Operator: Next question comes from the line of Jay Kornreich with Wedbush. Please go ahead.
Jay Kornreich: Wonder if you can just start off giving some commentary around the depth of the buyer pool you’re seeing in the regional casino market. And how that may be impacting cap rates holding steady even in this uncertain market, or if the buyer pool is spitting out, which leads to cap rates rising?
Peter Carlino: Steve, you’re looking kind of quiet at that end of the table. So…
Steven Ladany: Yes. Look, I think the buyer pool is ever evolving. I feel like the market backdrop as far as the capitalization in the credit markets has changed the players slightly. So the cash buyers who were highly levered and taking advantage of low-cost debt have pulled back some. However, others have started to participate as you’ve seen with folks like Realty Income. So I think the players might have changed, the game remains the same. I think, broadly speaking, everyone involved realizes that market cap rates have moved. So whether you’re a new entrant as a buyer or a bidder or you’re an existing and long-standing person like ourselves, you realize that the market is changing and the cap rates need to adjust in order to garner the upfront accretion that Matt mentioned earlier, even though there is the qualitative aspect.
Jay Kornreich: Right. And I guess just on that comment, do you have a sense of how much cap rates have already moved? Or do you need to see more transaction activity to get a sense of that?
Steven Ladany: I mean, I think you’re ultimately going to — it’s going to be dependent on the transaction, right? There’s not a — this isn’t cookie cutter. So we’ve seen historically, even if you look back before the credit markets have dislocated, you had very different cap rates for different assets. We bought an asset in Maryland from the Cordish folks, and we paid a low cap rate. There was an asset that traded also in Maryland than 6 months later at a materially different cap rate. So it’s going to be very dependent on the asset, the market and things of that nature. But I think wholeheartedly, I think the entire marketplace is seeing a shift.
Jay Kornreich: And if I could just throw in one more. Regarding the construction financing that you guys made some commentary on, specifically with $150 million development commitment to the Hard Rock Casino development. Is this type of higher interest construction financing something that you guys like and we should expect to see more so going forward of? And then also just specific to the Rockford, how likely do you foresee that becoming a ROFR going forward or using the ROFR, I should say?
Peter Carlino: Des, do you want to?
Desiree Burke: I mean, obviously, a 10% rate on the construction loan was specific to the Rockford transaction because it was well underway when we entered into the financing. So whether or not we would do it going forward, sure, depends on the facts and circumstances as to which projects we determined to undertake. To answer your question on the ROFR, we negotiated for it specifically. We would like to own the asset someday, but we can’t quantify whether that will occur or not.
Brandon Moore: Yes. I think the ROFR you should see as — what we’ve said in the past was we would do these types of loans if there was a segue to property ownership. So in this transaction, we acquired the land and we negotiated the ROFR so that the building — changes hands, we would have the ability to potentially acquire that building. I think that we’re somewhat uniquely positioned in this area to underwrite a loan like this because as you’ve seen in Baton Rouge. And if you look back to the history at PENN National, now PENN Entertainment, we have significant development expertise here with Jim and Peter and others that I think we’re confident in underwriting that type of a loan. So in Rockford, we were pretty confident with the Hard Rock team, the ownership team and the ability to get that casino constructed.
And so you may see more of that from us. But it will be thoughtful, and it will depend on each project and what it brings to the market and what we view the risk of the construction to be.
Matthew Demchyk: Think of it, Jay as a tool in our tool chest to provide an even more holistic one-stop solution for a counterparty.
Operator: Next question comes from the line of Barry Jonas with Truist Securities. Please go ahead.
Barry Jonas: There’s been some commentary this quarter on macro pressures for the operators. I think we all understand how safe your end streams are, but wondering how you’re thinking about the current environment there. I guess I’m curious if it’s influencing any of your deal discussions.
Peter Carlino: Who wants to grab that one?
Matthew Demchyk: Question is how the macro environment plays out? Yes. Look, we have to be continually careful. The volatility is higher and the odds of things moving are more significant, but there’s more natural openings for folks to need, again, solutions, from folks like us. And if they need money or they’re an environment development and redevelopment is something they need to do. The reality is that cost of funding for everyone has moved up. But as a counterparty, we’re uniquely positioned to try and meet their needs. That’s bleeding into all the conversations we’re having with folks.
Steven Ladany: Yes, let me…
Brandon Moore: Go ahead, Steve.
