PENN Entertainment (PENN) has announced a significant project aimed at relocating its Ameristar Casino Hotel Council Bluffs riverboat operations to a more contemporary, land-based site. This initiative, projected to cost between $180 million and $200 million, has received the green light from the Iowa Racing and Gaming Commission alongside an extension of Ameristar's agreement with the Iowa West Racing Association for 15 years.
The forthcoming Hollywood Casino Council Bluffs will boast a sprawling development of approximately 125,000 square feet. The new gaming space is expected to cover around 58,000 square feet and will feature more than 1,000 gaming positions consolidated on a single floor. This new facility is designed to seamlessly integrate with the existing ESPN BET sportsbook, a 160-room hotel, and various dining amenities.
The transition from the existing riverboat, which currently offers multilevel gaming, to this land-based location marks a strategic move for PENN. Todd George, Executive Vice President of Operations, expressed enthusiasm about this addition to the company’s development projects. This relocation is anticipated to take approximately 18 to 24 months to complete after the design and permitting phases conclude.
Financing for the project is supported by Gaming and Leisure Properties (GLPI, Financial), allowing PENN to access up to $150 million at a 7.10% cap rate. PENN has the flexibility to structure this financing as rent or opt for a 5-year term loan with the advantage of prepayment anytime without penalties.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 23 analysts, the average target price for Gaming and Leisure Properties Inc (GLPI, Financial) is $55.50 with a high estimate of $61.00 and a low estimate of $48.00. The average target implies an upside of 12.80% from the current price of $49.20. More detailed estimate data can be found on the Gaming and Leisure Properties Inc (GLPI) Forecast page.
Based on the consensus recommendation from 24 brokerage firms, Gaming and Leisure Properties Inc's (GLPI, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Gaming and Leisure Properties Inc (GLPI, Financial) in one year is $53.28, suggesting a upside of 8.29% from the current price of $49.2. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Gaming and Leisure Properties Inc (GLPI) Summary page.
GLPI Key Business Developments
Release Date: February 21, 2025
- Total Income from Real Estate: Increased by over $20 million compared to Q4 2023.
- Cash Rent Increase: Over $22 million due to acquisitions and escalation.
- Tioga Acquisition Cash Income: Increased by $3.6 million.
- Rockford Loan Cash Income: Increased by $2.8 million.
- Strategic Acquisition Cash Income: Increased by $2.3 million.
- Bally's Chicago Land Cash Income: Increased by $5 million.
- Bally's Tropicana Funding Cash Income: Increased by $1 million.
- Bally's Kansas City Shreveport Cash Income: Increased by $1.4 million.
- Ione Loan Cash Income: Increased by $400,000.
- Percentage Rent Adjustments and Escalation: Added approximately $6.2 million of cash income.
- Operating Expenses: Increased by $7.7 million, mainly due to non-cash adjustments in the provision for credit losses.
- 2025 AFFO Guidance: Ranges from $3.83 to $3.88 per diluted share and OP units.
- Anticipated Development Funding: Approximately $400 million expected.
- Rent Coverage Ratios: Ranging from 1.79 to 2.55 on master leases.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gaming and Leisure Properties Inc (GLPI, Financial) reported a significant increase in total income from real estate, exceeding the fourth quarter of 2023 by over $20 million.
- The company experienced a substantial rise in cash rent, driven by acquisitions and escalations, contributing over $22 million to cash income.
- GLPI's strategic acquisitions, such as the Tioga and Rockford Loan, have positively impacted cash income, demonstrating successful investment strategies.
- The company's tenant relationships are a competitive advantage, enabling GLPI to secure a meaningful share of gaming real estate transactions.
- GLPI maintains a strong financial position, providing flexibility for proactive capital deployment and laying the groundwork for future growth.
Negative Points
- GLPI's 2025 AFFO guidance is slightly below consensus, influenced by factors such as the timing of forward share settlements and development funding.
- Operating expenses increased by $7.7 million, primarily due to non-cash adjustments in the provision for credit losses.
- The timing and amount of development funding remain uncertain, with potential delays in project funding affecting financial projections.
- Interest expense assumptions for 2025 are impacted by multiple changes in 2024, including bond issuances and repayments.
- The company's rent coverage ratios, while strong, have seen fluctuations, with some properties facing challenges in achieving escalator thresholds.
