Gaming & Leisure Properties, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the financial position and operating results of Gaming and Leisure Properties, Inc. for the three months ended March 31, 2025 should be read in conjunction with the Financial Statements and related notes thereto and other financial information contained elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes for the year ended December 31, 2024. All defined terms included herein have the same meaning as those set forth in the Notes to the Consolidated Financial Statements contained within this Quarterly Report on Form 10-Q. Cautionary Note Regarding Forward-Looking Statements Forward-looking statements in this document are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Gaming and Leisure Properties, Inc. ("GLPI") and its subsidiaries (collectively with GLPI, the "Company") to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include information concerning the Company’s business strategy, plans, goals and objectives. Forward-looking statements in this document include, but are not limited to, statements regarding our ability to grow our portfolio of gaming facilities. In addition, statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans," "may increase," "may fluctuate," and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could" are generally forward-looking in nature and not historical facts. You should understand that the following important factors could affect future results and could cause actual results to differ materially from those expressed in such forward-looking statements: • our or our partner’s ability to successfully complete construction of various casino projects currently under development for which we have agreed to provide construction development funding, including Bally’s Chicago (as defined below), and the ability and willingness of our partners to meet and/or perform their respective obligations under the applicable construction financing and/or development documents; • the impact that higher inflation rates and interest rates and uncertainty with respect to the future state of the economy could have on discretionary consumer spending, including the casino operations of our tenants; • unforeseen consequences related to United States ("U.S.") government, economic, monetary or trade policies and stimulus packages on inflation rates, interest rates and economic growth; • the ability of our tenants to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including, without limitation, to satisfy obligations under their existing credit facilities and other indebtedness; • the availability of and the ability to identify suitable and attractive acquisition and development opportunities and the ability to acquire and lease the respective properties on favorable terms; • the degree and nature of our competition; • the ability to receive, or delays in obtaining, the regulatory approvals required to own and/or operate our properties, or other delays or impediments to completing our planned acquisitions or projects; • the potential of a new pandemic or similar national health crisis, including its effect on the ability or desire of people to gather in large groups (including in casinos), which could impact our financial results, operations, outlooks, plans, goals, growth, cash flows, liquidity, and stock price; • our ability to maintain our status as a real estate investment trust ("REIT"), given the highly technical and complex Internal Revenue Code (the "Code") provisions for which only limited judicial and administrative authorities exist, where even a technical or inadvertent violation could jeopardize REIT qualification and where requirements may depend in part on the actions of third parties over which the Company has no control or only limited influence; 30 • the satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis in order for the Company to maintain its REIT status; • the ability and willingness of our tenants and other third parties to meet and/or perform their obligations under their respective contractual arrangements with us, including lease and note requirements and in some cases, their obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; • the ability of our tenants to comply with laws, rules and regulations in the operation of our properties, to deliver high quality services, to attract and retain qualified personnel and to attract customers; • the ability to generate sufficient cash flows to service and comply with financial covenants under our outstanding indebtedness; • our ability to access capital through debt and equity markets in amounts and at rates and costs acceptable to GLPI, including for the satisfaction of our funding commitments to the extent drawn by our partners, acquisitions or refinancings due to maturities; • the ability of our tenants to decline our funding commitments by seeking alternative financing solutions and/or if our tenants do elect to utilize our funding commitments, the amounts drawn and the timing of these draws may be different than what the Company assumed; • adverse changes in our credit rating; • the availability of qualified personnel and our ability to retain our key management personnel; • changes in the U.S. tax law and other federal, state or local laws, whether or not specific to real estate, REITs or the gaming, lodging or hospitality industries; • changes in accounting standards; • the impact of weather or climate events or conditions, natural disasters, acts of terrorism and other international hostilities, war (including the current conflict between Russia and Ukraine and conflicts in the Middle East) or political instability; • the risk that the historical financial statements included herein do not reflect what the business, financial position or results of operations of GLPI may be in the future; • other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and • additional factors as discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the "Annual Report"), in this Quarterly Report on Form 10-Q and Current Reports on Form 8-K as filed with the United States Securities and Exchange Commission. You should consider the areas of risk described above, as well as those set forth in the "Risk Factors" section in the Company’s Annual Report and this Quarterly Report on Form 10-Q, in connection with considering any forward-looking statements that may be made by the Company generally. Other unknown or unpredictable factors may also cause actual results to differ materially from those projected by the forward-looking statements. Most of these factors are difficult to anticipate and are generally beyond the control of the Company. Except for the ongoing obligations of the Company to disclose material information under the federal securities laws, the Company does not undertake any obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required to do so by law. 31 Company Overview GLPI is a self-administered and self-managed REIT headquartered in Wyomissing, Pennsylvania. GLPI was incorporated 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 Hollywood Casino Baton Rouge and Hollywood Casino Perryville and then spun-off GLPI to holders of PENN's common and preferred stock in a tax-free distribution (the "Spin-Off"). Since 2021, the Company has been structured as an umbrella partnership REIT under which substantially all of our business is conducted through GLP Capital, the day-to-day management of which is exclusively controlled by GLPI. GLPI has no material assets other than its investment in GLP Capital. GLPI issues equity from time to time and is obligated to contribute the net proceeds from those offerings to GLP Capital. As of March 31, 2025, GLPI holds a 97.0% controlling financial interest in the operating partnership. Business Strategy We seek to provide an opportunity to invest in the growth opportunities afforded by the gaming industry, with the stability and cash flow opportunities of a REIT. Our primary business consists of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements. Under these arrangements, 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. Property and lease information The Company has disclosed the following key terms of its Master Leases and Single Property Leases in the tables below, along with the properties within each lease at March 31, 2025. We believe the following key terms are important for users of our financial statements to understand. • The Coverage ratio is a defined term in each respective lease agreement with our tenants and represents the ratio of Adjusted EBITDAR to rent expense for the properties contained within each lease. Adjusted EBITDAR is defined in each respective lease but is generally consistent with the Company's definition of Adjusted EBITDA (as defined on page 42) plus rent expense paid to GLPI. • Certain leases have a Minimum Escalator Coverage Ratio Governor as disclosed below. Before a rent escalation of up to 2% on the building base rent component of each lease can occur, the minimum coverage ratio for these leases needs to be 1.8 to 1 for the applicable lease year. • The reported Coverage ratios below with respect to our tenants' rent coverage over the trailing twelve months were provided by our tenants for the most recently available time period. GLPI has not independently verified the accuracy of the tenants' information and therefore makes no representation as to its accuracy. Rent coverage ratios are not reported for ground leases and development projects nor on leases that have been in effect for less than twelve months. 32 Master Leases Penn 2023 Master Lease Amended Penn Master Lease Operator PENN PENN Properties Hollywood Casino Aurora Aurora, IL Hollywood Casino Lawrenceburg Lawrenceburg, IN Hollywood Casino Joliet Joliet, IL Argosy Casino Alton Alton, IL Hollywood Casino Toledo Toledo, OH Hollywood Casino at Charles Town Races Charles Town, WV Hollywood Casino Columbus Columbus, OH Hollywood Casino at Penn National Race Course Grantville, PA M Resort Henderson, NV Hollywood Casino Bangor Bangor, ME Hollywood Casino at the Meadows Washington, PA Zia Park Casino Hobbs, NM Hollywood Casino Perryville Perryville, MD Hollywood Casino Gulf Coast Bay St. Louis, MS Argosy Casino Riverside Riverside, MO Hollywood Casino Tunica Tunica, MS Boomtown Biloxi Biloxi, MS Hollywood Casino St. Louis Maryland Heights, MO Hollywood Gaming Casino at Dayton Raceway Dayton, OH Hollywood Gaming Casino at Mahoning Valley Race Track Youngstown, OH 1st Jackpot Casino Tunica, MS Commencement Date 1/1/2023 11/1/2013 Lease Expiration Date 10/31/2033 10/31/2033 Remaining Renewal Terms 15 (3x5 years) 15 (3x5 years) Corporate Guarantee Yes Yes Master Lease with Cross Collateralization Yes Yes Technical Default Landlord Protection Yes Yes Default Adjusted Revenue to Rent Coverage 1.1 1.1 Competitive Radius Landlord Protection Yes Yes Escalator Details Yearly Base Rent Escalator Maximum 1.5% (1) 2 % Coverage ratio at December 31, 2024 1.91 2.17 Minimum Escalator Coverage Governor N/A 1.8 Yearly Anniversary for Realization November November Percentage Rent Reset Details Reset Frequency N/A 5 years Next Reset N/A Nov-28 (1) In addition to the annual escalation, a one-time annualized increase of $1.4 million occurs on November 1, 2027. 33 Master Leases Amended Pinnacle Master Lease Bally's Master Lease Operator PENN Bally's Properties Ameristar Black Hawk Black Hawk, CO Bally's Evansville Evansville, IN Ameristar East Chicago East Chicago, IN Bally's Dover Casino Resort Dover, DE Ameristar Council Bluffs Council Bluffs, IA Black Hawk (Black Hawk North, West and East casinos) Black Hawk, CO L'Auberge Baton Rouge Baton Rouge, LA Quad Cities Casino & Hotel Rock Island, IL Boomtown Bossier City Bossier City, LA Bally's Tiverton Hotel & Casino Tiverton, RI L'Auberge Lake Charles Lake Charles, LA Hard Rock Casino and Hotel Biloxi Biloxi, MS Boomtown New Orleans New Orleans, LA Ameristar Vicksburg Vicksburg, MS River City Casino & Hotel St. Louis, MO Jackpot Properties (Cactus Petes and Horseshu) Jackpot, NV Plainridge Park Casino Plainridge, MA Commencement Date 4/28/2016 6/3/2021 Lease Expiration Date 4/30/2031 6/2/2036 Remaining Renewal Terms 20 (4x5 years) 20 (4x5 years) Corporate Guarantee Yes Yes Master Lease with Cross Collateralization Yes Yes Technical Default Landlord Protection Yes Yes Default Adjusted Revenue to Rent Coverage 1.2 1.2 Competitive Radius Landlord Protection Yes Yes Escalator Details Yearly Base Rent Escalator Maximum 2 % (1) Coverage ratio at December 31, 2024 1.73 (2) 2.01 Minimum Escalator Coverage Governor 1.8 N/A Yearly Anniversary for Realization May June Percentage Rent Reset Details Reset Frequency 2 years N/A Next Reset May-26 N/A (1) If the CPI increase is at least 0.5% for any lease year, then the rent shall increase by the greater of 1% of the rent as of the immediately preceding lease year and the CPI increase capped at 2%. If the CPI is less than 0.5% for such lease year, then the rent shall not increase for such lease year. (2) Coverage ratio for escalation purposes excludes adjusted revenue and rent attributable to the Plainridge Park facility as well as certain other fixed rent amounts. 34 Master Leases Bally's Master Lease II Casino Queen Master Lease Operator Bally's Bally's Properties Bally's Kansas City Kansas City, MO DraftKings at Casino Queen East St. Louis, IL Bally's Shreveport Shreveport, LA The Queen Baton Rouge Baton Rouge, LA Casino Queen Marquette Marquette, IA Belle of Baton Rouge Baton Rouge, LA Commencement Date 12/16/2024 12/17/2021 Lease Expiration Date 12/15/2039 12/31/2036 Remaining Renewal Terms 20 (4x5 years) 20 (4x5 years) Corporate Guarantee Yes Yes Master Lease with Cross Collateralization Yes Yes Technical Default Landlord Protection Yes Yes Default Adjusted Revenue to Rent Coverage 1.35 (1) 1.4 Competitive Radius Landlord Protection Yes Yes Escalator Details Yearly Base Rent Escalator Maximum (2) (3) Coverage ratio at December 31, 2024 N/A 2.34 Minimum Escalator Coverage Governor N/A N/A Yearly Anniversary for Realization December December Percentage Rent Reset Details Reset Frequency N/A N/A Next Reset N/A N/A (1) The default adjusted revenue to rent coverage declines to 1.2 if the annual rent equals or exceeds $60 million on an annual basis. (2) If the CPI increase is at least 0.5% for any lease year, then the rent shall increase by the greater of 1% of the rent as of the immediately preceding lease year and the CPI increase capped at 2%. If the CPI is less than 0.5% for such lease year, then the rent shall not increase for such lease year. (3) Rent increases by 0.5% for the first six years. Beginning in 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 is less than 0.25% then rent will remain unchanged for such lease year. 35 Master Leases Boyd Master Lease Caesars Amended and Restated Master Lease Operator Boyd Caesars Properties Belterra Casino Resort Florence, IN Tropicana Atlantic City Atlantic City, NJ Ameristar Kansas City Kansas City, MO Tropicana Laughlin Laughlin, NV Ameristar St. Charles St. Charles, MO Trop Casino Greenville Greenville, MS Isle Casino Hotel Bettendorf Bettendorf, IA Isle Casino Hotel Waterloo Waterloo, IA Commencement Date 10/15/2018 10/1/2018 Lease Expiration Date 4/30/2031 9/30/2038 Remaining Renewal Terms 20 (4x5 years) 20 (4x5 years) Corporate Guarantee No Yes Master Lease with Cross Collateralization Yes Yes Technical Default Landlord Protection Yes Yes Default Adjusted Revenue to Rent Coverage 1.4 1.2 Competitive Radius Landlord Protection Yes Yes Escalator Details Yearly Base Rent Escalator Maximum 2 % 1.75 % (1) Coverage ratio at December 31, 2024 2.51 1.87 Minimum Escalator Coverage Governor 1.8 N/A Yearly Anniversary for Realization May October Percentage Rent Reset Details Reset Frequency 2 years N/A Next Reset May-26 N/A (1) Building base rent will be increased by 1.75% in the 7th and 8th lease year and 2% in the 9th lease year and each year thereafter. 36 Master Leases Pennsylvania Live! Master Lease Strategic Gaming Leases (1) Operator Cordish Strategic Properties Live! Casino & Hotel Philadelphia Philadelphia, PA Silverado Franklin Hotel & Gaming Complex Deadwood, SD Live! Casino Pittsburgh Greensburg, PA Deadwood Mountain Grand Casino Deadwood, SD Baldini's Casino Sparks, NV Commencement Date 3/1/2022 5/16/2024 Lease Expiration Date 2/28/2061 5/31/2049 Remaining Renewal Terms 21 (1x11 years, 1x10 years) 20 (2x10 years) Corporate Guarantee No Yes Master Lease with Cross Collateralization Yes Yes Technical Default Landlord Protection Yes Yes Default Adjusted Revenue to Rent Coverage 1.4 1.4 (2) Competitive Radius Landlord Protection Yes Yes Escalator Details Yearly Base Rent Escalator Maximum 1.75 % 2% (2) Coverage ratio at December 31, 2024 2.39 N/A Minimum Escalator Coverage Governor N/A N/A Yearly Anniversary for Realization March Jun-26 Percentage Rent Reset Details Reset Frequency N/A N/A Next Reset N/A N/A (1) Consists of two leases that are cross collateralized and co-terminus with each other. (2) The default adjusted revenue to rent coverage declines to 1.25 if the tenant's adjusted revenues total $75 million or more. Annual rent escalates at 2% beginning in year three of the lease and in year 11 escalates based on the greater of 2% or CPI, capped at 2.5%. 37 Single Property Leases Belterra Park Lease Horseshoe St Louis Lease Morgantown Lease MD Live! Lease Operator Boyd Caesar PENN Cordish Properties Belterra Park Gaming & Entertainment Center Horseshoe St. Louis Hollywood Casino Morgantown Live! Casino & Hotel Maryland Cincinnati, OH St. Louis, MO Morgantown, PA Hanover, MD Commencement Date 10/15/2018 9/29/2020 10/1/2020 12/29/2021 Lease Expiration Date 04/30/2031 10/31/2033 10/31/2040 12/31/2060 Remaining Renewal Terms 20 (4x5 years) 20 (4x5 years) 30 (6x5 years) 21 (1x11 years, 1x10 years) Corporate Guarantee No Yes Yes No Technical Default Landlord Protection Yes Yes Yes Yes Default Adjusted Revenue to Rent Coverage 1.4 1.2 N/A 1.4 Competitive Radius Landlord Protection Yes Yes N/A Yes Escalator Details Yearly Base Rent Escalator Maximum 2% 1.25% (1) 1.50% (2) 1.75% Coverage ratio at December 31, 2024 3.36 1.97 N/A 3.56 Minimum Escalator Coverage Governor 1.8 N/A N/A N/A Yearly Anniversary for Realization May October December January Percentage Rent Reset Details Reset Frequency 2 years N/A N/A N/A Next Reset May 2026 N/A N/A N/A (1) For the second through fifth lease years, after which time the annual escalation becomes 1.75% for the 6th and 7th lease years and then 2% for the remaining term of the lease. (2) Increases by 1.5% on the opening date (which occurred on December 22, 2021) and for the first three lease years. Commencing on the fourth anniversary of the opening date and for each anniversary thereafter, 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 if the CPI increase is less than 0.5% for such lease year, then the rent shall not increase for such lease year. 38 Single Property Leases Tropicana Lease Tioga Downs Lease Rockford Lease Chicago Lease Operator Bally's American Racing and Entertainment (managed by Hard Rock) Bally's Properties Tropicana Las Vegas Tioga Downs Hard Rock Casino Rockford Bally's Chicago Development Las Vegas, NV Nicholas, NY Rockford, IL Chicago, IL Commencement Date 9/26/2022 2/6/2024 8/29/2023 9/11/2024 Lease Expiration Date 9/25/2072 2/28/2054 8/31/2122 11/30/2121 (3) Remaining Renewal Terms 49 (1 x 24 years, 1 x 25 years) 32 years and 10 months (2x10 years, 1x12 years and 10 months) None (3) Corporate Guarantee Yes Yes No (3) Technical Default Landlord Protection Yes Yes Yes (3) Default Adjusted Revenue to Rent Coverage 1.4 1.4 1.4 (3) Competitive Radius Landlord Protection Yes Yes Yes (3) Escalator Details Yearly Base Rent Escalator Maximum (1) 1.75% (2) 2% (3) Coverage ratio at December 31, 2024 N/A N/A N/A N/A Minimum Escalator Coverage Governor N/A N/A N/A N/A Yearly Anniversary for Realization October March September (3) Percentage Rent Reset Details Reset Frequency N/A N/A N/A N/A Next Reset N/A N/A N/A N/A (1) If the CPI increase is at least 0.5% for any lease year, then the rent shall increase by the greater of 1% of the rent as of the immediately preceding lease year and the CPI increase capped at 2%. If the CPI is less than 0.5% for such lease year, then the rent shall not increase for such lease year. (2) Increases by 1.75% beginning with the first anniversary and increases to 2% beginning in year fifteen of the lease through the remainder of the initial lease term. (3) The Company is currently in the process of amending and restating the lease to have an initial lease term of 15 years followed by multiple renewal extensions to be agreed upon between Bally's and the Company. The lease is also anticipated to have lease terms generally consistent with the terms of the Bally's Master Lease except as modified by the binding term sheet. 39 Funding commitments As of March 31, 2025, we have entered into various commitments or call rights to finance/acquire future investments in gaming and related facilities for our tenants. These are detailed in the table below. Our tenants retain the option to decline our financing for certain projects and may seek alternative financing solutions. The inclusion of a commitment in this disclosure does not guarantee that the financing will be utilized by the tenant in circumstances where a tenant has the option. See Note 1 in the Notes to the Condensed Consolidated Financial Statements for further details. Description Maximum Commitment amount Amount funded at March 31, 2025 Relocation of Hollywood Casino Aurora $225 million None Relocation of Hollywood Casino Joliet, construction of a hotel at Hollywood Casino Columbus and a hotel tower at the M Resort $350 million None Construction improvements at Ameristar Casino Council Bluffs (1) None Potential transaction at the former Tropicana Las Vegas site with Bally's $175 million $48.5 million Real estate construction costs for Bally's Chicago $940 million None Funding and oversight of a landside move and hotel renovation at The Belle $111 million $43.5 million Construction costs for a landside development project at Casino Queen Marquette $16.5 million $0.7 million Ione Loan to fund a new casino development near Sacramento, California $110 million $18.4 million Call right to acquire Bally's Lincoln $735 million None (1) The Company has agreed to fund, if requested by PENN at their sole discretion, on or before March 1, 2029, construction improvements in an amount not to exceed the greater of (i) the hard costs associated with the project and (ii) $150.0 million. 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, investment in leases, financing receivables, net, 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 condensed 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. For further information on our critical accounting estimates, see Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and the Notes to our audited consolidated financial statements included in our most recent Annual Report. There has been no material change to these estimates for the three months ended March 31, 2025. Executive Summary Financial Highlights We reported total revenues and income from operations of $395.2 million and $258.8 million, respectively, for the three months ended March 31, 2025, compared to $376.0 million and $257.6 million, respectively, for the corresponding period in the prior year. The major factors affecting our results for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, were as follows: • Total income from real estate increased by $19.3 million to $395.2 million for the three months ended March 31, 2025 compared to $376.0 million for the corresponding period in the prior year. The reason for the increase was primarily due to our recent acquisitions which in the aggregate increased cash rental income by $20.2 million for the three months ended March 31, 2025. 40 Additionally, the three months ended March 31, 2025 benefited by $5.2 million compared to the corresponding period in the prior year from escalations on our leases, favorable variable rents of $1.5 million and higher ground rent revenue of $0.8 million. The Company also recognized lower accretion of $1.0 million on its Investment in leases and unfavorable straight-line rent adjustments of $7.4 million compared to the corresponding period in the prior year. • Total operating expenses increased by $18.0 million for the three months ended March 31, 2025 as compared to the corresponding period in the prior year. The primary reason for the increase was due to an increase in the provision for credit losses of $16.0 million during the three months ended March 31, 2025. The provision increase was due primarily from a more pessimistic forward looking economic forecast at March 31, 2025. The Company incurred higher land rights and ground lease expense of $1.7 million due to the acquisition of the assets in Bally's Master Lease II. Additionally, general and administrative expenses increased by $0.8 million due primarily from higher stock based compensation expense of $0.7 million. Partially offsetting these increases was a decline in depreciation expense of $0.3 million. • Other expenses increased by $10.5 million for the three months ended March 31, 2025, primarily due to higher interest expense of $10.6 million associated with the Company's increased borrowings to fund our recent acquisitions and prefunding the redemption of our $850 million, 5.25% senior unsecured note that occurred in March 2025. • Net income decreased by $9.2 million for the three months ended March 31, 2025, as compared to the corresponding periods in the prior year, primarily due to the variances explained above. 41 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 recent years and expect to continue to grow our portfolio by pursuing opportunities to acquire additional gaming facilities (either existing facilities or new development facilities) to lease to gaming operators under prudent terms. • Several wholly-owned subsidiaries of PENN lease a substantial number of our properties and account for a significant portion of our revenue. • The risks related to economic conditions, including volatility in the financial markets, high inflation levels 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 certain annual rent escalators we receive from our 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 Internal Revenue Service 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 three months ended March 31, 2025 and 2024 are summarized below: Three Months Ended March 31, 2025 2024 (in thousands) Total revenues $ 395,235 $ 375,964 Total operating expenses 136,401 118,358 Income from operations 258,834 257,606 Total other expenses (87,916) (77,443) Income before income taxes 170,918 180,163 Income tax expense 564 637 Net income $ 170,354 $ 179,526 Net income attributable to non-controlling interest in the Operating Partnership (5,170) (5,062) Net income attributable to common shareholders $ 165,184 $ 174,464 FFO, AFFO and Adjusted EBITDA Funds From Operations ("FFO"), Adjusted Funds From Operations ("AFFO") and Adjusted EBITDA are non-U.S. generally accepted accounting principles ("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 dispositions of property, net of tax and real estate depreciation. We define AFFO as FFO excluding, as applicable to the particular period, stock based compensation expense; the amortization of debt issuance costs, bond premiums and original issuance discounts; other depreciation; amortization of land rights; accretion on investment in leases, financing receivables; non-cash adjustments to financing lease liabilities; straight-line rent and deferred rent adjustments; losses on debt extinguishment; capitalized interest; and provision (benefit) for credit losses, net, reduced by capital maintenance expenditures. Finally, we define Adjusted EBITDA as net income excluding, as applicable to the 42 particular period, interest, net; income tax expense; real estate depreciation; other depreciation; (gains) or losses from dispositions of property, net of tax; stock based compensation expense; straight-line rent and deferred rent adjustments; amortization of land rights; accretion on Investment in leases, financing receivables; non-cash adjustments to financing lease liabilities; losses on debt extinguishment; and provision (benefit) 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. 43 The reconciliation of the Company’s net income per GAAP to FFO, AFFO, and Adjusted EBITDA for the three months ended March 31, 2025 and 2024 is as follows: Three Months Ended March 31, 2025 2024 (in thousands) Net income $ 170,354 $ 179,526 Gains from dispositions of property, net of tax (125) — Real estate depreciation 64,529 64,877 Funds from operations $ 234,758 $ 244,403 Straight-line rent and deferred rent adjustments (8,412) (15,790) Other depreciation 483 483 Provision (benefit) for credit losses, net 39,246 23,294 Amortization of land rights 4,270 3,276 Amortization of debt issuance costs, bond premiums and original issuance discounts 3,232 2,684 Stock based compensation 8,858 8,122 Accretion on investment in leases, financing receivables (6,896) (7,884) Non-cash adjustment to financing lease liabilities 98 117 Capitalized interest (3,605) — Capital maintenance expenditures (36) (90) Adjusted funds from operations $ 271,996 $ 258,615 Interest, net 87,149 76,768 Income tax expense 564 637 Capital maintenance expenditures 36 90 Amortization of debt issuance costs, bond premiums and original issuance discounts (3,232) (2,684) Capitalized interest 3,605 — Adjusted EBITDA $ 360,118 $ 333,426 Net income, FFO, AFFO and Adjusted EBITDA were $170.4 million, $234.8 million, $272.0 million, and $360.1 million for the three months ended March 31, 2025, respectively. This compares to net income, FFO, AFFO and Adjusted EBITDA of $179.5 million, $244.4 million, $258.6 million and $333.4 million for the corresponding period in the prior year. The decrease in net income of $9.2 million was primarily attributable to increased operating expenses of $18.0 million (which was driven by the increase in provision for credit losses of $16.0 million) and higher other expenses of $10.5 million (driven by higher interest expense to partially finance our acquisitions) partially offset by an increase in total revenues of $19.3 million. The decrease in FFO for the three months ended March 31, 2025 was due to the items described above, excluding gains from dispositions of property and real estate depreciation. The increases in AFFO and Adjusted EBITDA were due to the items described above, as well as the adjustments mentioned in the tables above. 44 Revenues Revenues for the three months ended March 31, 2025 and 2024 were as follows (in thousands): Three Months Ended March 31, Percentage 2025 2024 Variance Variance Rental income $ 340,252 $ 330,582 $ 9,670 2.9 % Income from investment in leases, financing receivables 47,764 44,305 3,459 7.8 % Income from sales type leases 3,760 — 3,760 N/A Interest income from real estate loans 3,459 1,077 2,382 N/A Total income from real estate $ 395,235 $ 375,964 $ 19,271 5.1 % Total income from real estate • Total income from real estate increased by $19.3 million to $395.2 million for the three months ended March 31, 2025 compared to $376.0 million for the corresponding period in the prior year. The reason for the increase was primarily due to our recent acquisitions which in the aggregate increased cash rental income by $20.2 million for the three months ended March 31, 2025. Additionally, the three months ended March 31, 2025 benefited by $5.2 million compared to the corresponding period in the prior year from escalations on our leases, favorable variable rents of $1.5 million and higher ground rent revenue of $0.8 million. The Company also recognized lower accretion of $1.0 million on its Investment in leases and unfavorable straight-line rent adjustments of $7.4 million compared to the corresponding period in the prior year. 45 Details of the Company's income from real estate for the three months ended March 31, 2025 was as follows (in thousands) Three Months Ended March 31, 2025 Building base rent Land base rent Percentage rent and other rental revenue Interest income on real estate loans Total cash income Straight-line rent and deferred rent adjustments (1) Ground rent in revenue Accretion on financing leases Total income from real estate Amended PENN Master Lease $ 54,152 $ 10,759 $ 6,561 $ — $ 71,472 $ 4,952 $ 473 $ — $ 76,897 PENN 2023 Master Lease 59,797 — (121) — 59,676 4,738 — — 64,414 Amended Pinnacle Master Lease 61,482 17,814 8,122 — 87,418 1,858 2,061 — 91,337 PENN Morgantown Lease — 796 — — 796 — — — 796 Caesars Master Lease 16,302 5,932 — — 22,234 1,916 330 — 24,480 Horseshoe St. Louis Lease 5,991 — — — 5,991 324 — — 6,315 Boyd Master Lease 20,470 2,946 3,047 — 26,463 (350) 432 — 26,545 Boyd Belterra Lease 724 473 500 — 1,697 (25) — — 1,672 Bally's Master Lease 26,411 — — — 26,411 — 2,555 — 28,966 Bally's Master Lease II 8,048 — — 8,048 — 954 — 9,002 Maryland Live! Lease 19,412 — — — 19,412 — 2,108 3,288 24,808 Pennsylvania Live! Master Lease 12,793 — — — 12,793 — 308 2,238 15,339 Casino Queen Master Lease 7,974 — — — 7,974 (1) — — 7,973 Tropicana Las Vegas Lease — 3,763 — — 3,763 — — (3) 3,760 Rockford Lease — 2,040 — — 2,040 — — 507 2,547 Rockford Loan — — — 3,000 3,000 — — — 3,000 Tioga Downs Lease 3,652 — — — 3,652 — 2 572 4,226 Strategic Gaming Leases 2,299 — — 2,299 — 106 294 2,699 Bally's Chicago — 5,000 — 5,000 (5,000) — — — Ione Loan — — — 459 459 — — — 459 Total $ 299,507 $ 49,523 $ 18,109 $ 3,459 $ 370,598 $ 8,412 $ 9,329 $ 6,896 $ 395,235 (1) Current year amount includes $0.1 million of tenant improvement allowance amortization. 46 Three Months Ended March 31, 2024 Building base rent Land base rent Percentage rent and other rental revenue Interest income on real estate loans Total cash income Straight-line rent adjustments Ground rent in revenue Accretion on financing leases Total income from real estate Amended PENN Master Lease $ 53,090 $ 10,759 $ 6,519 $ — $ 70,368 $ 4,952 $ 569 $ — $ 75,889 PENN 2023 Master Lease 58,913 — (107) — 58,806 5,622 — — 64,428 Amended Pinnacle Master Lease 60,277 17,814 7,164 — 85,255 1,858 2,063 — 89,176 PENN Morgantown Lease — 784 — — 784 — — — 784 Caesars Master Lease 16,022 5,932 — — 21,954 2,196 330 — 24,480 Horseshoe St. Louis Lease 5,918 — — — 5,918 399 — — 6,317 Boyd Master Lease 20,068 2,946 2,566 — 25,580 574 432 — 26,586 Boyd Belterra Lease 709 473 472 — 1,654 151 — — 1,805 Bally's Master Lease 25,893 — — — 25,893 — 2,689 — 28,582 Maryland Live! Lease 19,078 — — — 19,078 — 2,160 4,529 25,767 Pennsylvania Live! Master Lease 12,573 — — — 12,573 — 311 2,273 15,157 Casino Queen Master Lease 7,905 — — — 7,905 38 — — 7,943 Tropicana Las Vegas Lease — 2,678 — — 2,678 — — — 2,678 Rockford Lease — 2,000 — — 2,000 — — 498 2,498 Rockford Loan — — — 1,077 1,077 — — — 1,077 Tioga Lease 2,212 — — — 2,212 — 1 584 2,797 Total $ 282,658 $ 43,386 $ 16,614 $ 1,077 $ 343,735 $ 15,790 $ 8,555 $ 7,884 $ 375,964 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 condensed consolidated statements 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. The Company recognizes earnings on Investment in leases, financing receivables and Investment in leases, sales type based on the effective yield method using the discount rate implicit in the leases. The amounts in the table above labeled accretion on financing leases represent earnings recognized in excess of cash received during the period. Operating expenses Operating expenses for the three months ended March 31, 2025 and 2024 were as follows (in thousands): Three Months Ended March 31, Percentage 2025 2024 Variance Variance Land rights and ground lease expense $ 13,555 $ 11,818 $ 1,737 14.7 % General and administrative 18,713 17,886 827 4.6 % Gains from dispositions (125) — (125) N/A Depreciation 65,012 65,360 (348) (0.5) % Provision for credit losses 39,246 23,294 15,952 68.5 % Total operating expenses $ 136,401 $ 118,358 $ 18,043 15.2 % 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 $1.7 million for the three months ended March 31, 2025, as compared to the corresponding period in the prior year due to the acquisition of the real estate assets in Bally's Master Lease II. 47 General and Administrative Expense General and administrative expenses include items such as compensation costs (including stock based compensation), professional services and costs associated with development activities. General and administrative expenses increased by $0.8 million for the three months ended March 31, 2025 as compared to the corresponding period in the prior year. This was due primarily to higher stock based compensation expense of $0.7 million. Depreciation Depreciation expense decreased by $0.3 million for the three months ended March 31, 2025 as compared to the corresponding period in the prior year. Provision for credit losses The Company recorded a provision for credit losses of $39.2 million for the three months ended March 31, 2025 compared to a provision of $23.3 million for the corresponding period in the prior year. As described in Note 3, the Company follows ASC 326 “Credit Losses”, which requires that the Company measure and record current expected credit losses, the scope of which includes our Investments in leases, financing receivables, net as well as the Company's real estate loans and related loan commitment. The reason for the increased provision during the three months ended March 31, 2025 was due to a more pessimistic forward looking economic forecast utilized in our CECL reserve calculation. Future changes in economic projections, probability factors, changes in the estimated value of our real estate property and earnings assumptions at the underlying facilities may result in non-cash provisions or recoveries in future periods that could materially impact our results of operations. Other income (expenses) Other income (expenses) for the three months ended March 31, 2025 and 2024 were as follows (in thousands): Three Months Ended March 31, Percentage 2025 2024 Variance Variance Interest expense $ (97,272) $ (86,675) $ (10,597) 12.2 % Interest income 9,356 9,232 124 1.3 % Total other expenses $ (87,916) $ (77,443) $ (10,473) 13.5 % Interest expense Interest expense increased by $10.6 million for the three months ended March 31, 2025, as compared to the corresponding period in the prior year. The increase was due to increased borrowings that partially funded our recent acquisitions and prefunding the redemption for our $850 million, 5.25% senior unsecured note that occurred in March 2025. Net income attributable to noncontrolling interest in the Operating Partnership As partial consideration for certain real estate acquisitions, the Company's operating partnership has issued OP Units. OP Units are exchangeable for common shares of the Company on a one-for-one basis, subject to certain terms and conditions. The operating partnership is a variable interest entity ("VIE") in which the Company is the primary beneficiary because it has the power to direct the activities of the VIE that most significantly impact the partnership's economic performance and has the obligation to absorb losses of the VIE that could be potentially significant to the VIE and the right to receive benefits from the VIE that could be significant to the VIE. Therefore, the Company consolidates the accounts of the operating partnership, and reflects the third party ownership in this entity as a noncontrolling interest in the Condensed Consolidated Balance Sheets and allocates the proportion of net income to the noncontrolling interests on the Condensed Consolidated Statements of Income. The Company’s net income or loss is allocated to noncontrolling interests based on the respective ownership or voting percentage in the Operating Partnership associated with such noncontrolling interests and is removed from consolidated income or loss on the Condensed Consolidated Statements of Operations in order to derive net income or loss attributable to common stockholders. The noncontrolling ownership percentage is calculated by dividing the aggregate number of LTIP Units and OP Units by the total number of units and shares outstanding. 48 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 $252.5 million and $257.9 million during the three months ended March 31, 2025 and 2024, respectively. The decrease in net cash provided by operating activities of $5.4 million for the three months ended March 31, 2025, as compared to the corresponding period in the prior year, was primarily comprised of an increase in cash receipts from customers of $26.9 million along with decreases in cash paid for operating expenses of $2.6 million and an increase in interest income of $13.2 million. This was offset by increases in cash paid for employees and cash paid for interest of $1.3 million and $46.8 million respectively. The increase in cash receipts collected from our customers for the three months ended March 31, 2025, as compared to the corresponding period in the prior year, was due to increased rental income from the Company's recent acquisitions and lease escalations and the increase in interest expense was due to increased borrowings that partially funded our recent acquisitions and prefunding the redemption for our $850 million, 5.25% senior unsecured note that occurred in March 2025. Investing activities provided cash of $534.0 million and used cash of $448.4 million during the three months ended March 31, 2025 and 2024, respectively. Net cash provided by investing activities during the three months ended March 31, 2025 primarily consisted of the maturity of zero coupon U.S. Treasury Bills totaling $550.0 million, partially offset by Ione Loan fundings of $3.2 million, and capital expenditures of $12.9 million. The net cash used in investing activities for the three months ended March 31, 2024 consisted primarily of $93.3 million for the acquisition of the real estate assets which were added to the Bally's Master Lease, the purchase of zero coupon U.S. Treasury Bills totaling $341.0 million and Ione Loan fundings of $14.0 million. Financing activities used cash of $1,080.3 million and $281.9 million during the three months ended March 31, 2025 and 2024, respectively. Net cash used in financing activities during the three months ended March 31, 2025 was driven by the repayment of long term debt of $850.1 million, dividend payments of $209.1 million, non-controlling interest distributions of $6.3 million, and taxes paid related to shares withheld for tax purposes on restricted stock award vestings of $14.8 million. Cash used in financing activities during the three months ended March 31, 2024 was driven by the repayment of long term debt of $63.5 million, dividend payments of $206.6 million, noncontrolling interest distributions of $6.1 million and taxes paid related to shares withheld for tax purposes on restricted stock award vestings of $14.7 million, partially offset by proceeds from the issuance of common stock, net of costs of $9.0 million. Capital Expenditures Capital expenditures are accounted for as either capital project expenditures 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 three months ended March 31, 2025 and 2024, we spent approximately $12.9 million and $0.1 million, respectively, for capital expenditures. The majority of the capital expenditures in 2025 were related to a land side and hotel development project at The Belle. Debt The Company has access to a $2.09 billion variable rate revolving credit facility under its credit Agreement, as amended (the "Amended Credit Agreement") of which $332.5 million is outstanding as of March 31, 2025. Additionally, the Company was contingently obligated under letters of credit issued pursuant to the Amended Credit Agreement with face amounts aggregating approximately $0.4 million, resulting in $1,757.2 million of available borrowing capacity under the Amended Credit Agreement as of March 31, 2025. The Company has $6.89 billion of debt outstanding with a weighted average maturity and interest rate of 6.3 years and 5.06%, respectively as of March 31, 2025. The majority of the Company's debt obligations have fixed interest rates from the issuance of its senior unsecured notes. During the three month period ended March 31, 2025, the Company redeemed its $850 million 5.250% note that was due in June 2025. See Note 7 for the future minimum repayments of the Company's debt obligations. 49 GLPI owns 97.0% 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. 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. Such distributions generally can be made with cash and/or a combination of cash and Company common stock if certain requirements are met. 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. To the extent any of the Company's taxable income was not previously distributed, the Company will make a dividend declaration pursuant to Section 858(a)(1) of the Code, allowing the Company to treat certain dividends that are to be distributed after the close of a taxable year as having been paid during the taxable year. 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 Agreement and our ability to raise equity proceeds (including the Company's forward sale agreement that is anticipated to be settled in June of 2025), will be adequate to meet our anticipated debt service requirements, funding commitments, capital expenditures, working capital needs and dividend requirements for the next twelve months and beyond. In late December 2022, the Company refreshed its ATM capacity to $1 billion (the "2022 ATM Program"). As of March 31, 2025, the Company had $34.2 million remaining for issuance under the 2022 ATM Program. Once the 2022 ATM Program is exhausted, the Company would expect to enter into a new program. We expect the majority of our future growth to come from funding commitments to our tenants and acquisitions of gaming and other properties to lease to third parties. If we consummate significant transactions 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 2022 ATM Program and future ATM programs that we would expect to enter into once the 2022 ATM Program is fully utilized), issuance of additional OP Units, and/or debt offerings. Our future operating performance and our ability to service or refinance our debt will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. See "Risk Factors-Risks Related to Our Capital Structure" in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, for a discussion of the risk related to our capital structure. 50