Gaming and Leisure Properties Inc (GLPI) 2013 Q4 法說會逐字稿

Greetings and welcome to the Gaming and Leisure Properties Fourth Quarter and Full Year 2013 Earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

(Operator Instructions). As a reminder, the conference is being recorded.

I would like to turn the conference over to your host, Ms. Kara Smith of ICR. Thank you, you may begin.

Good morning. We would like to thank you for joining us today for Gaming and Leisure Properties Fourth Quarter 2013 Earnings call and webcast. The press release distributed earlier this morning is available on the Investor Relations section of our website, at www.glpipropinc.com.

On today's call, Management's prepared comments and answers to your questions may contain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statement address matters that are subject to risks and uncertainties certainties that may cause actual results to differ from those discussed today.

Examples of forward-looking statements includethose related to revenue, operating income, and financial guidance, as well as non-GAAP financial measures, such as FFO and AFFO. As a reminder, forward-looking statements represent Management's current estimates and the Company assumes no obligation to update any forward-looking statements in the future.

We encourage listeners to review the more detailed discussions related no these forward-looking statements contained in the company's filings with the SEC, and the definitions and reconciliations of non-GAAP financial measures contained in the Company's Earnings Release.

On this morning's conference call, we are joined by Peter Carlino, Chairman and Chief Executive Officer; Bill Clifford, Chief Financial Officer; and Steven Snyder, Senior Vice President Corporate Development of Gaming and Leisure Properties, Inc.

Now I would like to turn the call over to Mr. Peter Carlino. Peter?

Yes, thank you very much. Well, good morning, everyone, and thanks to those who have dialed in this morning, for this our first-ever earnings call, which is kind of fun for us to start off in our new world.

What we will highlight, of course, is the biggest accomplishment of all, that is getting here. This is, probably, a two-and-a-half or more-year process that has been most painful, miserable for all involved, but it's finally happened and we have completed our spin from Penn National and we are off and running. We have just concluded, as you know, our E & P purge.

We have, now, announced our first quarterly dividend and I think starting off with, as we did, the acquisition of the Casino Queen property, has sort of gotten all of the elements in motion for us. So, this is a new beginning and we could not be more excited about it. We see a great future and we are looking forward to a lot of fun in this industry.

So, as those of you who have followed us, followed me, for a long stretch of time know, I tend to keep my comments pretty brief. We try to highlight anything that we think is important, but look to you folks to ask the kind of questions that you want and you will find that you will get very direct answers from us to the best of our ability.

I will ask Bill to highlight a few points. And, first, to point out that with us, also, is our General Counsel Brandon Moore, but Bill, go ahead.

Thanks, Peter. I'm just going to hit a couple of highlights that are reflected in the Press Release.

First of all, we want to point out to everybody that in our fourth quarter, we had three months of operations from the TRS, comprising Baton Rouge and Perryville; and two months of real estate transactions within the quarter. And, then, for the year numbers that are included in the release, that includes, really, only the results from the TRS, actually while it was part of Penn National.

We had $13.5 million in nonrecurring spin-related expenses for a variety of concepts, most notably, advisors. And kind of moving on to some other items inside the Penn ramp is mostly fixed with monthly variable portion of the rent related to Toledo and Columbus. And I would point out to everybody, mostly because we have had a number of calls, that the Columbus and the Toledo variable portion of the rent is less than 10% of the total rent from Penn.

So the extent that Columbus or Toledo were to fluctuate, it would only be on 10%. So, if there was a 10% fluctuation--I'm not saying that there would be--but if there were a 10% fluctuation, that effectively comes out to a 1% actual variability to our total rent.

Our rent coverage on the Penn lease is expected to exceed [1.8%], and the escalators are expected to take effect on November 1st. I will point out that when people are looking to calculate the rent coverage for Penn, that the elements of that are corporate overhead is excluded. The EBITDA coverage on the properties included in the rent alone. So, those elements that are owned by Penn National, which are not part of the mass release, don't count towards that calculation.

The last two points I think I have is that we have a green fill pipeline, which is underway for both racetracks in Ohio and we expect both of those to open up in the Fall of 2014. And lastly, I think, the good news is that we were informed that we will be added, effective February 28th, to the Morgan Stanley REIT Index.

And with that, I will turn it back over to the Operator. Operator, questions?

Thank you. We will be conducting a question-and-answer session. (Operator instructions.)

And our first question comes from the line of Felicia Hendrix with Barclays. Please proceed with your question.

Hello. Good morning. So nice to talk to you under your new umbrella. I know, as you just mentioned, the variable part of your rent is very small as an overall portion, but just wondering if you can update us as to your assumptions for Ohio, you know, what's in your official documents? I was just wondering if you could give us an update there? And, then, I have a follow-up.

You know, I think I can tell you that what we have done is communicated with Penn National and we are, basically, using their projections for what they expect to see out of the property. I don't know that I necessarily -- I don't know if they have given that level of detail in their press release and so I will back off that for just a second and probably confer with them before I give out any specific information relative to that.

Okay. That's understandable. And, then, your assumptions on the TRS property seems to be a bit higher than ours, maybe we are being too conservative given what we are seeing in the overall environment, but can you address that?

It's hard to know and respond exactly given that I don't know, exactly, what your estimates are, but I will tell you that I think we are really pleasantly surprised with how well Perryville has been performing, certainly in the fourth quarter, and we expect that Baton Rouge will continue to see some challenges going forward, especially as the Pinnacle property ramps up and I think, changes their focus from trying to be a destination resort to, now, really appearing to be zeroing in on the Baton Rouge market.

I'm not saying they have abandoned their strategy of trying to create a destination business from outside of the Baton Rouge market. It clearly seems that they have pointed their barrels more squarely into the Baton Rouge market, which was a concern we always had. We never believed that that property was going to be a property that was truly going to be a destination into Baton Rouge, especially competing with locations like New Orleans and Biloxi, but --

Well, that was part of their claim, as you might remember, Felicia, that into the Gaming Commission and getting licensed. Look, it's a two-boat market. They shoved another boat in the market that didn't merit it, with the argument that they were going to be a destination property. I mean, I think we all knew that was crap. And, again, this is a drive-in, 30-minutes and in-market. It never made any sense. So, now we are down to what we expected. We'll compete for customers and that's fine, but we are not confused about where that property has to go.

So, I think we recognize in our numbers, we believe we have accounted for what is going to happen when the Horseshoe in Baltimore opens up, which is reflected in our guidance. To the extent that we are more optimistic than you, I hope we are right.

Obviously, all of these forecasts have a bit of guesstimating and we have done our best to come up with numbers that we think are achievable. And this will be the first time in my career that, I think, I have been accused of being too aggressive. In any event, let's hope we have a new trend.

Okay. I think we probably differ in the cannibalization. And then, as a REIT, that's what you guys are now, just if you could just talk about the pool of potential transactions you are looking at and, you know, we frequently get asked by the REIT investors regarding your acquisition strategy, you know, the timeframe of when you might venture out to non-gaming type of deals?

Felicia, that's an easy one. Not soon. Not soon. We are not going to get a lot of credit for drifting off into areas where our expertise is less.

I will say what I always said in my earlier days with my last company, that, look, if we run out of stuff to do, our obligation as a public company is to continue growing. So anything is possible, but it will be the last thing that we do. I think there are opportunities. We are not going to identify any, but any and all things we are looking at today, and we are very active in that, and so time will tell.

These are early days, but I think that there's a large field of potential. We'll have to work through that field over the next years; and by the way, that's a changing landscape all the time. So, I think we have at least a few years of happy entertainment here before we have to begin even thinking about what else might be possible. I mean, we are going to stick to our knitting for now.

Yeah, and as relative to the pipeline, listen, we are in various stages of discussions with a number of people. I can tell you that some of those discussions are moving along well; some are not. But I think we are pretty optimistic that we are going to get some transactions done this year.

I can't tell you the size of the scale, or the scope, because all of that is, somewhat, event-specific and I wouldn't want to, necessarily, pre-stage any particular strategy or outcome, because no matter how promising something looks, you can wake up the next day and find out that it's gone poof. And, on the other hand, you can be sitting there one day thinking, Well, that deal is not going to happen and, then, all of a sudden things start to re-energize.

And we have set some set some goals that we have been forthright about in volume that we would love to achieve, in a perfect world, but that can be highly variable. Because as you know, some of these transactions in the gaming business are very large. So, even multi-billion dollars transactions are not impossible in a single deal.

So, this is highly unpredictable. You know the answer. We are working very hard at every possibility and stay tuned.

Thank you very much.

Thank you. And our next question comes from the line of Joe Greff with JP Morgan. Please proceed with your question.

Good morning, everybody. On the topic of potential fields and acquisitions, just given the revenue trends we have seen as of late, have you seen absolute price levels come down over the last three months, i.e., are there potentially cheaper deals there than maybe what you have been working on just a few months ago?

That's hard to say. You know, because expectations are really relevant to each individual party. To the extent have we had an individual party, who said, Hey, I used to want this and now I want that? No. Because you are dealing with each individual on an expectation level.

I certainly think -- one thing I will say, I think people have become more interested, in other words, in talking to us, given where the regional gaming trends have been as of late, but, then, that's something that we have to factor in as well. But, again, you know, when we go down that path, it's always about making sure we have adequate [rain] coverage. So, I don't know that the price that we are paying is still the same, relative, but it's all where we think the relative REIT coverage is going to be.

Well, look and I think you know, you have seen what's happened over the last months, since we were successful in doing this, to regional gaming stock prices. I mean, obviously, they have been somewhat inflated, I might argue. Simply because of what we have done. It created expectations that benefited a lot of our competitors and some of our prospects, but look, all of that will norm out over time and things will run level.

I think Bill answered it best, we don't see any material differences.

Great. And, then, just a follow-up to that, to what extent have potential sellers of gaming real estate been interested in taking your equity; and to what extent do they look at their tax consequence to say that you might know that when you have discussions?

Steve, go ahead. You look like you are about to say something.

No, it's a great question, but every seller's circumstances are different. Right, Joe?So, it's hard to, sort of, standardize in terms of a transaction.

We have got the potential with an upgrade approach to look at creative ways to mitigate, or defer, tax liability, but at this point in time, it would, certainly, be beyond the scope of this call to tell you exactly what appetite sellers have had for equity versus cash consideration. And fairly , right, the situation where people are going to look for some kind of an up REIT are private individuals who own the facility outright. Generally, not a very appealing concept to any companies, or publicly-traded companies, that might have access.

It's, obviously, not going to be appealing for them. It's not an appealing option. So, it's really about individual properties that are held by families, or trusts, or estates, or some such organization like that.

Structure.

Got it, thanks. I know these were not easy questions.

There are no bad questions.

And our next question comes from the line of Shaun Kelley with Bank of America, Merrill Lynch. Please proceed with your question.

Hey, good morning, Guys, and congratulations on all the transactions, getting everything across the finish line. I have two questions.

One is, if you could just, you know, maybe attacking the same question in a different fashion, since -- I know you guys will hear it a lot. Speaking about the M&A environment, what are you seeing right now in terms of the target universe, you know, in terms of private versus public companies? Are you seeing all the sorts of assets? And how many inbound inquiries are you, kind of, receiving right now, versus outbound, now that the transaction has actually completed?

I mean, well, we have got another inbound inquiry this morning. You know, the reality is, we have a few, is the best way to -- it's kind of like dating; right? You have to find one that says yes. So, I think the way I would characterize it is that it's -- there's a number of conversations taking place. A lot of times it's informational, in terms of people looking to understand how it might work, how a transaction might work, what our appetite might be to providing a solution to their problem.

I think the Queen deal is a particularly good example of what we might do that's just a little bit outside of the norm, which was, they had a situation where they had some debt, that, obviously, had some covenants to which were a little bit problematic from their perspective, on a forward-looking basis. And we came up with a structure for the failed defect, which was the majority of the consideration that they needed, but that didn't solve all of their problems. So, we came around to the table and we came up with the concept of an additional loan, on top of the sale leaseback transaction, so that we could completely clean up their balance sheet and to, basically, pay off their entire debt structure.

You know, each situation is a little bit different. I think what we bring to the table, and this is part of what has been happening with the conversations, different people want to do different things for different purposes. Some of it is strategic; some of it is balance sheet;and some of it is cleaning up, creating some liquidity of a dividend, or whatever it is. And we just have to kind of go situation by situation and figure out a solution for that.

And I think that's one of the things that this Management Team, particularly, is -- I give Peter enormous credit for this, the flexibility and the creativity to come up with solutions that are not, necessarily, always the bread and butter for that cash asset sale. I think that's what will help us get to the finish line on transactions. I can tell you, it's certainly been well-received on the other side, the fact that we are willing and able to do things that, maybe, is a little bit outside the normal circumstance.

Now, we, obviously, are going to be disciplined with that and we, obviously, are going to make sure that it makes sense for our shareholders. And even on the Queen deal, we gave them a loan at a rate that was attractive to them, especially when you consider it was in the second lien position, but it was still very creative to us. Earning 7% while we are paying, effectively, on our revolver 2%, a 500 basis point spread is a great solution for both parties, is, I guess, the best description and answer I can give you as to how we'll get there.

That's really helpful, Bill. And, then, my second question is a little bit, just, technical on the rent payment, but just looking out, you know, kind of -- and I know this is way down the road, but the rent reset out in five years, on, I guess, what's kind of the historical, you know, the legacy Penn business,how is that reset calculated? Can you just remind us?

Is that a -- is it the kind of -- I believe it's like the trailing five-year average of EBITDA, or is it more of a step function than that; if you can remind us what that calculation is?

The calculation is that on the land portion, which is set on the 4%, which is all the properties other than Columbus and Toledo, we will take the net revenues for the five-year period, on average across the five years, and set the rent based on that new revenue level. So, it has nothing do with with the EBITDA. The EBITDA piece is related to the escalator, which is an annual escalator for, roughly, 2% of the building value of the rent, assuming they hit the 1.8 coverage test, but that gets reset every year. And that has a component as to how well they are doing from an EBITDA perspective.

The other one has no impact relative to what they are doing on EBITDA. It's simply a reset, based on the revenue levels for the five-year period.

And to be clear, Bill, that's for the land based rent component or the building based rent component?

The land.

So the land will be reinvested down?Is the building, then, fixed?

The building is fixed. The building never goes down. The building has the potential to go up by 2% per year, assuming that Penn is performing well enough to have a [1.8%] rent coverage on the properties. Again, excluding corporate overhead and properties owned by Penn that are not part of the master lease.

Got it. Okay. That's very helpful. Thank you for the time.

No problem.

And your next question comes from the line of Carlo Santarelli with Deutsche Bank.

Alright. Hey, Guys, good morning. Just one quick one, Bill, you mentioned earlier that you are hearing some pushback in some of your discussions,could you just, maybe, highlight some of the negative feedback you are getting in some of the deal structures; and where some of that pushback has been coming from, just in terms of how people are thinking about it on the other side of the table?

We didn't hear that. But go ahead, Bill you heard it.

No, I was going to say, if I left the impression that this was a pushback, I would say it's more about solving each other's problems. I don't think there's been pushback relative to GLP, per se. I think, at least so far, all the discussions we have had, everybody -- there's no feelings like, Hey, you are trying to do something that you are not supposed to be doing, or there's some problem. It's more about how do we come together to solve their problems; and how do we do it in such a way that it's accretive for GLP shareholders?

The one thing that -- obviously, the tension is, obviously, going to be, what's the risk factors around the transaction? What's the return? And we are not going to be doing, one we will not be doing, (inaudible), we won't be doing transactions that are not accretive for shareholders. We are not going to do a transaction that simply makes the Company larger to add scale, that doesn't improve the dividend per share, period, end of story.

There's zero chance of that. You can take that to the bank. But, look, I mean, I think everyone -- as Bill said, every one of these transactions is a little bit different, and what we bring to the table here, that nobody else can bring, is highly specific knowledge of this industry, of every market in the United States, and a realistic sense of risk and opportunity. Others may speculate about it, but we know it. And that gives us a tremendous amount of ability to help understand what people want, and they are all different.

I think Bill said it extremely well. Everybody's situation is a little bit different. Everybody is looking for something different and our job is to find creative ways to solve for what they are looking for.

Look, these are early days. I mean really early days, and Steve and I have a series of lunches, dinners. Bill has had some. There's a lot of activity now and let's see what we can put together over the next year.

So it's really too early to say, but we are certainly not seeing any pushback. Maybe great jealousy on the part of some of folks; I wish they were real, but other than that, there's no pushback.

Understood. And, Guys, just as a point of kind of looking at some questions that have already been asked, but maybe in a little bit of a different light. When you guys embarked on this, I guess shortly over 15 months ago now, you had an opportunity set and you kind of spoke to that opportunity set in your introductory calls on the split. When you think about how that base of potentials, potential assets, potential acquisition candidates, has changed since then, given what's gone on in regional gaming, et cetera, you know, how pushback -- or sorry, any kind of conversations you had with the public operators, how they are looking at it, how would you say the things, overall, have changed in terms of how many opportunities there are out there for you?

I think the field of opportunities are every bit as rich as what we said they were back then. I haven't seen anything that causes me to believe thatthere's a difference in terms of what our opportunities are. Now, within the scope of opportunities, obviously, I would say there's some that are low probability; and some that are average probability; and some that are high probability.

I think that mix is pretty much in line with what we thought it was going to be.

And I can also add, look, one of our biggest focuses was the ability to open markets where Penn cannot go. Where there are limited licenses and so forth. We are looking at a number of things where, my gosh, everything is possible now with the REIT that was not possible before. No, it's dramatically expanded, the field of what we can do.

Great. And, then, just one last one, if I may, in your 2014 guidance, is there anything in there that is kind of a one-off in nature, as we look ahead to, potentially, 2015, that hasn't been, you know, specifically called out within the color on the guidance?

Within the assumptions that are laid out?

Yes.

Relative to '15 -- the one thing that does come down a bit over time, that we haven't talked about in the guidance, relative to [2015], is the dividend payments on options; obviously, those are legacy issues back from the days when we were still Penn. Now, those end in three years, but even over time, they come down a little bit, simply because the options reaped their expectation date. One of the things that happened to Penn, which I think was good in many ways, is the people who have the largest number of shares, and certainly at the Corporate level, most people hung on to their options and didn't exercise them on [investing].

So, we have a tremendous number of shares that are actually going to come off over time, and so not only is it the number that we reflected in the guidance the number for this year, but that number will come down next year, and the year after that and, then, obviously, completely terminates in the third year.

It comes down pretty rapidly.

Yes.

And, Bill, that's $12 million for '14 that you are referring to; correct?

Right.

Okay. Great. Thank you very much.

Yep.

Thank you. And our next question comes from the line of David Harris with Imperial Capital. Please proceed with your question.

Yes, good morning. Hi. I have a couple of REIT-related questions, if I may? Can you give us any information as to any discussions with the inclusion of your stock in other REIT indexes?

Yes, we haven't had any conversations, specifically, with people relative to that. I

think that's one of our highlights of what will happen in the next coming months. Clearly, it was very helpful to get included in the Morgan Stanley index, which, my understanding, is a general benchmark, which will cause a lot of the other indexes to, then, think about whether or not to include us or not. But, no, we haven't had a lot of conversations.

Yes, I will emphasize again, it's been a very busy place, just getting this whole change [effective],more complex than -- we could write a book on the subject, and we'll never know just how difficult this actually was, and how remarkable the accomplishment that we have achieved, but I can tell you right up to today, and getting through the E&P purge, there are some guys here who have less hair on their head than a few weeks ago, just trying to get it all done. So, they are moving through that part, and as I say, it's the kind of the beginning of our new life and all of those things will be addressed over the course of the next year, with the same kind of fervor that we bring to everything that we do.

I should know this, but is it my understanding that you need to approach these indexes, or do they approach you?

Well, we are going to approach them, if they don't approach us.

Okay. All right. And, then, a question on diversification, which I think you probably heard many times in terms of questions with REIT investors, is, could you talk, at least in the broadest terms, as to what your ambitions might be over the next year or two, in terms of diversifying the tenant income stream?

Well, I mean, any one of us could take that, but, look, from my point of view, we are highly diversified. I realize the look at Penn, as a single tenant, but the reality is, you are looking at a very highly-rated company, with properties all throughout the United States, through every geographic area, and the risk there is as close to zero, in my opinion, as you can get.

Now, obviously, we intend to grow this company, not because we worry about diversification, because it isn't remotely on my mind, and I can't make it any clearer, it matters to me, not one wit, but we want to grow this business and, indeed, we will. So, one would expect, over the period of the next years, that Penn will become a smaller and smaller part of our income stream, but not because we have any thought, or concern, or doubt, or risk, or sense of fear about that. So, in the normal course of growing, we intend to make that smaller.

And I think one of the concepts on the single tenant risk factor, which I guess is what people focus on when they get to Penn, is that I don't know that they have completely factored in the concept that it's a master collateralized lease. And as I was, you know, several months ago now, talking to a variety of credit rating agencies, as well as potential lenders, that the reality is that the Penn lease was broken up into 17 separate leases, with 17 separate operators. But the reality is that you have the likelihood of a renegotiation and a reset of the plan in a less favorable light to GLPI, would be much higher than it is on a cross-collateralized lease.

I think, at some levels, right, that the concern about the single tenant is, it hasn't really been explored as thoroughly as it might otherwise be, in terms of understanding the underlying risk factors as to why people don't want to have a single tenant. I get the concept that says, okay, well if Penn gets in trouble, that there could be some type of master lease reset, but that's still better. I think, the likelihood of that is very remote, and even if it did happen, you would still prefer to have it as a master lease, because what would end up happening is, even if you had to reset the (inaudible), and there's no discussions, no thoughts, no anything along those lines, but if you did get there, the reality is, you would want to make sure that you weren't left with all the properties that were massively underperforming, while the tenant kept the better-performing property. So it would all still be one big pool of assets.

But to the point of diversifying? Yes, we want to diversify. We want it, but it's really around the goals of growth, and I think we think that there's good strategic reasons and it will be helpful to us to diversify, because I think that's what other operators will get comfort in doing deals with us, when they see that we have done deals with others. And I think that's really the big goal, our big reason for why we are looking to diversify, is not really for the single tenant risk aspects,it's more because it creates a situation where other people feel more comfortable with us, and other people have done it, and regardless of what industry it is, whether it's Wall Street, or any other industry, people like company when they go off and do transactions. So, knowing that somebody else has done it and done it well, and it's worked for them, is going to be helpful for us.

Okay. Thanks. And a final question, if I may, on funding your acquisitions, does the guidance--and you may have laid this out and I haven't had a chance to read through the press release in full detail--do youtalk about the need to raise any additional equity or debt to fund your acquisition pipeline this year?

Well, until we announce it, we are, certainly, well-covered right now, for what we have got on the table, which is the two tracks in Ohio. It would be our expectation that we will raise equity around any new transactions that would happen. It is absolutely our goal to keep our leverage ratio around five-and-a-half.

As you look out this year, it does creep a little bit up into still under six, as a result of the Ohio spend that we are going to have this year and, obviously, the different levels that we have laid out. But we have stated before, and it's still our goal, that we want to become totally -- you know, right now, we are split rated on the debt side. We expect to get to investment grade. We recognize that when we go out and make acquisitions, that we will have to keep our leverage ratios appropriate and that means that we will have to raise some equity.

Now, we do have $700 million revolver, of which, I think, by the end of the year, [will be] somewhere around $200 million, and on the next acquisition, I would expect this probably to keep doing equity raise, which would be a little bit more weighted towards the equity side than the debt side, in order to free up our revolver capacity around the acquisition.

Okay. Very good. Thank you.

And our next question comes from the line of Steven Kent with Goldman Sachs. Please proceed with your question. Steven Kent, your line is live.

Okay. Our next question comes from the line of Thomas Allen with Morgan Stanley. Proceed with your question.

Hey, good morning. So, in your earlier comments, you said there were situations of kind of low, medium, and high likelihood of happening near term. As we think about different types of transactions, and I will give you five different,so public portfolios, public single assets, private portfolios, private single assets, ground-up developments, like what you were thinking of doing in Massachusetts, can you bucket these into low, medium, and high chances? Thank you.

Steve!

I think, to try and stereotype, I mean, a public transaction right now, we are not in any negotiations. So, it's hard to suggest that is something that would be actionable. I think the more likely are the private transactions, with private counter parties, looking for liquidity events, and the green fields development projects, along the lines of Massachusetts. You used a transaction precedent that we like.

In a market like Massachusetts, we really will continue to look for those kinds of opportunities in some of the newer jurisdictions that do have limited licenses and appear to be pretty stable operating environments. So, I mean, assessing probability across the five-asset transaction categories that you have laid out would be pure speculation at this point.

The color is helpful. And, then, as you look at potential deals in the future, I mean, how do you think about using Penn as a partner; and, then, balancing that with increasing their diversification among tenants? Thanks.

Any number of us can answer that question. Look, I mean, Penn would be a favorable choice for us, but by no means, the only choice. And, in fact, some of the things that we have looked at are in-markets, where Penn can't compete for FTC reasons. So, look, I might smile slightly more favorably from time to time, but, no, I think we are out there looking to do business with the world, and that's what we fully intend to do and it will be whatever is right for our shareholders and that's the deal we will make.

Penn is Penn and that's very nice, and if they fit, great;if they don't, that's kind of the way it is.

So, I want to be real clear,these are two very separate companies, with two very separate paths to grow in the future, and we think about it precisely that way. So --

I think from our perspective, the way we look at it, we want to get our deal done and we want to make things happen, andto the extent that Penn is helpful to getting that done, we are going to, absolutely, talk to those guys. To the extent that, for whatever reason, the deal doesn't involve Penn for, certainly, an existing operator, that wants to continue to operate, there won't be an opportunity to include Penn on that transaction.

On situations where an individual wants to sell outright, absolutely, we have talked to Penn and, obviously, we have a fiduciary responsibility to the GLPI shareholders to make sure the deal we have gotten with Penn is in the best interest of GLPI shareholders. So, what I mean by that, there can't be a total sweetheart deal for Penn, but, clearly, we are very favorably disposed. We know who they are. We have great faith in their operating abilities. We know them, obviously, incredibly well and, obviously, over time, that may change, but right now we are comfortable with them as an operator. And to the extent that there was a transaction where they would roll it into the master lease, we would look at that on a favorable aspect because, obviously, part of the master lease is better than a one-off standalone, in terms of certainty of collecting rents for the long term.

That's a big advantage.

It is a big advantage.

On the other hand, you know, somebody has got something we want and they are willing it trade that in change for an operation, we will look at it from what is in the best interest of the GLPI shareholders.

And, listen, there are states, and you know which they are, where GLP can own just about every facility in the state, but Penn can't. So, maybe Penn can do one. Well, Penn has got one, but they are not even a contender. I mean, getting back to the proof of concept, why we did this in first place, it was to create opportunity that we did not have before.

So, I think Bill answered it very well. There will be times when Penn may have an advantage, being able to throw this into the master lease, highly appealing to [GLPI] shareholders, under those circumstances, but that presumes they are in a market where they can even do that; every circumstance is going to be different. A lot of people may want to stay in place and operate themselves. Isn't that terrific?

So, I mean, I know what you are trying to reach for, but I think you get the sense that, look, it is going to be everything and anything. We just have to wait and see.

Like getting the deal done is really the most important piece.

Thank you. I know that was a lot of reaching in those questions, but it was all very helpful. Thanks.

At least you have our disposition.

Thank you. And the next question comes from the line of Rich Hightower with ISI Group. Please proceed with your question.

Hi, good morning, Guys. Most of my questions have been answered, but a couple of quick ones on rent coverage. Can you just remind us of the range of individual property, rent coverages within the master lease that build up to the [1.8%]?

I don't know that we publicly disclosed that. I think it ranged from as low as [1.4%]to as high as, almost, [3.5%].

Okay. And, then, on the acquisition side, other than issues -- you know, obvious issues like cannibalzation, can you just, kind of, walk us through some of the final points of how would you set the rent coverage on future acquisitions, just other things that you guys think about?

Well, one of the things we are going to do, whenever we look at a property, is take a view relative to where we see the market heading. We are, also, going to look at -- what we mean by that, generally speaking, assessing risk of potential future capacity in the market, and understanding, you know -- I will use an example of Atlantic City, clearly, over the last number of years, that's been a market that's been headed, obviously, in the wrong direction, mostly because every state surrounding it was adding gaming.

We are also going to, then, we will look at the health of the earnings, in terms of how well that particular project is performing. We will take a risk assessment in terms of where we see the trends going, and in terms of margins, and whether, potentially internally, there's opportunities for the operator to perform better, or if they are already performing at peak efficiency.

If the performance is at peak efficiency, then, [unfortunately], that's not a great thing. It doesn't leave me great room for improvement. Because it tells me they optimized the results that they can in the market. At the end of the day, we will set a target of two-to-one rent coverage.

Now, will we move that number? We will, obviously, in a green field environment, where we know that there's a healthy market and we know there's going to be an ability to grow revenues, and grow EBITDA, and, if for no other reason, there's going to be efficiencies in the second and third years of operations. Would we start with a lower rent coverage? Yes, but we, certainly, would be looking to get to the two-to-one rent coverage on a normal assumption.

To our view, the underwriting of therent is very much about ensuring we have a very nice cushion, relative to the properties' EBITDA, relative to the rent; and two-to-one rent coverage, I think, in our view, is high quality rent. To the extent we would lower that coverage, we would have to be on a particular, unique circumstances to that individual set of properties.

Yes. And let me add, I said it before, I'll say the obvious, that's what makes us uniquely able to do what, really, others can't; and that is understanding these properties, these markets, these operators in a way that is unique, so that we are able to make those kind of judgments, but Bill is giving you the guidelines.

Great. Great commentary. Thank you.

Thank you. And our next question comes from the line of Felicia Hendrix with Barclays.

Just a housekeeping follow-up, to make (inaudible) life easier later. I know that you gave a lot of guidance, and we can probably back into this, but can you just give us the run rates on G&A, or the TRS, in general; and, then, just the run rate of taxes?

You know, on the TRS, I think there's the -- you can apply the -- we kind of gave you EBITDA. I think you should be able to get there, just by taking the revenues, other than rent, and taking the TRS expectations of EBITDA should get you to a number that gets you, relatively, comfortable there.

In the back of the slide, we haven't really given guidance on that piece, but we did breakout, within the TRS--and I think it's on Page 15 of the Earnings Release--breakout of what is unique to the TRS. And I know it's way on the back, and there wasn't that much time between the time we released the earnings and the start of the call, I'll give everybody on the call a break. At the very back, we break out of the TRS components, separate from the real estate component and, then, we have a consolidated relative to the G&As. I think if you go to that page, you will get the run rates for what we are looking for.

Okay. And then the same with the practical --

One more thing, there's, on Page 12, we talked about --

Are you talking about your Release? Because I have a nine-page release.

I'm talking about our Release. Yes. There's 12 pages, so. There's some schedules in the back after all the wonderful Safe Harbor language, there's a bunch of schedules behind there; part of the language in the back.

No, I see it. I have that. I see that. Okay. Okay.

Like I said, we can probably back into it, but I wanted to see if there was anything else. And, then, the same with the taxes?

The taxes, we think, is going to be, roughly, 40% on the TRS.

Okay. Okay. Thank you.

Sure. Thank you.

Thank you. It seems that we have no further questions at this time. I would like to turn the floor back over for any closing comments.

Thanks, Operator, very much.

Look, thank you all for dialing in this morning. I emphasize again, we are very excited about what we are doing here. So, it seems like yesterday that I started off the first call at Penn National, when we were a tiny, little company, doing about $36 million in sales. And 20 years later, obviously, that's a very different company. I had the same kind of enthusiasm and feeling about what we are doing here today with Gaming and Leisure Properties. I think we have an exciting opportunity and path before us, so I look forwarded to talking with you all at future quarterly calls.

Thanks again.

Thank you.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time and thank you for your participation.