Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) Q4 2022 Earnings Call Transcript

Ronald Kamdem: Great. Just two quick ones for me. One, just on bigger picture, regional gaming revenue operating trends, some of the data we’ve seen in December had shown it was sort of down year-over-year, I think 100%, no alarm by any means. But just curious what you guys are seeing on the regional gaming front, if any commentary there would be helpful. Thanks. A – Peter Carlino Well, remember, we don’t get any information that you don’t get. We’re not privy to accept what’s publicly available. But we see nothing that suggests there’s a problem on the horizon. I think the 1% is an aberration that is ignorable. So we have the general feel that our tenants are doing well, and they have a long, long way to go before we have even given any thought to it at all. Anybody again, on the GLPI side have a — any insight around that?

Desiree Burke: Yes, sure. So even though coverage may come down due to these items that we’re seeing in the regional markets, we still feel that our tenants are strongly — their rent coverage is stronger than it was in 2019. And we will also recall that it’s coming down 1% off an all-time high after COVID and what has happened in 2021. So we’re not concerned at all. It certainly won’t impact our business from the perspective that in my opening remarks — I noticed that I noted that only 5.3% of our rent is variable in any way. So even if it did impact revenues at the tenants and dropped their coverage a little bit, we have such strong coverage well over 2 times at our master lease tenants that it will not have an impact on GLPI.

Ronald Kamdem: Great. Helpful. And then my second question was just going back to the guidance on the AFFO growth of 2.5%. Just sort of curious, what’s baked into that in terms of organic growth or rent bumps? And presumably, what’s baked into that for the external drivers? Thanks.

Desiree Burke: So we have baked in all fixed escalators that will happen in 2023. We have baked in the transaction that we did with Valleys or the recent one with Biloxi and Tiverton. We have not baked in any additional acquisitions into the 2023 guidance number.

Ronald Kamdem: Great. That’s it from me. Thanks so much.

Peter Carlino: Thank you.

Operator: Our next question comes from the line of John Massocca with Ladenburg Thalmann. Please proceed with

John Massocca: Good morning.

Peter Carlino: Good morning, John.

John Massocca: So maybe going at the cap rate question from a different angle. You’ve seen a couple of transactions in the regional space closed or be announced in the last couple of months. And kind of in a rough high 7% cap rate, low to mid-8% cap rate range. Do you think that’s an appropriate level of return given what we’ve seen in terms of interest expense and cost of capital increases, both for landlords and operators?

Peter Carlino: Probably not. But Steve, do you want to — Steve or Matt, do you want to opine on that.