Gaming and Leisure Properties, Inc. (GLPI) Q4 2022 Earnings Call Transcript

Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) Q4 2022 Earnings Conference Call February 24, 2023 10:00 AM ET

Company Participants

Joe Jaffoni - Investor Relations

Peter Carlino - Chairman and Chief Executive Officer

Desiree Burke - Chief Financial Officer and Treasurer

Brandon Moore - Chief Operating Officer, General Counsel and Secretary

Matthew Demchyk - Senior Vice President and Chief Investment Officer

Steven Ladany - Senior Vice President and Chief Development Officer

Conference Call Participants

Greg McGinniss - Scotiabank

Brad Heffern - RBC

Haendel St. Juste - Mizuho

Rich Anderson - SMBC

Barry Jonas - Truist Securities

David Katz - Jefferies

Daniel Gulino - Capital One

Ronald Kamdem - Morgan Stanley

John Massocca - Ladenburg Thalmann

Robin Farley - UBS

John DeCree - CBRE Securities

Mitch Germain - JMP Securities

Operator

Greetings. Welcome to nan Gaming and Leisure Properties, Inc. Fourth Quarter 2022 Earnings Conference Call. At this clip each participants’ are successful a listen-only mode. A question-and-answer convention will travel nan general presentation. [Operator Instructions] Please note, this convention is being recorded.

I will now move nan convention complete to your host, Joe Jaffoni. You whitethorn begin.

Joe Jaffoni

Thank you. Good morning, everyone, and convey you for joining Gaming and Leisure Properties 4th fourth 2022 net telephone and webcast. The property merchandise distributed yesterday day is disposable successful nan Investor Relations conception connected our website astatine www.glpropinc.com.

On today's call, management's prepared remarks and answers to your questions whitethorn incorporate forward-looking statements arsenic defined successful nan Private Securities Litigation Reform Act of 1995. Forward-looking statements reside matters that are taxable to risks and uncertainties that whitethorn origin existent results to disagree materially from those discussed today. Forward-looking statements whitethorn see those related to revenue, operating income and financial guidance, arsenic good arsenic non-GAAP financial measures specified arsenic FFO and AFFO.

As a reminder, forward-looking statements correspond management's existent estimates, and nan institution assumes nary responsibility to update immoderate forward-looking statements successful nan future. We promote listeners to reappraisal nan much elaborate discussions related to nan consequence factors and forward-looking statements contained successful nan company's filings pinch nan SEC, including its 10-Q and successful the net release, arsenic good arsenic nan definitions and reconciliations of non-GAAP financial measures contained successful nan company's net release.

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

With that, it's my pleasance to move nan telephone complete to Peter Carlino. Peter, please spell ahead.

Peter Carlino

Well, convey you, Joe, and bully morning, everyone. Let maine [Technical Difficulty] there's sound connected nan line. Let maine denote astatine nan outset that respective of america person dialed successful from retired of nan office. And hopefully, that won't impact nan soft travel of our presentation. We are very pleased to denote different affirmative and eventful twelvemonth present astatine GLPI documented pinch sizeable item successful our published release.

Some of nan highlights, which we will look astatine successful much item arsenic we spell done this telephone includes notably reaching a caller fixed rent statement pinch PENN Entertainment, which importantly limits nan rent volatility that we've knowledgeable successful nan past. Additionally, we've signed agreements that specify nan statement by which we will money nan antecedently announced relocation of PENNs properties successful Aurora, Illinois and Joliet, Illinois, on pinch providing semipermanent backing for a caller edifice successful Columbus, Ohio and supporting nan 2nd edifice building astatine nan M successful Las Vegas. This is simply a beautiful breathtaking stuff, and we're delighted to beryllium doing this pinch PENN.

Also this quarter, we closed connected Valley's Tiverton, Rhode Island spot and Valley's Hard Rock successful Biloxi. And additionally, arsenic we'll astir apt talk successful much detail, we worked difficult this past twelvemonth and past 4th to cleanable our equilibrium sheet, now achieving nan lowest leverage we've ever enjoyed successful positioning america to do -- pinch nan action to do things utilizing that now if we wish and still enactment wrong nan 5% to 5.5% leverage scope that we person discussed.

I'm going to inquire Desiree to put immoderate numbers down immoderate of these things that I've conscionable outlined. So Desiree, please spell ahead.

Desiree Burke

Thank you, Peter, and bully morning, everyone, and acknowledgment for joining our call. We reported grounds results for nan 4th fourth of 2022, and our full income from existent property exceeded Q4 ‘21 levels by complete $50 million. This maturation was driven by nan quarter's Live! transactions, which accrued rate rental income by astir $31 million. The summation of Valley's Black Hawk and Rock Island properties, which drove an summation successful rate rental income of $3 million, nan Tropicana LV onshore lease, which accrued rental income by $2.6 million, nan nickname of escalators and 10 percent rent increases connected our leases, which added astir $4 cardinal of rate rent, arsenic good arsenic nan operation of higher non-cash gross gross-ups, finance and lease adjustments and straight-line rent adjustments, which drove collectively a year-over-year summation of astir $8 million.

Our operating expenses declined $33 million, chiefly owed to a reversal of anterior play provisions for in installments losses connected our Cordish leases resulting from improved spot capacity and a diminution of astir $8 cardinal successful gaming and G&A disbursal related to nan 2021 waste of our TRS operations. We proceed to spot beardown sum ratios crossed our leases. In nan 4th quarter, we realized afloat escalation connected nan PENN maestro lease, which accrued yearly building guidelines rent by $5.7 million, $1 cardinal of which was recognized successful 2022.

In relationship pinch nan PENN transactions, which created a caller maestro lease, it amended nan existing PENN maestro lease and terminated nan Perryville and Meadows leases. The information of our rents that are adaptable arsenic a percent of our rate rents will diminution to astir 5.3% successful 2023 from 11.7% successful ‘22 providing further visibility into uncertainty of our early gross streams from this tenant.

From a equilibrium expanse perspective, we had a very engaged 4th quarter. During nan quarter, we sold 3.2 cardinal shares of communal banal nether our ATM program, raising nett proceeds of $156 million. We besides settled nan guardant waste statement successful February of 2023 and issued 1.3 cardinal shares, raising nett proceeds of $64.6 million.

We utilized these proceeds to partially money nan early redemption successful February of ‘23 of nan $500 million, 5.375% notes, which were coming owed successful November of ‘23. Our nett leverage is now conscionable nether 5 times EBITDA. In addition, we entered into a caller $1 cardinal at-the-market program, which remains unused arsenic of today.

In today's release, we provided full-year 2023 guidance for AFFO per diluted stock successful OP units, ranging from $3.61 to $3.67 per diluted stock and OP unit. Please statement that this guidance does not see nan effect of immoderate early transactions. For modeling purposes, our non-cash straight-line rent accommodation for 2023 will beryllium astir $39 million, which will request to beryllium included successful revenue, but past deducted for AFFO arsenic it is non-cash, and it is changing owed to nan caller leases that we entered into successful 2023.

I would besides for illustration to statement that we declared a first 4th dividend of $0.72 per stock connected nan company's communal banal arsenic good arsenic a typical net and profits dividend of $0.25 per share. The typical dividend is related to nan net and profits from nan waste of nan Tropicana building, which was completed successful nan 3rd 4th of 2022.

With that, I will move nan telephone backmost to Peter.

Brandon Moore

Peter, do you person immoderate different further comments? If not, I deliberation Matt had a fewer things he'd for illustration to address?

Peter Carlino

I put speaker connected hold. My apologies. Yes, indeed, I had turned it complete to Matt. So Matt, spell ahead. I cognize you wanted to attraction connected a mates of points you thought were critical.

Matthew Demchyk

Sure. Thanks, Peter, and acknowledgment for everyone for joining america successful nan engaged net season. In an environment, nan economical and monetary situation pinch important transverse currents, volatility and uncertainty, I want to punctual everyone that GLPI's business exemplary was built pinch environments for illustration this successful mind. So our shareholders tin use from a level that is strong, resilient and opportunistic.

We've worked difficult and agelong connected nan effort to fortify our equilibrium sheet; our leverage and liquidity levels service some arsenic a ballast and besides a beardown instauration for growth. Our nett leverage positions america for important optionality arsenic we look to money early opportunities. At that end, we've besides worked diligently nan past galore years to grow our tenant roster, sow nan seeds of early maturation done various structures of circumstantial assets, unfastened speech pinch caller imaginable partners and to fortify our estimation arsenic a collaborative landlord, problem solver that is willing successful enhancing nan semipermanent occurrence of our tenant partners.

We've sewage a spot astatine nan array for opportunities and proceed patient conversations crossed nan board. And to nan extent, 1 of our galore conversations leads to an opportunity of interest, we're poised to pounce. We return our domiciled arsenic stewards of shareholder superior very earnestly and stay resolutely focused connected expanding intrinsic worth per stock complete nan long-term.

With that, I'll move nan telephone backmost to Peter.

Peter Carlino

Well, this time, thanks, Matt. I don't person my shut up fastener on. No, I deliberation that says very good what we're each astir here. And I must say, conscionable 1 editorial remark that I'm very pleased pinch wherever we find ourselves today.

So pinch that, let's unfastened nan level to questions. Somali, would you please unfastened nan mics.

Question-and-Answer Session

Operator

Sure. At this time, we will beryllium conducting a question-and-answer session. [Operator Instructions] And our first mobility comes from nan statement of Greg McGinniss pinch Scotiabank. Please proceed pinch your questions.

Greg McGinniss

Hey, bully morning. Just looking astatine nan guidance scope you're a spot amazed by nan low-end of nan scope fixed what appears to beryllium a beautiful straightforward communicative connected lease escalators and constricted percent rent effect successful November and December. And I conjecture based connected our math, nan guidance scope does connote different 2 cardinal shares outstanding versus wherever you guidelines today? So could you conscionable touch connected your expectations successful position of utilizing nan ATM aliases settling guardant equity? And what would extremity up driving you to nan bottommost extremity of nan guidance range?

Desiree Burke

Yes. So certainly. So we did really usage nan forward, which was 1.3 cardinal shares that I deliberation that you're missing from wherever we ended ‘22 to wherever we statesman ’23. We did propulsion that forward, arsenic I mentioned successful my notes, successful bid to repay nan $500 cardinal enslaved that was coming owed that we redeemed early. So I deliberation that is nan biggest stock count alteration that you have.

As acold arsenic nan precocious to low, I mean our liking complaint environment, we now person $600 cardinal of adaptable complaint debt. So arsenic you know, nan liking rates are changing daily. So we person immoderate -- for illustration up to a 1% alteration successful nan liking complaint that could hap successful our low-end, arsenic good arsenic we do not scheme for [Technical Difficulty] that is different quality betwixt our high-end and our low-end.

And nan 3rd point to deliberation astir is conscionable M&A transactions and really galore things we reappraisal successful nan people of nan year. And spell and owed diligence connected and do immoderate taxation activity connected and ineligible activity connected that will alteration our G&A number based connected really galore of those transactions we look at. So that is what's causing nan scope from nan precocious to debased and I deliberation nan biggest number that you would beryllium missing successful nan stock count.

Greg McGinniss

Okay. No, convey you very overmuch for that. Just a 2nd speedy 2nd mobility here. Now that we're benignant of person to nan extremity of Q1, do you person much visibility into really that trim improvement is coming on pinch respect to timing and spend?

Steven Ladany

Sure.

Peter Carlino

Steve, why don't you return that?

Steven Ladany

Thanks, Peter. Yes. So pinch respect to nan Hollywood Casino successful Baton Rouge, astatine this constituent successful time, we are continuing to move forward. A batch of nan awesome expenditures person been bought out. But we are still facing scheduling and timing disruption associated pinch proviso concatenation and labour market. So I deliberation astatine this point, our champion approximation of difficult costs walk funded by GLPI will beryllium $70 million. And our anticipation of timing for opening is apt to beryllium sometime astir nan commencement of nan 4th quarter. It could beryllium sooner if immoderate things spell right, but I don't want to overpromise.

Greg McGinniss

Okay. And moreover though nan walk is going up, you guys are getting a return connected that investment, right, still nan afloat magnitude that you extremity up spending?

Steven Ladany

Correct. Yes. There was nary headdress connected nan conversion aliases immoderate to rent. So yes, we'll get 8.25% headdress complaint applied to immoderate nan full difficult costs walk ends up.

Peter Carlino

Yes. I must opportunity looking astatine from Valley's constituent of view, looking precocious astatine nan building and nan advancement there, it's very impressive. I must admit it's beautiful exciting. I benignant of wish we still were operating there. So I deliberation it's successful business pinch Valley, this is going to beryllium a terrific task for them, and it's good connected its way, really rather exciting.

Greg McGinniss

Thanks, Peter.

Peter Carlino

Thank you.

Operator

Our adjacent mobility comes from nan statement of Brad Heffern pinch RBC. Please proceed pinch your question.

Brad Heffern

Hey, everyone. I was conscionable funny if you could talk done what you're seeing connected nan woody travel beforehand and possibly wherever you're expecting headdress rates to trend.

Peter Carlino

Steve, do you want to talk astir that? I mean, yes. Why don’t you return that.

Steven Ladany

Sure. Yes. Look, arsenic acold arsenic woody travel goes, I'd opportunity we're arguably arsenic engaged arsenic we've benignant of ever been. There are tons of different things that are coming successful from each direction. Some of its improvement related. Some of it's domestic. Some of it's not -- we're seeing each sorts of different transactions travel our way, and it's mostly related to nan gyrations successful nan superior markets, presenting immoderate opportunity.

And possibly that dovetails to your different portion of your question, which is I mean, I deliberation from an anticipation perspective, I deliberation that you're going to spot headdress rates perchance float a small spot higher. The benignant of counterbalance to that is, I deliberation that our plus people has really outperformed complete nan past fewer years. And it's taking -- starting to get noticed by different people. So we're seeing accrued title coming successful astatine times aliases astatine slightest an liking successful nan sector, and arsenic you saw successful Boston, for example. But astatine nan aforesaid time, I deliberation nan superior markets and nan costs of superior are benignant of offsetting that. And truthful I do deliberation you'll spot deals get done astatine somewhat higher headdress rates than we've seen successful nan past 2 years.

Brad Heffern

Okay, and immoderate updated thoughts connected perchance acquiring Lincoln astatine immoderate constituent down nan road?

Steven Ladany

Yes. I mean our champion -- correct now, our champion anticipation is that it's apt a 2024 event. I don't spot a batch of reasons why Valley’s would beryllium incented to effort to effectuate receiving that support successful 2023. But I do deliberation location are a number of reasons that they whitethorn be, successful fact, successful position successful 2024 to look to spell that direction. So that's our anticipation here.

Brad Heffern

Okay, convey you.

Operator

Our adjacent mobility comes from nan statement of Haendel St. Juste pinch Mizuho. Please proceed pinch your question.

Haendel St. Juste

He, bully morning. Thank you. I wanted to spell backmost to nan superior allocation successful nan quarter. You guys were very progressive successful nan quarter. And I was hoping you could supply immoderate colour connected immoderate of nan decisions you made, including paying down your $500 cardinal notes pinch rate while you besides issued looks for illustration astir $200 cardinal of equity from 4Q into early 1Q while besides receiving nan $200 cardinal backmost from Valley’s. And truthful you're sitting present pinch tons of awesome liquidity and leverage. So I guess, thief america understand nan -- immoderate of nan decisions made successful nan quarter?

And really do you expect to, I guess, nan poise excess liquidity complete nan adjacent term? I spot you person immoderate improvement projects successful nan pipeline. So thief america understand nan equilibrium expanse accuracy arsenic well. Thanks.

Desiree Burke

Sure. So we wanted to repay nan $500 million, because, arsenic you know, issuing 10-year indebtedness successful this marketplace is astir apt a debased six handle, not thing that we would really emotion to unrecorded pinch for 10-years, arsenic good arsenic nan truth that we had nan Valley’s transaction, which was requiring america to person indebtedness financed proceeds that needed to beryllium guaranteed by Valley’s. So we had to get $600 million. So we thought it was a prudent to usage immoderate equity successful bid to do that. We paid down immoderate indebtedness and borrowed caller debt. So location were immoderate equity utilized for nan Valley’s transaction moreover though successful essence, it was a indebtedness finance transaction. Anybody want to...

Peter Carlino

So fto maine -- I'm sorry. Desiree, do you want to spell ahead? I was going to opportunity that look, we locomotion a tightrope particularly successful our industry, because there's not a agelong drawstring of predictable acquisitions connected nan horizon. So we benignant of return nan somesthesia of wherever we are, what's successful nan shop astatine immoderate fixed clip and effort to prime a prudent level to beryllium prepared and not beryllium trim unprepared if and erstwhile we request to person cash. I mean, you raise money erstwhile you can. And arsenic favorably arsenic you can.

Sometimes -- and I've said this connected earlier calls that we'll judge some, astatine least, I will, immoderate resistance from complete equitizing, because it's a safer spot to be. And that's nan exemplary that we run with, safety, safety, information for our investors. So we are opportunistic astir that. Obviously, it says thing astir what we dream to person successful nan future. And I deliberation Desiree explained wherever short-term needs were that made this nan prudent measurement to raise cash. The indebtedness marketplace evidently was very unappealing. Go ahead.

Haendel St. Juste

Got it. Got it. Yes, spell ahead. [Indiscernible] Was location more?

Peter Carlino

Anything from...

Matthew Demchyk

This is Matthew. I'll adhd a small nuance taking a measurement back. Our semipermanent attack of targeting a 5 times to 5.5 times leverage scope remains really important to us. At nan aforesaid time, tactically, erstwhile we rumor equity, it's really pinch -- it’s imperishable capital. It's pinch a semipermanent position successful mind. So nan approximate usage of nan rate towards nan indebtedness wasn't nan driving decision. It was to prefund what our early opportunity group mightiness beryllium and to adhd optionality into our business exemplary arsenic I mentioned successful nan intro.

So whenever those adjacent opportunities mightiness travel to nan past, we person nan action to take utilizing much leverage to nan grade we wish to astatine that clip aliases equity successful nan mix. Remember, we've sewage a very heavy instrumentality thorax betwixt overnights, spot deals, ATM that we've utilized pinch and without guardant nan different indebtedness strategies betwixt nan word indebtedness we utilized and besides semipermanent unsecured that we've -- really, to Peter's point, artfully woven together to get nan champion result for shareholders. And nan punchline is, arsenic we money immoderate is next, we've sewage much choices than we've ever had arsenic a institution to do what's best.

Haendel St. Juste

Great. Guys, admit that color. Separate question, 1 for you, perhaps, Peter. I deliberation nan Governor of Texas mentioned nan different time that he'd beryllium unfastened to experiential assets that person an constituent of gaming “if it tin beryllium built successful nan measurement that master provides a shape of intermezo for people”. So I guess, I was funny if you could supply your thoughts connected nan imaginable legalization of commercialized and destination casinos successful Texas. And if you would spot that arsenic much of an opportunity aliases a threat.

Peter Carlino

Well, surely not a threat. It would so beryllium an opportunity for 1 aliases different of our operators. But -- and we do enactment reasonably intimately to that. My consciousness is astatine nan infinitesimal thing worldly is going to happen. You whitethorn spot sports betting, because remember, nan teams are involved. The master teams are progressive successful Texas, truthful I person a emotion that that's what you whitethorn spot first move to sports betting.

Flat retired casinos, I think, are further down nan statement and who knows. I've ever said location successful my lifetime, I dream that Texas gets afloat gaming. But my consciousness is, and from what I'm hearing, that's not apt to hap successful this first round. So -- but what it's worth, which is not a lot. That's my consciousness of wherever Texas stands today. But we support a adjacent oculus connected it. And obviously, we want to make judge that we're astir nan hoop for immoderate state, immoderate activity anywhere, and you tin stake that we are. Texas is tough. We'll see. I deliberation it's going to beryllium a multistep process.

Haendel St. Juste

Got it. Got it. Thank you, guys. I’ll leave.

Peter Carlino

Thank you.

Operator

Our adjacent mobility comes from nan statement of Rich Anderson pinch SMBC. Please proceed pinch your question.

Rich Anderson

Thanks. Good morning, everyone. So you get immoderate shape of this mobility each 4th probably, but a batch of talk astir expanding extracurricular of gaming. And I wonderment if it's successful betwixt nan 4 walls of GLPI, if it's going thing for illustration nan TRS woody that Peter, you sewage talked into taking that disconnected nan books and going afloat triple nett lease connected those situations. Are you benignant of -- you sewage poker chips coursing done your veins. Are you -- is it difficult to waste you connected non-gaming investments? Or do you deliberation that is successful nan reasonably short early for you guys successful position of expanding your horizons?

Peter Carlino

You know, we've said from nan beginning, we'll look astatine anything, perfectly anything. And I've utilized this silly affinity clip and clip again, and I mean it. Look, I would return a shack connected nan formation pinch nary windows and doors if it had demonstrably unchangeable rate flow, I mean each nan goals that we have. But nan problem is we're successful specified a terrific abstraction correct now. So stone solid, and arsenic I've said galore -- complete galore years, our revenues are bulletproof and I guidelines by that. Show maine thing that tin connection nan aforesaid thing. It's difficult to spell backwards erstwhile you're already astatine nan apical of nan heap.

So look, we look each nan time. And again, I person said someday, I expect we'll beryllium location else. There's astir apt not a week spell by that we don't look astatine aliases aren't presented immoderate non-gaming activity. But I don't deliberation we get immoderate constituent for jumping disconnected nan cliff pinch aliases without a parachute. I deliberation our occupation is to look astatine everything and anything. But frankly, we're not going to hurry to spell elsewhere. There's capable -- first off, a, arsenic I've said, we can't find thing nan adjacent of wherever we are. But b, we've not tally -- arsenic Steve highlighted, we're not retired of opportunity rather yet. And I'm not judge complete nan adjacent mates of years that we're going to beryllium location anyway. So we spot capable worldly connected nan sky to opportunity we'll instrumentality to our knitting until we don't.

Rich Anderson

Okay. Fair enough. Second mobility is nan talk astir a smoking prohibition successful Atlantic City that nan workers like, but I wonderment what you deliberation nan nett would beryllium successful that lawsuit aliases if this were to beryllium thing that sewage legs astir nan country. Do you deliberation a smoking prohibition would beryllium a bully point aliases a bad point for your business erstwhile you benignant of rotation it each up?

Peter Carlino

Well, for GLPI, it's not going to person an impact. It really won't. It's conscionable not going to impact us. It will impact operators. And nan thought that someway you tin put a smoking -- gamblers smoked. I mean that's a elemental factor. We've seen clip again; you enforce a smoking ban. You're going to spot a 15% -- arsenic overmuch arsenic a 15% driblet successful revenue, and it doesn't travel back, it doesn't travel back. Now what a batch of businesses are doing successful states wherever it's possible, are building these smoking platforms, that suffice arsenic extracurricular truthful agelong arsenic location is nan expertise to do that and companies operate.

Again, this doesn't impact us. But operating’s person gotten beautiful clever and building immoderate very, very bully smoking accommodation did work. So a batch depends connected really nan authorities go. But by and large, nan smoking bans are not a bully point for operators. I'll time off it astatine that. It won't impact us.

Rich Anderson

Okay. Yes, I retrieve nan smoking conception connected a level erstwhile I was overmuch younger, it didn't look for illustration that was really a imaginative attack to addressing nan issue. But yes, we'll spot really it plays retired successful nan gaming space. Thanks for your color.

Peter Carlino

Well, I deliberation if were successful this -- deliberation successful nan spot correct down nan feline smoking.

Rich Anderson

I didn't rather get that one, but whatever. Thank you.

Peter Carlino

You’re welcome.

Operator

Our adjacent mobility comes from nan statement of Barry Jonas pinch Truist Securities. Please proceed pinch your question.

Barry Jonas

Hi, hey guys. Good morning. Congrats connected a awesome year. I deliberation years ago, you utilized to talk astir a target of for illustration $500 cardinal a twelvemonth of M&A. Curious really you deliberation astir that today?

Peter Carlino

Look, I'll conscionable reply quickly. I deliberation we're still there. It whitethorn not beryllium successful a peculiar year, but I deliberation you tin beautiful good -- but we were consenting to guidelines by that. Anybody other connected nan GLPI broadside want to opine.

Steven Ladany

I mean, I'll propulsion successful 2 2nd answer, I guess. I mean I deliberation $500 cardinal is good arsenic a goal. I deliberation we proceed to outperform that successful nan past. And I don't needfully judge that we would underperform it successful nan future. So I deliberation it's good for a target. I deliberation betwixt nan PENN transactions that we dream to money complete nan adjacent fewer years, and immoderate of nan superior betterment dollars that we expect to put retired to different tenants for different projects. I deliberation we're going to beryllium location again aliases done it. So I deliberation each signs constituent to that arsenic a continued extremity and continued intent of outperforming it.

Barry Jonas

Great. Great. And past conscionable for a follow-up, why don't I touch connected iGaming and cannibalization. Just really really it plays into immoderate semipermanent strategy aliases really you whitethorn commencement underwriting early deals. Peter, I deliberation I asked you this mobility for illustration a twelvemonth ago, and you said it was excessively early, but funny different twelvemonth of data. Any updated thoughts present aliases still excessively soon? Thanks.

Peter Carlino

No, look, I'll enactment pinch wherever I was a twelvemonth ago. And for this reason, look, iGaming and supply nan convenience that evidently we each understand. But group are societal animals. I mean, my full emotion astir that is that group whitethorn -- look, you're going to spot a stake connected a assemblage game, for example. So we'll look astatine immoderate sports betting successful your driveway to stake connected your assemblage squad aliases immoderate different crippled astir nan country. But that's not an acquisition that group like.

I look astatine it this way. I look astatine really good nan Cordis group are doing pinch their Live! accommodation that don't moreover connection gaming. Pack, damned, my 23-year-old granddaughter this twelvemonth could person watched nan Eagles astatine location connected a elephantine surface and watch nan play. Where did she go? She went each nan measurement down to Philly Live. And joined each nan different crazies down there, drinking, partying and having a expansive each time. Because, look, gambling is simply a societal experience. And you tin play poker connected your iPhone, but it's not nan aforesaid arsenic look astatine nan feline successful nan sunglasses and nan shot had turned backwards crossed nan array from you trying to fig retired wherever that personification is actually, that dynamism is what group want.

So I'm suggesting there's going to beryllium a hellhole of a batch much gambling going on, but I don't deliberation it's going to person a antagonistic effect astatine all. In fact, I'm much convinced to that now connected nan bricks-and-mortar properties.

Barry Jonas

Great. Thanks truthful much.

Peter Carlino

Thank you.

Operator

Our adjacent mobility comes from nan statement of David Katz pinch Jefferies. Please proceed pinch your question.

David Katz

Hi, bully morning, everyone. Thanks for taking my question. One of nan areas I proceed to inquire astir and deliberation astir is nan ways successful which you mightiness prosecute pinch Native American entities, who are much and much expanding what they person connected preservation onshore arsenic good arsenic trying to turn off-reservation onshore aliases contiguous to preservation land. If you could update america connected your pursuit of those imaginable opportunities, if location is any, please?

Peter Carlino

We look astatine specified things and of course, admit nan imaginable if you tin fig retired a measurement to make it work. I don't know, Brandon, you've been benignant of saddling for a while that benignant of rolls into nan ineligible area arsenic overmuch arsenic nan business opportunity. What, did you adhd immoderate color?

Brandon Moore

Yes. I mean we do walk a batch of clip looking astatine opportunities successful tribal gaming. I deliberation location are immoderate evident challenges successful dealing pinch nan tribes from a protection standpoint because there's only truthful overmuch you tin do to workout connected nan collateral. And truthful for us, it's a prudent investigation and improvement task to spot if there's a measurement that we could finance aliases different put successful immoderate of these commercialized developments that Tribes are doing successful a measurement that we tin protect our asset, our finance and our shareholders.

So it's thing that we do attraction on. It's an effort that we've engaged successful for a number of years. We evidently haven't done thing to date. But it's not to opportunity that we don't deliberation that there's an opportunity there. I deliberation location is an opportunity location pinch nan correct drive, nan correct task and nan correct investment.

David Katz

Okay. Thank you very much.

Peter Carlino

Thank you, David.

Operator

Our adjacent mobility comes from nan statement of Daniel Gulino pinch Capital One. Please proceed pinch your question.

Daniel Gulino

Hey, everyone. Thank you for taking my question. Just 1 for me. So services ostentation is still elevated successful nan U.S. moreover though you each tally a ray operating model, your tenants are ample employers successful their various locations. Are location definite things you each are watching retired for into 2023? Thank you.

Peter Carlino

Look, my ain sentiment is not really again. We're truthful acold buffered pinch nan benignant of sum we person pinch our tenants that it has to beryllium a catastrophe of unimagined proportions for it to really get down to america successful immoderate meaningful way. So there's not losing immoderate slumber this twelvemonth complete immoderate existent harm to our tenants. Anybody other person -- I mean, that's my flat-out answer, but anybody other person a thought astir that?

Matthew Demchyk

Yes, I'll adhd one, and it's -- there's different perspective present and it's what do we deliberation astir erstwhile we look astatine acquisitions and we're very thoughtful successful disaggregating nan income statements and uncovering sum that has an due separator of information fixed nan plus location, operating history, et cetera. And a portion of that is assessing this very point. And it's thing connected nan acquisition side, we springiness a batch of thought to.

Daniel Gulino

Okay, convey you.

Peter Carlino

Thank you.

Operator

Our adjacent mobility comes from nan statement of Ronald Kamdem pinch Morgan Stanley. Please proceed pinch your question.

Ronald Kamdem

Great. Just 2 speedy ones for me. One, conscionable connected bigger picture, location gaming gross operating trends, immoderate of nan information we've seen successful December had shown it was benignant of down year-over-year, I deliberation 100%, nary siren by immoderate means. But conscionable funny what you guys are seeing connected nan location gaming front, if immoderate commentary location would beryllium helpful. Thanks.

A - Peter Carlino

Well, remember, we don't get immoderate accusation that you don't get. We're not privy to judge what's publically available. But we spot thing that suggests there's a problem connected nan horizon. I deliberation nan 1% is an aberration that is ignorable. So we person nan wide consciousness that our tenants are doing well, and they person a long, agelong measurement to spell earlier we person moreover fixed immoderate thought to it astatine all. Anybody again, connected nan GLPI broadside person a -- immoderate penetration astir that?

Desiree Burke

Yes, sure. So moreover though sum whitethorn travel down owed to these items that we're seeing successful nan location markets, we still consciousness that our tenants are powerfully -- their rent sum is stronger than it was successful 2019. And we will besides callback that it's coming down 1% disconnected an all-time precocious aft COVID and what has happened successful 2021. So we're not concerned astatine all. It surely won't effect our business from nan position that successful my opening remarks -- I noticed that I noted that only 5.3% of our rent is adaptable successful immoderate way. So moreover if it did effect revenues astatine nan tenants and dropped their sum a small bit, we person specified beardown sum good complete 2 times astatine our maestro lease tenants that it will not person an effect connected GLPI.

Ronald Kamdem

Great. Helpful. And past my 2nd mobility was conscionable going backmost to nan guidance connected nan AFFO maturation of 2.5%. Just benignant of curious, what's baked into that successful position of integrated maturation aliases rent bumps? And presumably, what's baked into that for nan outer drivers? Thanks.

Desiree Burke

So we person baked successful each fixed escalators that will hap successful 2023. We person baked successful nan transaction that we did pinch Valleys aliases nan caller 1 pinch Biloxi and Tiverton. We person not baked successful immoderate further acquisitions into nan 2023 guidance number.

Ronald Kamdem

Great. That’s it from me. Thanks truthful much.

Peter Carlino

Thank you.

Operator

Our adjacent mobility comes from nan statement of John Massocca pinch Ladenburg Thalmann. Please proceed with…

John Massocca

Good morning.

Peter Carlino

Good morning, John.

John Massocca

So possibly going astatine nan headdress complaint mobility from a different angle. You've seen a mates of transactions successful nan location abstraction closed aliases beryllium announced successful nan past mates of months. And benignant of successful a unsmooth precocious 7% headdress rate, debased to mid-8% headdress complaint range. Do you deliberation that's an due level of return fixed what we've seen successful position of liking disbursal and costs of superior increases, some for landlords and operators?

Peter Carlino

Probably not. But Steve, do you want to -- Steve aliases Matt, do you want to opine connected that.

Matthew Demchyk

I'll hop in. Firstly, I'd opportunity I dream that's an achievable complaint for nan benignant of things we for illustration to buy. I mean those were some nuanced transactions pinch a batch of characteristics that, for various reasons, didn't activity for us. And nan reality is successful nan broader world, I deliberation you've seen much of an description successful headdress rates successful broader triple-net than successful gaming to Steve's earlier comments astir appreciating nan stableness of these rate flows.

So nan bully news is for our business exemplary and for our inputs to our costs of superior equation, we tin get a patient risk-adjusted dispersed astatine rates for illustration those nan situations we like, and it's really going to travel down to plus by asset.

John Massocca

Okay. And past a speedy benignant of elaborate mobility connected nan equilibrium sheet. Any updated thoughts connected swapping retired nan word loan? And I conjecture if you were to do it today, what would benignant of beryllium unsmooth pricing connected that?

Desiree Burke

So we only person astir 9.5% of our full indebtedness astatine a adaptable complaint debt, and we person looked astatine nan switch rate, and we are comfortable that we astatine this time, do not intend to switch that out.

John Massocca

Okay. I conjecture immoderate wide thoughts connected wherever pricing is coming aliases moreover pricing is coming comparative to past year, just…

Desiree Burke

Right. So nan past clip that I looked astatine it, a three-year switch was astir 5.2%.

John Massocca

Okay. That’s helpful. Thank you very much.

Peter Carlino

Thank you.

Operator

[Operator Instructions] Our adjacent mobility comes from nan statement of Robin Farley pinch UBS. Please proceed pinch your…

Robin Farley

Great. Thanks. I wanted to inquire arsenic a follow-up. You benignant of made a passing reference to it earlier successful nan Q&A, but tin you talk a small spot astir nan situation for transactions successful position of different buyers that you're competing pinch benignant of nan appetite and nan number of buyers successful nan section and benignant of really those person changed successful nan past 4th aliases two? Thanks.

Peter Carlino

Yes, Robin. Yes, it's intelligibly a batch of people, a batch much group are willing successful our abstraction for evident reasons. It's a awesome spot to be. I'll make my wide remark that we're mostly not successful nan bidding business. Most of nan transactions we person done were crafted to lick immoderate different issues. I mean I'd for illustration to opportunity that successful a flat-out auction, nan bidder loses. We mostly don't for illustration to beryllium there. Typically, we are not there. It's because we tin supply thing different than nan past dollar to make a transaction effective. I deliberation Steve was correct that location are seemingly much group retired there, but it hasn't affected america yet. I mean we don't suffer galore things that we spell after. Steve, do you want to remark connected that? Agree aliases disagree?

Steven Ladany

Sure. I'll opportunity 1 aliases 2 senses and past fto Matt jump in, too. Look, I deliberation location were a number of -- location person been a number of competitors who person travel successful and who person past disappeared. I deliberation that could beryllium somewhat superior markets related aliases based connected their backing structures. But it's undeniable that this plus people is gaining attention. Based connected ours and our competitors' capacity from a full return position successful nan past and based connected conscionable nan stableness of our capacity done COVID.

And I deliberation arsenic you look guardant and immoderate group person various views connected what nan system whitethorn do going forward. But I deliberation looking backmost astatine COVID is simply a beautiful bully glimpse and gives you a consciousness of what whitethorn aliases whitethorn not hap to folks tenants. And successful our case, our tenants performed wonderfully done that, and we would expect nan aforesaid to beryllium existent going forward. So Matt, I don't cognize if you person thing to add.

Matthew Demchyk

I mean, it's benignant of interesting. If you look -- if you went backmost to past June aliases summertime of past twelvemonth and asked nan question, location would person been immoderate names that we were thoughtful astir that were benignant of wrong nan bidding shelter that aren't location anymore. And anecdotally, astatine slightest 1 of them position this arsenic benignant of a mispriced in installments and sewage into nan space. And past I deliberation came to nan conclusion based connected nan superior markets and opportunities successful gaming indebtedness aliases different places that nan amended return would beryllium elsewhere. It's a batch of hassle to beryllium a landlord.

And you've besides seen headlines from immoderate noteworthy ample backstage equity folks that intelligibly are not playing discourtesy arsenic aggressively arsenic they were. And a batch of that speaks to they're reliant connected really wherever existent liking rates successful existent time, wherever is ostentation and what's nan costs of the, nan juice that you tin get from nan indebtedness broadside of things. And we've sewage an arrow successful our quiver from a competitory position pinch our costs of equity and entree crossed each those areas I mentioned earlier, erstwhile you deliberation astir our superior sourcing that now gives america a competitory advantage successful that bidding scenario. So again, we've positioned ourselves to usage that thoughtfully passim this twelvemonth to nan grade we get opportunities. And we're hopeful that backdrop stays astir nan same.

Robin Farley

Great. That’s very helpful. Thank you.

Peter Carlino

Thank you, Robin.

Operator

And our adjacent mobility comes from nan statement of John DeCree pinch CBRE Securities. Please proceed pinch your question.

John DeCree

Good morning, everyone. Maybe to benignant of proceed nan speech alternatively than imaginable competitors for caller woody activity possibly Peter aliases Steve, wondering if you could elaborate connected nan type of activity. I think, Steve, successful nan prepared remarks, you've mentioned you are benignant of seeing akin imaginable woody measurement complete nan past mates of quarters. Curious benignant of what nan operation of that is. Is it existing tenants looking astatine M&A? Is it possibly sellers looking for an exit? And past nan follow-up would be, really is nan bid inquire evolved? I deliberation past year, fixed nan volatility successful superior markets that we're still facing today, nan bid-ask has seemingly widened for imaginable transactions. Curious if you've seen immoderate normalization aliases reasonable expectations among different parties successful nan market.

Peter Carlino

Steve?

Steven Ladany

Yes, sure. As you would expect, income processes, which were launched anterior to nan superior markets, and nan indebtedness market, successful particular, dislocating. Many of those are astir apt not going to benignant of scope finality different than DOA. So I deliberation that successful those cases, nan seller anticipation was dramatically different from nan reality arsenic nan indebtedness markets corrected and nan costs of superior conscionable quickly accrued connected people. So I deliberation that things that are coming to marketplace now, everyone astatine slightest had nan aforesaid lens that they're looking astatine nan world through. So I consciousness for illustration things are astir apt a small much achievable astatine this constituent than they were nan opening of past year. So that would beryllium my first commentary connected that piece.

But I mean, pinch respect to what we're seeing, look, our existent tenants are successful various places wrong their life cycle. So immoderate of them are looking to turn pinch immoderate type of assets whitethorn beryllium available. Some are looking for definite geographic locations aliases definite sizes. But there's speech and nary one's looking to beryllium stagnant. So we person speech pinch them astir imaginable acquisitions. We besides person galore much partnerships and relationships pinch folks that -- and dialogues than person materialized into tenancy. So astatine this point, I deliberation we're very hopeful that transactions will proceed to beryllium capable to beryllium created and constructed, and we're moving difficult to make judge that's achieved.

Matthew Demchyk

This is Matt. Let maine adhd 1 thought. Remember, location was immoderate subset of counterparties that utilized to opportunity hey, you guys are an costly shape of imperishable debt. And they were comparing america against nan prices successful nan wider market. The different broadside of that equation has moved meaningfully and nan competitiveness of our costs of superior versus each those different options is surely converge to an grade that's favorable for us.

John DeCree

Thanks, Matt. Thanks, I admit nan color.

Operator

Our adjacent mobility comes from nan statement of Mitch Germain pinch JMP Securities. Please proceed pinch your question.

Mitch Germain

Good morning. How should we deliberation astir nan economics down nan OP units associated pinch nan Valley deal?

Desiree Burke

So they -- we only issued 15 cardinal shares, I think, of OP units successful nan Valleys deal. $15 million, yes, sorry, did I opportunity units? I'm sorry, we only issued $15 million, that was astir 300,000 shares. So it is simply a beautiful mini drag, but it is successful our guidance that we've provided.

Mitch Germain

Understood. And past past 1 for me. I presume Penn backing is not successful guidance, but should we deliberation of immoderate of that perchance starting to deed towards nan backmost portion of ‘23 aliases is it really much of a ‘24 event?

Peter Carlino

It's difficult to know. But if we had to guideline you immoderate place, we would opportunity later alternatively than earlier. Candidly, I don't person a existent bully grip connected wherever they are successful nan creation phases. I mean, I deliberation there's a precocious grade of assurance that these things are going to happen, but nan erstwhile is conscionable not existent clear.

Steven Ladany

Yes. I mean, I think, PENN -- this is Steve. I deliberation PENN has been nationalist pinch stating that they expect to commencement these projects by nan extremity of ‘23, but that each 4 projects are apt to not unfastened until sometime successful 2025. So nan -- they are not obligated to return dollars from america from time 1 for each these projects. So they do person immoderate elasticity astir erstwhile they would want to entree our capital. So it's conscionable an evolving timeline that we're going to proceed speech pinch them and benignant of arsenic soon arsenic we know, you'll know.

Mitch Germain

And nan measurement [Multiple Speakers]

Peter Carlino

I was conscionable going to opportunity that look, [Indiscernible], depending upon what their ain rate needs are aliases immoderate other is going connected astatine nan company, they whitethorn aliases whitethorn not request nan money sooner. Look, if they tin money it internally, it will beryllium later, but it's nan semipermanent solution and astir apt successful nan short run, they usage their ain rate if they had it. So we'll conscionable person to spot really it plays out.

Mitch Germain

Got it. Congrats connected nan year.

Peter Carlino

Thank you.

Operator

And we person reached nan extremity of nan question-and-answer session. I'll now move nan telephone backmost complete to Peter Carlino for closing remarks.

Peter Carlino

Well, convey you very much. And acknowledgment to everyone who has dialed successful today. We are really excited astir having closed retired a very eventful year. But we deliberation that 2023 is going to beryllium a beardown twelvemonth for america arsenic well. Fingers cross, moving difficult and dream to spot you each adjacent quarter. Thank you.

Operator

And this concludes today's conference, and you whitethorn disconnect your lines astatine this time. Thank you for your participation.