GLPI - NASDAQ

Greetings, and welcome to the Gaming and Leisure Properties, Inc. Third Quarter 2025 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today, Joe Jaffoni, Investor Relations. Please proceed.

Thank you, Latanya, and good morning, everyone, and thank you for joining Gaming and Leisure Properties Third Quarter 2025 Earnings Call and Webcast. The press release distributed yesterday afternoon is available on the Investor Relations section on our website at www.glpropinc.com. In addition to the third quarter press release, GLPI also posted a supplemental earnings presentation which highlights the events of the quarter, of recent developments and future considerations that can also be accessed at www.glpropinc.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. Forward-looking statements may include those related to revenue, operating income and financial guidance as well as non-GAAP financial measures such as FFO and AFFO. As a reminder, forward-looking statements represent management's current estimates, and the company assumes no obligation to update any forward-looking statements in the future. We encourage listeners to review the more detailed discussions related to the risk factors and forward-looking statements contained in the company's filings with the SEC, including its 10-Q and in the earnings release as well as the definitions and reconciliations of non-GAAP financial measures contained in the company's earnings release. On this morning's call, we are joined by Peter Carlino, Chairman and Chief Executive Officer at Gaming and Leisure Properties. Also joining today's call are Brandon Moore, President and Chief Operating Officer; Desiree Burke, Chief Financial Officer and Treasurer; Steve Ladany, Senior Vice President and Chief Development Officer; and Carlo Santarelli, Senior Vice President, Corporate Strategy and Investor Relations. With that, it's my pleasure to turn the call over to Peter Carlino. Peter, please go ahead.

Well, thank you, Joe, and good morning, everyone. We are particularly pleased to announce a really terrific quarter in which I think a lot of really good things have come together. As always, these have been thoroughly detailed in our earnings release. Nonetheless, there are 3 items that I think are worthy of spending just a little bit of time this morning that represent important elements of the GLPI story today. The first topic I'd like to highlight is our pipeline and our recent transactions. Very simply, in the last 60 days, we have announced 3 transactions. And while the market has given us a little credit for these deals, each of these has been -- is accretive and allowed us to deploy $875 million of capital at a blended cap rate of 9.3%. When completed, these transactions will add over 5% to our current annualized cash rent while also expanding partnerships with 2 existing tenants and furthering our initiatives in the area of tribal gaming. The second item is funding, which is something we get lots of questions about. We currently have over $3 billion of announced transaction activity in our pipeline. As you saw in our third quarter results announcement, we executed on $363 million of forward equity in this period at an average price of $48. Despite the size of our current funding commitments, given our current leverage profile, it is worth pointing out that we can fund the entirety of our future commitments solely with debt financing and still remain at approximately 5.1x leverage, the low end of our 5 to 5.5 range. So given the current valuation of our equity, the -- this path appears to be most appealing as it's unlikely we'll be tapping the equity market in this current pathetic range. Number three, the third item is Bally's. We get lots of questions about that. And I'd like to talk a little bit about our relationship with them. We have 2 very strong well-covered leases with Bally's, the development in Chicago, a ground lease on a soon-to-be-developed prime parcel of Las Vegas real estate and which you would know is the new home of the Las Vegas A's. Since we last spoke, a lot has transpired with Bally's, all of which has been very positive from our perspective. Bally's successfully completed its international iGaming transaction with Intralot, positioning the company very well from a liquidity perspective. Additionally, as we last spoke, Bally's has become 1 of 3 remaining bidders for 3 potential licenses, very lucrative licenses in New York, which whether we participate or not is a very good thing for them. And lastly, of core importance to us, significant progress has been made in Chicago in the development of that project. And we extended our first tranche of capital for the development earlier this month. So we step back and look at the Bally's relationship. We like the assets that we have. Coverage on our existing leases is very good. And the Chicago development has a very, very strong ROI framework. We see tremendous potential and opportunity in land in Las Vegas, and we see New York as a, as I said earlier, potentially material value-enhancing opportunity for us or for Bally's with or without us. So these have been very positive developments. I would like to point out that the progress in Chicago is significant, and the pace of construction has picked up dramatically. To that end, we publish photographs that give any interested among you an idea of just how things are looking. We've gone vertical, and we're going to keep that -- those photographs and the storyline updated, so you know at any moment where we are in Chicago. In Las Vegas, Bally's has published a site plan that encompasses what may be possible at the site. We are very pleased with what they have discovered or what they have laid out. And we may or may not participate as opportunities. It's unlikely that we will finance the entire project, but there are elements of that, profit-making elements, that I think we could participate in. So I'd stay tuned in Las Vegas as well. It's in a very good place at the moment. So with that, I'm going to turn it over to Desiree to give you things that really matter.

Thanks, Peter. Good morning. For the third quarter of 2025, our total income from real estate exceeded the third quarter of 2024 by over $12 million. The growth was primarily driven by increases in our cash rent of $20 million. And those are related to our acquisition of Bally's Kansas City and Shreveport, which increased cash rent by $8 million. The Chicago land lease increased cash income by $3.9 million. Bally's Tropicana funding increased it by $600,000, and the Belle development increased cash rent by $1.6 million. The Ione loan increased cash income by $900,000. The Joliet funding increased our cash income by $1.7 million, and the recognition of our escalators and percentage rent adjustments increased cash income by about $4.2 million. The combination of our noncash revenue gross-ups, investment and lease adjustments and straight-line rent adjustments partially offset those increases driving a collective year-over-year decrease of $8.4 million. Our operating expenses decreased $53.5 million, mainly resulting from noncash adjustments in the provision for credit losses due to a less pessimistic forward-looking economic forecast as compared to the prior quarter, as well as the fact that 2024 the provision included a charge for the establishment of the Tropicana reserve. [ For the company, ] just a reminder that we capitalized interest and deferral rent during the development period for financial reporting purposes. However, we add that rend back and deduct the capital interest in deriving our AFFO. Included in today's release is an increase in GLPI's full year 2025 AFFO guidance ranging from $3.86 to $3.88 per diluted share and OP units. Please note that this guidance does not include the impact of future transactions. However, it does include our anticipated funding of $150 million for the M Resort tower expected to occur next month and approximately $280 million of funding for development projects expected to occur during the fourth quarter, of which $125 million was funded for Chicago in October. From a balance sheet perspective, and this is probably the most important part of my comments, during the quarter, we sold 7.6 million shares under a forward sale agreement to raise $363.3 million or $47.87 per share. Additionally, we issued $1.3 billion in new bonds and redeemed our sole 2026 maturity of $975 million, thereby raising in excess of $680 million of capital for our development and acquisition pipeline. Our leverage ratio is at 4.4x, well below our target and historical levels. Given our current balance sheet position, the several year runway to fund our development projects and our annual free cash flow over that time frame, we have optionality to fund our future accretive commitments. As a reminder, our significant development projects pay us cash rent upon funding. In October, we extended the company's option and call rate to acquire the real property assets of Bally's Twin River Lincoln by 2 years from 2028 -- to 2028 from 2026. Our rent coverage ratios on our master leases are ranging from 1.69 to 2.78 as of the end of the prior quarter end. With that, I will turn it back to Peter.

Well, thanks, Desiree. And with that, operator, can we open the call to questions.

[Operator Instructions] The first question comes from Haendel St. Juste with Mizuho.

Desiree, I wanted to follow up on your comments on the balance sheet. Looks like you're well covered in terms of sources through your uses for now. But I guess would we -- how comfortable are you -- looks like leverage is going to tick up over the near term as you deploy capital. So I guess, how comfortable are you with your current liquidity profile? And how much would you be comfortable with letting leverage tick up here in the near term?

Right. So look, if I funded everything I have out there in the pipeline with debt, which obviously, that's not exactly what we intend to do. But however, if our equity remains where it is, we may just do that. We only get to 5.1x levered, right, once everything is annualized in. So I'd be very comfortable at that range. I mean, you can see in our supplemental, historically, we've been over that, right, up to 5.5x is our maximum range of leverage. So I am very comfortable with our current liquidity position and the funding of the transactions that we've announced to date.

Got it. Appreciate that. And then I guess, just more broadly, curious on the regional gaming trends during the quarter, foot traffic, revenue in light of the slowing macro? And I guess some broader commentary on how do you expect regional gaming to perform in this environment?

Well, any number of us could take that question. I mean, look, generally, regional gaming has held up very well, and our coverages remain pretty protected and see no threat to the industry whatsoever. I mean, look, given time, who knows what will evolve. But right now, the regional business is very, very strong. So -- Carlo, do you want to add something to that?

Sure. It's Carlo. I think when you look across our tenants who've reported to date and some who haven't, but when you look across those who have reported to date, you had a good regional report from obviously MGM, a good regional report from Caesars. I think when you look at the state level data, it all appears very solid and very steady. I know there were some concerns around promotional activity in those markets, but certainly not showing up in EBITDAR and has not showed up in coverage for those who've reported thus far.

And foot traffic?

Yes. I think foot traffic remains fairly steady as well in regionals. I think there's a broader malaise around the space that's created by numerous other things. But I think in regional markets, there hasn't been a dramatic change in demand as far as we can see.

The next question comes from Rich Hightower with Barclays.

So my first question just has to do with some of the puts and takes in expected fourth quarter development funding. I think there were some questions last night as to kind of what changed versus what the expectation was 90 days ago or even more recently. So just help us understand what changed, including obviously the impact of Chicago within that mix.

Right. So really, the biggest take, I would say, is that we've reduced our Chicago development funding by about $25 million and pushed that into 2026. So it's really just a timing adjustment. So my $338 million is now $280 million. Obviously, we funded about $35 million for the quarter. And so that has declined $25 million, that's it. But it's really just timing of coming out of '25 and going into '26.

Look, I think it's safe to add that some delay in the actual first payment or advance had to do with just papering the transaction. I'm looking at Brandon sitting across the table, who spent a lot of time working on the details to make sure it was all right and perfect given the scale of what's happening and so forth. But now that they're underway, the advances have begun, I think you can expect a regular flow of capital investment going forward.

Okay. Great. And then obviously, we all noticed the extension of the purchase option at Lincoln. So just tell us your latest thoughts, if you don't mind on that asset and maybe some of the pressures that asset might be facing over the next couple of years and how it factors into the timing and even the purchase price itself, if you don't mind.

Well, I'll take part of it, and we'll spread around the second half. Look, I think the -- you know perfectly well, as I think it's well publicized that getting approval from their lenders to get release on that property has been challenging. And look, though, we had a call right, we're not about to put our tenant -- our partner, if you will, under pressure and demand something that just simply is not in their best interest. We're perfectly happy to wait, and it's fine to assist in that manner. So it was nothing more than just simply taking pressure off that story and moving it down the road in some comfortable time frame.

Yes, Rich, I mean, I think on the second half, the Lincoln asset has had some stress because of road closures, bridge closures and the competing First Light project, which is being expanded somewhat we understand. I think that this is mutually beneficial to the 2 companies. For us, we'll push Lincoln out. We'll get a better look at that market and what's going on. We've got plenty of growth in place for '26 and '27 and pushing this out doesn't hurt us at all. We have our hands full for the next year, 18 months. And so as Peter said, for the reasons it was beneficial for Bally's, it certainly isn't detrimental to GLPI. And so I think this was a win-win accommodation to push it out to '28.

Yes, it's kind of an ace in the hole that we've got it, and we'll get it when its time is right. We feel good about that.

The next question comes from Jay Kornreich with Cantor Fitzgerald.

I guess just first off, there's been a number of announced deals lately from you in the past 2 months, as you mentioned. And I'm curious if there's been anything that's really been driving that for you? Or is it kind of just more coincidence that many transactions you've been working on just all got done around the same 2-month time?

Why don't you take that, Brandon?

Okay. Yes, I'm happy to address that. I think that's easy. I think it's the latter. A lot of hard work came together at about the same time. And so all those deals, while very different, were things we have been working on for a very long time and just came together in the quarter. So as you know, from our business, it can be a little lumpy from time to time, and this was a quarter where we just had a lot of things come in at the same time.

Okay. And then if I could just follow up on the funding for the Chicago Bally's development. Are you able to comment on how much funding you expect in 2026 and what portion may spill into 2027?

Yes. No, I mean, I'm not prepared to comment on that. I would tell you that it will spill into 2027, the funding, and we have said that. And when we come out with fourth quarter -- when we come out with 2026 guidance in February of next year, we will give you as much information on the timing of the funding for that project as possible.

Yes. Every day that goes by, it gives us a better focus on kind of where the project is. We stay very close to that construction process, have people -- our people in place, keeping an eye on how things are going. It's going well, but it's a large project. And every -- as I say, further we get down the road, the better we'll understand kind of what the final day will be. I know they're focused on getting the casino open as early as possible.

The next question comes from Barry Jonas with Truist.

You've now announced 2 tribal deals. How would you characterize the pipeline for tribal deals from here? Curious how the education process has been resonating.

Do you want to take that, Steve?

Sure. Look, I think from a tribal perspective, the education process is ongoing. I will say we're getting many more inbounds, and we're still placing outbounds. But I think that the cadence of those discussions is somewhat starting to turn. Part of that is just the ongoing reality that other folks and advisers in that marketplace are starting to see transactions occur and access to capital being afforded to their clients, so they're starting to call us more frequently. I think we'll continue to pursue transactions in that space. I think one thing we are focused on is availing the marketplace to the reality that our structure and our capital can be utilized in more than just greenfield sense in the tribal landscape. So I think that's something we are focused on trying to find uses that are either mature assets and people are looking to diversify into other areas of business, other lines of business or looking to refinance maybe debt that they have in place as opposed to just simply funding a greenfield project. So not saying we won't continue to look at greenfield projects, but we will -- we are continuing to try to find other uses for the capital that can be demonstrated to that marketplace to continue to further the education process.

Great. And then just as a follow-up, we just talked a little bit about the regional markets, but curious to get your wider views on the Strip today, given the recent softness we've been seeing. You commented on Bally's project there, but would you be open to meaningfully increasing your Vegas exposure if the right opportunity came along?

Well, yes, I mean, simple answer is yes. You said it right, the right opportunity, whatever that might be. We're not looking for anything there. We have a wonderful project in hand that offers us an opportunity to participate at some level should we choose. But look, we're always in the market for the next thing.

And Barry, this is Carlo. Look, I mean, you've covered the space for a long time. You've seen Las Vegas Strip go through many cycles, and this feels like just another one of those cycles. So when you're thinking long term like we are, I don't think a couple of choppy quarters in a row coming off of a very strong period like we saw coming out of COVID really changes the thinking much around investment into that market.

The next question comes from John Kilichowski with Wells Fargo.

My first question is just on the New York City casinos. How is your appetite to participate in those casinos change given the developments that we've seen in the quarter? There's been some news flow recently. And I don't know if there's been any more progressive conversations being had? Or are we in the same place that we were a quarter ago?

Well, I think we're in a little bit different place than we were a quarter ago given that there are now 3 left standing and 3 licenses to provide. No telling whether New York will actually issue the 3 licenses or whether they'll be issued to the folks that are still standing or some other change in process might occur that we saw back when resorts eventually came out in Queens. But I think that the appetite for New York is strong in the sense that these are really strong projects that promise a lot of EBITDA coming out of that market. And if we can participate in a prudent way in those projects, we'll certainly seek to do that. As most of you probably know, we do have a ROFR associated with the Bally's project. So we'll see how that plays out. I think it's a little early in the game for us to tell you if and at what level we might commit capital to that market. But it obviously remains a very attractive expansion market to not only GLPI, I'm sure everybody that's looking at investing in gaming.

And I probably should underline that there's no shortage of money chasing that opportunity. And I can't speak for Bally's, but I can well surmise that they're getting calls from all over the place, people wanting a piece of that opportunity. So it's a big deal. Good for them. We could take us -- a part if the right opportunity appears, but we're certainly not going to be the sole source of what they're going to require there.

Okay. Very helpful. And then my second one is back on the tribal deal. Could you just talk more about the return hurdles that you're looking for, for a tribal deal where there's less protections maybe involved versus the construction that you're working on or the fee simple acquisitions that you've been targeting?

Yes. I think from an underwriting standpoint, each of them are going to be a little bit unique because each one will present a different credit profile, just as in commercial gaming, we face that. And I think at the end of the day, the difference between the risk on the tribal and the commercial may not be as wide as some folks believe. I think when you dig into it, you can see that there are some challenges to tribal gaming, but they may not be as steep as you think, and there are some very well-capitalized tribes. So clearly, we're looking at a wider spread to the cost of capital than what we do with commercial gaming, whether it's 50 basis points or 100 basis points or 150 basis points. It's going to depend on the credit quality of the tribe and the opportunity. And I think we're also looking for increased coverage on those assets because of the nature of that investment, we want to make sure that the coverage is even stronger than what we have in our commercial deals. And as I think most of you know, we've always focused on coverage. We've done that since day 1 here. We've known that creating a healthy tenant landlord relationship for the term of the lease is very important. And so while we look at 2:1 coverage generally on commercial assets, if not better, you can assume with tribal we're looking to be much higher. So that's kind of where we are in the underwriting process on tribal as we sit here today. And I think each deal will be a little bit different. With Dry Creek, we went into a project that had some cash flow with an existing facility. It has some history to it. It has a very strong partner in Caesars branding at their top brand, Caesars Republic and a strong market in California. And you see what kind of rates we got for that transaction and what kind of coverage we wanted for that transaction. And I think it's demonstrative of how we'll view tribal gaming as we continue to roll this out.

The next question comes from Greg McGinniss with Scotiabank.

So I guess just quickly speaking on coverage. Is the expected rent coverage at Live! Virginia in that 2:1 range? And how did you go about underwriting that project to determine the expectations?

So as we always do, we go through a rigorous process to due diligence on what we think the market can do and what the demographics of the market are, the drive times around the property. And we do expect in the line of 2:1 rent coverage on that property as it opens.

Yes. Let me add. We're talking about the Cordish organization. These guys are highly capable, highly successful. The kind of folks you'd want to sign up for every deal imaginable given the opportunity. So it doesn't get any -- there's no better opportunity to partner with any entity in the planet than the Cordish organization. So we're delighted to be part of that project. No worries whatsoever.

Yes. I think in that market, we also did a lot of work on the legislative side, on the regulatory side to understand what the potential for expansion is going to be in that market. And we're pretty comfortable that, that Richmond market is pretty well protected at the moment. As Peter said, the Cordishes have a demonstrated ability to deliver projects on time and on budget. And so that's a project that's easy for us to get behind in that market with that kind of partner. And I would just add at 2:1, I think it's more of a downside base case scenario. If you ask the Cordish folks, I think they tell you that they think coverage is going to be much higher at that facility. But we don't underwrite on the hope certificate. We underwrite on the conservative side. And so at 2:1, we think we're going to be very well protected in that market.

Yes, I guess, given where their other leases are, that makes sense.

That's right.

And then just a follow-up on, I guess, a point of clarification on the Lincoln deal. If Bally's were to receive approval from the term loan lenders, the few remaining that they need it from, do you expect they'd elect to do that deal earlier? Or do they prefer not to have to pay off the $500 million of debt that would require?

I think that asks us to crawl into the minds of Bally's, which we obviously can't do, but I will acknowledge that you're correct in the way that the option works. If they solve the lender consent issue, Lincoln can come in well before 2028. There's been no change in the terms of how the option works only the date. So if Bally's can solve that and they think it's prudent to bring that capital in, they'll likely come to us and ask for that. I can tell you that we've done a lot of work in the market. We have our own views on how the market is going to perform and what's happening in that market. And if we're called upon to exercise Lincoln earlier than 2028, we'll be prepared to make that decision and have that discussion.

The next question comes from Ronald Kamdem with Morgan Stanley.

Just 2 quick ones. Going back to the Chicago project, I think you guys are providing a lot more transparency. I believe some of the upcoming activities were -- you talked about going vertical construction on the hotel, vertical construction on the casino and then sort of the cranes being delivered, Cranes #2 and 3. Just any sort of update on that piece of it and those progress?

Yes. There are 3 cranes now working on the projects, steel's getting erected. The hotel, I think, is -- there's 4 or 5 levels of concrete that have been poured. So it's approaching the first floor guestroom height. So there's definitely a lot of ongoing construction taking place on the property. And if you pull up the camera to take a peek or if you happen to be in Chicago, you can swing by. There are plenty of people, and there's plenty of action taking place every day there.

Great. Helpful. And then my second one was just on just the cost of financing, if you can remind us where you think you can issue 10-year? And how is that impacting or is that even impacting your sort of underwriting return hurdles for new deals in the pipeline? Just how is that shifting?

Yes. Sure. So obviously, as you know, the 10-year treasury is moving quite a bit lately. So the last I looked, it was around 4.1%, which means we would be issuing somewhere around 5.6% to 5.6% range. I think it bumped up over the last few minutes, hours, it keeps changing on me, but that's about where we would fund. And it is pretty consistent. We've been somewhere around the treasury of right around 4%, and our spreads to that haven't changed significantly. So our funding and our spreads that we're expecting to our cost of capital are really only changing on the equity side more so, not necessarily the debt side.

We're very hopeful that the market will realize that 160 or 165 basis point spread between the equity dividend yield and the 10-year issuance costs will be recognized by investors and...

Well said, Steve.

The next question comes from Chad Beynon with Macquarie.

Congrats on the recent activity. On the gaming calls this quarter and last quarter, there's been a lot of focus on the overall benefit from the One Big Beautiful Bill on the construction side and the CapEx side, obviously, accelerated depreciation. So I wanted to ask if -- how important is this, I guess, in your conversations with current or potential counterparties, just kind of the urgency and the benefit of spending money, I guess, in the next year or 2? And could that lead to more funding or lease deals in the near term?

So -- yes, it doesn't really come up in our conversations. Obviously, there is a tax benefit to our tenants to do that under the One Big Beautiful Bill. But it's a tax benefit. It's not a free cash flow issue for them. So it's not part of our discussions as to them wanting to do it quickly.

Yes. I don't think it's what's driving capital investment decisions at the gaming operators primarily. It may be something that if it's on the margin or on the edge, they might tip it over. But I think they're making those decisions based on the return of capital, not on tax depreciation. But as Desiree said, I don't think we've seen any of that. Steve?

Most of our transactions, as you're aware, we're funding the hard cost and we're owning hard cost. So the tenants are not in position where they own that physical property to be able to take the accelerated depreciation. So I think what you're hearing is the tenants in our discussions have been more focused on cost of capital and the rate at which they can access capital from us versus a lender and therefore, making the decision based on the cost of capital afforded to them, not necessarily on a tax deduction they can get.

Great. Appreciate that. And then on the strategic deal that was done, maybe just a broader one in terms of assets, country that maybe generate less than $50 million or less than $40 million of EBITDA and finding homes for these operators. Do you think there's going to be additional M&A or kind of changing of properties that could help some of these smaller regional gaming operators that you either work with or could work with in the near term?

So -- this is Steve. Two things. One, if -- and you might not have been going there. But if you were, I did see one note overnight talking about the $40 million EBITDA ROFR with Strategic. That was an aggregate number, so they've exceeded that through this deal. So if that was part of where you were going, I just want to clarify it for you. Separately, with respect to smaller assets and smaller operators, I do think we will see an acceleration of opportunities for them. The opportunity will be in sellers' willingness to get rid of what used to be called 4, 5 years ago by everybody noncore divestitures. I think that will become in vogue again. So the larger regional folks will look to sell off some of the smaller ones. I think one of the things that will be complicated for the smaller possible buyer will be access to capital. So I do think, given the right partner and the right relationship, if we have a number of smaller operators that we're comfortable working with, I do think there will be opportunities for those businesses to grow. But as you see, looking across the space right now, capital is constrained from some parties, and I don't think they'll be able to take advantage of the noncore divestitures in those cases.

The next question comes from Daniel Guglielmo with Capital One.

At REITworld last fall, there was a lot of discussion around the new administration and potential for gaming M&A. It didn't materialize in the first half, but it has picked up some in the second half. From your seat, what conditions do you think have led to that pick up? And do you expect them to carry through to next year?

I think most of the transactions you're seeing have been worked on for a number of months. They are not things that just happened in the second half of this year. So I don't think there's a perfect read-through for you on that front. The other thing I would tell you is most of the transactions that have been announced either by us or others in the space are more bespoke and they're one-off transactions. I think what you will see maybe now going forward is maybe more broadly marketed competitive bidding type process transactions, which historically aren't the ones that we typically are passionately winning. But I do think you'll start to see maybe some more broadly marketed type transactions that will feed off of the REITworld assumptions, I guess.

Great. I appreciate that. And then the second one, you mentioned that lease coverages have held up well. But for leases where coverage ratios are coming down, when you dig into those properties and talk with the operator, can you just give us a sense of if it's revenues lagging, labor coming in hot, both? Anything you have there would be helpful.

And so our rent coverage is really -- when we say tick down, I think they were like 1 to 2 basis points. It wasn't like -- we haven't seen any large changes. What we did see earlier this year was a decrease on the Pinnacle lease that we have with PENN. And that was more due to competition than really what was happening in any regional market.

Yes. Look, our coverages are strong. It's a long way to the bottom. So there's nothing that we're -- that gives us any pause at all quite candidly.

The next question comes from John DeCree with CBRE.

I think we talked quite a bit about some deal terms, coverage, et cetera, underwriting, but maybe some of the less exciting ones like initial lease term and master lease or single assets. So the Cordish transaction in Virginia, can you talk a little bit about the negotiation or thoughts on keeping that as a single asset lease versus combining it with the other leases? And then the initial term, 39 years is what you've done with Cordish in the past, but it's quite a bit higher than some of the other leases we've seen in gaming. So curious to hear your thoughts there if that's a significant negotiating point or not.

Yes. Thanks, John. I mean I think to your latter point, the longer lease term is mutually beneficial. I think it shows that Cordish is investing in these deals for the long term, and it's a generational investment rather than quick in and out. And so they're looking for long-term certainty in the lease, and we are as well. So I think that mutually beneficial lease term to have is the longer leases. Your initial question on negotiation with the Cordishes -- I'm sorry, John, what was the question there?

The decision or negotiation point to keep it as a single asset lease versus combining it with Maryland and Pennsylvania.

Yes. That's more just structural. The Cordishes have a different partnership in Virginia with the Bruce Smith Enterprise. And so there's not an overlap -- a perfect overlap of the partners in those deals, and therefore, Cordish can't combine those deals and have one risk to the other because there's not the same ownership structure. So that's just not a possibility for those trends.

And that applied even in Maryland versus Pennsylvania and previously as well.

[ It's a different ] partnership group.

That's correct. So Pennsylvania master lease, the Maryland lease and the Virginia lease will all be separate single-tenant leases. Pennsylvania, obviously, has Westmoreland and Philadelphia and those cross-collateralize each other. But the ownership groups in Maryland and Virginia are different. So...

The next question comes from Chris Darling with Green Street.

I'd love to get your thoughts on regional casino values and how they might have evolved over the course of the last year. As I think back through the past several commercial sale-leaseback deals you've done, they've all kind of been in roughly that 8.25% cap rate range. And I wonder if that really reflects just competitive market dynamics or it's more a reflection of GLPI being one of maybe the only bidder in some of these cases?

I think it's going to be deal specific. But I think in -- in many cases, I think that the pricing pressure that you would get, whether you were the only bidder or a competitive bid is only probably slightly different from our perspective. We're going to be a disciplined buyer either way. The market is not unintelligent. Everyone is banked by someone who knows where all the comps have been and where everything else is traded. So whether someone brings us a deal and says, "Hey, you're our favorite guy, we'd love you to buy this, before we go shop it." They're still not going to then give us a 200 basis point spread because we're nice. So the market is going to dictate where pricing goes. We all recognize where that should be, and we're always going to look to get a spread to our cost of capital. So that's just kind of how things will evolve.

Look, I think you've heard us say before, we don't like auctions. I like to think the winner loses often. And so it's never our goal to be the high bidder on anything. So there's a range of things that we would consider and that we would offer that make us desirable, but not -- but the absolute lowest or highest price, if you will, is never our goal.

All right. Fair enough. And then maybe just a quick point of clarification on something mentioned earlier. You discussed a view around your share price, your equity cost of capital today. Does that impact your willingness to pursue incremental new deals from this point going forward? Or does it really just influence how you would finance any future deals?

I think it really just influences how we would finance future deals or what the spread we would be looking for to our cost of capital.

The next question comes from David Katz with Jefferies.

Covered a lot already, but I wanted to go back to New York, if I may. The concession there is -- or the license is 15 years, I believe, instead of 30, right? And I'd love just your perspective on what that does to the parameters of your participation. And I think, Peter, you mentioned earlier there's any number of sources of capital that might be available to them, right? They have a partner in that bid, who I assume is a funding partner, too. How does that sort of change your opportunity set also, please?

Go ahead.

I'll comment on the first part, David, on the licensing. I haven't dug into that in tremendous detail, but I will point out that licenses in many jurisdictions renew every 3 years, every 5 years, every 10 years. So the fact that you have a 15-year initial license period, I guess I'm not reading too much into that. In other words, if you put $4 billion, $8 billion into the ground, the thought that you'd lose a license in 15 years and they'd relocate that or do something with that license seems outlandish even in a smaller market where you might invest $400 million. And it's inconsistent with how any other state regulator has approached a renewal of a gaming license. So we're going to take a closer look at that given that that's been highlighted as a rationale for why MGM might not want to do Yonkers or didn't want to do Yonkers. But on its faith, I think that we're less concerned with that than we are of getting the spend right, getting the facility right, understanding what the market is and the EBITDA that's coming out of it, what the competition is going to be. I think all those things may be more important than that 15-year term. That being said, we are going to dig into that and take a closer look to make sure it's not something more than what we think it is.

The next question comes from Smedes Rose with Citi.

Covered a lot of territory, but I just had a couple of just quick ones here. I noticed that the Bally's added a corporate guarantee for the Chicago casino. And I was just wondering, was there something in particular that triggered that? Or is that something you were pushing for? Or kind of what was -- I mean, I think it's positive for you, right? But just kind of curious what caused that.

Contractually triggered, Smedes. That was a negotiated term that when Chicago came into the restricted group, which is what they did following the Intralot, Gamesys merger, we were to get a corporate guarantee on that. So that was already prenegotiated.

And then I just wanted to go back, you talked about funding at the beginning of the call on how you could use all debt. But presumably, you want to have an equity mix in there. I guess, I'm just thinking how do you -- can you just remind us how you guys think about issuing equity. Some companies are kind of -- they have an internal estimate of NAV and they don't want to issue below that. Others are -- it might be below NAV, but it's still accretive. And just how do you think about equity issuance?

Yes. So we do look at it very opportunistically, right? So we do look at the cap rate of where we're trading and what that spread would yield to whatever we are attempting to finance. I wouldn't say that we put a floor on it per se, but certainly, I can tell you at these levels, we have 0 interest in funding with equity.

Smedes, I'll add to that. You saw, obviously, we executed on the forward closer to $48. Since that, subsequent to that, we've announced a couple of transactions that are AFFO accretive. So you could kind of think about that floor as potentially moving higher in the absence of an immediate need for equity, which we don't have, as Desiree outlined earlier.

The next question comes from David Hargreaves with Barclays.

I apologize if this is really a simple question, but you guys have given us a range of rent coverage. And I'm just wondering if that's calculated based on reported EBITDAR or some adjusted EBITDAR? Are you just using cash rent? Are you making adjustments to these numbers? How do you -- what's the [ comp? ]

Right. So those -- they're -- contractually, they must be reported to us by our tenants, and they are based off of their actual EBITDAR as defined in each of the lease and the actual total rent that's being paid. There's a small adjustment in the Pinnacle lease because there's an asset that is not included in their coverage ratio, but it's very minor adjustment on that lease, but all the other leases are all of the properties, all of their EBITDAR and divided by the total rent that's being paid.

But is this just the property-level EBITDAR? Or are you looking at it on a consolidated basis.

Yes. It's the properties that are in that lease. So if it's a master lease, it's all of the properties that are in that lease. It is not at a corporate level.

So for example, with Bally's, it wouldn't have been factoring in any contribution from Gamesys or anything like that?

That's correct.

The next question from Robin Farley with UBS.

I just wanted to circle back to the New York project. I know you mentioned you're sort of evaluating how to weigh a 15-year term. And I know other operators that pulled out of bidding cited the risk of New York legalizing iGaming. I guess just given some of those factors, would you -- how would you think about the rent coverage ratio that you would need in New York compared to maybe a typical 2x?

We're looking around the table to see who wants to take that one.

I can tell you, I don't envision us doing anything upfront in New York that would be based on anything close to 2x. I think our -- we all know that there are a lot of things that are at play here, there's construction schedules, there's construction budgets, the number of years it could take to build in New York. So I think if we were asked by anyone to do something in a very accretive way upfront, it would be massively more coverage than 2x. We would never consider doing something at that level. I think beyond that, once you get out, I think when we're all sitting here on the call 4 years from now, I think we'll have a much better vantage point into whether iGaming has transpired, has not transpired, what the profitability is of those businesses. and I would still venture to say, based on what we've seen in Las Vegas as far as the need to refresh these massive mega resort -- casino resort properties, I think we would look at New York to be a pretty similar experience with these massive mega casino resort properties. So I think we would continue to have a level of cushion that we would build into our rent coverage underwriting.

Yes. I also think a lot of the projects that you've seen fall by the wayside in New York failed the Community Action Committee hurdle. So I think that ended up being a much bigger hurdle than maybe even New York could realize it would be. And therefore, a lot of those folks, I think, would still be interested despite iGaming and unknown tax rates and things like that, had they passed that hurdle. And that was the last and final for many of these applicants.

Thank you. At this time, I would like to turn the call back to Mr. Peter Carlino for closing comments.

Well, thank you all who have dialed in this morning. I think and hope you get the idea that we're quite happy with the way things have been going here at GLPI. And we were anxious to tell our story, and we'll see how it plays out. But stay tuned. I think there's good things ahead. With that, operator, and all, thank you very much. Have a great day.