Gaming & Leisure Properties' Q3 2025 Earnings Call: Contradictions Emerge on Bally's and New York Casino Strategies, Chicago Project Timeline, and Liquidity Management

Business Commentary:

• Pipeline and Recent Transactions:
• GLPI announced three recent transactions, deploying $875 million of capital at a blended cap rate of 9.3%, which added over 5% to the company's annualized cash rent.
• The transactions expanded partnerships with existing tenants and enhanced initiatives in tribal gaming.

• These deals were accretive and reflect GLPI's strategic focus on expanding their portfolio and leveraging their capital effectively.

• Funding and Leverage Profile:

• GLPI executed on $363 million of forward equity in Q3, raising capital to fund future commitments and maintain leverage below their target range.
• The company has a planned funding runway adequacy for several years, with significant free cash flow to support future obligations.

• GLPI's equity valuation and leverage profile are influenced by the cost of capital and funding strategies.

• Bally's Relationship and Development Projects:

• GLPI's relationship with Bally's involves significant developments in Chicago and Las Vegas, with coverage on existing leases remaining strong.
• The Chicago development project has seen construction progress, with significant advances in vertical construction and site preparation.

• GLPI anticipates further growth opportunities in the Chicago and Las Vegas markets, with ongoing positive developments in Bally's financial position.

• Impact of Macroeconomic Conditions and Regional Gaming:

• Regional gaming has held up well despite macroeconomic challenges, with coverage ratios remaining protected and no apparent threat to the industry.
• Coverages for GLPI's tenants remain strong, with no significant changes in foot traffic or revenue trends.
• The regional gaming industry's resilience is attributed to its fundamental strengths and the long-term outlook, despite broader economic conditions.

Contradiction Point 1

Appetite for Bally's Projects and Partnerships

It involves a shift in the company's stance regarding its interest in partnering with Bally's on projects, which could impact strategic decisions and investment plans.

How has your appetite for New York City casinos changed with recent developments? - John Kilichowski (Wells Fargo)

2025Q3: Peter Carlino: We are in a different place than before, with three licenses left standing and New York's interest in multiple licenses. We need to assess the 15-year term of the license and see how it impacts our participation. - [Peter Carlino](CEO)

What is your view on the risk-reward tradeoff for committing to Bally's projects, considering their leverage and funding concerns? - Brad Heffern (RBC Capital Markets)

2025Q2: Brad Heffern: Your thoughts on the risk-reward balance for committing to Bally's projects, given their leverage and funding concerns? Steven Ladany: We're open to discussions with various parties, including Bally's. - [Steven Ladany](COO)

Contradiction Point 2

Liquidity and Leverage Strategy

It involves the company's stance on liquidity and leverage, which are critical for financial planning and investor expectations.

How comfortable are you with your current liquidity, and how much would you be comfortable allowing leverage to increase in the short term? - Haendel St. Juste (Mizuho Securities USA LLC)

2025Q3: We are very comfortable with our current liquidity position and the funding of announced transactions. - [Desiree Burke](CFO)

Can you provide an update on your current liquidity position and how it's affected by your capital expenditure and acquisition strategies? - Steve Symington (The Motley Fool)

2025Q1: We are very comfortable with our current liquidity position. - [Desiree Burke](CFO)

Contradiction Point 3

Chicago Project Progress

It relates to the progress and challenges faced in the Chicago project, which is a significant ongoing initiative for the company.

Can you update us on the Chicago project's progress? - Ronald Kamdem (Morgan Stanley, Research Division)

2025Q3: There are three cranes working on the project, with steel erection and concrete pouring up to the first floor guestroom level. - [Steven Ladany](CDO)

Can you provide an update on the Chicago project? - Joeseph Jaffoni (Investor Relations)

2025Q1: The project started in July and faces delays due to issues like a wall collapse and complex city approvals... As of the call, 272 caissons out of 331 are installed, with steel ordered and expected in July. - [Peter Carlino](CEO)

Contradiction Point 4

New York Casino Appetite

It involves the company's interest in participating in New York City casinos, which could have significant implications for expansion strategies.

How has your interest in New York City casinos changed with recent developments? - John Kilichowski (Wells Fargo Securities, LLC)

2025Q3: We are in a different place than before, with three licenses left standing and New York's interest in multiple licenses. We need to assess the 15-year term of the license and see how it impacts our participation. - [Peter Carlino](CEO)

How does the 15-year license term in New York affect your participation? - David Katz (Jefferies LLC, Research Division)

2025Q1: We're extremely excited about the opportunity in terms of what it could add to our geographic diversification. - [Peter Carlino](CEO)

Contradiction Point 5

Chicago Project Funding Adjustments

It involves changes in funding expectations for the Chicago project, which could impact financial forecasts and investment decisions.

What changed in Q4 development funding expectations compared to previous ones? - Richard Hightower (Barclays Bank PLC)

2025Q3: We reduced our Chicago development funding by about $25 million and pushed it into 2026. It's a timing adjustment, not a funding reduction, and we funded about $35 million for the quarter, with more to come. - [Desiree Burke](CFO & Treasurer)

Can you break down the $400 million in funding by project and clarify if schedule delays have impacted the amount? - Brad Heffern (RBC Capital Markets)

2024Q4: The $400 million contemplates the Belle project, the Ione funding, and Chicago. It does not include the PENN transactions as their timing is uncertain. - [Desiree Burke](CFO & Treasurer)