Gaming and Leisure Properties Has ‘Stable,’ Says Fitch

Gaming and Leisure Properties (NASDAQ:GLPI) was affirmed at a credit entry rating of “BBB-” — the lowest investiture level — with a “stable” outlook past Fitch Ratings.

The ratings bureau noted the cassino landlord’s deferred payment tier is hindered past gaming real landed estate investment funds trusts (REITs) having weaker dependent on(p) liquidity profiles than other commercial REITs, but GLPI’s leveraging ratio is within the 4.5x to 5.5x chain of comparably rated existent landed estate firms.

Fitch expects GLPI to control through and through the cycle with purchase at or infra 5.5x, which is seize for a ‘BBB-‘ rated U.S. REIT with the company’s plus profile,” according to the search firm. “GLPI’s ratings hold some tolerance for leveraging to temporarily surpass 5.5x for larger acquisitions; however, Fitch would await the troupe to yield to below 5.5x within 12-18 months of an acquisition through debt quittance from equity sales and retained cash in flows.”

Penn Entertainment is GLPI’s largest renter and other clients include Bally’s, Boyd Gaming, Caesars Entertainment and Cordish Cos.

Gaming and Leisure Client Stability

Compared to contender VICI Properties (NYSE: VICI), Gaming and Leisure’s Las Vegas exposure, including the Strip, is low.

However, the REIT is indirectly uncovered to kinetics inwards the U.S. casino nerve center because clients such as Bally’s, Boyd Gaming and Caesars Entertainment have substantial footprints there. That triplet combined for 29% of GLPI’s first-quarter rental income patch Penn, which operates the M Resort inward Henderson Nevada, and Cordish combined for 70%.

“The original leases experience long initial terms and cross-default provisions, providing stability and visibility to GLPI’s hard currency flows, and assist insulate the fellowship from single asset and/or market-level underperformance. Each publically traded major tenant accessed the capital markets throughout the pandemic and has intelligent liquidity,” added Fitch.

The ratings authority noted GLPI’s tenants, including Penn, have got weaker deferred payment profiles than the REIT itself, but those concerns are mitigated by long-term leases and default on provisions featured inward those contracts.

Gaming and Leisure Has Perks for Investors

Since existence spun away from William Penn in 2013, GLPI has been a steady dividend grower and it even out paid a special dividend inward late 2021. The shares closed today with a payout bear 5.82%.

Additionally, the REIT has a reputation for savvy deal-making, often scooping upwards the belongings assets of regional casinos at attractive prices. Gaming and Leisure itself has also been mentioned as a takeover target, but for now, that’s just old speculation. Broadly speaking, GLPI’s equilibrize tack is steady and the companion has avenues to bring up hard cash should it need to.

“GLPI’s portfolio is solely unencumbered, providing the fellowship with ample mental ability to borrow secured debt in a stress scenario below the tests inward its senior unsecured draw together and bank building covenants,” concluded Fitch. “The company has no secured debt and unsecured assets / meshing unsecured debt (UA/UD) is to a higher place 2.0x, giving the plentiful company contingent liquidity. The company’s assets are preponderantly regional, considered less cyclical than Las Vegas striptease assets.”

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