Gaming & Leisure Properties, Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our Operations GLPI is a self-administered and self-managed Pennsylvania REIT. The Company was formed from the 2013 tax-free spin-off of the real estate assets of Penn and was incorporated in Pennsylvania on February 13, 2013, as a wholly-owned subsidiary of Penn. On November 1, 2013, Penn contributed to GLPI, through a series of internal corporate restructurings, substantially all of the assets and liabilities associated with Penn's real property interests and real estate development business, as well as the assets and liabilities of the TRS Properties and then spun-off GLPI to holders of Penn's common and preferred stock in the Spin-Off. The Company elected on its U.S. federal income tax return for its taxable year that began on January 1, 2014 to be treated as a REIT and the Company, together with an indirect wholly-owned subsidiary of the Company, GLP Holdings, Inc., jointly elected to treat each of GLP Holdings, Inc., Louisiana Casino Cruises, Inc. (d/b/a Hollywood Casino Baton Rouge) and Penn Cecil Maryland, Inc. (d/b/a Hollywood Casino Perryville) as a "taxable REIT subsidiary" effective on the first day of the first taxable year of GLPI as a REIT. In addition, during 2020, the Company and Tropicana LV, LLC, a wholly owned subsidiary of the Company which holds the real estate of Tropicana Las Vegas, elected to treat Tropicana LV, LLC as a “taxable REIT subsidiary”. As a result of the Spin-Off, GLPI owns substantially all of Penn's former real property assets (as of the consummation of the Spin-Off) and leases back most of those assets to Penn for use by its subsidiaries, under the Penn Master Lease and owns and operates the TRS Properties through its indirect wholly-owned subsidiary, GLP Holdings, Inc. The assets and liabilities of GLPI were recorded at their respective historical carrying values at the time of the Spin-Off. GLPI's primary business consists of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements. As of December 31, 2020, GLPI's portfolio consisted of interests in 48 gaming and related facilities, including the TRS Segment, the real property associated with 33 gaming and related facilities operated by Penn, the real property associated with 7 gaming and related facilities operated by Caesars, the real property associated with 4 gaming and related facilities operated by Boyd and the real property associated with the Casino Queen in East St. Louis, Illinois. These facilities, including our corporate headquarters building, are geographically diversified across 16 states and contain approximately 24.3 million square feet. As of December 31, 2020, our properties were 100% occupied. We expect to continue growing our portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators under prudent terms. Amended Pinnacle Master Lease, Boyd Master Lease and Belterra Park Lease In April 2016, the Company acquired substantially all of the real estate assets of Pinnacle for approximately $4.8 billion. GLPI originally leased these assets back to Pinnacle, under the Pinnacle Master Lease, the term of which expires on April 30, 2031, with no purchase option, followed by four remaining 5-year renewal options (exercisable by the tenant) on the same terms and conditions. On October 15, 2018, the Company completed the previously announced Penn-Pinnacle Merger to accommodate Penn's acquisition of the majority of Pinnacle's operations, pursuant to a definitive agreement and plan of merger between Penn and Pinnacle, dated December 17, 2017. Concurrent with the Penn-Pinnacle Merger, the Company amended the Pinnacle Master Lease to allow for the sale of the operating assets of Ameristar Casino Hotel Kansas City, Ameristar Casino Resort Spa St. Charles and Belterra Casino Resort from Pinnacle to Boyd and entered into the Boyd Master Lease for these properties on terms similar to the Company’s Amended Pinnacle Master Lease. The Boyd Master Lease has an initial term of 10 years (from the original April 2016 commencement date of the Pinnacle Master Lease and expiring April 30, 2026), with no purchase option, followed by five 5-year renewal options (exercisable by the tenant) on the same terms and conditions. The Company also purchased the real estate assets of Plainridge Park from Penn for $250.0 million, exclusive of transaction fees and taxes and added this property to the Amended Pinnacle Master Lease. The Amended Pinnacle Master Lease was assumed by Penn at the consummation of the Penn-Pinnacle Merger. The Company also entered into the Belterra Park Loan with Boyd in connection with Boyd's acquisition of Belterra Park. In May 2020, the Company acquired the real estate of Belterra Park in satisfaction of the Belterra Park Loan, subject to the Belterra Park Lease with a Boyd affiliate operating the property. The Belterra Park Lease rent terms are consistent with the Boyd Master Lease. The annual rent is comprised of a fixed component, part of which is subject to an annual escalator of up to 2% if certain rent coverage ratio thresholds are met, and a component that is based on the performance of the facilities which is adjusted, subject to certain floors, every two years to an amount equal to 4% of the average annual net revenues of Belterra Park during the preceding two years in excess of a contractual baseline. The Meadows Lease The real estate assets of the Meadows are leased to Penn pursuant to the Meadows Lease. The Meadows Lease commenced on September 9, 2016 and has an initial term of 10 years, with no purchase option, and the option to renew for 36 Table of Contents three successive 5-year terms and one 4-year term (exercisable by the tenant) on the same terms and conditions. The Meadows Lease contains a fixed component, subject to annual escalators, and a component that is based on the performance of the facility, which is reset every two years to an amount determined by multiplying (i) 4% by (ii) the average annual net revenues of the facility for the trailing two-year period. The Meadows Lease contains an annual escalator provision for up to 5% of the base rent, if certain rent coverage ratio thresholds are met, which remains at 5% until the earlier of ten years or the year in which total rent is $31 million, at which point the escalator will be reduced to 2% annually thereafter. Amended and Restated Caesars Master Lease and Lumière Place Lease On October 1, 2018, the Company closed its previously announced transaction to acquire certain real property assets from Tropicana and certain of its affiliates pursuant to the Real Estate Purchase Agreement dated April 15, 2018 between Tropicana and GLP Capital, which was subsequently amended on October 1, 2018. Pursuant to the terms of the Amended Real Estate Purchase Agreement, the Company acquired the real estate assets of Tropicana Atlantic City, Tropicana Evansville, Tropicana Laughlin, Trop Casino Greenville and the Belle of Baton Rouge from Tropicana for an aggregate cash purchase price of $964.0 million, exclusive of transaction fees and taxes. Concurrent with the Tropicana Acquisition, Caesars acquired the operating assets of these properties from Tropicana pursuant to an Agreement and Plan of Merger dated April 15, 2018 by and among Tropicana, GLP Capital, Caesars and a wholly-owned subsidiary of Caesars and leased the GLP Assets from the Company pursuant to the terms of the Caesars Master Lease. Additionally, on October 1, 2018, the Company entered into the CZR loan in connection with Caesars’s acquisition of Lumière Place. The CZR loan was satisfied and replaced with the Lumière Place Lease on September 29, 2020, the initial term of which expires on October 31, 2033, with 4 separate renewal options of five years each, exercisable at the tenants' option. The Lumière Place Lease rent is subject to an annual escalator of up to 2% if certain rent coverage ratio thresholds are met. On June 15, 2020, the Company amended and restated the Caesars Master Lease (as amended, the "Amended and Restated Caesars Master Lease") to, (i) extend the initial term of 15 years to 20 years, with renewals of up to an additional 20 years at the option of Caesars, (ii) remove the variable rent component in its entirety commencing with the third lease year, (iii) in the third lease year increase annual land base rent to approximately $23.6 million and annual building base rent to approximately $62.1 million, (iv) provide fixed escalation percentages that delay the escalation of building base rent until the commencement of the fifth lease year with building base rent increasing annually by 1.25% in the fifth and sixth lease year, 1.75% in the seventh and eighth lease years and 2% in the ninth lease year and each lease year thereafter, (v) subject to the satisfaction of certain conditions, permit Caesars to elect to replace the Tropicana Evansville and/or Tropicana Greenville properties under the Amended and Restated Caesars Master Lease with one or more of Caesars Gaming Scioto Downs, The Row in Reno, Isle Casino Racing Pompano Park, Isle Casino Hotel – Black Hawk, Lady Luck Casino – Black Hawk, Waterloo, Bettendorf or Isle of Capri Casino Boonville, provided that the aggregate value of such new property, individually or collectively, is at least equal to the value of Tropicana Evansville or Tropicana Greenville, as applicable (vi) permit Caesars to elect to sell its interest in Belle of Baton Rouge and sever it from the Amended and Restated Caesars Master Lease (with no change to the rent obligation to the Company), subject to the satisfaction of certain conditions, and (vii) provide certain relief under the operating, capital expenditure and financial covenants thereunder in the event of facility closures due to pandemics, governmental restrictions and certain other instances of unavoidable delay. The effectiveness of the Amended and Restated Caesars Master Lease was subject to the review of certain gaming regulatory agencies and the expiration of applicable gaming regulatory advance notice periods which were received on July 23, 2020. On December 18, 2020, the Company and Caesars completed an Exchange Agreement with subsidiaries of Caesars in which Caesars transferred to the Company the real estate assets of Waterloo and Bettendorf in exchange for the transfer by the Company to Caesars of the real property assets of Tropicana Evansville, plus a cash payment of $5.7 million. Tropicana Las Vegas On April 16, 2020, the Company and certain of its subsidiaries closed on its previously announced transaction to acquire the real property associated with the Tropicana Las Vegas from Penn in exchange for rent credits of $307.5 million, which were applied against future rent obligations due under the parties' existing leases during 2020. An affiliate of Penn will continue to operate the casino and hotel business of the Tropicana Las Vegas pursuant to a triple net lease with GLPI for nominal rent for the earlier of two years (subject to three one-year extensions at the Company's option) or until the Tropicana Las Vegas is sold. We will conduct a sale process with respect to the Tropicana Las Vegas, with Penn receiving 75% of the net proceeds above $307.5 million (plus certain taxes, expenses and costs) if a sale agreement is signed during the first 12 months following closing and 50% of net proceeds above $307.5 million (plus certain taxes, expenses and costs) if a sale agreement is signed during the subsequent 12 months following closing. Penn will not be entitled to receive any net sale proceeds if the relevant sale agreement is signed at any time after 24 months from closing. 37 Table of Contents Morgantown Lease On October 1, 2020, the Company and Penn closed on their previously announced transaction whereby GLPI acquired the land under Penn's gaming facility under construction in Morgantown, Pennsylvania in exchange for $30.0 million in rent credits that were utilized by Penn in the fourth quarter of 2020. The Company is leasing the land back to an affiliate of Penn pursuant to the Morgantown Lease for an initial annual rent of $3.0 million, provided, however, that (i) on the opening date and on each anniversary thereafter the rent shall be increased by 1.5% annually (on a prorated basis for the remainder of the lease year in which the gaming facility opens) for each of the following three lease years and (ii) commencing on the fourth anniversary of the opening date and for each anniversary thereafter, (a) if the CPI increase is at least 0.5% for any lease year, the rent for such lease year shall increase by 1.25% of rent as of the immediately preceding lease year, and (b) if the CPI increase is less than 0.5% for such lease year, then the rent shall not increase for such lease year subject to escalation provisions following the opening of the property. Hollywood Casino Baton Rouge On November 25, 2020, the Company entered into a definitive agreement to sell the operations of our Hollywood Casino Baton Rouge to Casino Queen Holding Company Inc. ("Casino Queen") for $28.2 million. The Company will retain ownership of all real estate assets at Hollywood Casino Baton Rouge and will simultaneously enter into a master lease with Casino Queen, which will include the Casino Queen property in East St. Louis that is currently leased by us to them and the Hollywood Casino Baton Rouge facility. The initial annual cash rent will be approximately $21.4 million and the lease will have an initial term of 15 years with four 5 year renewal options exercisable by the tenant. This rental amount will be increased annually by 0.5% for the first six years. Beginning with the seventh lease year through the remainder of the lease term, if the CPI increases by at least 0.25% for any lease year then annual rent shall be increased by 1.25%, and if the CPI increase is less than 0.25% then rent will remain unchanged for such lease year.Additionally, the Company will complete the current landside development project that is in process and the rent under the master lease will be adjusted upon delivery to reflect a yield of 8.25% on GLPI's project costs. The Company will also have a right of first refusal with Casino Queen for other sale leaseback transactions up to $50 million over the next 2 years. Finally, upon the closing of the transaction, which is anticipated to occur in mid 2021, subject to regulatory approvals and customary closing conditions, GLPI will forgive the Casino Queen Loan which has been previously written off in return for a one-time cash payment of $4 million. Hollywood Casino Perryville On December 11, 2020, Penn agreed to purchase from the Company the operations of our Hollywood Casino Perryville, located in Perryville, Maryland, for $31.1 million, with the closing of such purchase, subject to regulatory approvals, expected to occur during calendar year 2021 on a date selected by Penn with reasonable prior notice to the Company unless otherwise agreed by both parties. Upon closing, the Company will lease the real estate assets of the Perryville facility to Penn pursuant to a lease providing for initial annual rent of $7.77 million, $5.83 million of which will be subject to escalation provisions beginning in the second lease year through the fourth lease year and shall increase by 1.50% and then to 1.25% for the remaining lease term. The escalation provisions beginning in the fifth lease year are subject to CPI being at least 0.5% for the preceding lease year. As of December 31, 2020, the majority of our earnings are the result of the rental revenues we receive from our triple-net master leases with Penn, Boyd and Caesars. Additionally, we have rental revenue from the Casino Queen property which is leased back to a third-party operator on a triple-net basis pursuant to the Casino Queen Lease. In addition to rent, the tenants are required to pay the following executory costs: (1) all facility maintenance, (2) all insurance required in connection with the leased properties and the business conducted on the leased properties, including coverage of the landlord's interests, (3) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor) and (4) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties. Additionally, in accordance with ASC 842, we record revenue for the ground lease rent paid by our tenants with an offsetting expense in land rights and ground lease expense within the Consolidated Statement of Income as we have concluded that as the lessee we are the primary obligor under the ground leases. We sublease these ground leases back to our tenants, who are responsible for payment directly to the landlord. Gaming revenue for our TRS Properties is derived primarily from gaming on slot machines and to a lesser extent, table game and poker revenue, which is highly dependent upon the volume and spending levels of customers at our TRS Properties. Other revenues at our TRS Properties are derived from our dining, retail and certain other ancillary activities. 38 Table of Contents Our Competitive Strengths We believe the following competitive strengths will contribute significantly to our success: Geographically Diverse Property Portfolio As of December 31, 2020, our portfolio consisted of 48 gaming and related facilities, including 45 rental properties, the TRS Segment. Our portfolio, including our corporate headquarters building, comprises approximately 24.3 million square feet and approximately 5,700 acres of land and is broadly diversified by location across 16 states. We expect that our geographic diversification will limit the effect of a decline in any one regional market on our overall performance. Financially Secure Tenants Three of the company's tenants, Penn, Caesars and Boyd, are leading, diversified, multi-jurisdictional owners and managers of gaming and pari-mutuel properties and established gaming providers with strong financial performance. All three of these tenants raised significant amounts of capital in 2020 to bolster their liquidity positions in response to COVID-19. Additionally, all of the aforementioned tenants are publicly traded companies that are subject to the informational filing requirements of the Securities Exchange Act of 1934, as amended, and are required to file periodic reports on Form 10-K and Form 10-Q and current reports on Form 8-K with the Securities and Exchange Commission ("SEC"). Readers are directed to Penn's, Caesar's and Boyd's respective websites for further financial information on these companies. Long-Term, Triple-Net Lease Structure Our real estate properties are leased under long-term triple-net leases guaranteed by our tenants, pursuant to which the tenant is responsible for all facility maintenance, insurance required in connection with the leased properties and the business conducted on the leased properties, including coverage of the landlord's interests, taxes levied on or with respect to the leased properties (other than taxes on our income) and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties. Resilient Regional Gaming Characteristics We believe that the recession resulting from COVID-19 pandemic has illustrated the resiliency of the regional gaming market. In spite of all our properties being forced to close during mid-March 2020, the Company collected all contractual rents, inclusive of rent credits, due in 2020. Furthermore, our tenants' results since they have reopened has been strong and in some cases better than prior to COVID-19, due to their increased focus on cost efficiencies and decreasing and/or eliminating lower margin amenities. Although we are unable to predict whether these results will continue, we believe that our assets should generate substantial cash flows well into the future for both ourselves and our tenants. Flexible UPREIT Structure We have the flexibility to operate through an umbrella partnership, commonly referred to as an UPREIT structure, in which substantially all of our properties and assets are held by GLP Capital or by subsidiaries of GLP Capital. Conducting business through GLP Capital allows us flexibility in the manner in which we structure and acquire properties. In particular, an UPREIT structure enables us to acquire additional properties from sellers in exchange for limited partnership units, which provides property owners the opportunity to defer the tax consequences that would otherwise arise from a sale of their real properties and other assets to us. As a result, this structure potentially may facilitate our acquisition of assets in a more efficient manner and may allow us to acquire assets that the owner would otherwise be unwilling to sell because of tax considerations. We believe that this flexibility will provide us an advantage in seeking future acquisitions. Experienced and Committed Management Team Our management team has extensive gaming and real estate experience. Peter M. Carlino, our chief executive officer, has more than 30 years of experience in the acquisition and development of gaming facilities and other real estate projects. Through years of public company experience, our management team also has extensive experience accessing both debt and equity capital markets to fund growth and maintain a flexible capital structure. Segment Information Consistent with how our Chief Operating Decision Maker (as such term is defined in ASC 280 - Segment Reporting ) reviews and assesses our financial performance, we have two reportable segments, GLP Capital and the TRS Segment. The GLP Capital reportable segment consists of the leased real property and represents the majority of our business. The TRS Segment consists of our operations at Hollywood Casino Perryville and Hollywood Casino Baton Rouge, as well as the real estate of Tropicana Las Vegas we acquired in 2020. 39 Table of Contents Executive Summary Financial Highlights We reported total revenues and income from operations of $1,153.2 million and $809.3 million, respectively, for the year ended December 31, 2020, compared to $1,153.5 million and $717.4 million, respectively, for the year ended December 31, 2019. The major factors affecting our results for the year ended December 31, 2020, as compared to the year ended December 31, 2019, were as follows: • Total income from real estate was $1,050.2 million and $1,025.1 million for the years ended December 31, 2020 and 2019, respectively. Total income from real estate increased by $25.1 million for the year ended December 31, 2020, as compared to the year ended December 31, 2019, primarily due to favorable non-cash straight line rent adjustments on our Amended Pinnacle Master Lease, Boyd Master Lease and Amended and Restated Caesars Master Lease. Additionally current year results were positively impacted by higher building base rents as the majority of our leases incurred escalators in 2019. This was partially offset by lower percentage rent from the Amended Pinnacle Master Lease and Boyd Master Lease which reset on May 1, 2020 and the Meadows Lease which reset on October 1, 2020 as well as lower ground rents due to the casino closures related to COVID-19. Finally, 2020 results were negatively impacted by lower percentage rent on the Penn Master Lease due to the temporary closures of Hollywood Casino Columbus and to a lesser extent, Hollywood Casino Toledo from mid-March 2020 to June 19, 2020. • Net revenues for our TRS Properties decreased by $25.4 million for the year ended December 31, 2020, as compared to the prior year, due to decreased revenues at both TRS Properties. The largest driver of the decrease resulted from the temporary closures of the properties during 2020 due to COVID-19. The TRS Properties were closed in mid-March 2020. Hollywood Casino Baton Rouge reopened to the public on May 18, 2020 and Hollywood Casino Perryville reopened on June 19, 2020 with various restrictions to limit capacity in accordance with regulatory requirements. • Total operating expenses decreased by $92.2 million for the year ended December 31, 2020, as compared to the prior year, primarily driven by a non-cash gain on the disposition of property related to the Evansville swap transaction of $41.4 million, the $13 million loan impairment charge recorded on the Casino Queen Loan in 2019, lower land rights and ground lease expense due primarily to the acceleration of amortization of expense related to the ground lease for the closure of the Resorts Casino Tunica property and lower ground rents due to the casino closures from COVID-19 and decreased expenses at both TRS Properties during 2020 due to the temporary closures from COVID-19. Finally, depreciation expense declined due primarily to the acceleration of $10.3 million related to the closure of the Resorts Casino Tunica property in 2019. • Other expenses, net decreased by $22.1 million for the year ended December 31, 2020, as compared to the prior year, primarily due to lower interest expense resulting from the refinancing of long term debt. • Net income increased by $114.8 million for the year ended December 31, 2020, as compared to the prior year, primarily due to the variances explained above. Segment Developments The following are recent developments that have had or are expected to have an impact on us by segment: GLP Capital • Due to temporary casino closures that occurred during 2020 as a result of COVID-19, for our leases that contain variable rent which is reset on varying schedules depending on the lease, we would expect downward resets. In the aggregate, the portion of our cash rents that are variable represented approximately 15% of our 2020 full year cash rental income. Of that variable rent, approximately 29% resets every five years which is associated with our Penn Master Lease and Casino Queen Lease, 41% resets every two years and 30% resets monthly which is associated with the Penn Master Lease (of which approximately 51% is subject to a floor or $22.9 million annually for Hollywood Casino Toledo). The percentage rent in the Penn Master Lease decreased by $4.0 million for the year ended December 31, 2020 compared to the year ended 2019 due to the temporary closures of Hollywood Casino Columbus and to a lesser extent, Hollywood Casino Toledo from mid-March 2020 to June 19, 2020, which was partially offset by the strong reopening performance of these properties in the third quarter of 2020 as well as the benefit Hollywood Casino Toledo experienced due to the 40 Table of Contents Detroit, Michigan gaming market being closed until August 5, 2020 and being closed once again from November 18, 2020 to December 23, 2020. • The variable rent resets in the Amended Pinnacle Master Lease and the Boyd Master Lease reset for the two year period ended April 30, 2020, which resulted in a $5.0 million and a $1.4 million reduction in annual variable rent on each of these leases, respectively, which will prevail for the subsequent two year period through April 30, 2022. In addition, the Meadows Lease variable rent reset occurred in October 2020 which lowered variable rent annually by $2.1 million. The Caesars Master Lease variable rent reset was scheduled to occur in October 2020; however, the variable rent component was removed in its entirety commencing with the third lease year in connection with the Amended and Restated Caesars Master Lease. We have no other variable resets scheduled to occur until 2022. • The fact that several wholly-owned subsidiaries of Penn lease a substantial number of our properties which account for a significant portion of our revenue, pursuant to two master leases and a single property lease. • On April 16, 2020, we acquired from Penn the real property assets of Tropicana Las Vegas in return for $307.5 million in rent credits. There can be no assurance that we will realize a return on this investment. • On October 1, 2020, the Company and Penn closed on their previously announced transaction whereby GLPI acquired the land under Penn's gaming facility under construction in Morgantown, Pennsylvania in exchange for $30.0 million in rent credits that were utilized in 2020. The Company is leasing the land back to an affiliate of Penn pursuant to the Morgantown Lease for an initial annual rent of $3.0 million, provided, however, that (i) on the opening date and on each anniversary thereafter the rent shall be increased by 1.5% annually (on a prorated basis for the remainder of the lease year in which the gaming facility opens) for each of the following three lease years and (ii) commencing on the fourth anniversary of the opening date and for each anniversary thereafter, (a) if the CPI increase is at least 0.5% for any lease year, the rent for such lease year shall increase by 1.25% of rent as of the immediately preceding lease year, and (b) if the CPI increase is less than 0.5% for such lease year, then the rent shall not increase for such lease year subject to escalation provisions following the opening of the property. • In connection with the Exchange Agreement with Caesars described earlier, whereby the Company acquired Waterloo and Bettendorf to replace Tropicana Evansville under the Amended and Restated Caesars Master Lease, the Company recorded a non-cash gain of $41.4 million in the fourth quarter of 2020, which represented the difference between the fair value of the properties received compared to the carrying value of Tropicana Evansville and the cash payment of $5.7 million made to Caesars. • On October 27, 2020, the Company entered into a series of definitive agreements pursuant to which a subsidiary of Bally's will acquire 100% of the equity interests in the Caesars subsidiary that currently operates Tropicana Evansville and the Company will reacquire the real property assets of Tropicana Evansville from Caesars for a cash purchase price of approximately $340.0 million. In addition, the Company entered into a real estate purchase agreement with Bally's pursuant to which the Company will purchase the real estate assets of the Dover Downs Hotel & Casino, located in Dover, Delaware which is currently owned and operated by Bally's, for a cash purchase price of approximately $144.0 million. At the closing of the transactions, which is expected in mid-2021, subject to regulatory approvals, the Tropicana Evansville and Dover Downs Hotel and Casino facilities will be added to the Bally's Master Lease. The Company anticipates that the Bally's Master Lease will have an initial term of 15 years, with no purchase option, followed by four five-year renewal options (exercisable by the tenant) on the same terms and conditions. Rent under the Bally's Master Lease will be $40.0 million annually and is subject to an annual escalator of up to 2% determined in relation to the annual increase in the Consumer Price Index. On November 6, 2020, the Company issued 9.2 million common shares at $36.25 to partially finance the funding required for this transaction. 41 Table of Contents TRS Segment • The Company's wholly-owned and operated TRS Properties closed in mid-March 2020 due to the COVID-19 outbreak. Our property in Baton Rouge reopened on May 18, 2020 and our property in Perryville, Maryland reopened on June 19, 2020 with enhanced safety protocols and capacity restrictions. To date, both properties have performed well in spite of lower attendance levels; however we are unable to predict whether this will continue as we believe results have benefited from pent up demand, reduced competition from non-gaming leisure related activities and federal stimulus benefits. • As previously discussed, the Company has entered into definitive agreements to sell the operations of the TRS Properties while maintaining the real estate assets and in turn entering into lease agreements with the operators. These transactions are subject to customary closing conditions and regulatory approvals and are anticipated to close in mid-2021. • On April 16, 2020, the Company and certain of its subsidiaries acquired the real property associated with the Tropicana Las Vegas from Penn. This asset has been placed in the Company's TRS Segment. An affiliate of Penn will continue to operate the casino and hotel business of the Tropicana Las Vegas pursuant to a triple net lease with GLPI for nominal rent for the earlier of two years (subject to three one-year extensions at the Company's option) or until the Tropicana Las Vegas is sold. The Company will conduct a sale process with respect to the Tropicana Las Vegas, with Penn receiving 75% of the net proceeds above $307.5 million (plus certain taxes, expenses and costs) if a sale agreement is signed during the first 12 months following closing and 50% of net proceeds above $307.5 million (plus certain taxes, expenses and costs) if a sale agreement is signed during the subsequent 12 months following closing. Penn will not be entitled to receive any net sale proceeds if the relevant sale agreement is signed at any time after 24 months from closing. Critical Accounting Estimates We make certain judgments and use certain estimates and assumptions when applying accounting principles in the preparation of our consolidated financial statements. The nature of the estimates and assumptions are material due to the levels of subjectivity and judgment necessary to account for highly uncertain factors or the susceptibility of such factors to change. We have identified the accounting for leases, income taxes, and real estate investments as critical accounting estimates, as they are the most important to our financial statement presentation and require difficult, subjective and complex judgments. We believe the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations and, in certain situations, could have a material adverse effect on our consolidated financial condition. Leases As a REIT, the majority of our revenues are derived from rent received from our tenants under long-term triple-net leases. Currently, we have master leases with Penn, Caesars and Boyd under which we lease thirty one, six and three properties, respectively, to these tenants. We also have a long-term lease with Casino Queen and separate single property leases with Penn, Caesars and Boyd. The accounting guidance under ASC 842 is complex and requires the use of judgments and assumptions by management to determine the proper accounting treatment of a lease. We perform a lease classification test upon the entry into any new tenant lease or lease modification to determine if we will account for the lease as an operating or sales-type lease. The revenue recognition model and thus the presentation of our financial statements is significantly different under operating leases and sales-type leases. Under the operating lease model, as the lessor, the assets we own and lease to our tenants remain on our balance sheet as real estate investments and we record rental revenues on a straight-line basis over the lease term. This includes the recognition of percentage rents that are fixed and determinable at the lease inception date on a straight-line basis over the entire lease term, resulting in the recognition of deferred rental revenue on our consolidated balance sheets. Deferred rental revenue is amortized to rental revenue on a straight-line basis over the remainder of the lease term. The lease term includes the initial non-cancelable lease term and any reasonably assured renewal periods. Contingent rental income that is not fixed and determinable at lease inception is recognized only when the lessee achieves the specified target. 42 Table of Contents Under the sales-type lease model, however, at lease inception we would record an investment in sales-type lease on our consolidated balance sheet rather than recording the actual assets we own. Furthermore, the cash rent we receive from tenants is not entirely recorded as rental revenue, but rather a portion is recorded as interest income and a portion is recorded as a reduction to the lease receivable. Under ASC 842, for leases with both land and building components, leases may be bifurcated between operating and sales-type leases. To determine if our real estate leases trigger full or partial sales-type lease treatment we conduct the five lease tests outlined in ASC 842 below. If a lease meets any of the five criteria below, it is accounted for as a sales-type lease. 1) Transfer of ownership - The lease transfers ownership of the underlying asset to the lessee by the end of the lease term. This criterion is met in situations in which the lease agreement provides for the transfer of title at or shortly after the end of the lease term in exchange for the payment of a nominal fee, for example, the minimum required by statutory regulation to transfer title. 2) Bargain purchase option - The lease contains a bargain purchase option, which is a provision allowing the lessee, at its option, to purchase the leased property for a price which is sufficiently lower than the expected fair value of the property at the date the option becomes exercisable and that is reasonably certain to be exercised. 3) Lease term - The lease term is for the major part of the remaining economic life of the underlying asset. However, if the commencement date falls at or near the end of the economic life of the underlying asset, this criterion shall not be used for purposes of classifying the lease. 4) Minimum lease payments - The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset. 5) Specialized nature - The underlying asset is of such specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. Additionally, the adoption of ASC 842 requires us to record right-of-use assets and lease liabilities on balance sheet for the assets we lease from third-party landlords, including equipment and real estate. As a lessee, we utilize our own incremental borrowing rate as the discount rate utilized to determine the initial lease liability and right-of-use asset we record on balance sheet, as well as the lease's classification as an operating or finance lease, using the same tests outlined above. Although both operating and finance leases result in the same right-of-use asset and lease liability being recorded on balance sheet at lease inception, the expense profile of the two lease types differs, in that expense is straight-lined over the term of an operating lease, while the expense profile under a finance lease is front-loaded. Furthermore, expense under the operating lease model is classified simply as lease expense, whereas the finance lease model breaks the expense into the interest expense and asset amortization expense. The tests outlined above, as well as the resulting calculations, require subjective judgments, such as determining, at lease inception, the fair value of the underlying leased assets, the residual value of the assets at the end of the lease term, the likelihood a tenant will exercise all renewal options (in order to determine the lease term), the estimated remaining economic life of the leased assets, and an allocation of rental income received under our Master Leases to the underlying leased assets. A slight change in estimate or judgment can result in a materially different financial statement presentation. Income Taxes We elected on our U.S. federal income tax return for our taxable year that began on January 1, 2014 to be treated as a REIT and we, together with an indirect wholly-owned subsidiary of the Company, GLP Holdings, Inc., jointly elected to treat each of GLP Holdings, Inc., Louisiana Casino Cruises, Inc. and Penn Cecil Maryland, Inc. as a "taxable REIT subsidiary" effective on the first day of the first taxable year of GLPI as a REIT. In addition, during 2020, the Company and Tropicana LV, LLC, a wholly owned subsidiary of the Company which holds the real estate of Tropicana Las Vegas, elected to treat Tropicana LV, LLC as a “taxable REIT subsidiary”. We intend to continue to be organized and to operate in a manner that will permit us to qualify as a REIT. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to shareholders determined without regard to the dividends paid deduction and excluding any net capital gain, and meet the various other requirements imposed by the Code relating to matters such as operating results, asset holdings, distribution levels, and diversity of stock ownership. As a REIT, we generally will not be subject to federal income tax on income that we distribute as dividends to our shareholders. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate income tax rates, and dividends paid to our 43 Table of Contents shareholders would not be deductible by us in computing taxable income. Any resulting corporate liability could be substantial and could materially and adversely affect our net income and net cash available for distribution to shareholders. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which we failed to qualify to be taxed as a REIT. It is not possible to state whether in all circumstances we would be entitled to this statutory relief. Our TRS Segment is able to engage in activities resulting in income that would not be qualifying income for a REIT. As a result, certain activities of the Company which occur within our TRS Segment are subject to federal and state income taxes. Real Estate Investments Real estate investments primarily represent land and buildings leased to the Company's tenants. Real estate investments that we received in connection with the Spin-Off were contributed to us at Penn's historical carrying amount. We record the acquisition of real estate at fair value, including acquisition and closing costs. The cost of properties developed by GLPI includes costs of construction, property taxes, interest and other miscellaneous costs incurred during the development period until the project is substantially complete and available for occupancy. We consider the period of future benefit of the asset to determine the appropriate useful lives. Depreciation is computed using a straight-line method over the estimated useful lives of the buildings and building improvements. If we used a shorter or longer estimated useful life, it could have a material impact on our results of operations. We continually monitor events and circumstances that could indicate that the carrying amount of our real estate investments may not be recoverable or realized. The factors considered by the Company in performing these assessments include evaluating whether the tenant is current on their lease payments, the tenant’s rent coverage ratio, the financial stability of the tenant and its parent company, and any other relevant factors. When indicators of potential impairment suggest that the carrying value of a real estate investment may not be recoverable, we estimate the fair value of the investment by calculating the undiscounted future cash flows from the use and eventual disposition of the investment. This amount is compared to the asset's carrying value. If we determine the carrying amount is not recoverable, we would recognize an impairment charge equivalent to the amount required to reduce the carrying value of the asset to its estimated fair value, calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). We group our real estate investments together by lease, the lowest level for which identifiable cash flows are available, in evaluating impairment. In assessing the recoverability of the carrying value, we must make assumptions regarding future cash flows and other factors. Factors considered in performing this assessment include current operating results, market and other applicable trends and residual values, as well as the effect of obsolescence, demand, competition and other factors. If these estimates or the related assumptions change in the future, we may be required to record an impairment loss. Results of Operations The following are the most important factors and trends that contribute or may contribute to our operating performance: • The fact that several wholly-owned subsidiaries of Penn lease a substantial number of our properties, pursuant to two master leases and two single property leases and account for a significant portion of our revenue. • The risks related to economic conditions, including uncertainty related to COVID-19 and the effect of such conditions on consumer spending for leisure and gaming activities, which may negatively impact our gaming tenants and operators and the variable rent and annual rent escalators we receive from our tenants as outlined in the long-term triple-net leases with these tenants. • The ability to refinance our significant levels of debt at attractive terms and obtain favorable funding in connection with future business opportunities. • The fact that the rules and regulations of U.S. federal income taxation are constantly under review by legislators, the IRS and the U.S. Department of the Treasury. Changes to the tax laws or interpretations thereof, with or without retroactive application, could materially and adversely affect GLPI's investors or GLPI. 44 Table of Contents The consolidated results of operations for the years ended December 31, 2020 and 2019 are summarized below: Year Ended December 31, 2020 2019 (in thousands) Total revenues $ 1,153,165 $ 1,153,473 Total operating expenses 343,891 436,050 Income from operations 809,274 717,423 Total other expenses (299,686) (321,778) Income before income taxes 509,588 395,645 Income tax expense 3,877 4,764 Net income $ 505,711 $ 390,881 In accordance with the SEC's recent amendments to modernize and simplify Regulation S-K, the Company has omitted the discussion comparing its operating results for the year ended December 31, 2019 to its operating results for the year ended December 31, 2018 from its Annual Report on Form 10-K for the year ended December 31, 2020. Readers are directed to Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for these disclosures. Certain information regarding our results of operations by segment for the years ended December 31, 2020 and 2019 is summarized below: Total Revenues Income (Loss) from Operations Year Ended December 31, Year Ended December 31, 2020 2019 2020 2019 (in thousands) GLP Capital $ 1,050,166 $ 1,025,082 $ 792,467 $ 694,215 TRS Segment 102,999 128,391 16,807 23,208 Total $ 1,153,165 $ 1,153,473 $ 809,274 $ 717,423 45 Table of Contents FFO, AFFO and Adjusted EBITDA Funds From Operations ("FFO"), Adjusted Funds From Operations ("AFFO") and Adjusted EBITDA are non-GAAP financial measures used by the Company as performance measures for benchmarking against the Company’s peers and as internal measures of business operating performance, which is used as a bonus metric. The Company believes FFO, AFFO and Adjusted EBITDA provide a meaningful perspective of the underlying operating performance of the Company’s current business. This is especially true since these measures exclude real estate depreciation and we believe that real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time. FFO, AFFO and Adjusted EBITDA are non-GAAP financial measures that are considered supplemental measures for the real estate industry and a supplement to GAAP measures. The National Association of Real Estate Investment Trusts defines FFO as net income (computed in accordance with GAAP), excluding (gains) or losses from sales of property and real estate depreciation. We define AFFO as FFO excluding stock based compensation expense, the amortization of debt issuance costs, bond premiums and original issuance discounts, other depreciation, amortization of land rights, straight-line rent adjustments, losses on debt extinguishment, and loan impairment charges, reduced by maintenance capital expenditures. Finally, we define Adjusted EBITDA as net income excluding interest, taxes on income, depreciation, (gains) or losses from sales of property, stock based compensation expense, straight-line rent adjustments, amortization of debt issuance costs, bond premiums and original issuance discounts, amortization of land rights, losses on debt extinguishment, and loan impairment charges. FFO, AFFO and Adjusted EBITDA are not recognized terms under GAAP. These non-GAAP financial measures: (i) do not represent cash flows from operations as defined by GAAP; (ii) should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating, investing and financing activities; and (iii) are not alternatives to cash flows as a measure of liquidity. In addition, these measures should not be viewed as an indication of our ability to fund our cash needs, including to make cash distributions to our shareholders, to fund capital improvements, or to make interest payments on our indebtedness. Investors are also cautioned that FFO, AFFO and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures reported by other real estate companies, including REITs due to the fact that not all real estate companies use the same definitions. Our presentation of these measures does not replace the presentation of our financial results in accordance with GAAP. 46 Table of Contents The reconciliation of the Company’s net income per GAAP to FFO, AFFO, and Adjusted EBITDA for the years ended December 31, 2020 and 2019 is as follows: Year Ended December 31, 2020 2019 (in thousands) Net income $ 505,711 $ 390,881 (Gains) losses from dispositions of property (41,393) 92 Real estate depreciation 220,069 230,716 Funds from operations $ 684,387 $ 621,689 Straight-line rent adjustments 4,576 34,574 Other depreciation 10,904 9,719 Amortization of land rights 12,022 18,536 Amortization of debt issuance costs, bond premiums and original issuance discounts (1) 10,503 11,455 Stock based compensation 20,004 16,198 Losses on debt extinguishment 18,113 21,014 Loan impairment charges — 13,000 Capital maintenance expenditures (3,130) (3,017) Adjusted funds from operations $ 757,379 $ 743,168 Interest, net 281,573 300,764 Income tax expense 3,877 4,764 Capital maintenance expenditures 3,130 3,017 Amortization of debt issuance costs, bond premiums and original issuance discounts (1) (10,503) (11,455) Adjusted EBITDA $ 1,035,456 $ 1,040,258 (1) Such amortization is a non-cash component included in interest, net. 47 Table of Contents The reconciliation of each segment’s net income per GAAP to FFO, AFFO, and Adjusted EBITDA for the years ended December 31, 2020 and 2019 is as follows: GLP Capital TRS Segment Year Ended December 31, Year Ended December 31, 2020 2019 2020 2019 (in thousands) Net income (loss) $ 508,060 $ 382,184 $ (2,349) $ 8,697 (Gains) losses from dispositions of property (41,402) 8 9 84 Real estate depreciation 220,069 230,716 — — Funds from operations $ 686,727 $ 612,908 $ (2,340) $ 8,781 Straight-line rent adjustments 4,576 34,574 — — Other depreciation 1,972 1,992 8,932 7,727 Amortization of land rights 12,022 18,536 — — Amortization of debt issuance costs, bond premiums and original issuance discounts (1) 10,503 11,455 — — Stock based compensation 20,004 16,198 — — Losses on debt extinguishment 18,113 21,014 — — Loan impairment charges — 13,000 — — Capital maintenance expenditures (186) (22) (2,944) (2,995) Adjusted funds from operations $ 753,731 $ 729,655 $ 3,648 $ 13,513 Interest, net (2) 265,597 290,360 15,976 10,404 Income tax expense 697 657 3,180 4,107 Capital maintenance expenditures 186 22 2,944 2,995 Amortization of debt issuance costs, bond premiums and original issuance discounts (1) (10,503) (11,455) — — Adjusted EBITDA $ 1,009,708 $ 1,009,239 $ 25,748 $ 31,019 (1) Such amortization is a non-cash component included in interest, net. (2) Interest expense, net for the GLP Capital segment is net of an intercompany interest elimination of $16.0 million and $10.4 million for the years ended December 31, 2020 and 2019. Net income, FFO, AFFO, and Adjusted EBITDA for our GLP Capital segment were $508.1 million, $686.7 million, $753.7 million and $1,009.7 million, respectively, for the year ended December 31, 2020. This compared to net income, FFO, AFFO, and Adjusted EBITDA, for our GLP Capital segment of $382.2 million, $612.9 million, $729.7 million and $1,009.2 million, respectively, for the year ended December 31, 2019. The increase in net income in our GLP Capital segment was primarily driven by a $73.2 million decrease in operating expenses from a gain on the disposition of property related to the Evansville swap transaction of $41.4 million in 2020, lower land right and ground lease expense due to the acceleration of these items for the Penn closure of its Resorts Casino Tunica property in 2019 and a $13.0 million loan impairment charge related to the Casino Queen Loan in 2019. The Company also had a $27.7 million decrease in other expenses, resulting from lower interest expense due to refinancing activities and lower debt extinguishment charges, along with a $25.1 million increase in income from real estate. The increase in income from real estate in our GLP Capital segment was primarily due to favorable non-cash straight-line rent adjustments of $30.0 million on our Amended Pinnacle Master Lease, Boyd Master Lease and Amended and Restated Caesars Master Lease in accordance with ASC 842. We also experienced higher building base rents as the majority of our leases incurred escalators in 2019. This was partially offset by lower percentage rent resets that occurred on May 1, 2020 for the Amended Pinnacle Master Lease of $3.3 million and the Boyd Master Lease of $0.9 million due primarily to the impact of the casino closures from COVID-19, lower percentage rent of $4.0 million on the Penn Master Lease due to the temporary closure of Hollywood Casino Columbus and to a lesser extent, Hollywood Casino Toledo from mid-March 2020 to June 19, 2020 due to COVID-19, and lower percentage rent on the Meadows Lease as the variable rent reset occurred in October 2020 which decreased percentage rent by $0.5 million. 48 Table of Contents The decrease in operating expenses in our GLP Capital segment for the year ended December 31, 2020 as compared to the prior year period was primarily from a gain on the disposition of property related to the Evansville swap transaction of $41.4 million along with lower depreciation expense and land right amortization expense in our REIT segment of $24.1 million primarily from lower rent expense on the Company's long term ground leases due to the impact of COVID-19 and the acceleration of depreciation and amortization in 2019 resulting from the closing of Penn's Resorts Casino Tunica property. Additionally, there was a loan impairment charge of $13.0 million for the year ended December 31, 2019 related to the Casino Queen Loan. These items were partially offset by charges of $6.3 million associated with severance and stock based compensation acceleration charges for the departure of our former chief financial officer. The decrease in other expenses, net for the year ended December 31, 2020 compared to the prior year was driven by lower interest expense from our refinancing activities that occurred in the third quarter of 2019 and first quarter of 2020 and lower debt extinguishment charges compared to the prior year. The increase in FFO for our GLP Capital segment for the year ended December 31, 2020 is due to the items described above, excluding gains from the disposition of property and real estate depreciation. The increase in AFFO is due to the items described above, excluding the impact of straight-line rent adjustments, loan impairment charges and the other items listed on the previous table. The net loss of $2.3 million for our TRS Segment for the year ended December 31, 2020 as compared to the net income of $8.7 million for the prior year is primarily related to the impact of the mandated closures of our facilities during mid-March 2020 to May and June 2020 due to COVID-19 along with an increase in depreciation expense related to the acquisition of Tropicana Las Vegas. Revenues Revenues for the years ended December 31, 2020 and 2019 were as follows (in thousands): Year Ended December 31, Percentage 2020 2019 Variance Variance Rental income $ 1,031,036 $ 996,166 $ 34,870 3.5 % Interest income from real estate loans 19,130 28,916 (9,786) (33.8) % Total income from real estate 1,050,166 1,025,082 25,084 2.4 % Gaming, food, beverage and other 102,999 128,391 (25,392) (19.8) % Total revenues $ 1,153,165 $ 1,153,473 $ (308) — % Total income from real estate For the years ended December 31, 2020 and 2019, total income from real estate was $1,050.2 million and $1,025.1 million, respectively, for our GLP Capital segment. In accordance with ASC 842, the Company records revenue for the ground lease rent paid by its tenants with an offsetting expense in land rights and ground lease expense within the consolidated statement of income as the Company has concluded that as the lessee it is the primary obligor under the ground leases. The Company subleases these ground leases back to its tenants, who are responsible for payment directly to the landlord. Total income from real estate increased $25.1 million, or 2.4%, for the year ended December 31, 2020, as compared to the year ended December 31, 2019. As previously discussed, this was primarily due to favorable non-cash straight line rent adjustments on our Amended Pinnacle Master Lease, Boyd Master Lease and the Amended and Restated Caesars Master Lease in accordance with ASC 842. Additionally the current year was positively impacted by higher building base rents as the majority of our leases incurred escalators in 2019. This was partially offset by lower ground lease rents due to the impact of COVID-19, lower percentage rent from the Amended Pinnacle Master Lease and Boyd Master Lease which reset on May 1, 2020 and the Meadows Lease which reset on October 1, 2020. Finally, the year ended December 31, 2020 was negatively impacted by lower percentage rent on the Penn Master Lease due to the closures of Hollywood Casino Columbus and to a lesser extent, Hollywood Casino Toledo. The reason for the decline in interest income from real estate loans was due to the CZR loan and Belterra Park Loan both being satisfied in 2020 as the Company acquired the real estate subject to the Lumière Place Lease and the Belterra Park Lease. See Note 8 in the Notes to the Consolidated Financial Statements for further details. 49 Table of Contents Details of the Company's income from real estate for the year ended December 31, 2020 was as follows (in thousands): Year Ended December 31, 2020 Penn Master Lease Amended Pinnacle Master Lease Caesars Master Lease Lumiere Lease Boyd Master Lease Belterra Lease PENN - Meadows Lease Casino Queen Lease PENN Morgantown Lease Total Building base rent $ 279,406 $ 227,201 $ 62,156 $ 5,828 $ 75,643 $ 1,783 $ 15,811 $ 9,101 $ — $ 676,929 Land base rent 93,969 71,256 15,916 — 11,785 1,263 — — 750 194,939 Percentage rent 82,595 28,452 10,020 — 10,308 1,211 10,637 5,424 — 148,647 Total cash rental income (1) $ 455,970 $ 326,909 $ 88,092 $ 5,828 $ 97,736 $ 4,257 $ 26,448 $ 14,525 $ 750 $ 1,020,515 Straight-line rent adjustments 8,926 (10,555) (2,980) — (1,448) (808) 2,289 — — (4,576) Ground rent in revenue 2,317 5,770 5,299 — 1,519 — — — 14,905 Other rental revenue — — — — — — 192 — — 192 Total rental income $ 467,213 $ 322,124 $ 90,411 $ 5,828 $ 97,807 $ 3,449 $ 28,929 $ 14,525 $ 750 $ 1,031,036 Interest income from mortgaged real estate — — — 16,976 — 2,154 — — — 19,130 Total income from real estate $ 467,213 $ 322,124 $ 90,411 $ 22,804 $ 97,807 $ 5,603 $ 28,929 $ 14,525 $ 750 $ 1,050,166 (1) Included in cash rental income were rent credits of $337.5 million that were recognized in connection with the Tropicana Las Vegas and Morgantown transactions with Penn. See Note 7 in the Notes to the Consolidated Financial Statements for additional information. Gaming, food, beverage and other revenue Gaming, food, beverage and other revenue for our TRS Properties decreased by $25.4 million, or 19.8%, for the year ended December 31, 2020, as compared to the year ended December 31, 2019. These properties were closed in mid-March 2020 due to COVID-19. Hollywood Casino Baton Rouge reopened to the public on May 18, 2020 and Hollywood Casino Perryville reopened on June 19, 2020 with various restrictions to limit capacity in accordance with regulatory requirements. Results since reopening have exceeded the corresponding periods in the prior years as spend per visit has increased which has more than offset lower visitation levels. Operating Expenses Operating expenses for the years ended December 31, 2020 and 2019 were as follows (in thousands): Year Ended December 31, Percentage 2020 2019 Variance Variance Gaming, food, beverage and other $ 56,698 $ 74,700 $ (18,002) (24.1) % Land rights and ground lease expense 29,041 42,438 (13,397) (31.6) % General and administrative 68,572 65,385 3,187 4.9 % Gains (losses) from disposition of properties (41,393) 92 (41,485) (45,092.4) % Depreciation 230,973 240,435 (9,462) (3.9) % Loan impairment charges — 13,000 (13,000) N/A Total operating expenses $ 343,891 $ 436,050 $ (92,159) (21.1) % Gaming, food, beverage and other expense Gaming, food, beverage and other expense for our TRS Properties decreased by approximately $18.0 million, or 24.1%, for the year ended December 31, 2020, as compared to the year ended December 31, 2019, primarily due to the impact of COVID-19, which temporarily forced our TRS Properties to close as previously discussed. Land rights and ground lease expense Land rights and ground lease expense includes the amortization of land rights and rent expense related to the Company's long-term ground leases. Land rights and ground lease expense decreased by $13.4 million, or 31.6%, for the year 50 Table of Contents ended December 31, 2020, as compared to the year ended December 31, 2019, primarily due to the acceleration of amortization expense of $6.3 million related to the closure of Penn's Resorts Casino Tunica property in 2019 and lower ground lease rents paid by our tenants in 2020 that are based on the facilities' revenues which declined due to the impact of COVID-19. We sublease these ground leases back to our tenants, who are responsible for payment directly to the applicable landlord. These amounts are required to be recorded in both revenue and expense within the consolidated statements of income as we have concluded that as the lessee the Company is the primary obligor under the ground leases. General and administrative expense General and administrative expenses include items such as compensation costs (including stock-based compensation awards), professional services and costs associated with development activities. General and administrative expenses increased by $3.2 million, or 4.9%, for the year ended December 31, 2020, as compared to the year ended December 31, 2019. This is primarily attributable to the negative impact from severance and stock acceleration charges of $6.3 million, related to the departure of our former chief financial officer which were partially offset by lower payroll costs primarily attributable to the temporary closures of our TRS Properties due to COVID-19 and lower bonus expense. Gains and losses from dispositions of property In connection with the Exchange Agreement with Caesars, whereby the Company acquired Waterloo and Bettendorf to replace Tropicana Evansville under the Amended and Restated Caesars Master Lease, the Company recorded a non-cash gain of $41.4 million in the fourth quarter of 2020 which represented the difference between the fair value of the properties received compared to the carrying value of Tropicana Evansville and the cash payment of $5.7 million. Depreciation expense Depreciation expense decreased by $9.5 million, or 3.9%, to $231.0 million for the year ended December 31, 2020 as compared to the year ended December 31, 2019, primarily due to the closure of the Resorts Casino Tunica property in 2019 which resulted in the acceleration of $10.3 million of depreciation expense to bring the net book value related to the building value of this property to zero. Loan impairment charges On March 17, 2017 the Company provided the Casino Queen Loan to CQ Holding Company, to partially finance its acquisition of Lady Luck Casino in Marquette, Iowa. During 2018, the operating results of Casino Queen declined substantially and Casino Queen defaulted under its senior credit agreement and also the Casino Queen Loan. As a result, the operations of Casino Queen were put up for sale during the fourth quarter of 2018. At December 31, 2018, active negotiations for the sale of Casino Queen's operations were taking place and full payment of the principal was still expected, due to the anticipation that the operations were to be sold in the near term for an amount allowing for repayment of the full $13.0 million of loan principal due to GLPI. During 2019, the operating results of Casino Queen continued to decline, the secured debt of Casino Queen was sold to a third-party casino operator at a discount and the Company no longer expected the Casino Queen Loan to be repaid. Therefore, the Company recorded an impairment charge of $13.0 million through the Consolidated Statement of Income for the year ended December 31, 2019 to reflect the write-off of the Casino Queen Loan. Other income (expenses) Other income (expenses) for the years ended December 31, 2020 and 2019 were as follows (in thousands): Year Ended December 31, Percentage 2020 2019 Variance Variance Interest expense $ (282,142) $ (301,520) $ 19,378 (6.4) % Interest income 569 756 (187) (24.7) % Losses on debt extinguishment (18,113) (21,014) 2,901 (13.8) % Total other expenses $ (299,686) $ (321,778) $ 22,092 (6.9) % 51 Table of Contents Interest expense For the year ended December 31, 2020, interest expense related to our fixed and variable rate borrowings was $282.1 million, as compared to $301.5 million in the year ended December 31, 2019. Interest expense decreased primarily due to refinancing activities, such as the issuance of $400 million of 3.35% senior unsecured notes due 2024 and $700 million of 4.000% senior unsecured notes due 2030 during the third quarter of 2019. These proceeds were utilized to repay higher cost unsecured borrowings with near term maturities. Interest expense also benefited from the first quarter 2020 redemption of $215.2 million of 4.875% senior unsecured notes that were due in November 2020 and $400.0 million of 4.375% of senior unsecured notes that were due in April 2021, which were funded by borrowings under our revolving credit facility. Towards the end of the first quarter of 2020, we fully drew down our revolving credit facility by borrowing just over $530 million to increase liquidity levels given the near term uncertainty associated with COVID-19. We subsequently repaid all of our outstanding advances on our revolving credit facility on June 25, 2020, with cash on hand and the net proceeds from our 4.00%, $500 million unsecured note issuance due in January 2031 and Term Loan A-2 borrowings. On August 18, 2020, we raised an additional $200 million of 4.00%, unsecured notes at a premium to par and used the proceeds to repay Term Loan A-1 borrowings. Although these latter two transactions had a negative impact on interest expense they further increased the duration and fixed rate nature of our debt profile. Losses on debt extinguishment In the first quarter of 2020, the Company redeemed all $215.2 million aggregate principal amount of the Company's outstanding 4.875% senior unsecured notes due in November 2020 and all $400 million aggregate principal amount of the Company's outstanding 4.375% senior unsecured notes due in April 2021, resulting in the retirement of such senior notes. The Company recorded losses on the early extinguishment of debt related to the current year retirements of $18.1 million for the year ended December 31, 2020 primarily for call premium charges and debt issuance write-offs. On September 12, 2019, the Company completed a cash tender offer (the "2019 Tender Offer") to purchase its $1,000 million aggregate principal amount 4.875% Senior Unsecured Notes due 2020 (the "2020 Notes"). The Company received early tenders from the holders of approximately $782.6 million in aggregate principal of the 2020 Notes, or approximately 78% of its outstanding 2020 Notes, in connection with the 2019 Tender Offer at a price of 102.337% of the unpaid principal amount plus accrued and unpaid interest through the settlement date. Subsequent to the early tender deadline, an additional $2.2 million in aggregate principal of the 2020 Notes was tendered at a price of 99.337% of the unpaid principal amount plus accrued and unpaid interest through the settlement date, for a total redemption of $784.8 million of the 2020 Notes. The Company recorded a loss on the early extinguishment of debt related to the 2019 Tender Offer, of approximately $21.0 million, for the difference between the reacquisition price of the tendered 2020 Notes and their net carrying value. Taxes Our income tax expense decreased $0.9 million for the year ended December 31, 2020 as compared to the year ended December 31, 2019. During the year ended December 31, 2020, we had income tax expense of approximately $3.9 million, compared to income tax expense of $4.8 million during the year ended December 31, 2019. Our income tax expense is primarily driven from the operations of the TRS Segment, which are taxed at the corporate rate. Our effective tax rate (income taxes as a percentage of income before income taxes) was 0.8% and 1.2% for the years ended December 31, 2020 and 2019, respectively. Liquidity and Capital Resources Our primary sources of liquidity and capital resources are cash flow from operations, borrowings from banks, and proceeds from the issuance of debt and equity securities. Net cash provided by operating activities was $428.1 million and $750.3 million during the years ended December 31, 2020 and 2019, respectively. The decrease in net cash provided by operating activities of $322.2 million for the year ended December 31, 2020 as compared to the year ended December 31, 2019 was primarily due to a decrease in cash receipts from tenants and customers of $361.6 million, partially offset by $21.9 million and $13.4 million decreases in cash paid for operating expenses and interest, respectively. The decrease in cash receipts collected from our tenants and customers for the year ended December 31, 2020 as compared to the corresponding period in the prior year was primarily due to the recognition of $337.5 million in non-cash rent recognized in connection with the Tropicana Las Vegas and Morgantown transactions and the impact of COVID-19, which forced our TRS Properties to temporarily close in mid-March 2020 until May and June of 2020. The reason for the decline in cash paid for operating expenses is primarily attributable to the temporary closures of our TRS properties. 52 Table of Contents Investing activities used net cash of $9.5 million and $2.8 million during the years ended December 31, 2020 and 2019, respectively. Net cash used in investing activities during the year ended December 31, 2020 primarily consisted of capital expenditures of $3.1 million and $5.9 million for the acquisition of real estate assets primarily relating to the Evansville swap transaction. Net cash used in investing activities during the year ended December 31, 2019 primarily consisted of capital expenditures of $3.0 million, partially offset by proceeds from sales of property and equipment of $0.2 million. Financing activities provided net cash of $63.2 million during the year ended December 31, 2020 and used net cash of $746.4 million during the year ended December 31, 2019. Net cash provided by financing activities for the year ended December 31, 2020 was driven by $2,076.4 million of proceeds from the issuance of long-term debt and $320.9 million of net proceeds from the issuance of common stock. During the year ended December 31, 2020, we issued approximately 9.2 million shares of our common stock in a primary equity offering and approximately 0.1 million shares of common stock through our ATM. This was partially offset by repayments of long-term debt of $2,060.9 million, dividend payments of $230.5 million, $15.7 million of premium and related costs paid on the tender of senior unsecured notes, taxes paid related to shares withheld for tax purposes on restricted stock award vestings of $15.3 million and financing costs of $11.6 million. Net cash used in financing activities for the year ended December 31, 2019 was driven by repayments of long-term debt of $1,477.9 million, dividend payments of $589.1 million, $18.9 million of premium and related costs paid on the tender of senior unsecured notes, taxes paid related to shares withheld for tax purposes on restricted stock award vestings, net of stock option exercises of $9.1 million and financing costs of $10.0 million, partially offset by $1,358.9 million of proceeds from the issuance of long-term debt. During the year ended December 31, 2019, the Company issued $1,100.0 million par value in new senior unsecured notes, completed a cash tender for a portion of our 2020 Notes, partially repaid borrowings under our Term Loan A-1 and revolving credit facilities and launched a $600 million ATM Program. Capital Expenditures Capital expenditures are accounted for as either capital project or capital maintenance (replacement) expenditures. Capital project expenditures are for fixed asset additions that expand an existing facility or create a new facility. The cost of properties developed by the Company include costs of construction, property taxes, interest and other miscellaneous costs incurred during the development period until the project is substantially complete and available for occupancy. Capital maintenance expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out or no longer cost effective to repair. During the years ended December 31, 2020 and 2019 we spent approximately $3.1 million and $3.0 million respectively, for capital maintenance expenditures. The majority of the capital maintenance expenditures were for slot machines and slot machine equipment at our TRS Properties. Our tenants are responsible for capital maintenance expenditures at our leased properties. Debt Senior Unsecured Credit Facility Prior to June 25, 2020, the Company's senior unsecured credit facility (the "Credit Facility"), consisted of a $1,175 million revolving credit facility (the "Revolver") with a maturity date of May 21, 2023, and a $449 million Term Loan A-1 facility with a maturity date of April 28, 2021. The Company fully drew down on its Revolver in the first quarter of 2020 to increase its liquidity position and repay certain senior unsecured notes as described below. On June 25, 2020, the Company entered into an amendment to the Credit Facility (as amended, the "Amended Credit Facility" which extended the maturity date of approximately $224 million of outstanding Term Loan A-1 facility borrowings to May 21, 2023, which term loans are now classified as a new tranche of term loans (Term Loans A-2). Additionally, the Company borrowed incremental Term Loans A-2 totaling $200 million. Furthermore, on June 25, 2020, the Company also closed on an offering of $500 million of 4.00% unsecured senior notes due in January 2031 priced at a slight discount to par. The Company utilized the proceeds from these two financings along with cash on hand to repay all outstanding obligations under its Revolver. On August 18, 2020, the Company borrowed an additional $200 million of 4.00% unsecured senior notes due in January 2031 priced at a premium to par. The Company utilized the net proceeds from this additional borrowing to repay indebtedness under the Term Loan A-1 facility. At December 31, 2020, the Amended Credit Facility had a gross outstanding balance of $424.0 million, consisting of the $424.0 million Term Loan A-2 facility. No amounts were outstanding under the Revolver. Additionally, at December 31, 53 Table of Contents 2020, the Company was contingently obligated under letters of credit issued pursuant to the Amended Credit Facility with face amounts aggregating approximately $0.4 million, resulting in $1,174.6 million of available borrowing capacity under the Revolver. The interest rates payable on the loans are, at the Company's option, equal to either a LIBOR rate or a base rate plus an applicable margin, which ranges from 1.0% to 2.0% per annum for LIBOR loans and 0.0% to 1.0% per annum for base rate loans, in each case, depending on the credit ratings assigned to the Amended Credit Facility. At December 31, 2020, the applicable margin was 1.50% for LIBOR loans and 0.50% for base rate loans. In addition, the Company is required to pay a commitment fee on the unused portion of the commitments under the Revolver at a rate that ranges from 0.15% to 0.35% per annum, depending on the credit ratings assigned to the Amended Credit Facility. At December 31, 2020, the commitment fee rate was 0.25%. The Company is not required to repay any loans under the Amended Credit Facility prior to maturity and may prepay all or any portion of the loans under the Amended Credit Facility prior to maturity without premium or penalty, subject to reimbursement of any LIBOR breakage costs of the lenders. The Company's wholly owned subsidiary, GLP Capital is the primary obligor under the Amended Credit Facility, which is guaranteed by GLPI. The Amended Credit Facility contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of GLPI and its subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations or pay certain dividends and other restricted payments. The Amended Credit Facility contains the following financial covenants, which are measured quarterly on a trailing four-quarter basis: a maximum total debt to total asset value ratio, a maximum senior secured debt to total asset value ratio, a maximum ratio of certain recourse debt to unencumbered asset value and a minimum fixed charge coverage ratio. In addition, GLPI is required to maintain a minimum tangible net worth and its status as a REIT. GLPI is permitted to pay dividends to its shareholders as may be required in order to maintain REIT status, subject to the absence of payment or bankruptcy defaults. GLPI is also permitted to make other dividends and distributions subject to pro forma compliance with the financial covenants and the absence of defaults. The Amended Credit Facility also contains certain customary affirmative covenants and events of default, including the occurrence of a change of control and termination of the Penn Master Lease (subject to certain replacement rights). The occurrence and continuance of an event of default under the Amended Credit Facility will enable the lenders under the Amended Credit Facility to accelerate the loans and terminate the commitments thereunder. At December 31, 2020, the Company was in compliance with all required financial covenants under the Amended Credit Facility. Senior Unsecured Notes At December 31, 2020, the Company had an outstanding balance of $5,375.0 million of senior unsecured notes (the "Senior Notes"). In the first quarter of 2020, the Company redeemed all $215.2 million aggregate principal amount of the Company’s outstanding 4.875% senior unsecured notes due in November 2020 and all $400 million aggregate principal amount of the Company’s outstanding 4.375% senior unsecured notes due in April 2021, incurring a loss on the early extinguishment of debt related to the redemption of $17.3 million, primarily for call premium charges and debt issuance write-offs. On June 25, 2020, the Company issued $500 million of 4.00% senior unsecured notes due January 2031 at an issue price equal to 98.827% of the principal amount to repay indebtedness under its Revolver. On August 18, 2020 the Company issued an additional $200 million of 4.00% senior unsecured notes due January 2031 at an issue price equal to 103.824% of the principal amount to repay Term Loan A-1 indebtedness, incurring a loss on the early extinguishment of debt of $0.8 million, related to debt issuance write-offs. These bond offerings have extended the maturities of our long-term debt. On August 29, 2019, the Company issued $400 million of 3.35% Senior Unsecured Notes maturing on September 1, 2024 at an issue price equal to 99.899% of the principal amount (the "2024 Notes") and $700 million of 4.00% Senior Unsecured Notes maturing on January 15, 2030 at an issue price equal to 99.751% of the principal amount (the "2030 Notes"). Interest on the 2024 Notes is payable semi-annually on March 1 and September 1 of each year, commencing on March 1, 2020. Interest on the 2030 Notes is payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2020. The net proceeds from the sale of the 2024 Notes and 2030 Notes were used to (i) finance the Company's cash tender offer to purchase its 4.875% Senior Unsecured Notes due 2020 (described below) (ii) repay outstanding borrowings under the Company's revolving credit facility and (iii) repay a portion of the outstanding borrowings under the Company's Term Loan A-1 facility. On September 12, 2019, the Company completed a cash tender offer (the "2019 Tender Offer") to purchase its $1,000 million aggregate principal amount 4.875% Senior Unsecured Notes due 2020 (the "2020 Notes"). The Company received early tenders from the holders of approximately $782.6 million in aggregate principal of the 2020 Notes, or approximately 78% of its 54 Table of Contents outstanding 2020 Notes, in connection with the 2019 Tender Offer at a price of 102.337% of the unpaid principal amount plus accrued and unpaid interest through the settlement date. Subsequent to the early tender deadline, an additional $2.2 million in aggregate principal of the 2020 Notes was tendered at a price of 99.337% of the unpaid principal amount plus accrued and unpaid interest through the settlement date, for a total redemption of $784.8 million of the 2020 Notes. The Company recorded a loss on the early extinguishment of debt related to the 2019 Tender Offer, of approximately $21.0 million, for the difference between the reacquisition price of the tendered 2020 Notes and their net carrying value. The Company may redeem the Senior Notes of any series at any time, and from time to time, at a redemption price of 100% of the principal amount of the Senior Notes redeemed, plus a "make-whole" redemption premium described in the indenture governing the Senior Notes, together with accrued and unpaid interest to, but not including, the redemption date, except that if Senior Notes of a series are redeemed 90 or fewer days prior to their maturity, the redemption price will be 100% of the principal amount of the Senior Notes redeemed, together with accrued and unpaid interest to, but not including, the redemption date. If GLPI experiences a change of control accompanied by a decline in the credit rating of the Senior Notes of a particular series, the Company will be required to give holders of the Senior Notes of such series the opportunity to sell their Senior Notes of such series at a price equal to 101% of the principal amount of the Senior Notes of such series, together with accrued and unpaid interest to, but not including, the repurchase date. The Senior Notes also are subject to mandatory redemption requirements imposed by gaming laws and regulations. The Senior Notes were issued by GLP Capital, L.P. and GLP Financing II, Inc. (the "Issuers"), two wholly-owned subsidiaries of GLPI, and are guaranteed on a senior unsecured basis by GLPI. The guarantees of GLPI are full and unconditional. The Senior Notes are the Issuers' senior unsecured obligations and rank pari passu in right of payment with all of the Issuers' senior indebtedness, including the Credit Facility, and senior in right of payment to all of the Issuers' subordinated indebtedness, without giving effect to collateral arrangements. The Senior Notes contain covenants limiting the Company’s ability to: incur additional debt and use its assets to secure debt; merge or consolidate with another company; and make certain amendments to the Penn Master Lease. The Senior Notes also require the Company to maintain a specified ratio of unencumbered assets to unsecured debt. These covenants are subject to a number of important and significant limitations, qualifications and exceptions. At December 31, 2020, the Company was in compliance with all required financial covenants under its Senior Notes. Finance Lease Liability The Company assumed the finance lease obligations related to certain assets at its Aurora, Illinois property. GLPI recorded the asset and liability associated with the finance lease on its consolidated balance sheet. The original term of the finance lease is 30 years and it will terminate in 2026. 55 Table of Contents Summarized financial information for Subsidiary Issuers and Parent Guarantor As of December 31, 2020 As of December 31, 2019 Real estate investments, net $ 2,720,767 $ 2,514,806 Real estate loans — 246,000 Right-of-use assets and land rights, net 121,866 181,593 Cash and cash equivalents 480,066 4,281 Long term debt, net of unamortized debt issuance costs, bond premiums and original issuance discounts 5,754,689 5,737,962 Accrued interest 72,285 60,695 Lease liabilities 58,654 89,856 Deferred rental revenue 265,891 271,837 For the year ended December 31, 2020 For the year ended December 31, 2019 Revenues $ 580,428 $ 575,451 Income from operations 446,708 384,170 Interest expense (282,142) (301,520) Net income 146,323 61,734 The financial information presented above is that of the subsidiary issuers and parent guarantor and the financial information of non-issuer subsidiaries has been excluded. The financial information of subsidiary issuers and the parent guarantor has been presented on a combined basis; however, the only asset on the parent guarantor balance sheet is its investment in subsidiaries which is not included in the presentation above in accordance with the disclosure requirements. We had no off-balance sheet arrangements at December 31, 2020 and 2019. Distribution Requirements We generally must distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, in order to qualify to be taxed as a REIT (assuming that certain other requirements are also satisfied) so that U.S. federal corporate income tax does not apply to earnings that we distribute. To the extent that we satisfy this distribution requirement and qualify for taxation as a REIT but distribute less than 100% of our REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, we will be subject to U.S. federal corporate income tax on our undistributed net taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we distribute to our shareholders in a calendar year is less than a minimum amount specified under U.S. federal income tax laws. We intend to make distributions to our shareholders to comply with the REIT requirements of the Code. While the Company's Board of Directors declared a cash dividend of $0.70 for the first quarter of 2020, quarterly dividends of $0.60 per share on the Company's common stock were declared for both the second, third and fourth quarters. These dividends consisted of a combination of cash and shares of the Company's common stock. The cash component of the dividend (other than cash paid in lieu of fractional shares) did not exceed 20% in the aggregate, or $0.12 per share, with the balance, or $0.48 per share, payable in shares of the Company's common stock. This quarterly dividend level reflected the impact of the COVID-19 closures on the Company's business. LIBOR Transition The majority of our debt is at fixed rates and our exposure to variable interest rates is currently limited to our revolving credit facility and our Term Loan A-2. Both of these debt instruments are indexed to LIBOR which is expected to be phased out during late 2021 through mid-2023. The discontinuance of LIBOR would affect our interest expense and earnings. The borrowings under our Amended Credit Facility will be subject to the expected LIBOR transition. LIBOR is currently expected 56 Table of Contents to transition to a new standard rate, the Secured Overnight Financing Rate (“SOFR”). We are currently monitoring the transition and cannot be certain whether SOFR will become the standard rate for our variable rate debt. Outlook Based on our current level of operations and anticipated earnings, we believe that cash generated from operations and cash on hand, together with amounts available under our Amended Credit Facility, will be adequate to meet our anticipated debt service requirements, capital expenditures, working capital needs and dividend requirements. During 2020, we refinanced our near term debt obligations and as such have no significant obligations coming due until 2023 and we issued common shares in advance of the planned 2021 closing of the Bally's transaction. We also announced a project to move our Hollywood Casino Baton Rouge property landside in early 2022. On December 15, 2020, we announced that Penn had exercised its option to acquire the gaming operations at Hollywood Casino Perryville for $31.1 million and that we entered into an agreement to sell the gaming operations of Hollywood Casino Baton Rouge for $28.2 million to Casino Queen. The Company will retain ownership of the real estate assets at Hollywood Casino Baton Rouge and will simultaneously enter into the Casino Queen Master Lease. Rent under the Casino Queen Master Lease will be adjusted upon completion of the project to reflect a yield of 8.25% on the Company's project costs. Both transactions are expected to close in the second half of 2021, subject to regulatory approvals and other customary closing conditions. In addition, we expect the majority of our future growth to come from acquisitions of gaming and other properties to lease to third parties. If we consummate significant acquisitions in the future, our cash requirements may increase significantly and we would likely need to raise additional proceeds through a combination of either common equity (including under our ATM Program) and/or debt offerings. Our future operating performance and our ability to service or refinance our debt will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. See "Risk Factors-Risks Related to Our Capital Structure" of this Annual Report on Form 10-K for a discussion of the risk related to our capital structure.