Construction Financing Key to GLPI’s Future Growth, Says Expert

The real estate investment trust, specializing casino properties, Gaming and Leisure Properties (GLPI), has enjoyed a busy year so far, with a number of important announcements and strategic moves. Recognized as the nation’s first gaming real estate investment trust, the 2013-founded company has a growing portfolio of 65 premier gaming and related facilities.

The properties are operated by recognizable gaming and entertainment operators, including Bally’s and Penn Entertainment, among others, positioning the Wyoming, Pennsylvania-based company for further success in the sector.

In a note to investors, an expert analyst spoke about recent business moves and growth initiatives announced by GLPI. Kim Noland, a GimmeCredit analyst, who sent a note to clients and was quoted by Casino.org, revealed that the real estate investment trust (REIT) was very active during the summer, engaging in strategic transactions to promote its future growth.

Still, the expert acknowledged that the strategic initiatives required raising additional funds through the issuing of new bonds. This otherwise means that while GLPI retained its focus on growth and expansion, to finance these activities, the company increased its debt levels.

Although Riskier, Construction Financing Brings Benefits

Additionally, Noland outlined the importance of construction financing as a growth initiative for GLPI. She spoke about a recent deal that saw the company agree to provide $2 billion in funding for Bally’s Corporation’s permanent Chicago property. The gaming and entertainment company was funded by GLPI after singing a new lease agreement.

“The provision of construction financing to tenants has become an important part of GLPI’s growth initiatives,“

explained Kim Noland, an analyst for GimmeCredit

The expert revealed that besides the $2 billion funding for Bally’s, GLPI previously agreed to finance the construction of the operator’s stadium in Las Vegas. Noland added that while construction financing may be considered more riskier, it helps grow GLPI’s EBITDA.

“In addition to the July deal, it already agreed to provide Bally’s with construction financing for a sports stadium that complements Bally’s gaming resort in Las Vegas. While construction financing is somewhat riskier than the more usual propco/opco transactions of existing properties, the higher interest income is helping to expand GLPI’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA),“

added Noland

Earlier this year, GLPI acquired three casinos in a deal for a total cost of $110 million. While $105 million was designated for the purchase itself, another $5 million was dedicated toward capital improvements, as announced by the company back in May.