflecting $29.5 million of additional cash rent from new or expanded leases, $15.2 million more Penn percentage rent, and $5.0 million from rent escalations, among other items.
- Operating cash flow increased substantially, in part because 2020 included $337.5 million of noncash rent recognition associated with the Tropicana Las Vegas and Morgantown transactions, as well as lower rental receipts during COVID-19 closures.
- GLPI acquired the real estate of Tropicana Evansville and Dover Downs and added them to a Bally’s master lease with $40 million of annual rent. It also completed the Perryville and Baton Rouge operating-asset sales, retaining and leasing the real estate to Penn and Casino Queen, respectively.
- GLPI completed the Maryland Live! real estate transaction in December and recorded a $12.2 million initial expected-credit-loss provision. The Pennsylvania Live! properties remained pending, subject to approvals and closing conditions.
- Net income benefited from stronger reopening results and transaction gains, but EPS declined as the weighted-average share count increased. 2020 had a $41.4 million noncash gain on a property exchange and $18.1 million of debt-extinguishment losses; 2021 included $22.4 million of pretax gains on sales of casino operations and higher income-tax expense.
Outlook, risks and unusual items
Management said operating cash flow, cash on hand and revolver availability were expected to cover anticipated debt service, capital spending, working capital and dividends, alongside planned transaction funding. At the time of filing, GLPI expected to close the Pennsylvania Cordish acquisitions in early 2022; it also anticipated the Bally’s Tropicana Las Vegas transaction and Bally’s Black Hawk and Rock Island acquisitions in the second half of 2022. Management expected to refinance the revolving facility and certain notes before their 2023 maturities and expected future growth to rely mainly on acquisitions. These are forward-looking expectations, not completed outcomes.
Key risks include tenant concentration—particularly dependence on Penn—tenant ability to meet lease obligations, gaming-sector competition and discretionary spending, COVID-19 variants and renewed restrictions, inflation and interest-rate changes, regulatory approvals, access to capital and refinancing, and maintaining REIT qualification. GLPI’s variable-rate borrowings were linked to LIBOR, whose phaseout was expected by mid-2023; the company was monitoring the transition to SOFR. Other risks include environmental and casualty exposure, cybersecurity, and execution of announced acquisitions.
Unusual items included the $12.2 million Maryland Live! expected-credit-loss provision, a $4.0 million recovery on a previously impaired Casino Queen loan, the casino-operation sale gains, and a $0.24-per-share special earnings-and-profits dividend. GLPI said all tenants were current on rental obligations at year-end and properties were open. The auditor issued unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Whether the Pennsylvania Live! acquisition and the announced Bally’s transactions closed on expected terms, and their ultimate funding, rent and return implications.
- Tenant credit quality and rent coverage, especially Penn’s contribution to real estate income and any effect of gaming-market weakness or competition.
- Maryland Live! lease performance and subsequent changes to the $12.2 million expected-credit-loss allowance.
- Debt refinancing progress, covenant headroom, borrowing costs and the LIBOR-to-SOFR transition.
- Actual cash dividends and REIT taxable income requirements; the filing reports $2.90 per share declared for 2021, including the special dividend, while cash-flow dividends paid were $633.9 million.