Gaming and Leisure Properties (NASDAQ:GLPI) has been assigned a ‘BBB-‘ (lowest funding grade) credit standing and a steady outlook by Fitch Scores.
The ranking company famous that the on line casino landlord’s credit standing is hampered by gaming actual property funding trusts (REITs) which have weaker contingent liquidity profiles in comparison with different business REITs, whereas GLPI’s leverage ratio is within the vary of 4.5x to five.5x for comparably rated actual property firms.
Fitch expects GLPI to function at not more than 5.5x leverage all through the cycle, which is suitable for a ‘BBB-‘ rated US REIT with its asset profile,” the analysis agency stated. “GLPI scores enable some short-term leverage above 5.5x for giant acquisitions. Nonetheless, Fitch expects the corporate’s share worth to return to beneath 5.5x inside 12-18 months after the acquisition resulting from debt reimbursement from the sale of shares and retained money move.”
Penn Leisure is GLPI’s largest tenant, with different shoppers together with Bally’s, Boyd Gaming, Caesars Leisure and Cordish Cos.
Gaming and leisure shopper stability
In comparison with competitor VICI Properties (NYSE: VICI), Gaming & Leisure publicity to Las Vegas, together with The Strip, is low.
Nonetheless, REITs are not directly uncovered to On line casino Middle USA developments, as shoppers similar to Bally’s, Boyd Gaming, and Caesars Leisure have left a big footprint there. The three firms accounted for 29% of GLPI’s first-quarter rental revenue, whereas Penn and Cordish, which function M Resorts in Henderson, Nevada, collectively accounted for 70%.
“Grasp leases have lengthy preliminary phrases and cross-default clauses, which offer stability and visibility into GLPI money flows and assist defend the corporate from underperformance on the particular person asset and market degree.
The scores businesses stated GLPI’s tenants, together with Penn, have weaker credit score than the REIT itself, however these issues are mitigated by long-term leases and default clauses in contracts.
Gaming and Leisure have perks for buyers
Since splitting from Penn in 2013, GLPI has steadily elevated its dividend, and likewise paid a particular dividend within the second half of 2021. The inventory closed at the moment with a dividend yield of 5.82%.
Moreover, the REIT has a repute for skillful offers, typically shopping for up actual property belongings in native casinos at engaging costs. Sport and Leisure itself has additionally been talked about as an acquisition goal, however for now it is simply outdated hypothesis. Broadly talking, GLPI’s stability sheet is steady and it has the means to boost money if wanted.
Fitch concluded that “GLPI’s portfolio is totally unencumbered and offers the corporate with ample headroom to borrow secured debt underneath stress eventualities primarily based on the senior unsecured bond and Banking Code exams.” “The corporate has no secured debt and has over 2.0x unsecured belongings/internet unsecured debt (UA/UD), giving the corporate enough contingent liquidity. The corporate’s belongings are primarily regional belongings and are thought of much less cyclical than the Las Vegas strip belongings.”
