Gaming and Leisure Properties Inc (GLPI) 2023 Q2 法說會逐字稿

Greetings, and welcome to the Gaming and Leisure Properties Second Quarter 2023 Earnings Conference Call.

(Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joe Jaffoni, Investor Relations. Thank you, sir. You may begin.

Thank you, Maria. Good morning, everyone, and thank you for joining Gaming and Leisure Properties Second Quarter 2023 Earnings Call and Webcast.

The press release distributed yesterday afternoon is available on the Investor Relations section on our website at www.glpropinc.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. Forward-looking statements may include those 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 to risk factors and forward-looking statements contained in the company's filings with the SEC, including its 10-Q and in the earnings release as well as the definitions and reconciliations of non-GAAP financial measures contained in the company's earnings release.

On this morning's call, we are joined by Peter Carlino, Chairman and Chief Executive Officer of Gaming and Leisure Properties; and also joining today's call are Brandon Moore, Chief Operating Officer, General Counsel and Secretary; Desiree Burke, Chief Financial Officer and Treasurer; Steve Ladany, Senior Vice President and Chief Development Officer; and Matthew Demchyk, Senior Vice President and Chief Investment Officer.

With that, it's my pleasure to turn the call over to Peter Carlino. Peter, please go ahead.

Well, thank you, Joe, and good morning, everyone. We have, as Joe has highlighted, our entire team, and you'll probably hear from most of them through this call.

Look, we've had another nice quarter and as we continue to build and strengthen our gaming portfolio, which, by the way, now totals 59 properties. And I wanted to highlight that our spin from PENN in 2013, we spun with 19 properties. So we continue to build our portfolio base. And I can say that while nothing is certain over the next 6 to 12 months, I believe that we can continue to build that number. And also as a large shareholder myself, with something in the order of 12 million shares in this company, I am highly focused on building our dividend base, which at the moment our current stock price is overly generous. We need to get that number down, but continue to build.

Let me talk briefly about a couple of projects that I think you're well aware of. The first, of course, is Baton Rouge that has been ongoing for some time. I think we've announced that, that property will open in -- at the end of August, and we're excited about it. The physical facility is terrific. We've pushed our budget a little bit up to $78 million, but all of those related to project enhancements. And I do think that Casino Queen and certainly, our team at this end are really proud of what has occurred there, and we're excited about its potential.

The other project, of course, that you're all well aware of is Tropicana. And with respect to that, you know that we have a long-term land lease with Bally's, which is financially unaffected by the 9 acres that we and Bally's have seeded to the A's. Obviously, Bally's is willing to do that because the spectacular new park should be a terrific job for that site. You know also that we've announced that we have committed $175 million to infrastructure and various construction items at the site. But we believe and hope that as the project evolves that there's a lot more opportunity than that.

We -- of course, we'll look at what is appropriate for our shareholders at our company, but are excited about the possibility of doing a whole lot more, subject, of course, to what Bally's would desire as this is Bally's project. We have to be competitive. But that being the case, we'd like to participate at an even greater level. So that's a couple of the big things that are occurring right now. And as I say, over the next couple of months, we hope we can deliver a number of new things as well.

So with that, I'm going to ask Desiree to go through some of the financial issues.

Thanks, Peter. Good morning. We reported record results for the second quarter of 2023, and our total income from real estate exceeded the second quarter of '22 by over $30 million. This growth was driven by the addition of the Bally's Biloxi and Tiverton assets, which drove an increase in cash rental income of $12.1 million, the Tropicana Las Vegas land lease, which increased cash rental income by $2.6 million. The recognition of escalators and percentage rent increases on our leases, which added approximately $3 million of cash rent, and the combination of higher noncash revenue gross-ups, investment and lease adjustments and straight-line rent adjustments, which drove a collective year-over-year increase of approximately $12.3 million.

Our operating expenses increased $28.9 million, primarily due to noncash items, such as the increase in the provision for credit loss on our Cordish leases, and an increase in the depreciation expense primarily related to recent transactions. We anticipate an annualized rent reduction in the amended PENN lease percentage rent between $5 million and $6 million beginning in November of this year that were negatively impacted by the casino closures from COVID during the prior 5-year reset period that this involves. We also expect full escalation of $4.2 million annualized on this lease.

In addition, our PENN amended Pinnacle and Boyd master leases have rent resets occurring on May 1 of '24. While it's too early to predict with confidence, we do expect these resets will result in increased percentage rent adjustments because the resets that occurred effective May 1, '22 included periods where the casinos were closed due to COVID. Our current land site development project that Peter spoke about, we've currently spent just over $56 million to date. As Peter mentioned, the total project spend will be $78 million, and we will begin generating rent at an 8.25% cap rate beginning upon opening.

From a balance sheet perspective, our net leverage is just under 5x EBITDA. We raised approximately $14.5 million under our at-the-market program. Our rent coverage ratios remained strong, ranging from 1.96 to 2.76 on our master leases as of the end of the prior quarter, and we have refined our guidance for 2023 AFFO per diluted share in owned OP units to a range of $3.66 to $3.68 per diluted share. Please note that this guidance does not include the impact of future transactions.

With that, I'll turn it back to Peter.

Thanks, Des. And Matt, would you add your thoughts?

Sure. Thank you, Peter, and good morning, everyone. One thing that's become increasingly predictable through each reported quarter of our results is the consistency of our business model. As our results continue to consistently compound GLPI's cash flows, the path towards institutionalization for our assets continues, while other real estate sectors are facing a number of unique challenges. The stage is set for continued convergence of perception and valuation. Our business model is also incredibly simple. Our top line rent payments dropped to the bottom line without the impact of re-leasing fees, tenant improvements, routine CapEx or other typical landlord costs that are common in other segments of the real estate market.

In addition to this consistency and simplicity is our thesis that a commitment to transparency supports institutionalization. We have respected positive investor feedback regarding our 4-wall coverage disclosure and transaction yields and appreciate that they are valuable and necessary data points that enable our investors who we view as long-term partners to reach their own informed conclusions about the stability and strength of our business model.

As you know, our cycle-tested approach to managing the company focuses on the long term. To complement the strength of our underlying business model, we have methodically and purposefully positioned our balance sheet to have conservative leverage. In addition to managing debt to EBITDA into the high 4s, we have also staggered debt maturities with the next of $400 million not due until September of next year and over $1.7 billion of available liquidity. We value the strong foundation that our balance sheet provides as both the ballast in an uncertain environment as well as a tool that positions us to play offense whenever and wherever prudent.

As we navigate a monetary interest rate and economic environment that has little precedent, we see clear -- clearly the potential for opportunity. Traditional sources of capital are not as abundant and are also proving to be less predictable, which is a natural opening for GLPI. Over the past quarter, dialogue with existing and potential counterparties has been healthy. We are working hard in the effort to translate that dialogue to tangible outcomes. We remain focused on unearthing opportunities to prudently deploy our shareholders' capital in the effort to increase long-term intrinsic value per share.

Thanks for joining today's call and to our investors for their vote of confidence. I'll now turn the call back to Peter.

Thank you, Matt. And Maria, would you open the floor to questions, please?

(Operator Instructions) Our first question comes from Barry Jonas, Truist Securities.

I wanted to start with Tropicana. There's been some discussion about whether 9 acres will be sufficient for a ballpark. Now I know there'll be some shared space, but it would be helpful to get your thoughts here.

Speaking just for me and others have thoughts around the table. I was surprised myself that they could do it so efficiently. But I can tell you that a lot of design work is already in place that makes it pretty clear they can accomplish that the way the site is prepared. It's a very interesting integrated plan. Some of it's been public. But did you want to add some comments to that? Others around the table. Steve?

No. I mean I think you said it right, Peter. The plan is for 9 acres. The 9-acre number has always been the number provided by the parties involved and those who are building the -- constructing the baseball stadium. So you're right, Barry, there is a significant portion of shared space, which is -- which also includes parking. So there is a plan to make sure that a lot of what you would normally see in a purpose-built stadium in a stand-alone land parcel, a lot of the ancillary exterior amenities and things will be shared between both the casino and the stadium itself.

Yes. And I might mention that this design process is on a tear. I mean, the A's and Bally's have been highly focused on keeping this moving. And there have been already significant numbers of meetings, a lot of detail. So this is moving at a very, very fast pace.

That's great. I appreciate all that color. And then just as a follow-up, maybe more a modeling question. Any thoughts on how the deployment schedule for funds relating to PENN's construction projects will work out?

Des, you -- I can say you want to take that question.

Yes, not really. No, I'm kidding. So we're working with PENN, but they haven't put out their plans yet. So we definitely don't want to jump ahead of them, but it will be a coordinated effort. And I don't believe anything will start until next year, but we'll have to wait and see what they finally determine when -- we did buy Aurora property this quarter to be used for the relocation, but that's as far as we've gotten at this point.

And we do understand with some authority that they are well along in architecture, design and planning on these various projects. So that gives us a lot of comfort. This is going to move relatively quickly. Never fast enough, but it's moving.

Our next question comes from Haendel St. Juste with Mizuho.

So first, perhaps, Peter, can you talk a bit about the competitive landscape today and your ability to execute in the current environment and convert some of the dialogues you guys were having into tangible opportunities, especially as it's well known, you're facing a bit more competition from some newer entrants and from peers who have a bit better cost of capital?

I can't say that we see a lot of change. If anything, I think things may have improved for us in this market. We have a very active series of discussions occurring again, obviously, nothing we can really say about that, but we're very encouraged that the next couple of years should be pretty positive for us. Again, cautious in how we say that, but we feel pretty good.

Any other thoughts around the table?

Yes. I mean, I'll add, Haendel. It's been interesting to watch kind of who's competitive when people look at solutions for their balance sheets. And over the past number of months, we've watched banks get their wings clipped a little bit. And in a different way around real estate, private equity folks have certainly shifted their focus looking more at potentially debt that sell some of the bank void and also don't have the same juice they could get from really low price debt to lever things up.

And I'd almost take the opportunity to take a step back and think about our differentiators. I mean we're different by design compared to banks, private equity or other public REITs. I mean, remember, we've got around this table a more collective gaming experience than arguably anyone else doing this and a lot of that goes back to Peter's respected place and position in the industry and the relationships our team has.

We've got a track record of creativity that's second to none, if you look at the deals that we've put together over time compared to others. And the nuances, I mean, we don't say something has to fit perfectly certain structure. We figured out with a clean slate what makes the most sense for us in the counterparty certainly of dependability. If you look at the importance that a lot of our counterparties place on having someone that's going to be there not just today, but 2, 3, 4 years out, to be able to be a partner over the long run.

And also as a public company, you know, especially in our balance sheet position, we can use our ability to match fund things. It's certainly a different tool chest than folks in private equity or banks have to be able to fund deals. So if you put it all together, we've got a very natural seat at the table and sometimes for our first call to be able to be a solution for counterparties.

Very helpful. Very helpful. And then a related follow-up, I guess, you guys have a long running and well-known relationship with Bally's. I guess I'm curious how you're thinking about the possibility today of being a takeout for their Chicago project and other opportunities, like perhaps the Trop, and how this would potentially fit with your long-term balance sheet philosophy?

Well, every project is project to project. We are obviously much more involved right now in Las Vegas than in Illinois. But again, we would look at anything and everything that Bally's would have to offer, and it's a deal-by-deal possibility. We want to be the go-to guys to Bally's. We have a great respect for their imagination for the -- they're highly motivated to build that company. So yes, we think positively about it, but there's nothing on the horizon at the moment. And that also applies in Las Vegas. We've got to see kind of how it evolves. We want to be part of it if we can, but it -- we haven't been offered anything yet and don't fully understand where that project is going.

And on the balance sheet philosophy question and how it ties in. I mean we're going to continue to do the same things you've watched us do. We're going to emphasize prefunding and match funding. And depending on the size of the transaction, we certainly have the tools in our ATM in our tool chest to use, and we'll be thoughtful about long-term rates and how we position our debt structure to be able to support our business model.

Our next question comes from Chad Beynon with Macquarie.

Peter, can you touch on your appetite to expand into Canada, given that we've seen some more transactions up there, that market appears to be as stable as the United States from a GGR and kind of a spend per adult standpoint and some recent capital that's been deployed into that market.

Yes. Happy to talk about it. I mean, look, we -- Canada is right across literally the border, and we look at it all the time. We just have never been able to find when you look at the tax issues. We've never been able to find a project that made sense to us. I mean we look at a lot, but we haven't seen it. I don't know, Brandon, do you want to add some thoughts about that?

I don't know that I have that much to add. I mean, I think we do look at a lot in Canada, but between the tax leakage and getting the -- repatriating the money back to the United States so that we can dividend it out and things like that. And of course, we can put debt on it. There's strategies we could employ to try to make those transactions more accretive. But I think to date, we haven't seen the transaction in Canada that's offered both a growth profile with it, where we could turn that into something more and in a way that would be accretive for our shareholders. And so I guess, in some, we've seen them so far as more risk and less reward. And I think we'll continue to look there.

But as you probably know, each of those provinces is different and how their taxes are structured and how their regulatory systems are structured are a little bit different. And so we look at each one uniquely and we look at a lot of them. And I think if we find the right project, we'll certainly do it. But we've been in Canada. We've been looking at all those projects. We just haven't found the deal structure and the project that's right for us.

Just as an aside, when I bought Hollywood casinos at PENN. We got, of course, the management contract at Casino Rama, which is a great experience. There was a fight between the U.S. government and the Canadian government over taxes that was there when we bought the company. And 16 years later, I'm not sure it was solved even by then. It went on literally for year in, year out, year in, year out. And that was just such a mess that certainly [colors] my thinking somewhat to be extra cautious about the intercountry relationship.

Great points. And then as a follow-up, I wanted to ask about rent coverage conversations. We've seen a few operators report so far in the second quarter. And it looks like revenues are broadly flat or maybe even down on a same-store basis, which has put a little bit of pressure on margins. So there's questions around are there -- are we at peak margin place for the operators. So as it relates to rent coverage conversations, how does this change deals that could be done in the future. Historically, I think when these deals were done, there were still some opportunities for your partners to increase margins and now there's less that they could do. So should we start to see different types of economics or deals printed in the future given where we are from a margin standpoint?

I'm looking around the table to see whose face is just dying to answer that question. Matt, I think it's you.

Okay. Yes, look, this goes back to our underwriting philosophy. We've always structured in a margin of safety. And as you've heard us talk about on a number of calls, the reality that as margins expanded, would likely find a set point somewhere shy of the max. And we're not calling the max of them in, but we're going to continue to get pound for pound more 4-wall coverage than we feel necessary to make sure that our cash flows are safe. I mean, look at the last few prints we've had and where we've settled out, usually it has a two handle, if not a very high one handle.

And if you look at the stress test, I mean, look back at both now the financial crisis and also what happened during COVID. I mean we've proven to have more than enough in both those situations. So it's thoughtful, it's case by case. We consider where things were pre-COVID as well to look at kind of a clean picture, and we thoughtfully apply our judgment.

Our next question comes from Daniel Guglielmo with Capital One Securities.

Peter, just the first one, going back to your comment about the dividend where you said you're highly focused on the dividend base and you're trying to get the yield number to come down. Is that just saying the price is undervalued and you think the dividend yield is too high?

Absolutely. We're giving away too much free money to people who aren't appreciating it adequately. You bet. Absolutely. Look, I mean, we don't control what the market does, but it's pretty fulsome right now.

Great. Okay. That makes sense. And then kind of on a similar vein to past question. Matthew, you mentioned kind of the flexibility partnership you all provide to the operators, and it's worked well with Bally's and Cordish recently. And there's a lot of operators out there with good properties that would appreciate the knowledge put base and flexibility. So what do you think can happen over the next year or so for them to come to the table and you guys -- it would allow you guys to put your leverage and leverage the strong balance sheet?

Yes. I mean, look, we're in an environment where there's a lot of uncertainty. And we've had a lot of great moves that haven't fully found their way to the economy, and you've got camps on both sides, expecting very dramatically different outcomes. Maybe we get Goldilocks, maybe we have some delayed stress that is really tied to when people's maturities come due and when they have to do things. But the catalyst for us to have an opening typically is either M&A, some generational wealth shift, transfer, estate planning, or some strategic goal that a counterparty has. I mean, we've yet to have someone who wants the top tech price and sell for the sake of selling.

And the reality is that we've seen some inflection. I mean, rates are moving, and we're in a period of cap rate discovery. So the discussions we've talked about are in real time, helping determine what might be our possibility and opportunity set. But it's very situation dependent. Some folks are saying, let's let things season and wait a little bit. And we're waiting to be a part of all the things that might happen if and when people pull the trigger.

Yes. It's safe to say that we're looking at our balance sheet every day. That's our business. Looking at equity, how it's priced, looking at debt, how it's priced. Looking ahead, we know what we have. Fortunately, a lot of what we have is sort of spaced over a period of time that is helpful, particularly in this environment. So we are very, very thoughtful about kind of where and what our opportunities are in the marketplace.

Our next question comes from Smedes Rose with Citi.

I just wanted to ask you a little bit more on the dividend. You mentioned the yield is very high. Does it make you think you change your policies or the way you might think about dividend increases going forward, if you kind of view that they're not being appreciated? And given that the shares have underperformed year-to-date and selling off today, would you look at potentially some sort of the purchase opportunities on the stock? It looks like it's trading below consensus NAV at this point?

I'm going to start with your first part of your question. So our dividend is largely driven by taxable income and required distributions to remain as a real estate investment trust. So we don't really have the luxury of pulling back our dividend as the initial question suggested. And currently, we are not looking to deploy capital in a buyback. We just mentioned that we had been in the ATM during the quarter and raised $14 million.

Yes, Smedes, we -- I mean take a step back, we have a pipeline, and we see things that are interesting in it. We get free cash flow of $200 million a year, and the threshold for any new acquisition is giving us a better risk-adjusted return than our existing portfolio. And if that lines up, we do it. But we need to have a persistent discount for a period of time and have that money pile up for us to kind of change gears and go into stock repurchase. But at the same time, at some point, it's certainly a consideration if those pieces line up. But we're very happy with the position we have now with regard to what opportunities might come to pass in the next 6 to 12 months. But in the very short term, we're not judging day-to-day. I mean this is a very long game.

Our next question comes from Greg McGinniss with Scotiabank.

So Peter, you mentioned wanting to be the go-to guy for Bally's. How are you considering the underlying credit quality of that company, protecting your cash flows and your willingness to continue increasing exposure there when some of their debt trades in the low double digits at times.

Do you have a comment? I'm looking around the table. I can answer that, but go ahead.

Well, I was just going to say, I think that we -- from the beginning, we've always focused on the 4-wall coverage of the portfolio of assets that we own. And we've been out in that from the first day to today. And I think when we look at the Bally's assets we own, we think they're good assets. We think that's a good lease, and we're excited about the things that they're doing, but we always constantly look at the assets we have in the portfolio, and I think we feel like those are solid assets. And so that enables us to be a good partner to Bally's and support them in their efforts, while at the same time looking at the assets we own and looking at the quality of the portfolio we own.

And I think what you're hearing from us when it comes to Chicago and Las Vegas is we're waiting to see how these projects come out. And if there are opportunities for us that are good for our shareholders and bolster this portfolio, we'll be excited to participate in that. But a lot of those are wait and see. So I think with the Bally's assets, we've been careful to acquire those assets that we're confident are good strong assets in the markets that they operate in.

Yes. I think that says it. I got to pile on with that, Brandon. What we have is terrific, and we're very comfortable with that. What may come in the future, it will depend on what the future holds. So we anxiously await new opportunities, and we'll evaluate them as they appear.

Okay. And then I appreciate the commentary regarding potential deals over the next 6 to 12 months and understanding the deals to be lumpy. But there haven't been any new acquisitions since June of -- new acquisition announcements since June of last year. And besides the [Trop last] investment opportunity with the PENN deal announced in October, so is there anything changing in the broader environment that makes maybe some of those catalysts that Matt mentioned more likely or changing in your process and targets providing you more confidence on getting deals done?

Well, we can't take any credit for the Bally's, A's deal, except to say that as of -- even just a few weeks ago, well, I think we can since I had made the original introduction. And as Bally's was highly focused on finding something that would be magnetic at the site. And so we were early instrumental. And of course, we agreed to part with the 9 acres. But to be fair, that Bally's is paying for along the way. So yes, in that sense, that's a new project that wasn't here a month ago or a little more than that. So -- and there's a lot else cooking.

So you just -- we've said it as strongly as we can. There's a lot of stuff we're working on. It is lumpy. We've kind of, as I jokingly have said, "We've never had a pipeline," but we plan plenty of deals. We've gone from 19 properties to 59, and that didn't happen by accident. So we expect to build that number. I expect over the next couple of years, you'll see that, and that's really all I can add today.

Yes, Greg, I wouldn't look past, I mean, the structure of what we did with PENN also. When you think about what drove that, you've got operators. I mean, life goes on, and there's kind of a function of time involved here, too, where folks need to run their businesses. And if there's low-hanging fruit for redevelopment or some sort of capital expenditures on properties that make them stronger and better, that's another channel of growth potential, and it's another dialogue we always have ongoing with our tenant base.

We take the long view here. We're trying to build value for share. Again, as a shareholder, I don't feel panic to do anything, frankly. As I like to say, there's no deal we have to do, but we sensibly are working deal by deal by deal. And I think you're going to find that a few years down the road, we're going to have a lot bigger portfolio. I really do.

And if you -- just a month before we announced Cordish, we probably wouldn't have thought we were doing it. Like sometimes these things are slow, slow, and they get very quick.

Our next question comes from Ronald Kamdem with Morgan Stanley.

Just quick ones. So the first is just on the commentary on the amended master leases. You talked about it's very early for the ['24, 01], but we expect that to go positive. Just any more color on that. And then it looks like there's also one of the single property leases that has a variable reset next year. Any color there would be helpful.

Des?

Yes. I mean, as I said, it's too early to tell. Those -- it's 2 years. There's 2-year periods in the reset, which we're only a year into, and what I can tell you is what I've said in my opening remarks is that there were COVID periods in the prior reset that reset in '22. So we expect them to go up, but we've got to wait and see how they continue to perform. It's a little bit early to give you a number yet.

0 is an easy comp.

Yes. That's well said. I like that.

And what about the -- does that include the single properties? I'm looking at Belterra Park lease, looks like there's one coming May 2024. Any comments there?

Yes, same commentary.

Okay. Got it. And then the last one was just I noticed on the Lincoln option was extended from '24 to '26. Just maybe -- how did that come about? And how are you thinking about sort of the potential and the conversations going there?

Brandon? Or do you want to -- we'll give it down Steve, then.

Yes, sure. So look, the Lincoln option was, as you pointed out, set to expire December '24. As part of the negotiations around the Tropicana release of the 9 acres with Bally's, we asked to negotiate it to extend it to December of '26, which if you look, is outside of their revolver maturity date. So the thinking there was, if we get it past a refinancing event. The refinancing event will likely allow them to adjust the language that is currently prohibiting the sale of that asset.

Our next question comes from Robin Farley with UBS.

Great. Two questions. One is just kind of circling back to your pipeline and fully understand that it's always lumpy. I'm just curious how you would characterize over the last quarter, like between the credit environment and sort of macro views, whether the pace of your discussions has gotten better or worse? Like in other words, does that make you think that you might have something new sooner or maybe a little delayed just based on kind of those views over the last quarter? And then I have one other after that.

Steve.

Sure, Robin. So look, I think the pace has definitely picked up. What I would tell you is the credit market dislocation really, really slowed down the M&A environment late last year and the first, call it, quarter or two of this year. Because as the operators -- whether it's the operator looking to sell or the operator looking to buy has more trouble accessing capital through the credit markets, it really just slows down the pace of everything. So I would tell you, early part of this year, a lot of our discussions were focused and around unique solutions that might be able to provide folks with access to capital.

Those conversations continue because the credit market isn't fully rebounded. However, I would tell you that I think on the broader M&A spectrum, I do think as the credit market continues to start to function more normally, I do think we will start to see larger gaming companies look to divest of certain assets or others looking to acquire them. So I do feel as if discussions on a more broad spectrum as far as various types of transactions has definitely started to pick up over the last quarter.

Okay. Great. And then my question was just on New York and whether you've kind of how you characterize the early discussions with any of the bidders for New York?

So we have had discussions with a number of folks in New York. I think our discussions -- I think our discussions have been start and stop, much like the process has been. And I think as the folks that are looking to bid continue to try to work through that process and await the responses from the state. I think those conversations will continue to evolve. But at this point, I'd say we are having conversations, and we look forward to trying to be a participant there.

Our next question comes from David Katz with Jefferies.

So I've been tracking for quite some time the project in Pompano between Cordish and Caesars. And I'm not asking will you or won't you? But what I'd love to just talk about is, what aspects of it are potential positives, potential gating factors, how you would look at a project like that and how you might get involved?

Looking around to see who wants to touch that.

Well, first and foremost, I would say that we would love to do a transaction, sale-leaseback on a casino asset in Pompano, and we have said a number of times with the folks at Caesars. With respect to the -- some of the entertainment stuff that Cordish is doing, I'd probably look to Matt and his discussions he has with them around those types of topics in various locations.

Yes. And I think there kind of folds in with their overarching strategy not to speak on their behalf around all the things that touch on casinos and how that gets funded. And if and when there's the right opportunity for us to do something, that's win-win on both sides. So we haven't gotten there yet, but it's certainly part of the overarching dialogue.

Yes. Suffice it to say, we would quite happily do more with Cordish on almost any front. They're just such experienced developers, and you always want to partner with somebody that is as smart as they.

Okay. I'll take it. Thanks very much.

Thank you.

(Operator Instructions) Our next question comes from Todd Thomas with KeyBanc Capital Markets.

I just wanted to follow up on the commentary around the percentage rent reset a little bit more here. And Desiree, I appreciate the detail on the amended PENN Master Lease reset in November this year, that's helpful. But if we look ahead, so the PENN Pinnacle and Boyd master leases, as you mentioned, the 2-year measurement period. So shorter comp periods with a bigger impact from the period of closures, as you said, Matt, 0 is an easy comp. And the combined percentage rent on those 2 master leases greater in total than the amended PENN Master Lease. So do you expect the percentage rent increase in '24 to be greater than the $5 million to $6 million decrease that you're experiencing on the 23 PENN lease reset that you outlined?

Yes. As I said, I'm not prepared to give you an exact number. But if you look back in that 2-year period, for May and June of 2020, there were closures that we do -- we're not going to have in our new reset period. But I am trying to point that we expect as a company for that percentage rent amount to increase, not a decrease like you saw in the PENN transaction. That's all the information we're willing to guesstimate at the moment.

Let me add. We've labored over that thought for quite a while. And all we can do is give you the cautious answer. It should be better, and we're pretty optimistic. But just unwilling to try to nail down something we can't guess at today.

Well, I think you have 10 months left out of the 24-month period. So it's probably prudent for us to -- we have quite a bit of time left before that reset takes place.

Right. And they haven't even reported to us for June of '23. So the last information I have is March, right? So there's a lot more time remaining that we don't know about, well over a year.

Right, right. But net-net, I guess, it seems with the combination of the percentage rent amounts on those 2 master leases, the shorter period, the impact that the closures would have on the prior period comp. It would seem net-net, the contribution to '24 should be positive or could be very close to being positive when combined with the $5 million to $6 million decrease that you're experiencing on the PENN lease. Would that be reasonable to assume?

Yes. That is the exact point that my commentary was trying to get at, just don't presume just the 5% to 6% down for a period of time because early next year, we have other resets that should offset it.

Look, the word we've used internally is we expect largely offset. So that's about as caution and response as we can -- cautious responses we can give you.

Understood. That's helpful. And is the calculation, just so we know, on those 2 master leases, the same as it was on the amended PENN Master Lease?

So the calculation is over a 2-year period, not a 5-year period. But yes, the math works the same, the 4% of revenues compared to the base.

Right. And it's the percentage rent and the land base rent that's included in the calculation and the amount that we'll reset, and it will only impact the percentage rent.

That's right. It's only percentage rent that should impact. Land-based rent stays the same forever.

Our next question comes from Mitch Germain with JMP Securities.

Just curious if all the approvals come to fruition by the end of the year. How do we -- how should we consider the time line for the stadium project?

Brandon?

Yes. I mean this is really the A's project. But I think from what we understand, they want to begin the 2028 season in that park. And when you start working backwards from that, they don't have a lot of room for error. So I think once they have their major league baseball approval, and we're reasonably certain the project is a go, then I think you'll start to see a time line come out for demolition of the current site that will permit the physical construction of the stadium to begin. So I don't think there's a set time line on this yet. But I will say when you work backwards from the 2028 opening day, there's not a lot of margin for error for the As team to get this done.

Yes. We've sat in on the all-hands construction meetings. And I can tell you, they're whipping this process pretty thoroughly. And meetings are scheduled well in advance. The entire design and planning teams are engaged. So it's pretty evident that as Brandon has indicated, there's not a lot of time, and they make that very clear.

And your portion of the project toward the start, middle or end, how does that work into the time line?

I think the answer is, yes. So the part of the project that we've committed to includes demolition, which will be at the beginning, obviously, and then it includes construction of the podium and some other shared infrastructure that would probably come towards the end, quite frankly. And so I think you're going to see the demolition piece upfront. And then the rest of it that we've committed so far at the back end.

There are no further questions at this time. I would now like to turn the floor back over to Peter Carlino for closing comments.

Well, thank you, everyone. I hope this has been helpful, and we always appreciate the opportunity to make these presentations. So see you all next quarter. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.