Peter Carlino: Yes. look, it’s safe to say we look at a lot of stuff and don’t miss a whole lot every now and then, but we don’t miss much. And we make conscious choices and we just have never been able to put one of these jurisdictions over the top. We’ll continue to look as we do with many that — those and many other opportunities. but until you see it, we are just not going to make the move.
David Katz: Understood. Thank you very much.
Operator: Our next question is from Caitlin Burrows with Goldman Sachs. Please proceed with your question.
Caitlin Burrows: Hi. good morning, everyone. Maybe, just back to that, how a lot of the deals you’re looking at today are not the simplest type given where the capital markets are. I guess, what do you think would make that change? Is it just lower cost of capital supporting lower cap rates? Is it capital needs by operators? Like what could get that traditional type deals going more actively?
Brandon Moore: My opinion would be capital market stability. I think, if you think about people trying to maximize price as a seller or you think about large scale M&A, for example in all those inputs that the critical component is the cost of debt, any quantum of leverage you can put on a transaction. So clearly, a few years ago, when that was plentiful and inexpensive. we saw prices, able to press higher, because the amount of leverage whether it be public gaming REITs or private real estate investors were able to utilize to maximize the purchase price. And I think from a gaming perspective, on the operator side, most of our tenants and even those that aren’t our tenants fund most transactions via debt. there are not a lot of gaming operators that go out and issue equity to do transactions.
So, as the capital markets are more expensive on the debt side in particular, it definitely causes a slowdown in regular way “traditional” sale leaseback transactions and puts a little bit of a capping on the pricing aspect.
Caitlin Burrows: Got it. Okay. That makes sense. And then maybe, just on that activity, you guys mentioned earlier in the call, how the number of properties has increased substantially over the past number of years. So, as you look at your current conversations and expectations for ’24, can you give any commentary on just your expectation for deal activity to kind of get over the finish line this year or even just in the first half?
Brandon Moore: The answer is no. The answer is no. Look, I think it’s been well said that, there’s a lot of stuff that is out there. We look at a lot of stuff. I sometimes use the Bible quote, that many are called, but few are chosen. So, it’s completely unpredictable. I could tell you the number of things, I can’t and won’t. but I could tell you some things we’re looking at, we’d like to see done. but they’re getting done is completely unpredictable. Or even if it is likely to happen, is it going to happen this year? Will it happen next year? A lot of complexities to the stuff that we do. There’s regulatory approvals, there’s just so many parts and pieces, so that nothing happens fast. Therefore, we’re just going to tell you we’re working at it. Stay tuned.
Caitlin Burrows: Okay, thanks. We’ll stay tuned.
Brandon Moore: Okay.
Operator: Our next question is from Ron Kamdem with Morgan Stanley. Please proceed with your question.
Ronald Kamdem: Hey, just two quick ones. So, one on the Tioga Downs deal. I saw the presentation on the website, which I think is one of the first times you guys have put out a presentation after a deal. So obviously curious, why you decide to start with this one, which is super-helpful. But the question on this one is just on this right, or first refusal for Vernon Downs, any sort of conversations with sort of American Racing are they looking to sell? But actually, what’s the color behind that ROFR?
Brandon Moore: I’ll touch base on the ROFR and then Steve can talk about the presentations, which you got to start somewhere, so why not now. I think, I think with the ROFR, the ROFR when we look at Vernon is more of a defensive play. So, Vernon doesn’t generate a ton of EBITDA and it has some challenges, some tax challenges and other things in the way that that property came to be. It’s not something that we have focused on as being necessary for the transaction and I don’t think it’s necessarily something that Vernon or that American Racing is focused on in monetizing. I think the issue in New York is or in any gaming jurisdiction, anytime you have a facility in its potential, you want to see if you can get a right to acquire that facility.
And this is one where it didn’t make sense to acquire it today, but that doesn’t mean it won’t make sense to acquire it in the future. And so that’s the reason we had negotiated that ROFR with respect to Vernon. but I wouldn’t say there’s anything in the foreseeable future from either our side or American Racing, where that will make much sense.
Steven Ladany: Yes. With respect to the presentations, I think we had heard through the Rockford transaction that I think it would’ve been helpful in some cases for us to have some nice pictures for people to look at and things of that nature. So, I think to Brandon’s point, we just figured we’d start somewhere and I think future transactions, we’ll have similar few pages of information for you to look at and glean a sense of what we’re doing.
Ronald Kamdem: Helpful. Look, my second question and we do appreciate the presentation so — my second question is just moving to the guidance, so you guys sort of came in below consensus, right. And it sounds like there’s some conservatism baked in there. I think you made some comments about your interest cost assumptions. but is there any way we can double click and get maybe, what the expectations for interest cost changes versus expectations for NOI change just the big picture line items other than just the AFFO situation, just so we can really piece together why the $3.72, which is basically just 4Q annualized is shaking out.
Desiree Burke: Yes. I mean, we’ve given all of the information that we want to give. but we look, it’s $10 million of a spread on $1.50 billion. It’s not a significant move to be in there. But — and I’ve tried to articulate, where we think we put some room for ourselves, given the timing of the transactions that need to be funded during the year, as well as the interest rate movement. I mean, it moved 38 basis points a week ago, so that was in one day, that’s what the rate moved by. So that gives you an indication of what we’re not sure that what will happen in the future as the fed comes out with more information and as inflation remains very strong and not down to the 2% that they’re looking to get to. So, I don’t think it’s significant in the scheme of things, our high point is $3.74.
we will modify guidance as we get more information throughout the year and get a little bit smarter as to what’s happening. But that is the color that we would like to give on this call.
Ronald Kamdem: Great. thanks so much.
Operator: Our next question comes from Mitch Germain with Citizens JMP. Please proceed with your question.
Mitch Germain: Thanks and congrats on the year. just toward guidance, I’m just trying to make sure, I understand what’s in it and what’s not. So, Tioga and I guess, you provided some perspective Desiree on Boyd and Pinnacle resets. Is that in guidance today?
Desiree Burke: Yes. It is in guidance today. And Tioga is in guidance today. That’s correct.
Mitch Germain: Right. Okay, great. And just curious about the competitive landscape. Are you guys seeing more organized capital kind of coming off the sidelines these days?
Brandon Moore: Well, it’s a very small sample size. But I would say, I would say not necessarily, I think this the same or organized capital, I think is the word used, the same organized capital that was — has been chasing gaming real estate for the last, call it, two years is the same organized capital that’s chasing it. I don’t think there have been new entrants that have raised funds or what have you to enter the space. And I know we’ve had dialogue with one provider — private real estate provider that’s discussed potentially exiting the space. So, I think — I don’t think there’s the headwinds are there. I think it’s mainly because of the leverage component and the cost of debt that have kind of kept some additional folks on the sideline.
Mitch Germain: Thank you.
Operator: Our next question comes from John DeCree with CBRE. Please proceed with your question.
John DeCree: Hey. good morning, everyone. I covered most of my questions. So maybe, just — maybe one big picture question, Peter, you’ve got quite a bit of experience in — on new states legalizing casinos. There’s been some activity in long holdout states on the legislative front, Texas, Georgia, Alabama, maybe a few others that could be interesting. So, assuming you don’t have a crystal ball there, is there anything that you’re watching closely or anything you think where there, there might be some momentum that maybe, we should be paying attention about? I’m not sure if you have any unique views on some of those situations.
Peter Carlino: We watch closely anything that looks like opportunity. So, you can count on the fact that we’re very much aware of what’s going on out there in the world, period. Look, my general view is everybody, game is going to be everywhere. There’s no place, where it won’t be, just a matter of time. States feel the pressure when the guy next door and half their population is going elsewhere to gamble. Sooner or later, they break down and participate. So, we keep a close eye on that. But Brandon, you want to add anything?
Brandon Moore: I think that’s generally right. I mean, we are very close to what’s going on in both Alabama and Georgia, and in addition in Texas. but I think Alabama and Georgia both have bills moving at the moment that could open the door for opportunities. I think the difference in the southeastern part of the United States now versus maybe five years ago is you’ve had a proliferation of sports betting and adjacent states, and neighboring places, and people are becoming more accustomed to the idea of gaming being more of an entertainment source as opposed to all the negative influences that people have historically associated with a gaming property. And I think in those states, you’re having the general population generally be supportive of more widespread resort style entertainment gaming, and I think that’s why you’re seeing more bills, you’re seeing more things moving further each year.
I mean, I think each year each one of these states kind of pushes things a little bit further along. And eventually, as Peter said, I think you’ll see it in both of those states and probably in neighboring states in the southeast as well. So, we keep a very close eye on that and those are — will be opportunities for folks, if those states get over the finish line.
John DeCree: That’s great. Appreciate all that color. Thank you, all.
Peter Carlino: Thank you.
Operator: We have reached the end of the question-and-answer session. I would now like to turn the call back over to Peter Carlino for closing comments.
Peter Carlino: Well, thanks, operator and thanks to all of you, who have dialed in this morning. I hope that what we’ve presented is helpful. and as always, we are looking forward to seeing you all next quarter. Thank you.
Operator: This concludes today’s conference. You may disconnect your lines at this time and we thank you for your participation.
