Gaming and Leisure Properties Inc. (GLPI) is projecting a better environment for M&A activity in 2024. An analyst discussed the matter following a conference call with GLPI’s leadership.
As reported by CDC Gaming Reports, Barry Jonas, an analyst at Truist Securities, told investors that GLPI has a balance sheet flexibility that will provide it with significant advantages when it comes to potential mergers and acquisitions. He reassured investors of the safety of the company, giving it a buy rating.
Jonas also added that GLPI’s leverage target remains at 5-5.5x. This provides the company with sufficient credit opportunities without major disruption of its debt/EBITDA coverage ratios.
Jonas pointed out that GLPI’s management is “very positive” about its 2024 outlook. He teased that the company’s conversations with operators over the past year have laid down the groundwork for some significant deals.
Management highlighted that ultimately, GLPI’s strong relationships and experience are the main differentiator that drives its access and ability to close deals.
Barry Jonas, analyst, Truist Securities
GLPI Is Interested in the International Market but Still Wary
The Truist Securities analyst explained that GLPI believes in“significant deal opportunities” in its domestic market and is planning to prioritize tax-motivated transactions since this is an area in which it has a lot of experience. The Hard Rock Rockford transaction was one such deal, according to GLPI’s leadership.
Outside of the domestic market, GLPI plans to continue exploring international opportunities. However, Jonas noted that the company is still experiencing some tax-leakage problems in Canada. Because of that, GLPI would carefully evaluate any international deal on its own merits.
Another sector the company is interested in exploring is the tribal gaming market, according to Jonas. Believing it to be an untapped market, GLPI believes that investment in tribal properties might bring in many benefits.
GLPI Discussed Several Properties
Jonas said that GLPI’s leadership also discussed some of its properties, mentioning the recent Tropicana redevelopment and saying that it would not be opposed to a sale of the property once its value has been maximized.
He also mentioned that GLPI’s management might be interested in participating in Bally’s permanent Chicago property. The company continues to be interested in Bally’s Lincoln property as well, Jonas added.
GLPI’s management also told the Truist Securities representative that it is open to restructuring the legacy Penn lease and removing any rent volatility.
GLPI also praised Queen Baton Rouge’s redevelopment and said that it would probably support a move of The Belle of Baton Rouge on land. In addition, the company said that the Rockford 815 Entertainment property was ahead of budget but did not share any news about a potential sale-leaseback.