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”. Finally, in advance of the UPREIT Transaction, the Company elected GLP Financing II, Inc. to be treated as a TRS effective December 23, 2021. 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, 2021, GLPI's portfolio consisted of interests in 51 gaming and related facilities, including the TRS Segment, the real property associated with 34 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, the real property associated with 2 gaming and related facilities operated by Bally's, the real property associated with gaming and related facilities at Live! Casino & Hotel Maryland operated by Cordish and the real property associated with 2 gaming and related facilities operated by the Casino Queen. These facilities, including our corporate headquarters building, are geographically diversified across 17 states and contain approximately 27.6 million square feet. As of December 31, 2021, 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. Penn Master Lease The Penn Master Lease is a triple-net operating lease, the term of which expires October 31, 2033, with no purchase option, followed by three remaining 5-year renewal options (exercisable by the tenant) on the same terms and conditions. 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 37 Table of Contents 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 Racetrack and Casino 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 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 a maximum of 2% annually thereafter. Amended and Restated Caesars Master 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. On June 15, 2020, the Company entered into 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 and approval of certain gaming regulatory agencies and the expiration of applicable gaming regulatory advance notice periods which conditions were satisfied on July 23, 2020. On December 18, 2020, the Company and Caesars completed the 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. This resulted in 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 made. In connection with the Exchange Agreement, the annual building base rent was increased to $62.5 million and the annual land component was increased to $23.7 million. Lumière Place Lease On October 1, 2018 the Company entered into a loan agreement with Caesars in connection with Caesars’s acquisition of Lumière Place, whereby the Company extended funds to Caesars under the CZR loan. The CZR loan bore interest at a rate equal to (i) 9.09% until October 1, 2019 and (ii) 9.27% until its maturity. On the one-year anniversary of the CZR loan, the mortgage evidenced by a deed of trust on the Lumière Place property terminated and the loan became unsecured. On June 24, 38 Table of Contents 2020, the Company received approval from the Missouri Gaming Commission to own the Lumière Place property in satisfaction of the CZR loan. On September 29, 2020, the transaction closed and we entered into the Lumière Place Lease, the initial term of which expires on October 31, 2033 with four separate renewal options of five years each, exercisable at the tenant's option. The Lumière Place Lease rent terms were adjusted on December 1, 2021 such that the annual escalator is now fixed at 1.25% for the second through fifth lease years, increasing to 1.75% for the sixth and seventh lease years and thereafter increasing by 2.0% for the remainder of the lease. Bally's Master Lease On June 3, 2021, the Company completed its previously announced transaction pursuant to which a subsidiary of Bally's acquired 100% of the equity interests in the Caesars subsidiary that currently operates Tropicana Evansville and the Company reacquired the real property assets of Tropicana Evansville from Caesars for a cash purchase price of approximately $340.0 million. In addition, the Company purchased the real estate assets of Dover Downs Hotel & Casino from Bally's for a cash purchase price of approximately $144.0 million. The real estate assets of these two facilities were added to the Bally's Master Lease which has 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 is $40 million annually and is subject to an annual escalator of up to 2% determined in relation to the annual increase in CPI. 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 continues 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. On April 13, 2021, Bally's agreed to acquire the Company's non-land real estate assets and Penn's outstanding equity interests in Tropicana Las Vegas for $150.0 million. The Company will retain ownership of the land and concurrently enter into a 50-year ground lease with an initial annual rent of $10.5 million. The ground lease will be supported by a Bally's corporate guarantee and cross-defaulted with the Bally's Master Lease. This transaction is expected to close in the second half of 2022. 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. Casino Queen Master Lease On November 25, 2020, the Company entered into a definitive agreement with respect to the HCBR transaction. This transaction closed on December 17, 2021 which resulted in a pre-tax gain of $6.8 million (loss of $7.7 million after tax) for the year ended December 31, 2021. The Company retained ownership of all real estate assets at Hollywood Casino Baton Rouge and simultaneously entered into the Casino Queen Master Lease. The initial annual cash rent is approximately $21.4 million and the lease has 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 39 Table of Contents other sale leaseback transactions up to $50 million over the next 2 years. Finally, GLPI forgave the unsecured $13.0 million, 5.5 year term loan made to CQ Holding Company, Inc., an affiliate of Casino Queen, which had been previously fully impaired in return for a one-time cash payment of $4 million which was recorded in provision for credit losses, net during the year ended December 31, 2021. Perryville Lease On December 15, 2020, the Company announced that Penn exercised its option to purchase from the Company the operations of our Hollywood Casino Perryville, located in Perryville, Maryland, for $31.1 million. The transaction closed on July 1, 2021 and the real estate assets of the Hollywood Casino Perryville are being leased to Penn pursuant to the Perryville Lease. A pre-tax gain of $15.6 million ($11.3 million after tax) was recorded during the year ended December 31, 2021 in connection with the sale of the operating assets to Penn. Maryland Live! Lease and Pennsylvania Live! Lease On December 6, 2021, the Company announced that it had agreed to acquire the real property assets of Live! Casino & Hotel Maryland, Live! Casino & Hotel Philadelphia, and Live! Casino Pittsburgh, including applicable long-term ground leases, from affiliates of Cordish for aggregate consideration of approximately $1.81 billion at deal announcement (the "Cordish Acquisitions"). The transaction also includes a binding partnership on future Cordish casino developments, as well as potential financing partnerships between the Company and Cordish in other areas of Cordish's portfolio of real estate and operating businesses. Upon the closing of the Live! Casino & Hotel Maryland transaction, GLPI entered into the Maryland Live! Lease, and upon the closing of the other transactions, GLPI will enter into the Pennsylvania Live! Master Lease. The Pennsylvania Live! Master Lease will have and the Maryland Live! Lease has initial lease terms of 39 years, with a maximum term of 60 years inclusive of tenant renewal options. The annual rent for the Maryland Live! Lease is $75 million and for the Pennsylvania Live! Master Lease will be $50 million both of which have or will have a 1.75% fixed yearly escalator on the entirety of rent commencing on the leases' second anniversary. The Maryland Live! Lease became effective on December 29, 2021 and the Pennsylvania transactions are expected to close in early 2022, subject to the receipt of regulatory approvals and other customary closing conditions. The majority of our earnings are the result of revenues we receive from our triple-net master leases with Penn, Boyd, Bally's, Cordish and Caesars. Additionally, we have rental revenue from the Casino Queen Master Lease which is also a triple net 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 Accounting Standards Codification ("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. Our Competitive Strengths We believe the following competitive strengths will contribute significantly to our success: Geographically Diverse Property Portfolio As of December 31, 2021, our portfolio consisted of 51 gaming and related facilities, including 50 rental properties and the TRS Segment. Our portfolio, including our corporate headquarters building, comprises approximately 27.6 million square feet and approximately 5,800 acres of land and is broadly diversified by location across 17 states. We expect that our geographic diversification will limit the effect of a decline in any one regional market on our overall performance. 40 Table of Contents Financially Secure Tenants Five of the company's tenants, Penn, Caesars, Boyd, Cordish and Bally's, are leading, diversified, multi-jurisdictional owners and managers of gaming and pari-mutuel properties and established gaming providers with strong financial performance. With the exception of Cordish, 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, Boyd's and Bally'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 the 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. For instance, the rent coverage ratios on our leases have increased at September 30, 2021 compared to pre-COVID-19 levels. 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 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 (until July 1, 2021 and subsequent to this date includes rental income from the Perryville Lease) and Hollywood Casino Baton Rouge (until December 17, 2021 when the operations were sold to Casino Queen), as well as the real estate of Tropicana Las Vegas we acquired in 2020. In December 2021, the TRS Properties were merged into GLP Capital and therefore the Company does not expect to have a TRS Segment in 2022. Executive Summary Financial Highlights We reported total revenues and income from operations of $1,216.4 million and $841.8 million, respectively, for the year ended December 31, 2021, compared to $1,153.2 million and $809.3 million, respectively, for the year ended 41 Table of Contents December 31, 2020. The major factors affecting our results for the year ended December 31, 2021, as compared to the year ended December 31, 2020, were as follows: • Total income from real estate was $1,106.7 million and $1,050.2 million for the years ended December 31, 2021 and 2020, respectively. Total income from real estate increased by $56.5 million for the year ended December 31, 2021, as compared to the year ended December 31, 2020. Current results benefited from the addition of the Bally's Master Lease, the Perryville Lease, the Morgantown Lease and the Casino Queen Master Lease which in the aggregate increased cash rental income by $29.5 million. Current year results also benefited from full escalations being incurred on the Amended Pinnacle Master Lease, Boyd Master Lease, Penn Master Lease and Belterra Park Lease which increased building base rents by $5.0 million. The Company also collected higher percentage rent of $15.2 million on the Penn Master Lease due to the impact of COVID-19 closures in 2020. The Company also had favorable straight line rent adjustments of $8.6 million and higher ground rent revenue gross ups of $3.7 million due to the impact of the temporary COVID-19 closures that occurred in 2020. Partially offsetting these favorable variances were lower percentage rents of $3.7 million from the 2020 resets on the Amended Pinnacle Master Lease, the Boyd Master Lease, and the Meadows Lease as well as lower cash rental income of $1.8 million from the Amended and Restated Caesars Master Lease that became effective in July 2020 which provided for fixed escalations in the future. • Gaming, food, beverage and other revenue increased by $6.7 million for the year ended December 31, 2021, as compared to the prior year. The prior year revenues were impacted by 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. Both properties opened to strong results which strengthened in the current year. The Company sold the operations of Hollywood Casino Perryville on July 1, 2021 and Hollywood Casino Baton Rouge on December 17, 2021. See Note 1 in the Consolidated Financial Statements for additional information. • Total operating expenses increased by $30.7 million for the year ended December 31, 2021, as compared to the prior year. The year ended December 31, 2020 had a non-cash gain on the disposition of property related to the Evansville swap transaction of $41.4 million, while the current year included pre-tax gains of $22.4 million attributable to the sale of the operations of Hollywood Casino Perryville and Hollywood Casino Baton Rouge, which also was the reason for the $3.7 million decline in gaming, food, beverage and other expense as well as a $2.3 million reduction in our TRS Segment general and administrative expenses. During the year ended December 31, 2021, the Company recorded an initial reserve for its direct finance lease related to the Maryland Live! Lease of $12.2 million, which was partially offset by a $4.0 million recovery on a previously impaired loan to Casino Queen. The Company incurred higher depreciation expense of $5.5 million due to its recent acquisitions and had lower general and administrative expenses of $5.0 million in our GLP Capital segment. This was due to severance and stock compensation charges associated of $6.3 million for the departure of our former chief financial officer in the third quarter of 2020, which was partially offset by higher bonus accruals in the current year as a result of improved financial performance relative to the prior year. Finally, the Company incurred higher land rights and ground lease expense of $8.3 million due to higher ground lease rents paid by our tenants in 2021 that are based on the facilities revenues which were negatively impacted in the prior year by the temporary closures COVID-19 had in 2020 and higher land lease right expense due to the June 3, 2021 acquisition of Tropicana Evansville. • Other expenses, net decreased by $20.3 million for the year ended December 31, 2021, as compared to the prior year, primarily due to debt extinguishment charges incurred in 2020 as well as a $3.5 million insurance gain at our TRS Segment related to the temporary closures of our TRS Properties in the prior year due to COVID-19. • Income tax expense increased by $24.5 million for the year ended December 31, 2021 as compared to the prior year due to the gain on the sale of the operations of Hollywood Casino Perryville and Hollywood Casino Baton Rouge, the write-off of deferred tax assets related to the Hollywood Casino Baton Rouge sale, improved performance at our TRS Segment due to strong results in the current year as well as the impact of the temporary closures related to COVID-19 in the prior year. • Net income increased by $28.4 million for the year ended December 31, 2021, 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: 42 Table of Contents GLP Capital • Our leases contain variable rent that resets on varying schedules depending on the lease. The portion of our cash rents that are variable represented approximately 14% of our 2021 full year cash rental income. Of that variable rent, approximately 24% resets every five years, which is associated with our Penn Master Lease, 32% resets every two years and 41% resets monthly, which is associated with two properties in the Penn Master Lease (of which approximately 37% is subject to a floor, or $22.9 million annually, for Hollywood Casino Toledo). The percentage rent in the Penn Master Lease increased by $15.2 million for the year ended December 31, 2021 compared to the year ended 2020 primarily 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 as well as strong results in 2021 at these two properties. In connection with the Casino Queen Master Lease becoming effective December 17, 2021, 3% of the Company's percentage rent in 2021 is no longer subject to any variability. • Certain of our leases contain annual escalation clauses that are based on adjusted revenues to rent coverage ratios exceeding 1.8 to 1. During the year ended December 31, 2021, full escalations were incurred on the Penn Master Lease, the Amended Pinnacle Master Lease, the Boyd Master Lease and the Belterra Park Lease, which increased 2021 rental income by $5.0 million. • We have announced or closed numerous transactions in the past two years and expect to continue to grow our portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators under prudent terms. • Several wholly-owned subsidiaries of Penn lease a substantial number of our properties which account for the majority of our revenue. • Our 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 Internal Revenue Service and the U.S. Department of the Treasury. Changes to the tax laws or interpretations thereof, including any changes proposed and implemented by the Biden administration, with or without retroactive application, could materially and adversely affect GLPI and its investors. 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. On July 1, 2021, the Company sold the operations of Hollywood Casino Perryville to Penn, recognizing a gain of $15.6 million and entered into the Perryville Lease. On December 17, 2021 the Company sold the operations of Hollywood Casino Baton Rouge to Casino Queen, recognizing a gain of $6.8 million, and entered into the Casino Queen Master Lease. • 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 was placed in the Company's TRS Segment. An affiliate of Penn continues 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. On April 13, 2021, Bally's agreed to acquire the Company's non-land real estate assets and Penn's outstanding equity interests in Tropicana Las Vegas for $150.0 million. The Company will retain the ownership of the land and concurrently enter into a 50-year ground lease with an initial annual rent of $10.5 million. The ground lease will be supported by a Bally's corporate guarantee and cross-defaulted with the Bally's Master Lease. This transaction is expected to close in the second half of 2022. 43 Table of Contents 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, allowance for credit losses, 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, Bally's, Boyd and Casino Queen. We also have separate single property leases with Penn, Caesars, Boyd and Cordish. 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. Under the sales-type lease model, however, at lease inception we would record an Investment in leases, on our Consolidated Balance Sheet rather than recording the actual assets we own. Furthermore, the cash rent we receive from tenants is not recorded as rental revenue, but rather a portion is recorded as interest income using an effective yield and a portion is recorded as a reduction to the Investment in leases. 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. 44 Table of Contents 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. 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 and income recognition method. Investment in Leases, Financing Receivables, net In accordance with ASC 842, for transactions in which we enter into a contract to acquire an asset and lease it back to the seller under a sales-type lease (i.e. a sale leaseback transaction), the Company must determine whether control of the asset has transferred to us. In cases whereby control has not transferred to the Company, we do not recognize the underlying asset but instead recognize a financial asset in accordance with ASC 310 "Receivables". The accounting for the financing receivable under ASC 310 is materially consistent with the accounting for our investments in leases - sales type under ASC 842. We have concluded that the Maryland Live! Lease is required to be accounted for as an Investment in leases - financing receivable on our Consolidated Balance Sheets in accordance with ASC 310, since control of the underlying assets was not considered to have transferred to the Company under GAAP. Allowance for credit losses The Company follows ASC 326 “Credit Losses” (“ASC 326”), which requires that the Company measure and record current expected credit losses (“CECL”), the scope of which includes our Investments in leases - financing receivables. We have elected to use an econometric default and loss rate model to estimate the Allowance for credit losses, or CECL allowance. This model requires us to calculate and input lease and property-specific credit and performance metrics which in conjunction with forward-looking economic forecasts, project estimated credit losses over the life of the lease or loan. The Company then records a CECL allowance based on the expected loss rate multiplied by the outstanding investment in lease financing receivable balance. Expected losses within our cash flows are determined by estimating the probability of default (“PD”) and loss given default (“LGD”) of our Investments in lease - financing receivable. We have engaged a nationally recognized data analytics firm to assist us with estimating both the PD and LGD for this financing receivable. The PD and LGD are estimated during the initial term of the lease. The PD and LGD estimates for the lease term were developed using current financial condition forecasts. The PD and LGD predictive model was developed using the average historical default rates and historical loss rates, respectively, of over 100,000 commercial real estate loans dating back to 1998 that have similar credit profiles or characteristics to the real estate underlying the Company's financing receivable. Management will monitor the credit risk related to its financing receivable by obtaining the rent coverage on the Maryland Live! Lease on a periodic basis. The Company also monitors legislative changes to assess whether it would have an impact on the underlying performance of its tenant. We are unable to use our historical data to estimate losses as the Company has no loss history to date on its lease portfolio. The CECL allowance is recorded as a reduction to our net Investments in leases - financing receivable, on our Consolidated Balance Sheets. We are required to update our CECL allowance on a quarterly basis with the resulting change being recorded in the Consolidated Statements of Income for the relevant period. Finally, each time the Company makes a new investment in an asset subject to ASC 326, we will be required to record an initial CECL allowance for such asset, which will result in a non-cash charge to the Consolidated Statement of Income for the relevant period. Changes in economic conditions and/or the underlying performance of the property contained within our leases accounted for as financing receivables impacts the assumptions utilized in the CECL reserve estimates. Changes in our assumptions could result in non-cash provisions or recoveries in future periods that could materially impact our results of operations. Income Taxes - REIT Qualification 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, 45 Table of Contents 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”. Finally, in advance of the UPREIT Transaction, the Company elected GLP Financing II, Inc. to be treated as a TRS effective December 23, 2021. 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 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. Due to the recent sales of the Company's TRS operations, the Company does not expect to have a TRS segment in 2022. 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 determine whether the estimated undiscounted cash flows from the underlying lease exceeds the real estate investments' carrying value. If we determine the estimated undiscounted cash flows is less than the asset's carrying value then 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 accounting principles generally accepted in the United States ("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, the Company must make assumptions regarding future cash flows and other factors. The factors considered by the Company 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, the Company 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: • We have announced or closed numerous transactions in the past two years and expect to continue to grow our portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators under prudent terms. • The fact that several wholly-owned subsidiaries of Penn lease a substantial number of our properties and account for the majority of our revenue. 46 Table of Contents • 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. The consolidated results of operations for the years ended December 31, 2021 and 2020 are summarized below: Year Ended December 31, 2021 2020 (in thousands) Total revenues $ 1,216,351 $ 1,153,165 Total operating expenses 374,583 343,891 Income from operations 841,768 809,274 Total other expenses (279,340) (299,686) Income before income taxes 562,428 509,588 Income tax expense 28,342 3,877 Net income 534,086 505,711 Net income attributable to noncontrolling interest in the Operating Partnership (39) — Net income attributable to common shareholders $ 534,047 $ 505,711 The Company has omitted the discussion comparing its operating results for the year ended December 31, 2020 to its operating results for the year ended December 31, 2019 from its Annual Report on Form 10-K for the year ended December 31, 2021. Readers are directed to Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2020 for these disclosures. Certain information regarding our results of operations by segment for the years ended December 31, 2021 and 2020 is summarized below: Total Revenues Income from Operations Year Ended December 31, Year Ended December 31, 2021 2020 2021 2020 (in thousands) GLP Capital $ 1,102,653 $ 1,050,166 $ 781,226 $ 792,467 TRS Segment 113,698 102,999 60,542 16,807 Total $ 1,216,351 $ 1,153,165 $ 841,768 $ 809,274 47 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. These metrics are presented assuming full conversion of limited partnership units to common shares and therefore before the income statement impact of non-controlling interests. 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, gains or (losses) on sales of operations, net of tax, losses on debt extinguishment, and provision for credit losses, net reduced by maintenance capital expenditures. Finally, we define Adjusted EBITDA as net income excluding interest, net, income tax expense, depreciation, (gains) or losses from sales of property, gains on sales of operations, net of tax, stock based compensation expense, straight-line rent adjustments, amortization of land rights, losses on debt extinguishment, and provision for credit losses, net. 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. 48 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, 2021 and 2020 is as follows: Year Ended December 31, 2021 2020 (in thousands) Net income $ 534,086 $ 505,711 Losses (gains) from dispositions of property 711 (41,393) Real estate depreciation 230,941 220,069 Funds from operations $ 765,738 $ 684,387 Straight-line rent adjustments (3,993) 4,576 Other depreciation 5,493 10,904 Amortization of land rights 15,616 12,022 Amortization of debt issuance costs, bond premiums and original issuance discounts (1) 9,929 10,503 Stock based compensation 16,831 20,004 Gains on sale of operations, net of tax (3,560) — Losses on debt extinguishment — 18,113 Provision for credit losses, net 8,226 — Capital maintenance expenditures (2,270) (3,130) Adjusted funds from operations $ 812,010 $ 757,379 Interest, net 282,840 281,573 Income tax expense 9,440 3,877 Capital maintenance expenditures 2,270 3,130 Amortization of debt issuance costs, bond premiums and original issuance discounts (1) (9,929) (10,503) Adjusted EBITDA $ 1,096,631 $ 1,035,456 (1) Such amortization is a non-cash component included in interest, net. 49 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, 2021 and 2020 is as follows: GLP Capital TRS Segment Year Ended December 31, Year Ended December 31, 2021 2020 2021 2020 (in thousands) Net income (loss) $ 514,883 $ 508,060 $ 19,203 $ (2,349) Losses (gains) from dispositions of property 604 (41,402) 107 9 Real estate depreciation 230,333 220,069 608 — Funds from operations $ 745,820 $ 686,727 $ 19,918 $ (2,340) Straight-line rent adjustments (3,873) 4,576 (120) — Other depreciation 1,881 1,972 3,612 8,932 Gain on sale of operations, net of tax — — (3,560) — Amortization of land rights 15,616 12,022 — — Amortization of debt issuance costs, bond premiums and original issuance discounts (1) 9,929 10,503 — — Stock based compensation 16,831 20,004 — — Losses on debt extinguishment — 18,113 — — Provision for credit losses, net 8,226 — — — Capital maintenance expenditures (65) (186) (2,205) (2,944) Adjusted funds from operations $ 794,365 $ 753,731 $ 17,645 $ 3,648 Interest, net (2) 265,439 265,597 17,401 15,976 Income tax expense 904 697 8,536 3,180 Capital maintenance expenditures 65 186 2,205 2,944 Amortization of debt issuance costs, bond premiums and original issuance discounts (1) (9,929) (10,503) — — Adjusted EBITDA $ 1,050,844 $ 1,009,708 $ 45,787 $ 25,748 (1) Such amortization is a non-cash component included in interest, net. (2) Interest, net for the GLP Capital segment is net of an intercompany interest elimination of $17.4 million and $16.0 million for the years ended December 31, 2021 and 2020. Net income, FFO, AFFO, and Adjusted EBITDA for our GLP Capital segment were $514.9 million, $745.8 million, $794.4 million and $1,050.8 million, respectively, for the year ended December 31, 2021. This compared to net income, FFO, AFFO, and Adjusted EBITDA, for our GLP Capital segment of $508.1 million, $686.7 million, $753.7 million and $1,009.7 million, respectively, for the year ended December 31, 2020. The increase in net income in our GLP Capital segment was primarily driven by a $52.5 million increase in income from real estate as explained below. In addition, we had several operating expense variances that are also discussed below. The increase in operating expenses in our GLP Capital segment for the year ended December 31, 2021 as compared to the prior year period of $63.7 million was primarily from a gain on the disposition of property related to the Evansville swap transaction of $41.4 million in 2020, higher depreciation expense and land right amortization expense in our REIT segment of $18.5 million due to the Company's recent acquisitions, and a $8.2 million provision for credit losses, net in the current year. Partially offsetting these increases was lower general and administrative expenses of $5.0 million due primarily from severance and stock based compensation acceleration charges for the departure of our former chief financial officer in 2020. The decrease in other expenses, net, for the year ended December 31, 2021 was due to $18.1 million of debt extinguishment charges in the prior year. The increase in FFO for our GLP Capital segment for the year ended December 31, 2021 is due to the items described above, excluding gains (losses) from the disposition of property and real estate depreciation. The increase in AFFO is due to the items described above, less the adjustments mentioned in the table above, primarily straight line rent adjustments, 50 Table of Contents amortization expenses, stock based compensation costs, provision for credit losses, net and losses on debt extinguishment. Adjusted EBITDA for our GLP Capital segment for the year ended December 31, 2021, as compared to the prior year, also increased driven by the explanations above, as well as adjustments mentioned in the table above, primarily related to interest expense. The net income of $19.2 million for our TRS Segment for the year ended December 31, 2021 as compared to a net loss of $2.3 million for the prior year is primarily related to strong reopening results in the current year at Hollywood Casino Baton Rouge and Hollywood Casino Perryville which in the prior year were closed temporarily from mid-March 2020 to May 2020 and June 2020, respectively, due to COVID-19. Additionally, the Company recorded a net after tax gain of $3.6 million on the sale of the operations of Hollywood Casino Perryville and Hollywood Casino Baton Rouge in 2021. Revenues Revenues for the years ended December 31, 2021 and 2020 were as follows (in thousands): Year Ended December 31, Percentage 2021 2020 Variance Variance Rental income $ 1,106,658 $ 1,031,036 $ 75,622 7.3 % Interest income from real estate loans — 19,130 (19,130) (100.0) % Total income from real estate 1,106,658 1,050,166 56,492 5.4 % Gaming, food, beverage and other 109,693 102,999 6,694 6.5 % Total revenues $ 1,216,351 $ 1,153,165 $ 63,186 5.5 % Total income from real estate Total income from real estate increased $56.5 million, or 5.4%, for the year ended December 31, 2021, as compared to the year ended December 31, 2020. Results for the current year benefited from the additions on the Bally's Master Lease, the Perryville Lease, the Morgantown Lease and the Casino Queen Master Lease which in the aggregate increased cash rental income by $29.5 million. Additionally, the Company benefited from full escalations being incurred on the Amended Pinnacle Master Lease, the Boyd Master Lease and the Belterra Lease effective May 1, 2021 and the Penn Master Lease that became effective November 1, 2021. The aggregate impact of these escalations increased building base rent by $5.0 million for the year ended December 31, 2021. The Company had higher percentage rent on the Penn Master Lease in the current year of $15.2 million, due to the impact of the COVID-19 closures in 2020 and strong performance in the current year by Penn's Hollywood Casino Columbus and Hollywood Casino Toledo properties. Finally, the Company also had favorable straight line rent adjustments of $8.6 million and higher ground rent revenue gross ups of $3.7 million due to the impact of the temporary COVID-19 closures that occurred in 2020. Partially offsetting these favorable variances were lower percentage rents of $3.7 million from the 2020 resets on the Amended Pinnacle Master Lease, the Boyd Master Lease and the Meadows Lease which was driven primarily from the COVID-19 closures. Additionally, we had lower cash rental income of $1.8 million on the Amended and Restated Caesars Master Lease that became effective in July 2020 which lowered rent initially but removed variable rents going forward and provided for fixed escalation increases as previously described. 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. 51 Table of Contents Details of the Company's income from real estate for the year ended December 31, 2021 was as follows (in thousands): Year Ended December 31, 2021 Building base rent Land base rent Percentage rent Total cash rental income Straight-line rent adjustments Ground rent in revenue (1) Other rental revenue Total rental income Penn Master Lease $ 280,338 $ 93,969 $ 97,814 $ 472,121 $ 8,926 $ 3,013 $ 12 $ 484,072 Amended Pinnacle Master Lease 230,230 71,256 26,779 328,265 (19,346) 7,430 — 316,349 Penn - Meadows Lease 15,811 — 9,046 24,857 2,288 — 195 27,340 Penn Morgantown — 3,000 — 3,000 — — — 3,000 Penn Perryville 2,914 971 — 3,885 120 — — 4,005 Caesars Master Lease 62,514 23,729 — 86,243 10,358 1,586 — 98,187 Lumiere Place Lease 22,875 — — 22,875 544 — — 23,419 BYD Master Lease 76,652 11,785 9,845 98,282 2,296 1,726 — 102,304 BYD Belterra Lease 2,709 1,894 1,817 6,420 (1,211) — — 5,209 Bally's Master Lease 23,111 — — 23,111 — 4,832 — 27,943 Casino Queen Master Lease 9,388 — 5,424 14,812 18 — — 14,830 Total $ 726,542 $ 206,604 $ 150,725 $ 1,083,871 $ 3,993 $ 18,587 $ 207 $ 1,106,658 (1) 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. Gaming, food, beverage and other revenue Gaming, food, beverage and other revenue for our TRS Properties increased by $6.7 million, or 6.5%, for the year ended December 31, 2021, as compared to the year ended December 31, 2020. The reason for the increase was due to the properties being 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 due to various factors such as pent up demand and government stimulus efforts, partially offset by the sale of the operations of Hollywood Casino Perryville on July 1, 2021 and Hollywood Casino Baton Rouge on December 17, 2021. Operating Expenses Operating expenses for the years ended December 31, 2021 and 2020 were as follows (in thousands): Year Ended December 31, Percentage 2021 2020 Variance Variance Gaming, food, beverage and other $ 53,039 $ 56,698 $ (3,659) (6.5) % Land rights and ground lease expense 37,390 29,041 8,349 28.7 % General and administrative 61,245 68,572 (7,327) (10.7) % (Gains) losses from disposition of properties (21,751) (41,393) 19,642 (47.5) % Depreciation 236,434 230,973 5,461 2.4 % Provision for credit losses, net 8,226 — 8,226 — Total operating expenses $ 374,583 $ 343,891 $ 30,692 8.9 % Gaming, food, beverage and other expense Gaming, food, beverage and other expense for our TRS Properties decreased by approximately $3.7 million, or 6.5%, for the year ended December 31, 2021, as compared to the year ended December 31, 2020. As previously discussed, the Company sold the operations of Hollywood Casino Perryville on July 1, 2021 and the operations of Hollywood Casino Baton Rouge on December 17, 2021. Additionally, the TRS Properties were closed for part of 2020 due to COVID-19. 52 Table of Contents 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 increased by $8.3 million, or 28.7%, for the year ended December 31, 2021, as compared to the year ended December 31, 2020, primarily from higher ground lease rents paid by our tenants in 2021 of $4.7 million that are primarily based on the facilities' revenues which increased due to the impact of COVID-19 in 2020 that resulted in temporary casino closures. 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. The Company also had higher land right amortization expense of $3.6 million due to the June 3, 2021 acquisition of Tropicana Evansville. 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 decreased by $7.3 million, or 10.7%, for the year ended December 31, 2021, as compared to the year ended December 31, 2020. 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 as well as lower costs at our TRS Properties of $2.3 million primarily due to the sale of the operations of Hollywood Casino Perryville effective July 1, 2021, partially offset by higher bonus accruals in the current year. Gains and losses from dispositions of property For the year ended December 31, 2021, the Company sold the operations of Hollywood Casino Perryville and Hollywood Casino Baton Rouge which resulted in a combined pre-tax gain of $22.4 million. See Note 1 to the Consolidated Financial Statements for further information. 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 increased by $5.5 million, or 2.4%, to $236.4 million for the year ended December 31, 2021 as compared to the year ended December 31, 2020, primarily due to the Company's acquisitions over the past year. Provision for credit losses,net For the year ended December 31, 2021, the Company recorded a $12.2 million provision for credit losses on the Maryland Live! Lease which represented the Company's best estimate of losses over the life of the lease under ASC 326 "Credit Losses". See Note 2 to the Consolidated Financial Statements, Allowance for Credit Losses, for further discussion. Additionally, the Company recorded a $4 million recovery during the year ended December 31, 2021 for a payment received from Casino Queen in full satisfaction of a loan that was previously fully impaired. Other income (expenses) Other income (expenses) for the years ended December 31, 2021 and 2020 were as follows (in thousands): Year Ended December 31, Percentage 2021 2020 Variance Variance Interest expense $ (283,037) $ (282,142) $ (895) 0.3 % Interest income 197 569 (372) (65.4) % Insurance gain 3,500 — 3,500 N/M Losses on debt extinguishment — (18,113) 18,113 (100.0) % Total other expenses $ (279,340) $ (299,686) $ 20,346 (6.8) % 53 Table of Contents Insurance gain For the year ended December 31, 2021, the Company recognized insurance gains of $3.5 million due to an insurance claim related to the temporary closures of Hollywood Casino Perryville and Hollywood Casino Baton Rouge in 2020 related to COVID-19. 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. Taxes Our income tax expense increased $24.5 million for the year ended December 31, 2021 as compared to the year ended December 31, 2020. During the year ended December 31, 2021, we had income tax expense of approximately $28.3 million, compared to income tax expense of $3.9 million during the year ended December 31, 2020. 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 5.0% and 0.8% for the years ended December 31, 2021 and 2020, respectively. The current year sale of the operations of Hollywood Casino Perryville and Hollywood Casino Baton Rouge, as well as deferred tax write off related to the sale of Hollywood Casino Baton Rouge resulted in a $18.9 million increase to income tax expense in 2021. 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 $803.8 million and $428.1 million during the years ended December 31, 2021 and 2020, respectively. The increase in net cash provided by operating activities of $375.7 million for the year ended December 31, 2021 as compared to the prior year was primarily due to an increase in cash receipts from tenants and customers of $388.2 million, a decrease in cash paid to employees of $9.6 million and a decrease in cash paid for operating expenses of $2.5 million, partially offset by an increase in cash paid for taxes of $14.1 million and an increase in interest payments of $12.4 million. The increase in cash receipts collected from our tenants and customers was primarily due to $337.5 million in non-cash rent recognized in connection with the Tropicana Las Vegas and Morgantown transactions in 2020, higher rental income from the Bally's Master Lease, the Perryville Lease, the Morgantown Lease, and the Casino Queen Master Lease, and higher percentage rent on the Penn Master Lease due to strong results at Hollywood Casino Columbus and Hollywood Casino Toledo (which were closed for part of 2020 due to COVID-19), along with the strong reopenings of our TRS Properties, which were forced to close in mid-March 2020 due to the impact of COVID-19. These properties reopened in May 2020 and June 2020 as previously discussed. The reduction in cash paid to employees was primarily due to lower bonus payouts in 2021 related to 2020 performance that was negatively impacted by COVID-19 as well as the sale of the operations of Hollywood Casino Perryville on July 1, 2021 and the sale of Hollywood Casino Baton Rouge on December 17, 2021. The increase in taxes paid was due to the sale of Hollywood Casino Perryville and Hollywood Casino Baton Rouge and strong results at the TRS Properties prior to the sales. The increase in interest payments is due primarily from the $700 million 4.000% senior unsecured note offering that was completed in June and August of 2020. Investing activities used net cash of $1,030.8 million and $9.5 million during the years ended December 31, 2021 and 2020, respectively. Net cash used in investing activities during the year ended December 31, 2021 consisted of $487.5 million for the acquisition of real estate assets in the Bally's acquisitions and $592.2 million for the acquisition of the real estate assets of Maryland Live! which was accounted for as an investment in lease, financing receivable. The Company also incurred capital expenditures of $16.2 million, partially offset by the net proceeds received for the sale of the operations of Hollywood Casino Perryville to Penn of $30.8 million, proceeds from the sale of the operations of Hollywood Casino Baton Rouge to Casino Queen of $28.2 million, a loan loss recovery of $4.0 million, and proceeds from the sale of property of $2.1 million. 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 related to the Evansville swap transaction. 54 Table of Contents Financing activities provided net cash of $443.1 million and $63.2 million during the years ended December 31, 2021 and 2020, respectively. Net cash provided by financing activities for the year ended December 31, 2021 was driven by $795.0 million of proceeds from the issuance of long-term debt and $662.3 million of net proceeds from the issuance of common stock, partially offset by the repayment of long term debt of $363.4 million relating to the Maryland Live! transaction, dividend payments of $633.9 million and taxes paid related to shares withheld for tax purposes on restricted stock award vestings of $9.9 million. During the year ended December 31, 2020, the Company raised $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. This was partially offset by repayments of long-term debt of $2,076.6 million, dividend payments of $230.5 million and taxes paid related to shares withheld for tax purposes on restricted stock award vestings of $15.3 million. 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, 2021 and 2020 we spent approximately $2.3 million and $3.1 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. However, during 2021, $5.2 million was incurred on capital project expenditures related to a landside development project at Hollywood Casino Baton Rouge and $8.7 million was incurred on capital project expenditures related to an expansion at Casino Queen. 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 an issue price equal to 98.827% of the principal amount. 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 at an issue price equal to 103.824% of the principal amount. The Company utilized the net proceeds from this additional borrowing to repay indebtedness under the Term Loan A-1 facility. At December 31, 2021, 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, 2021, 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, 2021, 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, 2021, 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 55 Table of Contents 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, 2021, the Company was in compliance with all required financial covenants under the Amended Credit Facility. Senior Unsecured Notes At December 31, 2021, the Company had an outstanding balance of $6,175.0 million of senior unsecured notes (the "Senior Notes"). On December 13, 2021, the Company issued $800 million of 3.25% senior unsecured notes due January 2032 at an issue price equal to 99.376% of the principal amount. The proceeds are being used to partially finance the Company's acquisition of certain real estate assets in the Cordish transaction as described in Note 7. 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 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. 56 Table of Contents 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 and GLP Financing II, Inc. (the "Issuers"), two wholly-owned subsidiaries of GLPI both of which are consolidated by GLPI, and are guaranteed on a senior unsecured basis by GLPI which such guarantees 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 Amended Credit Facility, and senior in right of payment to all of the Issuers' subordinated indebtedness, without giving effect to collateral arrangements. GLPI is not subject to any material or significant restrictions on its ability to obtain funds from its subsidiaries through dividends or loans or to transfer assets from such subsidiaries, except as provided by applicable law and the covenants listed below. None of GLPI's other subsidiaries guarantee the Senior Notes. 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. GLPI owns all of the assets of GLP Capital and conducts all of its operations through the operating partnership. Based on the amendments to Rule 3-10 of Regulation S-X that the SEC released on January 4, 2021, we note that since GLPI fully and unconditionally guarantees the debt securities of the Issuers and consolidates both Issuers, we are not required to provide separate financial statements for the Issuers and GLPI since they are consolidated into GLPI and the GLPI guarantee is “full and unconditional.” Furthermore, as permitted under Rule 13-01(a)(4)(vi), we excluded the summarized financial information for the Issuers because the assets, liabilities and results of operations of the Issuers and GLPI are not materially different than the corresponding amounts in GLPI’s consolidated financial statements and we believe such summarized financial information would be repetitive and would not provide incremental value to investors. At December 31, 2021, the Company was in compliance with all required financial covenants under its Senior Notes. 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. LIBOR Transition The majority of our debt is at fixed rates and our exposure to variable interest rates is currently limited to our Revolver and our Term Loan A-2. Both of these debt instruments are indexed to LIBOR which is expected to be phased out 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 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. 57 Table of Contents 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, pending acquisition costs for our Pennsylvania transactions with Cordish that will total approximately $698 million, inclusive of estimated real estate transfer taxes and fees (of which $575 million will require cash with the remainder funded in additional operating units) and the $150 million purchase price for the real estate of Bally's Black Hawk and Rock Island properties, capital expenditures, working capital needs and dividend requirements. Additionally, we anticipate the sale of the non-land real estate assets at Tropicana Las Vegas to Bally's will result in $150.0 million of proceeds. 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), issuance of additional operating partnership units, and/or debt offerings. In addition, although we have no significant debt maturities in 2022, the Company intends to refinance its Amended Credit Facility and certain senior unsecured note obligations in advance of their maturity dates in 2023. 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.