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Gaming and Leisure Properties Inc
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Greetings. Welcome to Gaming and Leisure Properties' Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. At this time, I'll turn the conference over to Joe Jaffoni. Joe, you may now begin.
Thank you, Rob. And good morning, everyone. And thank you for joining Gaming and Leisure Properties Inc. Fourth-quarter 2021 Earnings Call and Webcast. The press release distributed yesterday afternoon is available on the Investor Relations section on our website 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 risk factors and forward-looking statements contained in the company's filings with the SEC, including its 10-Q and definitions in the earnings release 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 of Gaming and Leisure Properties. Also participating in today's call are Desiree Burke, Senior Vice President and Chief Accounting Officer and Treasurer, Brandon Moore, Executive Vice President, General Counsel and Secretary, Steve Ladany, Senior Vice President and Chief Development Officer, and Matthew Demchyk, Senior Vice President and Chief Investment Officer. With that, it's my pleasure to turn the call over to your host, Peter Carlino. Peter, please go ahead.
Well, thank you, Joe, and good morning, everyone. Thanks for joining our fourth quarter earnings discussion. This quarter, and in fact the entire year for GLPI was pretty eventful. Notably, we affected a variety of transactions, both large and small, while at the same time significantly improving our balance sheet, which was a major focus for us this year, get down to what we've internally called fighting weight. As always, we have prepared a very detailed press release with everything important, pretty well outlined. So I'm not going to highlight every detail. Desiree and Matt will have some comment that we'll get to in just a moment. But we are most pleased to welcome the Cordish companies to our roster of the best regional gaming tenants in America. Well in addition to Maryland Live, we just achieved approval for the acquisition of Philly Live and Live Pittsburgh, which is out in Westmoreland County in Pennsylvania. Cordish brings both the grouping of some of the best regional gaming properties in the country, for any of you who have seen them, and along with the skills and one of the best and most successful developers in America. We are looking forward to significantly more work with them overtime. Also pleased to point out that part of the purchase price was funded with more than $300 million of OP units, which we view as a great vote of confidence in our company. So while you examine the new assets that we've just acquired with quarters, I would invite you to look at the entire GLPI website and what we believe is the best and certainly the largest assemblies of regional gaming assets in America. I'm surprised from time to time talking to investors that they've never seen any of our properties, which is a surprise, and have no idea what kind of quality these properties represent. I do think that trip through our website looking at what we have in our portfolio is instructive for many. With both -- and I'll say, with both Cordish and Bally's at the same time, we believe that there is an additional path to growth with these companies. And by the way, that could also include some of our existing tenants as we talked to them about a variety of investments that they may want to make going forward. So we see 2022 is already off to a great start. I would point out too that in the second half of this year, we expect to complete the acquisition of Valley's Rock Island in Illinois and Black Hawk. Plus of course, the balance of the quarters purchases which will get us to I think 55 properties today. Once again, I think what you see in these recent transactions that Gaming and Leisure Properties really never competes on the basis of its cost of capital. We don't -- we're not in the auction business, but rather we compete by capability and our ability to assemble and conclude very complex transactions. So I also highlighted then on the facility basis, which I called specialty to your attention. We've got the best cash flow coverage, four wall coverage, property to property in the industry. And you can expect, which I highlight here, that we will retain our same caution and care in making new investments. I've said publicly many times that we're not in the monument building business. No transaction we have to do, we're very careful with our shareholders money because we, like you are shareholders. One other comment I'll make is about dividends. We are pleased to announce $0.02 increase, $0.08 over the course of the year annualized in dividends. And I think I can say safely, that we expect, over the course of this year when transactions close and the year evolves, that that number will rise. Dividend growth is particularly important to me and to shareholders, as I suspect it is to many of you, and we will responsibly continue to grow our dividend as we are able. So with that, let me turn the prepared remarks over to Desiree Burke, our Chief Accounting Officer. Des?
Thanks, Peter, and good morning. I just wanted to run through some highlights on the income statement and compare the quarter of 2021 over the quarter of 2020. Our total income from real estate outperformed the fourth quarter of 2020 by over $17 million primarily due to the closing of the Bally's transaction on June 3rd, 2021, which increased income by $10 million, escalators on our Pinnacle Boyd, Belterra, and Penn leases, which added $2.5 million, Perryville rent received the $1.9 million, and increased Penn Ohio percentage rent of $2.6 million, higher non-cash straight-line rent and non-cash revenue gross ups of $2.9 million partially offset by a decrease in our rent related to Casino Queen of $3 million due to timing of cash collections on the lease in the fourth quarter, mainly in the fourth quarter of 2020. Our gaming revenue declined $19 million. And as a result of our sale of Perryville and Baton Rouge operations on July 1st in December 17th of this year, our operating expenses increased by $35.2 million and that's primarily due to a non-cash gain during 2020, which was not replicated in 2021, which was related to the Caesars exchange, where we acquired Waterloo and Bettendorf in exchange for Evansville. And that resulted in a $41.4 million non-cash gain last year. We did have a non-cash charge in 2021 of $12.2 million related to the provision of credit losses associated with our new Cordish lease. You will have -- this is the CSO reserve is what accountants call it, which is related to that lease being a financing for GLPI. A non-cash land-lease gross-up and land rates amortization of approximately $5.9 million, which was partially offset by a $4 million recovery on the Casino Queen loan, a $12.2 million reduction in gaming expenses, again, due to the sale of Perryville and Baton Rouge operations. And a gain on the sale of Baton Rouge's operations of $6.8 million on a pretax basis and an insurance gain of $3.5 million. With respect to the Perryville run, I wanted to again, call to your attention that this has been recorded in our TRF segment during 2021. We will be recording that in our REIT segment beginning in 2022 as a result of the winding up of our taxable REIT subsidiary. With respect to Maryland live lease, this lease will be accounted for as a financing receivable. We'll therefore recognize cash rent as interest income on revenues from real estate and a change in the receivable going forward. However, we will reconcile that cash received in our AFFO disclosures. With that brief summary, I'll turn it back to Peter.
Thanks, Des. And, Matt, you wanted to make a couple of comments as well because much has evolved in our balance sheet work this year and all of our transaction. So why don't you go ahead?
Sure. Thanks, Peter, and good morning, everyone. As Peter talked through, at this time last year, we shared a game plan and it was playing offense and doing so within the context of being disciplined and emphasizing our commitment to balance sheet strength with respect for the role it plays in our success. And related to these goals, we've delivered. Not only did we expand the relationship with Bally's, one of our most dynamic tenants, but we also directly sourced a new relationship to our tenant roster with the Cordish properties that Peter talked about. In the transaction where our counterparty made very clear, GLPI was not the best price, it was the best decision. In fact, coming from a 110-year-old family company that has signed their own names to financing projects and other bills that need to be paid over those -- those many years, it was taken as a great complement. When after hours of discussions, some negotiation, finalizing terms, John Cordish turned and said, it's pretty clear to me that you treat it like it's your own money. Any other REITs I've spent time with, treat it like it's other people's money. The Cordish's decision to take a significant equity stake in GLPI underscores our philosophical and business alignment. We're looking forward to seeing what might come from our Cordish relationship overall, and from the novel partnership structure that enables GLPI to invest at least 20% of the equity into any new gaming license opportunities achieved in newest jurisdictions over the next seven years. Realty Income's recently announced agreement to purchase wins Boston asset at a 5.9% cap rate, marks another milestone on the path towards institutionalization. It not only provides real-time price discovery, but also underscores the value created with our purchase of the Cordish portfolio. The fundamental thesis upon which our company was founded that thoughtfully structured gaming real estate cash flows are of institutional quality, has been further validated. As I've often stated in the past, we own the most homes in one of the best neighborhoods. Turning to the balance sheet, balance sheet strength and liquidity remain the foundation of our success. Throughout 2021, we stayed true to the philosophy of match funding our transaction activity. We also perfected the use of multiple tools in our tool chest with not only our overnight equity issuance and 10-year bond issuances that were both well over-subscribed, but also with over $250 million of ATM issuance at over $49 a share, and the Gaming REIT sector's first OP unit issuance that Peter talked about. We are well-positioned to be well within the target debt range of 5 to 5.5 times that we've articulated. We've got almost $1.2 billion of unused revolver capacity. And we see our staggered, almost entirely fixed rate debt profile as a strength amidst market volatility. As we move forward, our focus remains on unearthing opportunities for the prudent deployment of our shareholders' capital. I'll turn it back to you, Peter.
Matt, thank you very much. I hope that was helpful to you all out there. So Rob, would you please open the floor to questions.
Yes. Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pool for questions [Operator Instructions] Thank you. Our first question comes from the line of Neil Malkin with Capital One Securities. Please proceed with your question.
Thanks, everyone. Good morning. Good morning, all. First question. The -- couple -- couple of transactions, pretty notable transactions over the last, I don't know, nine months or so really continue to validate what you said, the regional gaming thesis. I'm wondering if you can maybe elaborate or talk a little bit more, either anecdotically -- anecdotally, specifically, what you -- whatever you'd like, on how you see the continuing institutionalization of the regional gaming market. And obviously Vegas is well known, but maybe if you could talk about incremental buyers, competitors, potentially how CMBS or debt markets have improved, any -- any of those things would be great.
Hey, Matt. Why don't you take that?
Sure. I mean, so you've seen the cap rates. I mean, we did, but for us was an aggressive deal, the 69, and very quickly in a few months, we've now seen a 59 for another regional property. And as Peter said, I'd really underscore for anyone who hasn't been to the Cordish properties, please reach out. You should see them, pound for pound. There's good as anything you're going to find. If you look forward, I mean, the reality are there is a significant amount of institutional capital in the private equity world in their private reach and in other public companies that is looking for returns. And when apartments have three handles, industrial has three handles, it's really hard to find safe and durable income. And when you look at a Dollar Tree or some other facility like that in the very second-tier market and compare it to some of the cash flows you get, that to Peter's point, not only have a great operator and a great property, but also strong four wall coverage and credit support, it's pretty obvious we've got a better mouse trap and a better business model when it comes to getting those cash flows. So to date, you've seen a bit of a competitive moat related to not only relationships, but also licensing. As people focus more on the space, I suspect some of them might find accommodations to do one or access both of those things. And I'd expect more cap rate compression. I mean, I watched this play out as we've talked about in manufactured housing, self-storage, data centers, cell phone towers. As long as our cash flows deliver on the premise that we've articulated, you're going to see more cap rate compression. Now, what does that mean for us is really the key question. And I'd point out, we get this question all the time. How do you guys compete? You don't have the best cost of capital. Why should someone do a deal with you? And in spite of that, you can look at the years of transactions we've done, to Peter's point, none of those were auctions. Each of those is a somehow bespoke, often directly negotiated deal with someone that does the transaction for more than maximize proceeds just economic terms, and Cordish I think is the best case study at that. So as we go forward, we're also going to have to be thoughtful about how we're sourcing capital and the cost of it. I tried to underscore the fact that we've used not only the ATM thoughtfully, but now this capability that's been validated by the Cordish is to use OP units, which is unique. And the math is going to be the same for us, risk-adjusted returns in excess of our cost to capital. And to Peter's point, doing only things that make our long-term intrinsic value greater.
That's great.
Matt,
Sorry. Go ahead.
Okay. Go ahead. No, please go ahead.
No, no, no. Go ahead, Peter.
No, I like Matt's answer, it was pretty much on point. But why don't you carry on with the question.
All right. Great. Yeah. Okay. Can you maybe talk about the -- just in terms of maybe acquisitions. I noticed that Bally's got pushed back to the end of '22, both of those transactions. Is that a function of just COVID and regulatory delays and constraints, or is there something else there?
Brandon, why don't you take that?
I don't think there's anything more to it. And I would caution you of Bally's, there's actually three separate transactions that we're looking at right now. There's the transaction in Las Vegas around the Las Vegas Tropicana, but then there's the Quad Cities and the Illinois. And I would expect the Quad Cities in Illinois transaction -- or the Quad City and Black Hawk transactions to close prior to the Trop transaction, which I think will be later in the year. I think the two former transactions will be a little bit earlier.
Okay. Great. And then I guess just last one. I think on the last call, Peter, you talked about, or Matt, about elevated opportunity on the forefront, and I'm just wondering specifically if you could talk about some of the alternatives leisure lifestyle, consumer oriented sort of endeavors or opportunities you're looking at if you could give any color in that?
Our answer is probably been the same for the last maybe seven years. There's not a weak that goes by that we don't look at some other something, and you know the struggle that we have is that we're already in one of the best spaces on the planet from the point of view of certainty of cash flow, longevity of cash flow, long, long, long-term leases. It's tough when you're already in the best place to take something less than the best. That having been said, there are some things we're looking at and look, I've said probably for years, I expect one day we will light, at least mildly in some other space. But we just are not there yet. There'll be a discussion. Just for fun to tell you about some new ideas, it's scheduled for, I think I saw 3:30 in Monday afternoon. That's a scheduled call about a different concept, but we do this all the time and we will see. But at the moment, there is nothing really special to report.
Okay. Thank you, guys, very much.
Thank you.
Next question is from the line of Smedes Rose with Citi. Please proceed with your questions.
Hi. This is Stefan for Smedes. Just going back to your cost of capital, you talked about not competing on cost of capital. And then you talked about potentially moving into non-gaming assets. So what type of non-gaming assets would you be interested in? I know in the past you've talked about potentially looking at some hotels with pent, and just how do you expand the universe as gaming becomes more institutionalized?
Well, I do think there's opportunity with some existing tenants that we can explore and are exploring right now. That's pretty near term, and by near-term mean over the next year, let's say, opportunity. It could happen, maybe won't, but there are active discussions about deploying capital with existing tenants. We're also excited, by the way, with Cordish, for example. Again, people who are very very aggressive, hungry, coast-to-coast, and people with whom we love to work and do more. And that applies to some of our other strong tenants. But again, this is highly unpredictable, we'll just have to see. In other space, again, I think I pretty well said that we just haven't seen what can match what we already have. Matt, do you want to add any color to that?
I will just say, listen, we spend a lot of time investing in R&D and everything outside of gaming to keep our finger on the pulse of anything that might be durable cash flows. But really at the end of the day, A, we don't want to say specifically what those things might be because, obviously, it's a very competitive marketplace. But B, durable characteristics are really the hallmark of what we're looking for, and we don't want to put our money into much more volatile income streams that cost a lot more than the gaming assets, to Peter's point. I'll also point out, we don't -- we don't feel that we need to do something outside of gaming to prove that we can do something outside of gaming. We always have access to those deals. The first deal we do is going to because it crosses the threshold is making sense on a risk-adjusted basis. So we try to be creative. Obviously, I mean, when you look at where we are, where in middle innings of institutionalization. And being able to find things in earlier innings of institutionalization with less efficient pricing is one avenue and one lens to look through. But at the end of the day, it's got to make the long-term value of the company greater.
Peter, you talked -- this is Michael Bilerman speaking. Peter, you talked about not wanting to compete in large auctions and generally wouldn't be competitive in those types of situations. Can you just talk a little bit about your relationship with Win and obviously, the Encore was not a broadly marketed transaction according to Win and Realty Income, but I'm sure you've had conversations you would have had relationships and knocking on a lot of doors. I guess what was it in the relationship that they didn't feel that you would be a good counterparty to buy that asset and progress down the road with just Realty Income?
I can't speak for that. We had no conversation with them about that property, so it never came up.
But I assume you've had a conversation with them over the years and then I assume you have conversation with every operator as you've uncovered things, right? That's part of the duty.
We have. In an RI spent some numbers of meetings with Steve himself over time, just never found something that made sense for us. Look, I mean, some of these transactions are bespoke where either they were approached by somebody directly and decided that these are the guys. Look, if it turns out in the end, we would not have been competitive anyhow, so I don't think we've missed anything. And I haven't lost five cents -- five seconds of sleep over that transaction. Good for them. I think it's a sweet deal, and it does validate, as Matt says, the value of some of our properties. But look, that is scarcely what I'd call regional property. It's really a Vegas -scale property in a major, major market where you've got a sense when you're monopoly. I don't think it says a whole lot about regional value. It does that kind of validate the space and delighted to see someone else sees the value, but we wouldn't have been competitive for that. In any case.
And why do you think you wouldn't be competitive? Do you feel like it's your own equity cost to capital, was it the bumps in the leases, was it the lack of capex, was it the size? I guess what is -- what are the elements that make it that you feel that given the same terms, it wouldn't have been something and I guess I'm getting a little bit of mix messages, Peter, in the sense of it is a validation, but it's too rich of a price, we wouldn't play there, but maybe we would sell our assets at that price. So I am just trying to reconcile all of these comments.
Look, every transaction's different. Look, we've done transactions at very favorable pricing. The deal we did with [Indiscernible], not exactly a solid known for giving away gifts, but it was a very complex transaction involving four public companies. What we did there was quite extraordinary. But we added value in creativity and so forth that maybe others couldn't. So that we just -- look, like everything else, you find what you do best. Straight up auction, I've said, it very directly speaking. The winner loses, generally that's the case. And whether you're trying to buy an automobile, you're trying to buy a piece of art,
Laying down the highest price at an auction is not generally my idea of fun. We have competed in, for example, in -- with MGP. We did compete there, because we were always there. They was getting [Indiscernible] for a couple of years prior. Unfortunately, when they ran it -- when he ran into some difficulty that ended our longstanding discussion about something we might do. The adjusted board there made a judgment that an auction would be the best way to go. Can't say they were long and we were already there, so we thought we sort of move and look hard and see what we can do. But any and we confirm that it was not a right deal, and we chose not to play. So, look, that speaks for itself. There are plenty of transactions to be done as we've demonstrated just recently. We'll continue to do business, but every deal isn't for us. That's all. I mean, I don't know why it's difficult to understand, so.
Okay. All right. Well, thanks.
I have nothing to prove -- we just proved it.
Yeah. Well, thanks. We'll sure to miss the company and you down in Florida, but we'll look forward to catching up at a later date. Thanks.
Thanks, Smedes.
And let me just add for the audience on just to follow up on Michael's question. It is interesting to look at the wins build in the stack that it's certainly well overcapitalized for the market is in and looks terrific, as Peter points out, take a look at our portfolio, a lot of the pictures do. But when you really drill down beyond what it looks like, the quality of the cash flows when you think about master leases, the four wall coverage, Peter brought up limited licensed similar to this quality of cash flows in our portfolio is very comparable to the ultimate quality of cash flows that come out of the wind asset.
Our next question comes from the line of Jay Kornreich with SMBC. Please, proceed with your questions.
Hey, good morning. You set up a kind of nice pipeline of potential future growth by establishing ROFR as with now Bally, Casino Queen, Cordish companies. And so I'm wondering if you can just talk about how you see those opportunities potentially playing out?
Well, the real answer is it's hard to know. We're -- we will stay close to these folks, who we like a great deal and trust that they like working with us. But we'll have to see how it unfolds. I can't make any prediction about where that might go. We've got some hungry partners out there that want to expand and will expand in this industry. We just want to be available when the time comes and the opportunity appears. Look, I mean, that's part of our job to stay close and wish them well and hope we can be of help when the time comes.
Okay. I guess with specifically the quarters companies, they own a wide range of both gaming and non-gaming assets. Are you able to expand a little bit more on just the partnership and opportunity set for you there going forward?
We -- look, real clear. We would be willing to step into some other real estate space with them should that opportunity present itself. We've had those conversations. We'll see. Again, if we can provide something that they at the time would need or desire, then we want to be the go-to people that they go -- that they deal with. That's really our job to hang around the hoop. Be good friends and partners, and to be available.
All right. Okay. And then I guess just one follow-up. As going back to the Wynn as it did now join many other casino owners in selling off it's real estate, can you give any color on how many other sizable hotel operators that maybe out there in the regional gaming opportunity set that awaits you if they're willing to start selling off their real estate?
I don't have a number. I don't know. As Steve, were talking about that? I have some thoughts. I mean, I don't have exact -- I don't have exact numbers, but if you look at some of the large, more urban areas that have legalized gambling, you'll see that many of the sizable properties are probably already owned by a [Indiscernible]. There are some -- there are some owners that still have some of those assets in [Indiscernible] Form. Most of those are sole proprietor, family-owned type businesses ones that would be potential transaction partners in the sense that they might in fact value the upgrade structure and the tax benefits it provides. So I think in large urban areas, you're going to see those types of assets that still exists.
And that does provide us a good runway for at least an open to discussion around tax savings. Separately, there are some large publicly traded companies in the gaming space that still own all or almost all of their real estate. So there's a huge runway ahead for those opportunities. And I guess the benefit for them and the unfortunate truth for everyone on trying to acquire those assets is they have held out today and they've been proved incorrect because the valuations just keep climbing. There could be a point in time depending on their borrowing costs and things of that nature that could cause them to look for alternative sources of capital.
Or they might just decide to join the party and sell the real estate. So we're having ongoing conversations with those folks and those aren't necessarily these monster assets in urban areas, but collectively as a company, their portfolios are very large and very valuable.
Great. Thanks a lot for the color. All right. Thanks, guys.
Thank you.
The next question is from the line of Haendel St. Juste with Mizuho. Please proceed with your question.
Yes. Good morning. One more follow-up on quarters. I guess I'm curious how large equity commitment you would be comfortable with there, given the co-investment opportunity you highlighted. I'm just curious about how you think about your balance sheet priorities in light of that potential equity commitment. Thanks.
Well, my quick answer would be depends on the opportunity and the -- where the capital is going. If it's a new gaming property, for example, in a strong market, we might be willing to do a whole lot and undoubtedly would. Listen, I have long said that the gaming license in limited license jurisdiction is just an opportunity to print money. It's just -- it's terrific if you can find it. The only risk for you is always spending and you simply over-investing, which some of the gaming world has managed to do on a regular basis.
But it's not what we do and I don't think it's what the Cordish companies, you mentioned them, but we have others that we would gladly partner with as well. But look, I -- you expect some discipline, and so it would be deal-to-deal. And I don't think there's any limit on what we'd be willing to do depending upon the opportunity.
Hey, Haendel, this is Matthew. I just want to add a couple of thoughts. That commitment is something that I'll say was the hard fought negotiation. This is -- people around the table are laughing. This is like someone handing away money coming from the REIT world. I know we get excited at a 7%, 8% development yield. I can't give specifics, but if you look back at the history that the Cordishes have been able to achieve, very similar to Penn. Every one of these things is over 20% cash-on-cash, unlevered. So the key point is what we want to do is move up the value chain and get access to cash flows earlier. I mean, this is a competitive advantage. Earlier in the process and not necessarily just be the takeout on the back-end after a lot of value is created, we want to participate in the value creation and hopefully on it on the back-end. But when you think about timing, I mean, we're going to see it coming. I mean, these are -- these are all dependent on new licenses being granted somewhere around the country where they don't exist currently. That's why we have a seven -year window. It will take some time for these to play out. And we're hopeful one does. And to the extent of how we think about the balance sheet in conjunction with it, just like everything else, I mean, we're going to keep our leverage in our five to five-and-a-half range, and we'll assess at the time depending on, between now and whenever that might be, how much retained cash flow, etc. we have at our starting point, and we'll thoughtfully use a mix of debt and equity consistent with that goal.
But just to be clear, that would be a great outcome for us if it were to come to pass. It's not guaranteed. Again, it's dependent on how things play out. But it's a novel thing that we structured in that we hope to be able to realize and create value for our shareholders with.
And what we can assume if we're staying very close to what's going on around the United States and spending time in those places to see how we may carve up or find some opportunities. So we're very much on top of any gaming expansion anywhere. So I'll just limit, just leave it at that.
And a follow-up to that, I guess maybe more specifically around -- in Las Vegas. Curious on thoughts on your potential development opportunities there around the [Indiscernible] and the potential stadium. Well, we don't know exactly what Bally has in mind for the site. We've been actively involved in conversation with them. We have an announced transaction with them. But if we can enhance that transaction with deploying some capital in a -- in a broader way to a project that we feel comfortable, we'd be open to that possibility. But right now, I think we're just assuming that it's going to be a ground lease. It's a very favorable deal we're very pleased to have it. We would work with them should the opportunity arise. But again, it has to cross all the other hurdles that we would normally consider so nothing -- nothing locked in there beyond the deal we have. I think Bally has mentioned on their earnings call yesterday that they expect it to be back mid-year with further information and thoughts around the redevelopment of that project so we're working with them, but we're not going to be the ones unveiling anything of their plans. Yeah, it's fair enough. We have been very involved with them, though, to be clear, we really have been. Nonetheless, it's their plan, so we'll see where it goes.
Okay. Fair enough. One more, Peter. I guess the guidance, a touchy subject when we graze in the past.
Yes.
If it's to the policy that we will not be having formal forward-year guidance this year and going forward and then any updates or comments on the CFO role also, a subject that we've asked in the past. It appears that the current structure is one that you've indicated you're comfortable with, but this gives [Indiscernible]. Thanks.
Yeah. I think if you look at what we've accomplished over the last year and -- it's been terrific. It's -- so on the CFO issue, we're still contend with where we are. Our Board is very contend with where we are. And we have enormous capability with these folks you've got on the call with you today. We really, really do. I can't say that we won't someday address that, but at the moment, we are blissfully happy with the way everything is working. Guidance, sticky item. I think we're going to wait till we get the last of our transactions closed. We're not sure about timing on a whole bunch of these things. And with that in mind, we're just going to wait. I have said that we're open to that notion of getting back to guidance. Look, I think we're very transparent though, as you know, in this business, you have a pretty clear sense of what our revenues and earnings are likely to be. But for the moment we are going to go pass this quarter, but I -- honestly, we'll look at it again on a quarter-to-quarter basis and just going to leave it at that. It is a matter of much discussion at our end here.
Okay. Fair enough.
I don't know. Anybody else wants to offer from the GLPI team? Any other thought about guidance? Hearing none. There's the answer.
Okay. Fair enough. I'd appreciate it and I think some investors would too. But thank you for the time.
Thank you.
Our next question is from the line of Greg McGinnis with Scotiabank, please proceed with your questions.
Hey, good morning. Peter, you briefly touched on the dividend during your opening remarks. You've spoken a lot over the last couple of years about getting the dividend back to $0.70 a share, which based on our numbers would represented on 80% AFFO payout ratio, excluding the future transactions. But then you step just short of that bogey at $0.69. So just a few question, there's why did you hold back from that threshold? What is the payout target and what's the expectation for additional raises this year?
The expectation is, I think probably safe to say very high. I don't know. I've look at our council ran [Indiscernible] and I get away with saying that. Yeah. I think it's pretty high, but that's what I desire. So I paint it that way. So I think that is the case. We could have gone higher this quarter, but frankly, you kind of like the idea of stepping it up throughout the year. And the ratio is we have not been at 80% as for a couple of years now, but by choice, we've decided to hold some firepower back to, and particularly now since raising equity would not be a desirable thing to do. So putting more cash and keeping -- retaining more cash in the pocket seems to be a very sensible thing to do at the moment. So I think -- Des, do you want to talk about where we are? I know, but where do you want to go with that?
No. I would say that the dividend -- we have to wait for deals to close, right? I do not think it would be prudent for the company to outlive the dividend prior to the closing of the transactions that are necessary in order to increase dividend. So our decision to stay at $0.69, and we do think $0.69 of comparable to yield 70 because we did raise 8.9 million shares in the fourth quarter and haven't received the benefit of that until January 1st, when we start getting rent from Cordish. So it was very thoughtful process we get close to the 80%, but we don't pay out exactly 80% and we haven't in the past as well. But we are extremely close to the 80% payout ratio.
Okay. So I guess comfortable saying nearly 80%. I mean, I guess I'm just confused and just a little confused because you've talked about the 70% we're nearly there and kind of just sell short for it sounds like just kind of want the ability to raise dividend later in the year.
Let me say this. It doesn't display any lack of confidence. I really want to emphasize that. In our likelihood of closing these transactions, we feel very confident that these transactions will each and all close. That having been said, we decided to sort of take the step-up approach. I think Desiree highlighted that were really kind of the equivalent of the old $0.70 internally. The question was, does the $0.70 number look just psychologically better? What you're saying is it seems like it might have, but we kind of like the idea of setting this thing up and having some fun quarter-to-quarter as we get through this year and into next. We're very optimistic about where this is going to go and we feel good about it.
Okay. And I guess along those lines then kind of going back to handles question on the guidance where you don't have the operating assets anymore, which cleans up results. It looks like you're going to be getting the escalators on most of the leases. You kind of have an idea or expectation that the transactions are going to close. So I guess I don't really understand why you're not comfortable providing guidance because you've talked about curious about you're not sure when the transaction that closed, but with your business and I think the whole prior part of this call will kind of reflects that, there's always going to be transactions, right?
I think there's -- we'll bring this up with our board as our next meeting approaches relatively soon. This was an issue well discussed with our Board and I think we have -- had decided with the Board's support to take a cautious approach to this. This issue is scheduled item that will considered at our next board meeting. And then we'll see. I did say that on the road that we quite possibly would get back to guidance. We just haven't felt as if it was a life or death issue for us, decided with an abundance of caution. It's kind of who we are that we would just wait a bit step it up. And so I'd say stay tuned. We -- I hear your request.
Okay. Yeah. Let's say just from an investor perspective, and at least the sell-side analyst perspective, that there is a level of confidence in the future that you guys do have, are necessarily sharing with the markets by establishing that guidance. And you can always go a bit wider if you're worried about the time and more, just let us know what the guidance implies for expected timing of transactions. Thank you, Peter.
That's fair enough. I suspect, by the way that virtually all of our board members are tuned into this call, and I suspect they have heard your desire.
Thanks, Peter.
Thank you very much. It's a fair -- fair question.
Thank you. [Operator Instructions]. The next question comes from the line of David Katz with Jefferies. Please proceed with your question.
Hello.
Mr. Katz, your line is open for questions.
Apologies. Post - COVID leaving it on mute. Good morning, everyone. Thanks for taking my question. I know that a portion of the strategy is to evolve beyond gaming. And I wonder if you could just elaborate a bit more or help us color in on what that might look like. Might it looked like a gaming property as part of a mixed-use development where your involvement might be broader? Is it perhaps through a vehicle of loan-to-own or other kinds of financing to launch a relationship? What might the evolution look like and what path could it take? Thank you.
Well, look, I think you laid out two sensible ways to get our toe in the water and that's certainly stuff that we have looked at, and we've would consider without a doubt. Look, the farther off we get into some of the space or some other business frankly, the less likely we are to get there barring something very compelling. David, I hate that -- look, I hate dodging answers, but the truth is we'll know it when we see it. I did emphasize earlier in the call that scarce a week goes by that we're not looking at something that one of our banks and one of our friends or somebody internally has brought to us as a possibility.
And we look at this stuff quite seriously because again, we're -- this is companies objectives are long-term. While we are not pressed to do heroic or crazy stuff, we are trying to build a company for the long, long future. And I think we've done that pretty effectively to-date. So that's an ongoing process. I think we'll know it when we see it. As I mentioned, just for fun, there happens to be a call on the calendar with some folks. Monday afternoon. I know it's -- I think it's 3:30 to be precise, from my memory to discuss something different. But this is a normal part of what we do and we'll continue unless -- until we find something that grabs us.
But I'm curious. It is to getting its safety and it's getting inappropriate spread to our cost in capital, since we're really not in the business of, quote, "strategic transactions. " We're only interested in cash flow and cash returns. That's who we are and that's who we've always been.
Okay. I appreciate that. And if I can just go back to one issue that you've discussed a little bit, which is the most recent entry into this category. Historically pays much higher prices than while they've paid a higher price than I think most of you and your peers have so far. It sure looked like a great price to them. And I only take that in the context that there could be more of the likes of them, there should be more of the like to them, that we'll look at opportunities at a better price than you are willing to pay as highly attractive. But I heard much comment earlier, that sometimes people make a better choice necessarily that isn't entirely numbers driven. I'm just posing the question about whether the market just got tighter and more competitive for new opportunities.
It's a fair question, and time will tell. Look, I think that's a unique property, as I said, it's a really a Las Vegas Strip property. A very expensive, we can argue overbuilt for that market. But property in a major city in monopolistic position. I think that's unique. I wouldn't imagine those folks would be going to -- I'm just being smart, [Indiscernible] in Mississippi to buy any asset in the market at a similar multiple. So look, I think it's partnering property to property market-to-market. And I think that was a unique situation. Time will tell where else they go or people like them go. Is that fair?
I do think it's fair. Thank you.
Okay. David, let me add a thought to that. It's interesting, but I'm going to go back to the point [Indiscernible] look at our transaction table and everything we've done historically. So you rightfully point out that there are some reliance of our business model on people needing to do things for strategic reasons but that's happened now, I don't know at least a dozen times. I mean, Cordish made very clear in this transaction. I mean, they were not trying to maximize proceeds, what they were trying to do was find a business partner to enable their business plan for the next many generations. And they expect their kids and their kids, kids all to be owning the Opco and running these assets for the future -- foreseeable future, and beyond. And in that transaction, we've structured a number of things to be able to help them execute on that. I suspect that others would have paid a much more aggressive coverage. In fact, in their case, they wanted less rent and they're speaking our language. We have again a philosophical alignment of use and they're not the only people in the world that think that way. You look back before that public company, Bally's and the fact that they were looking to do a strategic M&A deal in the UK and needed someone to do exactly what Peter pointed out, be creative, do something bespoke, move quickly with something very complex. Those were all things that we've got a muscle memory from doing it many times before that we can execute on. And you can keep looking back on our transaction history. Historically, it's been the case that people look at more than just cost of capital. And to your question, I'll say it, this was just similar to a mortgage broker and we're just looking for the lowest rate everything else held constant. We may not be the best buyer, and those terms may not be the ideal ones for our shareholders. Remember, every time we do a deal, we take very seriously the reality that we're selling a piece of our portfolio at the valuation that our stock's at in order to buy whatever is next. And it needs to be at least additive to that in whole. And if there's very aggressive coverage or a very aggressive cap rate without a lot of credit support, gets more challenging for us to cancel. But in spite of all that, we've time and time again found ways to do creative things that have added value for our shareholders. Let me say, Look, we can't. I think Matt said it. Well, we're not the choice in every situation, but we want to be the [Indiscernible] of choice in this industry. But people's add, our most desired to work with the best partner. The most available friend to develop a future together with our existing tenants. That's what we strive to be. Maybe not the biggest, but absolutely the best.
Thank you.
Our next question is from the line of Robin Farley with UBS, please proceed with your question.
Robin, you may be on mute.
Robin, your line is open. You may be muted. [Indiscernible] move on to our next question from John Massocca with Ladenburg Thalmann.
Good morning. Good morning. I know it's very much an offer and not a deal at this point, but is there any impact to either you in-place leases or opportunities, structured, kind of hypothetical from the proposed acquisition of values by standard general, just thing that you have other controlled tenants of standard general in the portfolio today?
Matt, you want to opine?
I think I'll pass to Brandon.
Yeah. I'm not sure we're in a position to really speak to the standard general offer for Bally's. Clearly, from the press release, the Bally's put out they have formed an independent committee. They've hired a banker. I suspect that they'll run that process and to the extent we have an opportunity to be a part of it, I'm sure we will try to be a part of it, but that process will take care of itself and we don't have any inside knowledge into that. The one thing I'll add is to the extent there is something there, the lens we look through is always going to be the same. It's asset quality, operator quality, four-wall coverage, credit support and figuring out ways to get accretive spread based on all those factors.
[Indiscernible] is there anything structural within the existing leases or agreements that would be impacted at all by that becoming a private entity as opposed to a publicly traded one?
No. I don't think there's anything structural in the leases that would particularly the problem. I think that if it were to become a privately-held entity, clearly, the leases would remain in effect. And if we had an opportunity to participate in that, we'd try to bolster those leases, but I don't think it changes the structure of the lease by the nature of the owner.
And then if you think about potentially working with existing tenants to deploy capital into properties you already own, is there any cap rate advantage you can get in that deployment versus maybe the de novo transactions, especially we've seen cap rate compression in de novo transactions or are you competing, frankly, with alternative sources of capital that your existing tenants can access to fund those improvements of the properties?
That's a fair question. It's tricky question. The answer is, yes, I think we can do better. And in almost every case, there are reasons why under existing leases to be very difficult to go elsewhere. In other words, there will be a trade-off of some sort. We'll give you X. You may want Y and it'll be a discussion. So I don't have any fear that a transaction like that would go elsewhere. Because clearly it's going to take a discussion and a trade-off of some sort. So I just leave it at that, but being almost impossible to [Indiscernible]. Very good.
Maybe -- this is Steve, real quick. Maybe what I would add is I think that the tenant typically looks at it with a different lens. For example, if we own a casino property, we own the land and the building, they're deciding -- they think -- they're thinking about adding a hotel. Well, at the end of the lease, I still own the land and the building. So in many cases, as simple as it may seem to just say, well, they can borrow at X rate and I might offer Y, and they should just pick the lower of the two, in many cases the psychology of it all changes because they know they're leaving it behind at the end. So they're going to either fund it, maybe potentially cheaper with a bank loan. But at the end of the day, I get it because it's all my property and not going to pick up and move to hotel digit bill. So ultimately, in many cases, they look to use -- they might look to use our capital in a more advantageous way for us.
John, this is Matthew, I'd also point out, so your latter point about comparing our capital with other sources of capital is relevant but the other side of the equation is other potential uses. And we've watched equities for some of the operators get pressure to the point that they've instituted share buybacks. So if there's an incremental dollar on their balance sheet and they can use it for either buying back their shares at a very opportunistic price or putting it into a building, our capital may fill an interesting GAAP there.
Okay, that was all very helpful, and that's it for me. Thank you very much.
Thank you.
Our next question is from the line of Spenser Allaway with Green Street. Please proceed with your question.
Thank you. Just on the digital gaming front, it seems as though the operators are in an arms race to gain market share and customer acquisition costs appear high. That said Penn does seem to have some sort of advantage with its captive audience from its partnerships. Just curious if you can comment on how you view this playing out over the next couple of years.
Well, it's hard to know. I mean, we have no insight whatsoever into Penn's thinking or philosophy other than an awareness that they decided to be very disciplined in marketing spend and claim or believe that they are profitable today. And that's been a goal to get to profitability earlier, that's all we kind of know. What the impact on the bricks and sticks operations will be, time will tell. I do know, for example, near to us, they just open the facility a couple of months ago in Morgantown, Pennsylvania, right down the road from our offices, I mean, 15 minutes away. The sportsbook presence and so forth has been pretty successful in attracting customers to that facility who then play on our Bricks-and-mortar facility. So what the overall impact is likely to be. I think it's going to be positive, but I think it's going to take some time to really understand where that's going.
I will just add Peter. We have seen a lot of investment in our properties by our tenants in expanding and building sportsbooks to attract customers into the facilities. And I think if you look at the product that the Cordish team offers, they really offer a fantastic product of a sports bar atmosphere. Where in many instances, I think you probably agree it'd be better to be there than in the stadium with an 80 foot wall TV and food and beverage. And so I think what sports betting has done is it's spread across the country as it has resulted in quite a bit of investment in our portfolio assets.
The Cordish people have got this down better than just about anybody else on the planet. Their lives, facilities, not even gaming license facilities are hugely successful because they're so exciting they are physically as Brandon points out scaled big time, and beautifully done. And they just are very attractive to new customers. So I mean, I think this is evolving. But for the casino companies, I think it's a plus. I know early days at Charlestown when they opened up early, the sports betting, it was very successful, attracting new customers, mostly male, who would come and play tables in addition to what they came to do with the sports betting. So I think this is a symbiotic arrangements. It's not been a net draw, it's actually been a net plus for the companies. We'll see where it goes, you know, in the future.
Spenser, this is that sorry, Spenser. I'd also point out the theme over the next number of years may likely be convergence as well. When you think about the sports based place making that Peter and Brandon articulated, and the reality that some of the folks betting on their phones are in the casinos, but a lot of [Indiscernible] other places. The likelihood and there's some data that shows this is that there are people who enjoy making those bets and make more bets if there isn't a fun, exciting environment like some of the ones that Cordish develops, creates, and manages. And that's something that we certainly are thoughtful about and it ties into David questions earlier too about thinking about what our strike zone isn't, how things might play out over time with the kinds of properties that we think makes sense for us.
Okay. Now we would agree that will be additive, but really appreciate the insight, especially at the property level. Just last one from me. As you look towards the future and you're signing new leases, has there been any consideration to have uncapped PPI-linked escalators, just given the inflation concerns around long duration leases?
I would suggest this. I mean, I can't imagine anybody in the current environment who is a tenant prospect signing an uncapped CPI. I mean, you would have to be out of your mind to do that. I know, I wouldn't and I suspect nobody on this call would do it either. It's so dangerous in the current environment. Would we love to have it? Absolutely. But I think we're walking a tight rope and try to get as large an adjustment as we can. But the uncapped I think just isn't going to happen. I'd be shocked if anybody went for that these days.
On the [Indiscernible] Spenser, it's Matthew again. I'd say it's a top consideration. At the same time, you've got, interestingly, in these last number deals, look at MGP, new lease reset or lease -- Realty Income's lease. There's caps that have certainly crept into the market that will become market. But I want to point you to a couple of points that Realty Income made. And even with 175 fixed, which is what they have for the initial term of their lease, same as in our lease with Cordish. Even at that rate, it compares incredibly favorably to the standard triple-net escalator, which is a lot closer in their case, I think to 1%. So the fact that we're not fully capturing inflation is true. But in the other direction, there certainly is the case that we're doing a lot better than a lot of the other leases in the triple-net world. The other thing I want to point out when you think about our company and our shareholders and our risk exposure there, is the fact that I'll point back to this long dated staggered maturity debt schedule. So one thing we've been very focused on with new debt issuance's is to not go short even if we [Indiscernible] cheaper capital. So we've skipped over three-year, five-year, and we actually did 100% 10-year debt on our last issuance. In fact, we even thought about a 30-year bond but market volatility ticked up into when we actually were able to hit market, which was a thread and needle based on, of course, just timeline, and wanting to get done by the end of the year. But that's something we're going to continue to focus on and matching better the duration of the cash flows from our income stream, which you point out are very long dated, with very strong credit and the credit on our balance sheet.
Thank you.
Thank you [Operator Instructions] The next question comes from the line of John DeCree with CBRE. Please proceed with your question.
Good morning, everyone. Thanks for taking my question. I think you've covered a lot of ground, but maybe one more Peter and one of your peers talked about possible international gaming opportunities. And then in the context that maybe digital gaming and sports betting blurs the border a little bit between the U.S. and Canada is international gaming something that you would consider seriously and under what pretenses or how would you kind of evaluate those opportunities?
We've looked at International for a long time, looking my days with Penn, I could write a book on just how many places where I spend time. Japan, of course China, Vietnam, Portugal, I could go on a long list. Australia, keep going. I've been to all these places. Finding the right transaction that makes sense and then given exchange rates and in Canada, it's particularly tricky. We just haven't found the right opportunity where we felt we could be competitive. Would we do that? Absolutely. Do we look there? You bet we do. So look, we look at everything. I'm not being [Indiscernible], but we look at everything. That's kind of our job. But kind of taking a bible quote, many are called but few are chosen, that's the process.
John a couple of the key guardrails for us are countries with [Indiscernible] with long black robes and property rates. We want to make sure that we could certainly collect our rent and have the ability to perfect any issues. And also all the math we look at to Peter's comments is really net of taxes translation, any explicit costs that would be involved in getting the cash out of the asset and ultimately onto our balance sheet. And then the same process takes place looking at risk adjusted cash flow and how it impacts the company's value.
Thanks, Matthew, that's helpful. Maybe one more and probably know the answer here, Peter, Matthew, but I think you've spoken to potential opportunities with Native American tribes in their push into commercial casino. Obviously reservation gaming is about half of all gaming in the U.S. and very tricky there from a regulatory perspective, but if there's a creative way to get involved, perhaps on the non-gaming side where there's adjacent hotels to Native American casinos. Have you had any of those conversations? Is there any movement on that front or is it just too tricky to get anything done given all the restrictions as it relates to gaming,
It is very tricky we've looked hard at it for many years, but I will say this I think that the opportunity to maybe easing up now for a variety of reasons and that is the tribes becoming more commercial in many markets. So that opportunity may now be more open and just leave it at that. But yes, of course, we're very aware of that.
Yeah. Just massive part of the U.S. gaming industry. So curious how long or if and how we can start to crossover. So I appreciate the thoughts, everyone, thanks so much for taking my questions.
Thank you. By the way, this call, I was just looking at the clock sets an all-time records for either my many, many years with Penn or here at GLPI. Why don't we take maybe just one or two more questions? And then we'll wind up.
Sure. The next question is from the line of Daniel Adam with Loop Capital Markets.
All right, thank you. And good morning, everyone. Just one question for me. So yesterday, one of your competitors alluded to being open to embracing a joint venture structure for a certain deal should they arise. I'm wondering if you've considered that kind of structure and under what circumstances might a joint venture make more sense than going at it alone. Thanks.
That's a pretty fair question and the answer is we spend a lot of time examining that possibility. I don't know what we're prepared to say, Matt, do you want to make any comments?
I think that is a comment, obviously, for us to have every tool in our tool chest, we need to be able to access capital and get some value for our platform and our validation in a transaction where pricing might be aggressive. So we haven't done it to date, but we certainly have dialogue with the right folks. If and when it's appropriate to be able in a position to use it.
Great. Thank you.
How about one more question? Unless.
We have no additional questions at this time. Mr. Carlino would like to make some closing comments.
Well, simply to thank those who have dialed in this morning, we're excited about what we accomplished last year. We're particularly excited about the things that we believe are going to get done this year. It looks like another strong year. So we'll look forward to talking at the next quarter. And thank you all very much.
[Operator Instructions] Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.