Gaming & Leisure Properties, Inc.

Previous wording

The following discussion and analysis of the financial position and operating results of Gaming and Leisure Properties, Inc. for the three months ended March 31, 2025 should be read in conjunction with the Financial Statements and related notes thereto and other financial information contained elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes for the year ended December 31, 2024. All defined terms included herein have the same meaning as those set forth in the Notes to the Consolidated Financial Statements contained within this Quarterly Report on Form 10-Q.

Current wording

The following discussion and analysis of the financial position and operating results of Gaming and Leisure Properties, Inc. for the three and six months ended June 30, 2025 should be read in conjunction with the Financial Statements and related notes thereto and other financial information contained elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes for the year ended December 31, 2024. All defined terms included herein have the same meaning as those set forth in the Notes to the Consolidated Financial Statements contained within this Quarterly Report on Form 10-Q.

Previous wording

•our or our partner’s ability to successfully complete construction of various casino projects currently under development for which we have agreed to provide construction development funding, including Bally’s Chicago (as defined below), and the ability and willingness of our partners to meet and/or perform their respective obligations under the applicable construction financing and/or development documents;

Current wording

•our or our partner’s ability to successfully complete construction of various casino projects currently under development for which we have agreed to provide construction development funding, including Bally’s Chicago, and the ability and willingness of our partners to meet and/or perform their respective obligations under the applicable construction financing and/or development documents;

Previous wording

(2)Coverage ratio for escalation purposes excludes adjusted revenue and rent attributable to the Plainridge Park facility as well as certain other fixed rent amounts.

Current wording

(3)Coverage ratio for escalation purposes excludes adjusted revenue and rent attributable to the Plainridge Park facility as well as certain other fixed rent amounts.

Previous wording

(2)Increases by 1.5% on the opening date (which occurred on December 22, 2021) and for the first three lease years. Commencing on the fourth anniversary of the opening date and for each anniversary thereafter, if the CPI increase is at least 0.5% for any lease year, the rent for such lease year shall increase by 1.25% of rent as of the immediately preceding lease year, and if the CPI increase is less than 0.5% for such lease year, then the rent shall not increase for such lease year.

Current wording

(2)If the CPI increase is at least 0.5% for any lease year, the rent for such lease year shall increase by 1.25% of rent as of the immediately preceding lease year, and if the CPI increase is less than 0.5% for such lease year, then the rent shall not increase for such lease year.

Previous wording

(2)Increases by 1.75% beginning with the first anniversary and increases to 2% beginning in year fifteen of the lease through the remainder of the initial lease term.

Current wording

(3)Increases by 1.75% beginning with the first anniversary and increases to 2% beginning in year fifteen of the lease through the remainder of the initial lease term.

Previous wording

For further information on our critical accounting estimates, see Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and the Notes to our audited consolidated financial statements included in our most recent Annual Report. There has been no material change to these estimates for the three months ended March 31, 2025.

Current wording

For further information on our critical accounting estimates, see Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and the Notes to our audited consolidated financial statements included in our most recent Annual Report. There has been no material change to these estimates for the three and six months ended June 30, 2025.

Previous wording

We reported total revenues and income from operations of $395.2 million and $258.8 million, respectively, for the three months ended March 31, 2025, compared to $376.0 million and $257.6 million, respectively, for the corresponding period in the prior year.

Current wording

We reported total revenues and income from operations of $394.9 million and $242.1 million, respectively, for the three months ended June 30, 2025, compared to $380.6 million and $293.4 million, respectively, for the corresponding period in the prior year. The Company reported total revenues and income from operations of $790.1 million and $500.9 million, respectively for the six months ended June 30, 2025 compared to $756.6 million and $551.0 million for the corresponding period in the prior year.

Previous wording

The major factors affecting our results for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, were as follows:

Current wording

The major factors affecting our results for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, were as follows:

Previous wording

•Total income from real estate increased by $19.3 million to $395.2 million for the three months ended March 31, 2025 compared to $376.0 million for the corresponding period in the prior year. The reason for the increase was primarily due to our recent acquisitions which in the aggregate increased cash rental income by $20.2 million for the three months ended March 31, 2025. Additionally, the three months ended March 31, 2025 benefited by $5.2 million compared to the corresponding period in the prior year from escalations on our leases, favorable variable rents of $1.5 million and higher ground rent revenue of $0.8 million. The Company also recognized lower accretion of $1.0 million on its Investment in leases and unfavorable straight-line rent adjustments of $7.4 million compared to the corresponding period in the prior year.

Current wording

•Total income from real estate increased by $33.5 million to $790.1 million for the six months ended June 30, 2025 compared to $756.6 million for the corresponding period in the prior year. The reason for the increase was primarily due to our recent acquisitions which in the aggregate increased cash rental income by $37.7 million for the six months ended June 30, 2025. Additionally, the six months ended June 30, 2025 benefited by $9.6 million compared to the corresponding period in the prior year from escalations on our leases, favorable variable rents of $2.0 million and higher ground rent revenue of $1.9 million. The Company also recognized lower accretion of $0.9 million on its Investment in leases and unfavorable straight-line rent adjustments of $16.7 million compared to the corresponding period in the prior year.

Previous wording

•Total operating expenses increased by $18.0 million for the three months ended March 31, 2025 as compared to the corresponding period in the prior year. The primary reason for the increase was due to an increase in the provision for credit losses of $16.0 million during the three months ended March 31, 2025. The provision increase was due primarily from a more pessimistic forward looking economic forecast at March 31, 2025. The Company incurred higher land rights and ground lease expense of $1.7 million due to the acquisition of the assets in Bally's Master Lease II. Additionally, general and administrative expenses increased by $0.8 million due primarily from higher stock based compensation expense of $0.7 million. Partially offsetting these increases was a decline in depreciation expense of $0.3 million.

Current wording

•Total operating expenses increased by $83.7 million for the six months ended June 30, 2025 as compared to the corresponding period in the prior year. The primary reason for the increase was due to an increase in the provision for credit losses of $73.5 million during the six months ended June 30, 2025. The provision increase was due primarily from a more pessimistic forward looking economic forecast at June 30, 2025 compared to what was utilized at December 31, 2024. The Company incurred higher land rights and ground lease expense of $3.8 million due to the acquisition of the assets in Bally's Master Lease II. Additionally, general and administrative expenses increased by $2.9 million due primarily from higher stock based compensation costs and payroll expenses. The Company also incurred higher depreciation of $3.6 million due to its recent acquisitions.

Previous wording

•Other expenses increased by $10.5 million for the three months ended March 31, 2025, primarily due to higher interest expense of $10.6 million associated with the Company's increased borrowings to fund our recent acquisitions and prefunding the redemption of our $850 million, 5.25% senior unsecured note that occurred in March 2025.

Current wording

•Other expenses increased by $6.7 million and $17.2 million for the three and six months ended June 30, 2025, primarily due to higher interest expense of $3.3 million and $13.9 million associated with the Company's increased borrowings to fund our recent acquisitions and less interest income from lower cash on hand and investments.

Previous wording

•Net income decreased by $9.2 million for the three months ended March 31, 2025, as compared to the corresponding periods in the prior year, primarily due to the variances explained above.

Current wording

•Net income decreased by $58.2 million and $67.4 million for the three and six months ended June 30, 2025, as compared to the corresponding periods in the prior year, primarily due to the variances explained above.

Previous wording

The consolidated results of operations for the three months ended March 31, 2025 and 2024 are summarized below:

Current wording

The consolidated results of operations for the three and six months ended June 30, 2025 and 2024 are summarized below:

Previous wording

The reconciliation of the Company’s net income per GAAP to FFO, AFFO, and Adjusted EBITDA for the three months ended March 31, 2025 and 2024 is as follows:

Current wording

The reconciliation of the Company’s net income per GAAP to FFO, AFFO, and Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024 is as follows:

Previous wording

Net income, FFO, AFFO and Adjusted EBITDA were $170.4 million, $234.8 million, $272.0 million, and $360.1 million for the three months ended March 31, 2025, respectively. This compares to net income, FFO, AFFO and Adjusted EBITDA of $179.5 million, $244.4 million, $258.6 million and $333.4 million for the corresponding period in the prior year. The decrease in net income of $9.2 million was primarily attributable to increased operating expenses of $18.0 million (which was driven by the increase in provision for credit losses of $16.0 million) and higher other expenses of $10.5 million (driven by higher interest expense to partially finance our acquisitions) partially offset by an increase in total revenues of $19.3 million.

Current wording

Net income, FFO, AFFO and Adjusted EBITDA were $156.2 million, $224.9 million, $276.1 million, and $361.5 million for the three months ended June 30, 2025, respectively. This compares to net income, FFO, AFFO and Adjusted EBITDA of $214.4 million, $279.2 million, $264.4 million and $340.4 million for the corresponding period in the prior year. The decrease in net income of $58.2 million was primarily attributable to increased operating expenses of $65.6 million (which was driven by the increase in provision for credit losses of $57.5 million) and higher other expenses of $6.7 million (driven by higher interest expense to partially finance our acquisitions) partially offset by an increase in total revenues of $14.3 million.

Previous wording

The decrease in FFO for the three months ended March 31, 2025 was due to the items described above, excluding gains from dispositions of property and real estate depreciation. The increases in AFFO and Adjusted EBITDA were due to the items described above, as well as the adjustments mentioned in the tables above.

Current wording

The decrease in FFO for the six months ended June 30, 2025 was due to the items described above, excluding gains from dispositions of property and real estate depreciation. The increases in AFFO and Adjusted EBITDA were due to the items described above, as well as the adjustments mentioned in the tables above.

Previous wording

Revenues for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Current wording

Revenues for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

Previous wording

Additionally, the three months ended March 31, 2025 benefited by $5.2 million compared to the corresponding period in the prior year from escalations on our leases, favorable variable rents of $1.5 million and higher ground rent revenue of $0.8 million. The Company also recognized lower accretion of $1.0 million on its Investment in leases and unfavorable straight-line rent adjustments of $7.4 million compared to the corresponding period in the prior year.

Current wording

•Total income from real estate increased by $33.5 million to $790.1 million for the six months ended June 30, 2025 compared to $756.6 million for the corresponding period in the prior year. The reason for the increase was primarily due to our recent acquisitions which in the aggregate increased cash rental income by $37.7 million for the six months ended June 30, 2025. Additionally, the six months ended June 30, 2025 benefited by $9.6 million compared to the corresponding period in the prior year from escalations on our leases, favorable variable rents of $2.0 million and higher ground rent revenue of $1.9 million. The Company also recognized lower accretion of $0.9 million on its Investment in leases and unfavorable straight-line rent adjustments of $16.7 million compared to the corresponding period in the prior year.

Previous wording

Details of the Company's income from real estate for the three months ended March 31, 2025 was as follows (in thousands)

Current wording

Details of the Company's income from real estate for the three and six months ended June 30, 2025 was as follows (in thousands)

Previous wording

(1) Current year amount includes $0.1 million of tenant improvement allowance amortization.

Current wording

(1) Amount includes $0.1 million of tenant improvement allowance amortization.

Previous wording

Operating expenses for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Current wording

Operating expenses for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

Previous wording

Land rights and ground lease expense includes the amortization of land rights and rent expense related to the Company's long-term ground leases. Land rights and ground lease expense increased by $1.7 million for the three months ended March 31, 2025, as compared to the corresponding period in the prior year due to the acquisition of the real estate assets in Bally's Master Lease II.

Current wording

Land rights and ground lease expense includes the amortization of land rights and rent expense related to the Company's long-term ground leases. Land rights and ground lease expense increased by $2.1 million and $3.8 million for the three and six months ended June 30, 2025, as compared to the corresponding period in the prior year due to the acquisition of the real estate assets in Bally's Master Lease II.

Previous wording

General and administrative expenses include items such as compensation costs (including stock based compensation), professional services and costs associated with development activities. General and administrative expenses increased by $0.8 million for the three months ended March 31, 2025 as compared to the corresponding period in the prior year. This was due primarily to higher stock based compensation expense of $0.7 million.

Current wording

General and administrative expenses include items such as compensation costs (including stock based compensation), professional services and costs associated with development activities. General and administrative expenses increased by $2.1 million and $2.9 million for the three and six months ended June 30, 2025 as compared to the corresponding period in the prior year. This was due to higher stock based compensation costs, payroll expenses and acquisition costs.

Previous wording

The Company recorded a provision for credit losses of $39.2 million for the three months ended March 31, 2025 compared to a provision of $23.3 million for the corresponding period in the prior year. As described in Note 3, the Company follows ASC 326 “Credit Losses”, which requires that the Company measure and record current expected credit losses, the scope of which includes our Investments in leases, financing receivables, net as well as the Company's real estate loans and related loan commitment.

Current wording

The Company recorded a provision for credit losses of $53.7 million and $93.0 million for the three and six months ended June 30, 2025 compared to a benefit of $3.8 million and a provision of $19.5 million for the corresponding periods in the prior year. As described in Note 3, the Company follows ASC 326 “Credit Losses”, which requires that the Company measure and record current expected credit losses, the scope of which includes our Investments in leases, financing receivables, net as well as the Company's real estate loans and loan commitments.

Previous wording

The reason for the increased provision during the three months ended March 31, 2025 was due to a more pessimistic forward looking economic forecast utilized in our CECL reserve calculation. Future changes in economic projections, probability factors, changes in the estimated value of our real estate property and earnings assumptions at the underlying facilities may result in non-cash provisions or recoveries in future periods that could materially impact our results of operations.

Current wording

The increased provisions during the three and six months ended June 30, 2025 were primarily driven by a sequential deterioration in the third-party forward-looking economic outlook used in the Company's CECL reserve calculations. The macroeconomic forecast as of March 31, 2025, was more pessimistic than the forecast used as of December 31, 2024, resulting in a provision during the three months ended March 31, 2025. The outlook further deteriorated as of June 30, 2025, leading to an additional provision during the three months ended June 30, 2025. Future changes in economic projections, probability factors, changes in the estimated value of our real estate property and earnings assumptions at the underlying facilities may result in non-cash provisions or recoveries in future periods that could materially impact our results of operations.

Previous wording

Other income (expenses) for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Current wording

Other income (expenses) for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

Previous wording

Interest expense increased by $10.6 million for the three months ended March 31, 2025, as compared to the corresponding period in the prior year. The increase was due to increased borrowings that partially funded our recent acquisitions and prefunding the redemption for our $850 million, 5.25% senior unsecured note that occurred in March 2025.

Current wording

Interest expense increased by $3.3 million and $13.9 million for the three and six months ended June 30, 2025, as compared to the corresponding period in the prior year. The increase was due to increased borrowings that partially funded our recent acquisitions and prefunding the redemption for our $850 million, 5.25% senior unsecured note that occurred in March 2025.

Previous wording

Net cash provided by operating activities was $252.5 million and $257.9 million during the three months ended March 31, 2025 and 2024, respectively. The decrease in net cash provided by operating activities of $5.4 million for the three months ended March 31, 2025, as compared to the corresponding period in the prior year, was primarily comprised of an increase in cash receipts from customers of $26.9 million along with decreases in cash paid for operating expenses of $2.6 million and an increase in interest income of $13.2 million. This was offset by increases in cash paid for employees and cash paid for interest of $1.3 million and $46.8 million respectively. The increase in cash receipts collected from our customers for the three months ended March 31, 2025, as compared to the corresponding period in the prior year, was due to increased rental income from the Company's recent acquisitions and lease escalations and the increase in interest expense was due to increased borrowings that partially funded our recent acquisitions and prefunding the redemption for our $850 million, 5.25% senior unsecured note that occurred in March 2025.

Current wording

Net cash provided by operating activities was $545.9 million and $510.0 million during the six months ended June 30, 2025 and 2024, respectively. The increase in net cash provided by operating activities of $35.9 million for the six months ended June 30, 2025, as compared to the corresponding period in the prior year, was primarily comprised of an increase in cash receipts from customers of $49.3 million along with decreases in cash paid for taxes of $0.6 million and an increase in interest income of $14.3 million. This was offset by increases in cash paid for employees, cash paid for interest and cash paid for operating expenses of $0.1 million, $23.7 million and $4.6 million respectively. The increase in cash receipts collected from our customers for the six months ended June 30, 2025, as compared to the corresponding period in the prior year, was due to increased rental income from the Company's recent acquisitions and lease escalations and the increase in interest expense was due to increased borrowings that partially funded our recent acquisitions and prefunding the redemption for our $850 million, 5.25% senior unsecured note that occurred in March 2025.

Previous wording

Investing activities provided cash of $534.0 million and used cash of $448.4 million during the three months ended March 31, 2025 and 2024, respectively. Net cash provided by investing activities during the three months ended March 31, 2025 primarily consisted of the maturity of zero coupon U.S. Treasury Bills totaling $550.0 million, partially offset by Ione Loan fundings of $3.2 million, and capital expenditures of $12.9 million. The net cash used in investing activities for the three months ended March 31, 2024 consisted primarily of $93.3 million for the acquisition of the real estate assets which were added to the Bally's Master Lease, the purchase of zero coupon U.S. Treasury Bills totaling $341.0 million and Ione Loan fundings of $14.0 million.

Current wording

Investing activities provided cash of $500.4 million and used cash of $604.8 million during the six months ended June 30, 2025 and 2024, respectively. Net cash provided by investing activities during the six months ended June 30, 2025 primarily consisted of the maturity of zero coupon U.S. Treasury Bills totaling $550.0 million, partially offset by Ione Loan fundings of $10.7 million, the acquisition of land related to the Joliet landside development of $5.0 million and capital expenditures of $34.1 million. The net cash used in investing activities for the six months ended June 30, 2024 consisted primarily of $205.0 million for the acquisition of the real estate assets which were added to the Bally's Master Lease, the purchase of zero coupon U.S. Treasury Bills totaling $341.0 million, capital expenditures of $7.6 million and Rockford Loan fundings of $53.0 million partially offset by the proceeds from a tax refund related to a previous acquisition of $1.8 million.

Previous wording

Financing activities used cash of $1,080.3 million and $281.9 million during the three months ended March 31, 2025 and 2024, respectively. Net cash used in financing activities during the three months ended March 31, 2025 was driven by the repayment of long term debt of $850.1 million, dividend payments of $209.1 million, non-controlling interest distributions of $6.3 million, and taxes paid related to shares withheld for tax purposes on restricted stock award vestings of $14.8 million. Cash used in financing activities during the three months ended March 31, 2024 was driven by the repayment of long term debt of $63.5 million, dividend payments of $206.6 million, noncontrolling interest distributions of $6.1 million and taxes paid related to shares withheld for tax purposes on restricted stock award vestings of $14.7 million, partially offset by proceeds from the issuance of common stock, net of costs of $9.0 million.

Current wording

Financing activities used cash of $904.7 million and $494.7 million during the six months ended June 30, 2025 and 2024, respectively. Net cash used in financing activities during the six months ended June 30, 2025 was driven by the repayment of long term debt of $850.1 million, dividend payments of $430.0 million, non-controlling interest distributions of $12.8 million, and taxes paid related to shares withheld for tax purposes on restricted stock award vestings of $14.8 million, partially offset by the proceeds from the issuance of common stock, net of costs of $403.0 million. Cash used in financing activities during the six months ended June 30, 2024 was driven by the repayment of long term debt of $63.5 million, dividend payments of $413.2 million, noncontrolling interest distributions of $12.3 million and taxes paid related to shares withheld for tax purposes on restricted stock award vestings of $14.7 million, partially offset by proceeds from the issuance of common stock, net of costs of $9.0 million.

Previous wording

During the three months ended March 31, 2025 and 2024, we spent approximately $12.9 million and $0.1 million, respectively, for capital expenditures. The majority of the capital expenditures in 2025 were related to a land side and hotel development project at The Belle.

Current wording

During the six months ended June 30, 2025 and 2024, we spent approximately $34.1 million and $7.6 million, respectively, for capital expenditures. The majority of the capital expenditures in 2025 were related to a land side and hotel development project at The Belle.

Previous wording

The Company has $6.89 billion of debt outstanding with a weighted average maturity and interest rate of 6.3 years and 5.06%, respectively as of March 31, 2025. The majority of the Company's debt obligations have fixed interest rates from the issuance of its senior unsecured notes. During the three month period ended March 31, 2025, the Company redeemed its $850 million 5.250% note that was due in June 2025. See Note 7 for the future minimum repayments of the Company's debt obligations.

Current wording

The Company has $6.89 billion of debt outstanding with a weighted average maturity and interest rate of 6.1 years and 5.06%, respectively as of June 30, 2025. The majority of the Company's debt obligations have fixed interest rates from the issuance of its senior unsecured notes. In the first quarter of 2025, the Company redeemed its $850 million 5.250% note that was due in June 2025 using cash on hand. See Note 7 for the future minimum repayments of the Company's debt obligations.

Previous wording

Based on our current level of operations and anticipated earnings, we believe that cash generated from operations and cash on hand, together with amounts available under our Amended Credit Agreement and our ability to raise equity proceeds (including the Company's forward sale agreement that is anticipated to be settled in June of 2025), will be adequate to meet our anticipated debt service requirements, funding commitments, capital expenditures, working capital needs and dividend requirements for the next twelve months and beyond.

Current wording

Based on our current level of operations and anticipated earnings, we believe that cash generated from operations and cash on hand, together with amounts available under our Amended Credit Agreement and our ability to raise proceeds from equity offerings (including the Company's 2025 ATM Program) and debt offerings, will be adequate to meet our anticipated debt service requirements (including the maturity of the $975 million senior unsecured note due in April 2026), funding commitments, capital expenditures, working capital needs and dividend requirements for the next twelve months and beyond.

Previous wording

We expect the majority of our future growth to come from funding commitments to our tenants and acquisitions of gaming and other properties to lease to third parties. If we consummate significant transactions in the future, our cash requirements may increase significantly and we would likely need to raise additional proceeds through a combination of either common equity (including under our 2022 ATM Program and future ATM programs that we would expect to enter into once the 2022 ATM Program is fully utilized), issuance of additional OP Units, and/or debt offerings. Our future operating performance and our ability to service or refinance our debt will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. See "Risk Factors-Risks Related to Our Capital Structure" in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, for a discussion of the risk related to our capital structure.

Current wording

We expect the majority of our future growth to come from funding commitments to our tenants and acquisitions of gaming and other properties to lease to third parties. If we consummate significant transactions in the future, our cash requirements may increase significantly and we would likely need to raise additional proceeds through a combination of either common equity (including under our 2025 ATM Program), issuance of additional OP Units, and/or debt offerings. Our future operating performance and our ability to service or refinance our debt will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. See "Risk Factors-Risks Related to Our Capital Structure" in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, for a discussion of the risk related to our capital structure.