Gaming and Leisure Properties ‘(GLPI) first report to investors fell short of its expectations, but GLPI expects long-term growth.
GLPI reported $207 million in net revenues for the second quarter, which is $4 million less than projected. It also reported an adjusted EBITDA of $180 million, and 39 cents per share in earnings.
GLPI said the Hollywood Casino Columbus and Hollywood Casino Toledo, both managed by Pinnacle Entertainment, underperformed for the quarter, leading to the $4 shortfall.
GLPI is the nation’s only publicly traded REIT whose properties are casinos only.
In April, it paid $4.75 billion to buy Pinnacle Entertainment’s 35 gaming properties, across the nation, and its second quarter report was its first as owner.
GLPI CEO Peter M. Carlino told investors the REIT is “more diversified by both tenant and geography” and has more stable cash flow.
Carlino said the company will guardedly grow over time, as it buys more properties, but only after ensuring the numbers add up before adding more casinos to its roster.
GLPI arranges what it calls “triple-net leasing” deals with gaming operators, which require them to pay all property costs, including taxes, insurance, and maintenance, as well as rent.
GLPI leases 18 of its casinos to Penn National Gaming, and 14 more to Pinnacle Entertainment, which now is GLPI’s casino-operating entity. A GLPI subsidiary operates two more casinos, while Casino Queen operates another in East St. Louis.
GLPI said it intends to sell up to $400 million in common stock at market rates as needed to finance the deal.
GLPI said it likely will close a deal to buy the Meadows Casino and Racetrack in Pittsburgh and lease it to Pinnacle Entertainment, which is optimistic about the future, despite a recent revenue decline.
“We are very pleased with the progress made across our portfolio of businesses and at our Las Vegas service center with the execution on our operational improvement initiatives so far in 2016 and are very optimistic about the future of Pinnacle Entertainment,” Pinnacle Entertainment CEO Anthony Sanfilippo told investors.
Las Vegas-based Pinnacle reported a 2.7 decline in net revenues of $566.2 million for the second quarter, down from $582 million last year.
It cited unusual events for the revenue decline, including localized flooding, severe rain storms, and road construction as a significant factor in the decline.
Thanks to cost-saving initiatives, though, Pinnacle reported a 1.7 percent improvement in EBITDA at $157 million.
