Kara Smith - IR Peter Carlino - Chairman and CEO Bill Clifford - CFO Steve Synder - SVP of Development Desiree Burke - CAO Brandon Moore - SVP, General Counsel and Secretary.

Steven Kent - Goldman Sachs Shaun Kelley - Bank of America Merrill Lynch Steve Wieczynski - Stifel Nicolaus Joseph Greff - JPMorgan Chase Carlo Santarelli - Deutsche Bank James Keller - Bank of America Merrill Lynch Felicia Hendrix - Barclays Capital Tayo Okusanya - Jefferies.

Greetings. And welcome to the Gaming and Leisure Properties First Quarter 20145Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to introduce your host, Kara Smith of ICR. Thank you. You may begin..

Good morning. We would like to thank you for joining us today for Gaming and Leisure Properties first quarter 2015 earnings call and webcast. The press release distributed earlier this morning is available in the Investor Relations section on our website at www.glpropinc.com.

On today's call, managements' 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 from those discussed today.

Examples of forward looking statements 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 these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP financial measures contained in the company's earnings release.

On this morning's conference call, we're joined by Peter Carlino, Chairman and Chief Executive Officer; and Bill Clifford, Chief Financial Officer of Gaming and Leisure Properties, Inc.

Also joining are Steve Synder, Senior Vice President of Development; Desiree Burke, Chief Accounting Officer; and Brandon Moore, Senior Vice President, General Counsel and Secretary. Now I'd like to turn over the call to Peter Carlino.

Peter?.

Thank you very much. And good morning to everyone who have joined this morning. We are of course pleased to report a solid quarter. And I must say as we sat here thinking about this call, we struggle with the same thing we are still adjusting to and that is what to say in a triple-net REIT business when the check is arrived as expected.

So happy to report that PENN appears to be doing very well. So our underlying revenue looks quite safe and secure. So we had a good quarter. We obviously expect some questions about the Pinnacle statement this morning. Essentially we've said what we are going to say in our public release, I'd say that we do remain engaged.

That our objective is much the same as it was when we first became public with the notion. And that we are focused on creating balanced, and I emphasized that word, transaction that would be good for Pinnacle shareholders and good of course for our shareholders.

So that remains our objective and if and when we have something further to report we will let you know.

Back to operations, Bill, do you have any comment at all just a couple of notes?.

No. I think, listen, I think results are very much in line what we expected. We do have a little bit; obviously we have some extra expenses reflecting our legal expenses around both the Pinnacle transaction as well as the Meadows. That's really about the only thing that I think is really of note in the quarter.

But we will take any questions anybody has on that. Now I guess -.

Brandon, any comment at the moment. .

No..

Okay. Well then we'll operator open the floor to questions. .

[Operator Instructions] Thank you. Our first question comes from the line of Steven Kent with Goldman Sachs. Please proceed with your question..

Hi, good morning. So since we can't too much about that trans, the other transaction which we won't mention, other -- can you just talk Peter though about other opportunities away from gaming? On and off you've talked about this.

How do you start down that process? Have you started to hire key people? I just want to understand what to expect over the next couple of years..

Well, couple of years is a long stretch in just about any business. As a public company I think quarter-to-quarter so we are focused on what we are going to be able to deliver in the near term.

Obviously thinking about the four term, the answer quite candidly is that we are giving that very little thought right now unless and until we run the table on all the opportunities in gaming. We have as I think we've said last quarter looked at the couple things in the general leisure business that have been brought to us.

And look cash is cash and cash flow is reliable is perfectly acceptable to us. But we are not seeking out non-gaming opportunities. So we looked at the couple, if they made sense we would have pursued them but frankly we are seeing real opportunity in the gaming side. And I think we should stick to our knitting unless and until we have to go elsewhere.

But we are not -- we are a long way from that right now. .

Okay. Then just as a follow up. Upside incentives on the lease payment front, if you had to put a number to it how strong would you need the overall regional markets to perform to really start to see some of that.

If you have to get back to a certain period of time 2006, 2007 period or is it a percentage of growth from currently depressed earnings -- depressed results?.

Yes. We don't need much for us to continue to receive improvement in the rent stream relative to the escalator. We just need PENN EBITDA to rent ratio to be north of 1.8x. Modest improvement either on the revenue side or on the -- obviously the margin, either one of those would ensure continuing escalators.

So -- we are right on the cuts -- I think we are at 1.79 something like that. I mean its 1.77 something, rounded up to eight but of course I have to get to eight. So from that perspective I don't -- we see the escalators being completely doable. And we are encouraged by what we are seeing in regional gaming trends.

I think as I said on a number of times, and hopefully on last call, we are really looking at the second quarter to kind of give us a really good handle on where we think regional gamings are going. There is -- I mean out there in the five year period I mean it's fairly easy.

It's we just need another component to the rent is the variable component relative to land rent which is at 4% of revenues. That one is pretty easy; it just goes right up against the test where we were when we spun out the company. So I guess going back says we need to get back to 2013 levels in order for that not to be adjustment.

Obviously depending where revenues are relative to 2013 you obviously better revenues as more rent and less revenues would be less but again even that's going to be somewhat normalized by the fact that it's a five year period.

So we've still got several more years to go before we really can get a good handle on exactly what will happen with that rent reset..

Our next question comes from the line of Shaun Kelley with Bank of America Merrill Lynch. Please proceed with your question..

Hi, good morning, everyone. Thank you for taking my question.

Peter, I'm going to try one on the comments regarding Pinnacle but there is one sense in here, do you said that you are impressed with the results that they continued achieve? And I am curious if that is particularly over some of the near-term as it relates to Lake Charles just given some of the sentiment around that? Or is there anything you could point to us in terms of what exactly you are impressed by? That would be really helpful..

Well, look, if I had to be proprietor I probably couldn't share it anyhow. But, no, I think generally coming off a very strong quarter, we feel pretty good about the asset, base that they have -- they've got some exceedingly attractive assets and performance has been good.

Bill, do you want to take a whack at that?.

Listen, I think what you are seeing that the performance that they have shown specially around their margin improvement as well as their top line levels, it is generally been broad based across all of their properties. Certainly the Charles has absolutely done incredibly well.

We are not naïve enough to realize the verdict is not completely done there. But certainly that what you've seen today has been incredibly impressive, at least from my perspective.

I think they've done a great job with their property and the results, and the margins and when you look over the last several years and even the most recent quarters I think there is nothing -- I would say that they have done bang up job operationally. .

Great. Now I appreciate guys answering that. And then my second would just maybe to switch gear, is there anything you can give us and I appreciate that it's also sort of in litigation but on the latest for the Meadows and just a chance if that could actually work out amicably. .

Brandon?.

Yes. At the present time the court has delayed cannery's motion to dismiss which was originally scheduled to be heard tomorrow on the 5th to July 22nd and at the present time we are engaged in active discovery of both side of the fence on the matters of transaction and that be really where that stands.

I think is it makes its way to the court system more patient then we are going to sign what we see in discovery and we'll see where we are..

Our next question comes from the line of Steve Wieczynski with Stifel. Please proceed with your question. .

Hey, good morning, guys.

So, Peter, Bill, I guess can you ask -- I guess the question is, are you still out there looking at -- are you still looking at other potential transactions? Can you give us an update in terms of, are operators a little bit more willing to talk to you and are multiple little bit more attractive than they were call it four five months ago..

I don't think anyone's any more or less willing to speak with us. I think to make this kind of judgment to spin out real estate is not a minor choice. It is kind of once in a lifetime choice that you get to make. It's great for shareholders as we witnessed with PENN. It's a terrific move to enhance value for shareholders.

But it is not one that any company is going to take lightly. So these things will never move overnight. I mean we don't get phone calls begging people to come out and see him and suggest they want to spin-off their real estate. I mean somewhat facetious but as you can imagine they are very complex transactions. And not taken lightly.

That having being said there are still potential. I think I mentioned that earlier. We are satisfied that there is a future here. And we are going to continue down that path unless and until we find that perhaps there isn't, but right now we are very optimistic. .

Okay. Then make sure I question that I don't think you are going to answer, but I guess maybe could you comment on your good friends at PENN made a pretty big transaction on the strip, one of the questions that we get a lot is, is that an asset that you would potentially be interested in working with the Penn folks or with --.

Well, I mean I think it is safe to say we are anxious to work with PENN on any transaction that makes economic sense to them and to us. For the momentum they have found another means to do that. And I think it is terrific for all the reasons that I think we've recognize that PENN wanted to be there for a long stretch of time.

And I actually believe that this is the right property at the right price at the right time. And should be terrific for them. But again they are going to function in their best interest and I guess it didn't include us on this round. But, look, we are still there ready, willing and able to participate when and if asked. .

I'll just add in fairness. The property they acquired it has really low levels of EBITDA. And therefore entering into a separate lease transaction on that unique property would have been incredibly difficult to accomplish in an event like this. And so I would -- I would and who knows where those growth opportunities are, and I can't speak for them.

But they maybe opportunities, there are still maybe opportunities down the road for them after they have improve the results which I have every confidence that they will both on the margin side as well as being able to drive revenues. But down the road it can make an enormous amount of sense to do a transaction.

There has been no discussion to do that. This is -- and maybe this is all wishful thinking on my part but I do think that the opportunity for us to potentially get involved with them on that asset is still out there and a possibility..

Our next question comes from the line of Joseph Greff with JPMorgan. Please proceed with your question..

Hi, good morning, guys. I empathized with your earlier comments Peter about what to say on this call asking the first question on this call is really not more to ask so I will take a step at a couple of things here. .

Ready to struggle, Joe, think about what can we say?.

One, obviously Pinnacle and Meadows I am sure are taking up a huge amount of your time.

How warmer are other potential deals right now? I am presuming there is sort of a huge backburner in terms of your priority but are there any other things that you are looking at? Whether they are small or medium size and then part two of the question, you mentioned in a press release that you guys were in productive substantive discussion with your friend at Pinnacle.

Can you talk as to when those discussions or engagement kind of be started and maybe when they may have shared additionally with you some of these tax BC data and information that you guys are going through. And that's all for me. Thank you. .

Joe, I would like to say more but frankly I think it is best we do not. You can assume that conversations have been productive and encouraging. To add a few more additives if you like, but can't get into specifics right now. We just simply cannot.

And as to your question beyond that as to what else is out there, how warm, hot or whatever, I think I took a stab at answering that before. I mean this is the -- these are slow moving time that decisions one plants a seed, has a conversation and then stays out over a period of time.

But again the frustration of these kinds of calls, we remain engaged, focused, encouraged and all other kind of stuff but that's about all we can say at the moment. And if that day comes that we feel differently we will let you know. I think over the years we've established a pretty good, I hope reputation for straight talk.

I mean we really never want to disappoint the people who follow us, mislead in anyway. So we are pretty careful about what we say. But even the framework that I have created pretty well characterizes the way we feel about it. .

Our next question comes from the line of Carlo Santarelli with Deutsche Bank. Please proceed with your question..

Hi, everyone. Thanks for taking my question.

If you guys could speak more broadly maybe about the context of how you think about acquisitions? Obviously, I think most of us in the call remember during the Penn time your mandate for how you think about returns and stuff, but in the new role has your level of accretion for potential transactions changed? And does it change based on the scope or size of the potential transaction?.

It is a question. Let me take a whack at it is. We do something stupid to make an important deal, the answer is absolutely not. We have bring the same discipline to this business that we brought for years to Penn.

I think I did say in my opening comments that we are discussing would be very, very good for Pinnacle shareholders and their judgment and very good for our shareholders and that is the essence of the sensible transaction. So, no, we haven't lost our senses. .

Okay. And just sorry, Peter, no, I wasn't insinuating that, I was thinking more along the lines of maybe the metrics with which you use the value accretion so to speak. .

Well, we always -- the metrics we look at as we look at FFO and AFFO per share. So post transaction those metrics haven't changed. I am not going to give you, listen, it will be accretive, and we are not going to do non-accretive transaction. At least not knowingly and so therefore that's probably about as far as I am going to go. .

Our next question comes from the line of James Keller with Bank of America Merrill Lynch. Please proceed with your question..

Hey, guys, how are doing? Just one that question, when you are thinking about Pinnacle or any transaction for that matter.

Can you just tell us sort of what are your current view on the balance sheet is? What your leverage tolerance is? And I guess importantly how focused are you on ratings one way or the other?.

Well, we are very highly focused on keeping our balance sheet in a very solid position. The goals that we set out ourselves originally at 5.5x acknowledge that we were little above that. We are half way back down. And whatever transaction we do we would never take our leverage higher than six for sure.

And I think candidly we would expect to have a roadmap that in short order and not that we have a lot of free cash flow in post transaction because the fact that we are dividing out 80% of our free cash flow. But with the 20% remaining we would expect to have a transaction we get us back to the 5.5 within a year or two of the transaction. .

Our next question comes from the line of Felicia Hendrix with Barclays. Please proceed with your question..

Hi, good morning. Peter, just going back to the Tropicana, you might have answered this implicitly or in your other discussion about that property. But was that on your radar screen at all or because of the low level of EBITDA? Just didn't kind of pass your --.

Did you mean GLPI -- [Multiple Speakers].

No, that's fair when I say your -- in different places but actually GLPI, yes. .

So, not at all. Not at all. This doesn't fit for the reasons, I think they are pretty well stated and obviously the subject never came up in any discussion with Penn, they didn't call and say what can you guys do for us. So, no, not even a little. .

Okay, helpful. And then -- and this is either for you Peter or for Bill or maybe for both.

I think it would be helpful for everyone to understand is when you look at -- when you kind of get involved in different discussion, what are some of the biggest getting factors? Is it the tax basis issues or there are other issues? What has consistently come up to be the biggest hurdles for you?.

Yes. I think the big challenge two pieces. And there is no doubt well there are probably three. The first piece is that the other side has to strategically decide that they are prepared to either sell the property or hold or split their property between the real state and their operations.

And that's kind of a threshold issues before you really get anywhere.

The next piece I would say is and not necessary in the right order of important is, the tax consequences of the separation are enormous amount of work and an enormous amount of really crazy thought process sometimes it's required to do that in a way that you don't destroy the benefits for the separation.

And those having -- obviously having a buying someone's land and building and having an enormous amount of money owed to the federal government to get transaction done, so probably destructive that sometimes it just set to can't work.

You might start off making a can but by the time you are done you realize that you really haven't accomplished anything except paid -- not that every good American shouldn't pay more taxes but that's really all you have accomplished. And then clearly the last element is to getting to evaluation everybody is in agreement of.

So I think those are three elements. Not exactly rocket science but.

No. But I mean you guys all had experience doing deals and wearing other hats in the past, now that you are under the structure it seems like the tax consequences are probably the hardest part.

Is that fair?.

Yes, well, it's certainly the one that's the most challenging right. The first one is fairly easy; it is just mettle state of mind that somebody is gotten in their head around the concept of separating. Their real estate from the operating side.

And once --and then valuation is simply getting to a point where you come to a consideration that the other side like, the tax component is without a doubt the most challenging from just getting your heads around what it is and how much it is. .

And just another factor that we've talked in the past. There are numbers of folks who want a holdco sale, I mean they just want to sell the property and as we've said before the trick with that is to approach a transaction with pocket in hand.

We have learned that is a -- is the only sensible way to do it, so you know what the outcome is when you head down that path. And obviously in a holdco situation, the tax implication because at sometime you still have to separate everything right out correct. .

Our next question comes from the line of Tayo Okusanya with Jefferies. Please proceed with your question..

Hi, yes, good morning. I just wanted to go back to the world of acquisition.

And if you could just get little bit more detail around pricing in regards to what you are seeing in the market and generally what kind of prices or that is in EBITDA multiple or cap rate that transaction seems to be consummated at?.

Well, there has been a whole lot of consummation -- not a lot of consummation going on. So I think we will have some effect on influencing kind of how that happens.

Bill, do you want to opine?.

Yes. I don't -- I really can't. I hate to say this, currently we started -- we initially had goals of 10, we've moved from that obviously with previous public announcement. We are not going -- I don't think there is obviously everybody -- I am not continuing that your question is trying to get what we think for Pinnacle.

But I don't how I really answer that question knowing with that answer is and then think about how I answer your question without getting half to close to the same number. So I am going to refrain answering that question right now. .

Yes, again I repeat that we are looking for an accretive transaction to our shareholders. And one that our shareholders would be quite pleased with. At the same time, the balance is to make an offer and get to a place where the other side is equally happy. So that's going to be a transaction by transaction kind of situation.

Because they are all different..

Our next question comes from the line of Shaun Kelley with Bank of America Merrill Lynch. Please proceed with your question..

Hey, guys, I know some people are struggling to ask question but I actually had a follow up which is -- I was actually curious Peter for your thoughts on separate situation, you guys are pretty generous in just telling us what you really think.

And there is obviously an active of shareholders out there is proposed REIT structure for MGM and since it is public and it is out there, just curious at a high level kind of what your thoughts are for that REIT process and also just for real estate on the Las Vegas strip in general?.

Well, Shaun, I don’t think we are prepared to comment on that. We have enough kind of on our plate right at the moment to keep us game fully occupied. That is interesting, could be an answer for those folks but I honestly can't speak to them. We have not had any contact with MGM.

And in fairness, I'll be just be a friend, we have not spent any time truly digging into the details of their proposal to understand the strengths or weaknesses of the proposal that's been put forward relatively to MGM. Quite candidly we are happily sitting on the sideline and we will watch with keen interest. .

We have no further questions at this time. I'd now like to turn the floor back over to management for closing comments. .

Well, thanks everybody who has dialed in this morning. I hope our comments brief that they are -- have been helpful. And we would certainly hoped to be back talking with you again soon with some positive things to say. So with that see you next quarter. Very good. .

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. And have a wonderful day..