Gaming and Leisure Properties, Inc. (GLPI) is poised for big things. The self-administered and self-managed real estate investment trust (REIT), headquartered in Wyomissing, Pennsylvania, is engaged in the business of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements.
GLPI was formed in November 2013 as a spin-off from Penn National Gaming, and currently owns 21 properties in 12 different states, including two casinos in which it owns all the operating assets that run the business as well as the real estate assets. In the other 19, it owns only the real estate.
Brandon Moore, GLPI’s senior vice president and general counsel, says the company expects to grow its portfolio by pursuing opportunities to acquire additional facilities to lease to gaming operators. On that front, GLPI already has made a bold move, announcing in June 2015 that it would acquire Pinnacle Entertainment, a publicly-traded company with 14 gaming entertainment properties.
“The Pinnacle transaction for us is about $4.7 billion, and it will add 14 properties to our portfolio, which will bring us up to 35 properties, and based on the trading today, it will make us the third largest triple-net REIT in the triple-net REIT space, so it’s pretty transformative for us,” Moore says. “There are some very nice properties that come with it, but it also makes us a much, much larger REIT than what we are today, and it helps diversify us a bit.”
At press time, some pretty significant gaming regulatory approvals as well as FCC documents still needed filing, but the deal was expected to close during the first quarter of 2016. As it waited, GLPI wasted no time in seeking other transactions and ways to continue to grow the company.
“I think as a company, we haven’t been shy to say we’d like to be the largest triple-net REIT out there, and we’re not resting with the Pinnacle transaction,” Moore says. “We expect every deal to be accretive to our shareholders, and we intend to follow that model and eventually become the largest triple-net REIT in the states. It may sound a little lofty, but the Pinnacle transaction gives us a great springboard for that; it really positions us well.”
As general counsel, Moore’s job doesn’t generally entail going out and trying to find assets for acquisition, though he does have contacts and people that will bring things to his attention. He is a member of the executive management team and will offer opinions on projects he does and doesn’t believe the company should pursue, providing advice on why certain projects make sense for GLPI and any regulatory implications and approvals it would need.
“I am the only lawyer at Gaming Leisure Properties, so pretty much everything that impacts the company from a liability perspective comes my way,” Moore says. “We’re trying to grow our REIT, but we’re also a publicly traded company, so we have all the work that comes with being a publicly traded company. We’re also heavily regulated in the gaming industry by gaming and racing regulators across many states, and we have two casinos that we operate.”
With nearly 800 employees working at these casinos and no attorneys on staff, Moore’s never quite sure what he’ll be doing on a given day. That unpredictability, he says, is both the best and worst part of his job.
As a relatively new company in the triple-net REIT space, focusing on an asset class not previously associated with REITs, the company certainly has had its challenges.
“One challenge has been an unexpected consequence of the spin-out from Penn National Gaming, which has raised the trading multiples on regional casino assets quite dramatically,” he says, adding that investors look to companies such as Pinnacle and Boyd, as well as major names such as MGM and Caesars. “Where we had an advantage coming out—having a higher trading multiple to REIT, lower cost to capital—once the gaming assets started trading up to higher levels, it made those deals not as accretive.” In other words, what GLPI initially figured would be a fertile area in the casino space ended up dryer than anticipated, because trading multiples have been so high.
Keeping such limits in mind, Moore says GLPI intends to diversify its portfolio over time. These moves will include the acquisition of properties outside the gaming industry to lease to third parties.
“I think there are a lot of assets out there that are attractive and could be beneficial to both the shareholders of the companies that currently own them and our shareholders,” Moore says, adding that it doesn’t mean an end to working in the casino space. The key to success, he says, is not letting GLPI be boxed into one segment.
“I think the investors we have are happy with our growth, they’re happy with their prospects, but I’m not sure we’re widely recognized in the REIT space yet,” he says. “For us, it’s important not to be seen as a gaming company, but to be seen as a REIT, and that’s where we’re really working.”
The Successful Spin-Out
Brandon Moore was working at the law firm Ballard Spahr when he started working on the Penn National Gaming account in 2007. He eventually reached the point in his career when he needed to decide if he wanted to be a partner in a big firm or do something else.
He considered the general counsel of Penn National to be a mentor, so when his mentor asked him to come on board in 2010, Moore joined the company and one of his first projects was the potential spin-out of the land and building from Penn National into a separate, publicly traded REIT.
“At the time, I don’t think anybody thought it stood any chance at all,” Moore says. “There were no gaming REITs. But two and a half years later, we were announcing our intention to spin-out the REIT after we had received a private letter ruling from the IRS, and then on November of 2013, that’s exactly what we did.”
Moore worked on the project for the better part of three years and when the real estate company was spun out, and both chairman and CEO Peter Carlino and CFO Bill Clifford went to the REIT, they asked him to join them as general counsel of the REIT.