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GLPI increases full-year guidance after record Q3

| By Robert Fletcher
Gaming and Leisure Properties Inc (GLPI) has increased its full-year guidance after posting a record set of resulting during the third quarter of its 2023 financial year.
Vici 2023

On an operating basis, revenue was 7.7% higher year-on year at $359.6m (£296.2m/€339.7m) at GLPI in Q3. This, the business says, was helped by the expansion of its portfolio in recent months.

In January GLPI finalised its acquisition of Bally’s Tiverton in Rhode Island and the Hard Rock Hotel & Casino Biloxi in Mississippi. Also this year, GLPI completed the creation of a new master lease with Penn Entertainment.

During Q3, GLPI acquired land associated with the Hard Rock Casino development project in Illinois. It also struck a 99-year ground lease agreement with 815 Entertainment in relation to this initiative.

Other highlights in Q3 included acquiring land at Casino Queen Marquette in Iowa and the reopening of The Queen Baton Rouge in Louisiana. 

These, coupled with the deal brokered with Oakland Athletics for an integrated casino to be built within a new stadium in Las Vegas, puts GLPI in a good position for further growth, says chairman and CEO Peter Carlino.

“The merits of our strategy to work with the industry’s leading operators and support their current and future initiatives, while expanding and diversifying our tenant roster in an accretive manner, was evident again in our record third quarter results,” Carlino said.

“With our opportunistic approach to portfolio expansion, the proven long-term resiliency of our tenants’ revenue streams and comfortable rent coverage ratios across our portfolio, we expect to continue to deliver strong capital returns and yields for our shareholders.”

Net profit slips despite revenue growth in Q3

Taking a closer look at the Q3 results, GLPI also published data in regards to FFO and AFFO. FFO, or funds from operations, is net profit excluding gains or losses from dispositions of property, net of tax and real estate depreciation. AFFO – adjusted funds from operation – is FFO excluding certain costs and expenses.

For the three months to 30 September, FFO was 9.3% higher at $254.4m. GLPI also says that AFFO increased by 6.9% to $251.2m.

Turning to spending, operating expenses were 460.1% higher at $91.3m. This was due to the expansion of the GLPI property portfolio. Other expenses, all of which relate to interest, hit $79.8m in Q3.

As increased spending more than offset revenue growth, pre-tax profit slipped 21.4% year-on-year to $189.8m. GLPI paid $482,000 in tax and also discounted $5.3m in profit from a non-controlling interest in an operating partnership.

As such, net profit declined 16.4% to $184.0m. However, adjusted EBITDA increased 5.9% to $327.1m.

Year-to-date revenue exceeds $1.00bn at GLPI

Looking at the year-to-date performance, revenue for the nine months to 30 September was $1.07bn. This is 9.8% more than at the same point last year.

GLPI did not disclose data on FFO or AFFO for the period. However, it did reveal operating costs in the nine months were 34.9% higher at $297.2m. Net other costs amounted to $234.3m for the period.

However, such was the impact of revenue growth across the year-to-date that pre-tax profit clipped 3.7% to $539.2m. GLPI paid $1.0m in tax and discounted $15.1m in net profit from the operating partnership.

This left a net profit of $523.0m for the nine-month period, an increase of 6.6%. In addition, adjusted EBITDA was 7.3% higher at $975.7m.

GLPI says AFFO could surpass $1.00bn in full year

Based on these figures, GLPI is increasing its full-year guidance. AFFO in the 12 months to 31 December 2023 is now expected to be between $1.00bn and $1.01bn. This is higher than the previous range of $994.0m to $999.0m.

“With recent portfolio additions and completed transactions combined with contractual rent escalators, we see continued financial growth in the balance of 2023 and beyond,” Carlino said.

“Our disciplined capital investment approach, combined with our focus on stable and resilient regional gaming markets, supports our confidence that the company is well positioned to further grow our cash dividend and drive long-term shareholder value.”

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