Kim Noland Analyzes Prospects of Gaming REIT Bonds Maturing in 2030


Analyzing the current financial landscape, seasoned Gimme Credit analyst Kim Noland provides valuable insight into the prospects of the gaming real estate investment trust’s (REIT) bonds due to mature in 2030. The bonds offer a yield-to-worst of 6.8%, an appealing indicator, though they are unlikely to yield significant capital appreciation. Assessing the impacts of debt-financed mergers and acquisitions, Noland advises that these strategies could initially increase the company’s leverage, discouraging potential ratings upgrades.

Gaming and Leisure’s leverage in the second quarter stood at 4.8x. It is anticipated that the figure will stabilize around a 5x margin. The corporation’s investment-grade debt is reviewed by Fitch Ratings, who have endorsed it with a BBB- rating – the lowest investment grade.

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Tenant diversification is acknowledged as a critical factor to the investment thesis of gaming REIT. Having been carved out of Penn Entertainment approximately ten years prior, Gaming and Leisure has seen the regional casino operation transfigure into its most significant occupant.

To accentuate the importance of diverse tenant involvement, the company has progressed to include additional casino clients like Bally’s and Cordish Cos. The REIT recently acquired the real estate of the Hard Rock Casino development in Rockford, Ill for $100 million, introducing 815 Entertainment as a new tenant. This move aligns with similar pursuits over the past few years, reinforcing GLPI’s diversified tenant base.

Seven gaming operators, along with the original Penn Entertainment, now fall under the patronage of Gaming and Leisure. Presently, the property assets of 59 gaming venues across 18 states lie within GLPI’s portfolio, inclusive of the upcoming Hard Rock Casino.

Another potential windfall for GLPI lies in Sin City. Las Vegas, a major player in the US casino scene, houses GLPI’s competitor–VICI Properties. GLPI, having expressed a preference for regional casino properties, has in its possession the property assets of the Tropicana on the Las Vegas Strip. This strategic investment could potentially pay off if the Oakland Athletics proceed with their rumoured move to Las Vegas. In anticipation, GLPI has agreed to invest $175 million towards property improvements, which in turn, will increase the rent. This commercial prowess stimulates a curiosity for the gaming world.