Greetings, and welcome to Gaming and Leisure Properties, Inc. Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joe Jaffoni, Investor Relations. Thank you. You may begin.

Thank you, Lori, and good morning, everyone, and thank you for joining Gaming and Leisure Properties’ third quarter 2020 earnings call and webcast. The press release distributed yesterday afternoon is available on the Investor Relations section of our website at www.glpropinc.com. On today’s call, management’s prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. Forward-looking statements may include those related to revenue, operating income and financial guidance, as well as non-GAAP financial measures such as FFO and AFFO. As a reminder, forward-looking statements represent management’s current estimates, and the company assumes no obligation to update any forward-looking statements in the future. We encourage listeners to review the more detailed discussions related to risk factors and forward-looking statements contained in the company’s filings with the SEC, including its third quarter 10-Q and in the earnings release, as well as definitions and reconciliations of non-GAAP financial measures contained in the company’s earnings release. On this morning’s call, we are joined by Peter Carlino, Chairman and Chief Executive Officer; Desiree Burke, Senior Vice President and Chief Accounting Officer; Brandon Moore, Senior Vice President, General Counsel and Secretary; Steve Ladany, Senior Vice President, Finance; and Matthew Demchyk, Senior VP of Investments. With that, it’s my pleasure to turn the call over to Peter Carlino. Peter, please go ahead.

Thank you, Joe, and good morning to all of you who have dialed in today. Obviously, we're quite pleased to report a very strong quarter, and to highlight a lot of positive activity that has occurred across several fronts that we will outline. I will call your attention to our press release, which I'd like to think is one of the most thorough and complete in the marketplace. Our team works very hard to give you as much information as possible to make judgments about the health of your company, and this quarter is no exception. There's a lot of detail. Frankly, if everybody read it thoroughly, we could probably skip this call, but for Q&A. Nonetheless, we will some of the strong things that have happened this quarter. Looking back just a little bit, the year got off to a pretty good start. January, February, March, and then of course COVID hit, which was not a pleasant event. You will recall that we moved pretty quickly to work with Penn National to improve its liquidity, which has been, if I must say so, a stunning success for them and by extension for us as well. You might recall we drew down our revolver at the beginning of the pandemic in an abundance of caution and used it to pay down some debt. The Penn National transaction, as I highlighted, was in exchange for a property. We made the judgment that having them owe us was not a very forward-thinking idea. It put a burden on the company that we thought they didn't need. On the other hand, forgiveness was not acceptable to us. So, kind of a rent exchange for property made a lot of sense to us, and we're well along with a lot of discussions about disposing of that property looking ahead. Along - at the same time, we agreed to a purchase option for our Hollywood casino in Prairieville, and the real estate, of course, would remain with GLPI. We also reopened the TRS Properties, Baton Rouge and Prairieville. By the way, I'll make a comment that it has been shocking, maybe surprising to see the strength with which these properties, not just ours, but others, have opened around the country. It's really quite stunning. A statistic that stands out in my mind is looking at Ohio performance at Penn's properties and Ohio itself hitting an all-time record in the month of September, which is really pretty stunning. That has certainly done well for the properties that we own in that State. GLPI also received the approval in Louisiana from the Gaming Commission to move its riverboat landside. We are well along with plans to move landside in a very attractive, but modestly priced facility that I think is going to dramatically improve the performance of that property. Also, after much struggle and effort, we finally acquired Lumière Place in St. Louis, and now rather than alone, we actually own the property and lease it. The same applies to Belterra Park in Ohio, with Boyd Gaming. We also, as you well know, completed a couple of financing transactions. I'm not going to go through them now, but others will walk through those with and for you. Last night, you saw the agreement we entered into with the exchange agreement with Caesars. As you know, they had to divest some property in Missouri, and one of those properties, Evansville, in Indiana— forgive me, I'm still back at Lumière Place. In Indiana, and one of those properties was Evansville. In exchange, we picked up two properties in Iowa. Hitting the park with Evansville is a first-rate place, just an outstanding property. They opened it up to bidding, and we were successful in buying that property back, which is another independent transaction, which is first-rate and gave us an opportunity to bring another operator into our portfolio, with Twin River, which is also exciting. So, and with that, we pick up the opportunity to buy Dover Downs in Delaware. So, a lot is happening here at GLPI that I think puts us on track for a really tremendous year. A lot of this has come together just recently, but it's been a lot of hard work through this year, and I commend our team for making these things possible. With that, I am going to turn the microphone over to Desiree Burke, who will walk through some numbers with you, and then we're going to go around the table and continue. Go ahead, Des.

Okay. Good morning. Thank you for taking the time to join our call today. Our performance for the quarter was very good. We’re ahead of the third quarter 2019 on many metrics that we normally report, primarily due to the variable items in our business. Revenues have increased just shy of $20 million for the quarter over the prior year, primarily related to income from real estate. As Peter mentioned, the monthly percentage rents in our Penn master lease at Fort Columbus and Toledo outperformed the prior year quarter. Toledo benefited from the Detroit, Michigan marketplace being closed until August 5. In addition, the income from real estate also benefited from non-cash straight-line rent adjustments as compared to the prior year. This revolving was offset by lower percentage rent from the Pinnacle and Boyd master leases, which were reset on May 1 and we disposed in the prior quarter. Additionally, our two TRS properties continue with strong operating results. Net revenue and adjusted EBITDA were up $2.8 million and $3.0 million compared to the prior year. We are appreciative of the efforts of our general managers who have led the properties during these challenging times. We continue to see strong spend per visit at our properties, which is more than offsetting the reduced attendance levels. Net income, FFO, AFFO, and adjusted EBITDA were well ahead of the prior year, which is detailed throughout our release. Looking ahead, we acquired Morgantown for $30 million in rent credits on October 1. This lease will generate $3 million in annual rent. Speaking of rent credits we've provided to Penn, in October, they fully utilized their remaining rent credits and will now return to paying us cash. Also on October 1, Penn exercised the next five-year renewals, which Peter discussed earlier. The Penn lease will be extended until November, 2033, and the Pinnacle lease until May of 2031. I wanted to note that Meadows’ lease percentage rent reset also occurred on October 1 and will lower annual rent by $2.1 million. This is our last variable rent reset until May of 2022, other than our monthly percentage rent resets that occurred at our properties in Toledo and Columbus. With that, I'm going to turn it over to Steve, so he can talk about our balance sheet and our transactions.

Thank you, Desiree. I'd like to highlight our capital markets activities during the quarter and provide additional information related to the recently announced transactions. On August 18, GLPI tapped its existing 4% senior unsecured notes due January 2031 by issuing an additional $200 million of principal amount of notes at a premium to yield just 3.55%. Net proceeds from the notes offering were used to fully repay the term loan A-1 borrowings. As a result, the company has no debt maturing until May of 2023 and from a liquidity perspective has a fully undrawn revolver. As mentioned earlier, yesterday GLPI entered into an exchange agreement with Caesars. This agreement enables GLPI to receive the real estate assets of the Isle Casinos in both Bettendorf, Iowa, and Waterloo, Iowa, in exchange for real estate from Tropicana Evansville and $5.7 million of cash. As you'll recall, GLPI in Eldorado completed an amendment in June to provide Eldorado with this flexibility, if necessary, to complete its merger with Caesars. The exchange provides GLPI’s master lease with two new regional gaming assets in both stable and mature markets, and an annual increase in total master lease rent to $520,000. In addition, it continues to demonstrate our willingness to work with our tenants to find win-win solutions. Also yesterday, GLPI executed definitive agreements to acquire the real estate assets of Tropicana Evansville and Dover Downs Hotel and Casino. The aggregate purchase price is $484 million, based on an initial annual rent amount of $40 million, and a blended cap rate of 8.3%. This acquisition is expected to be immediately accretive at closing, which is anticipated to be mid-2021. Both properties will be operated in a single triple net master lease with our newest tenant, Twin River. GLPI is pleased to be expanding its tenant roster with such an experienced and acquisitive regional gaming operator as Twin River. From a property perspective, we have always felt the Tropicana Evansville property was a wonderful asset. The landside move that they completed in 2017 has been a huge success, and the demographics around Evansville continue to be attractive. Dover Downs Hotel and Casino is a substantial regional real estate asset, with approximately 70 acres of owned land, 165,000 square feet of casino space, 500 hotel rooms, and numerous additional amenities. However, we believe that Twin Rivers' demonstrated ability to reposition the property, enhance the performance, and continually identify operational efficiencies will drive long-term asset value there.

As the first gaming real estate transaction announced since COVID hit, structuring this transaction was a thoughtful balancing act. While appropriate economics were a gating factor, and the strategic value of adding a new and dynamic tenant relationship is very exciting for us, structuring an appropriate margin of safety was of paramount importance. To that end, from a credit enhancement perspective, we successfully incorporated the corporate guarantee that Steve mentioned from a public company with a balance sheet that's strong and access to the capital markets, which is something we've appreciated in this COVID environment. The strong four-wall coverage just north of two on a normalized basis, and a master lease infrastructure that complements the stable and steady operating profile of Tropicana Evansville, which we're very familiar with, along with the geographically disparate and mature jurisdiction of Delaware, with the addition of Dover Downs as a new State in our footprint. We also structured a rent payment structure that thoughtfully balances our tenants’ goals with our goal of greater predictability and stability. And to that end, our lease doesn't have the percentage rent and features of other leases. The escalation is based on CPI between 1% and 2%, and is not subject to the operational coverage test like some of our other leases. Pricing this deal at an 8.3 cap rate reflected each of these attributes in our efforts to maximize the risk-adjusted spreads to our cost of capital in the current market environment. I'd also like to talk a little bit on the topic of COVID. It seems to us that the likelihood of a holistic property closure is much less now than it was in March. Since then, properties have proven the ability to go above and beyond with their safety protocols. Reduced capacity scenarios have been implemented successfully, and governments are now better informed and equipped to enact more targeted measures than that of a full shutdown. From our perspective at GLPI, while we can't be sure about the future, we've worked very hard to prepare for it. Looking back, as we understood the potential impact of COVID very early on, we took decisive steps in three key areas. First, with our tenants, we acted in a collaborative and supportive manner to find common ground and to make our shareholders economically whole while enabling our tenants to best position themselves for the uncertainty. That course of action set the stage for recapitalizations at our tenants that have bolstered their balance sheets and their capacity to mitigate any future challenges. The secondary was with our dividend. We elected, as you all know, to change the mix and composition of our dividend to 80% stock and 20% cash, based on the structure of the Tropicana transaction. At the same time, out of an abundance of caution, we proactively adjusted our payout ratio to a more conservative level. Subject to board approval, our business plan calls for a resumption of all-cash dividends, beginning with the first quarter of 2021. In addition, we also plan to revisit the payout ratio, as we find it prudent, with the intention of returning to dividend growth over time. The third area is with our balance sheet. We have been very focused throughout this period on solvency and leverage in our efforts to prudently manage the balance sheet. Given our efforts, to Steve's earlier comments, our balance sheet is now in a position with no maturities due until May of 2023. As we move forward, our focus remains on protecting and perfecting our existing cash flows, prudently managing our balance sheet, and being offensively postured to the extent that opportunities arise like the one we announced today. While the story is still being written, we are very confident that the case study provided by this backdrop will illustrate the relative resiliency of regional gaming assets and help solidify the case for broader appreciation, and the institutionalization of this asset class that we've long been discussing. With that, I'll turn the call back to the operator for questions.

Thank you. Our first question is from Joe Greff with JPMorgan. Please proceed with your question.

Hey, good morning, everyone. This is actually Dan Politzer on for Joe. So, thanks for taking my questions. So the first one, given the relative size of the transaction you guys announced last night, and the low interest rates you're able to get in this market, is it reasonable to presume that you would be looking to finance the deal solely through debt?

Yes. Dan, I mean, I'll point back to the earlier comments about prudent balance sheet management, and I'll point out that we've got a menu of options for funding the transaction overall, and it's really the whole list of things that you're probably thinking about, but it's our retained cash flow. Remember this is expected to close in mid-2021. Potential disposition proceeds from either the Tropicana or our Prairieville option with Penn. We've also got the potential use of our ATM program in other capital markets transactions. And to your point, we also had significant revolver capacity that we recently highlighted, that we've also got access to the public debt markets with the issuance that we discussed earlier, that 3.55% yield.

All right. I appreciate that. So I guess on Tropicana, earlier this week, there was a news report on two sizable Las Vegas strip conventional hotels that are entering, or likely to enter a sales process. I mean, is there a realistic scenario where you could have an interest here? And I guess similarly, how would you characterize interest for Las Vegas strip assets right now? And in your case, have you seen much interest, much third-party interest in the case of the Trop?

Yes, let me take that, guys. We've had a surprising amount of interest. Last time I checked, and I'm looking across at Brandon Moore, our General Counsel, we had more than 18 NDAs out. I mean, there's a lot of tire kickers, not necessarily a lot of check writers, but we've been surprised by the activity. Our focus is to reach a transaction as early as we plausibly can. But I - we feel very comfortable with the basis where we are in that asset. So there's been a lot of activity, but time will tell. We’ll see. As I say, there are a lot of wing and a prayer kind of offers that we have gotten. Those aren't going to fly. We're under no pressure. I would remind everybody that Penn is committed to covering every expense, heat, power, light, taxes, employment, everything, and to keep the property open, so that for us, it's just opportunity cost on the money invested, but we can afford to be patient. So, lots of activity. We'll just have to wait and see. Anything - but no, I think we're all - I'm looking around the table. No further comment on that, but that's where we are.

And anything on, if there's a realistic scenario were there to be interest in the other Las Vegas strip assets that have entered that sales process?

Yes. Dan, I mean, I'll comment. You know our underwriting standards. You know what we're looking for as far as stability goes in our assets and a fair basis. And if anything, COVID has shown the reason why we've got effectively the requirements that we need. When we look at the strip, when you look at the fixed costs associated with the properties and the exposure to travel and conventions, right now, if we underwrite assets there, it's even harder at the same economics to make them pass master. And when we've got a transaction like we announced today, at a very solid 8.3% cap rate, that to us is a lot more attractive than bidding very aggressively to get exposure to the strip, especially at this point in the cycle. That said, we look at everything and we'll certainly look, but it's hard for the numbers to work for us, given our approach and our model.

Yes. And I think most of you know that we've made the case for years, that the real safety and stability is out in the hinterlands, not on the strip. Love those assets. Terrific, but they're much too volatile for our case. To underwrite it as we would want to would be difficult to be competitive. So I think we're quite happy with where we are. I think following these announced transactions, we're up to some 50 properties around the United States, which is terrific. So no, we like - I think our thesis has finally been proved. And I'll just say parenthetically that as we made the conference scene over the last few years, we told the story about the strength of retail assets. Some of our investors would say, but what you guys need is a good recession to prove your point. I think, unfortunately, we have got that and I think we've proved that point. So I think we're going to stick close to our knitting. We never say never, but you kind of know the way we think.

All right, understood. Thanks for the color. I appreciate it.

Our next question is from Barry Jonas with Truist Securities. Please proceed with your question.

Hey guys. Good morning. Just, I'll start with a two-part question. We’ve all run different analyses, trying to quantify the remaining total addressable market for gaming REITs to acquire assets. I'm curious to get your perspective on how much you think is left in your wheelhouse. And then also at what point you start looking outside of gaming.

Who wants to volunteer for that?

Yes. Barry, if you look broad brushstroke, we’re something like 35% to 40% penetrated, considering the EBITDA of commercial gaming overall, and people will often bring up that some of those assets may or may not ever see the light of day. But to the last question, there's certainly rumors in the market that assets people thought might never trade, might in the not-too-distant future. So for us, that's the math. But to level set the discussion from our perspective, for us to realize value for our stock, it really goes back to those comments on protecting and perfecting our existing cash flow. To the extent we can continue to do that, and the Eldorado lease is a good example of that, the growth we're getting now with the acquisition is a good example of that. The future is very bright for the upside for our stock from that alone. You can look at Green Street’s ranking of all real estate asset classes. Gaming is the number one asset class for potential returns, head and shoulders above the rest. Our portfolio, to Peter's points, with regional assets and the stability we have, is best positioned in that asset class. So if we just execute our existing business plan, there's significant upside for shareholders from that. When we get the question often, what about outside of gaming? That's where the bar is set. We’ve got our chips on the best number on the board. Going forward, it's going to continue to be the same gating factors outside of real estate and gaming. It’s going to be competitive advantages that we have and how it sits, durable quality, similar to what we have, and attractive risk adjusted return profiles. To the extent something happens to trust our threshold that makes sense there, we'll do it, but otherwise, we're very happy with where we are. We find ourselves well positioned, especially with COVID.

Yes, Matt, that says it, I think perfectly well. We look always, always have, but finding something that has the longevity and the stability of our industry is very, very difficult. Look, if you would ask me though, do I think someday that we will find this elsewhere? I have to believe that you will, but at the moment, we're quite content. This looks like we're going to wind up a very strong year in our gaming space. I expect next year will be the same. So we haven't run out of runway quite yet.

That's great. And then just a quick one, just given the stability or visibility you're seeing, at what point do you feel comfortable reissuing guidance?

Are we ever going to feel comfortable? I don't think - we're not in a hurry to do that. But I'll look around the table to see if there's any - so you'll get it live. Any dissenting opinions here?

Yes. I think we're going to take a look at things once we get to the end of this year, look at the uncertainty and make a determination then.

Yes. With where we find ourselves right now and where the world is, I think it may happen, but it's off in the future.

Understood. Thanks so much, guys.

Our next question is from Carlo Santarellis with Deutsche Bank. Please proceed with your question.

Thank you everyone for taking my questions. Peter, you alluded to it earlier in your prepared remarks, and talked about kind of the need for a recession. And obviously, with the closures in this business, that was a lot more than your run of the mill recession. So my question is really from your perspective and the management team's perspective, have you guys seen kind of the uptick in interest from the incremental rededicated community as we've gone through this, and the business has obviously proven to be extremely resilient and far more so than maybe some of the other verticals within the triple net community?

The quick answer is, I think yes. Our story has a lot more residents today than it had a year ago. And so the answer is yes. Look, we haven't seen it reflected as aggressively in our stock prices. I think it should be. But my sense over the years has always been, put up the numbers. People eventually figure it out, and they will figure it out. This is still a time of great uncertainty. As we know, for every reason, political, financial, these are strange times. But I expect as we get into next spring, things will settle out. What you'll find is that the gaming industry is pretty darn stable, maybe not the strip, but in the regional world, and we expect good things as we move forward.

Carlo, I'll add to that. I mean, it's been reassuring to have folks calling in who we haven't talked to for a long time who've said just the point that you're making. What's really been telling is they're pointing out, if you look at other triple net companies, many of them have a tenant base that looked good on paper, but when this backdrop hit, did not have the financial capacity to pay rent and no ability to get capital to pay rent outside of PPP loans. For us, having tenants that get cash flow, but also have cash on the balance sheet, but also can tap the public markets to look at what Penn and the rest of our tenants have done over the last number of months in the darkest of days, really underscores the point that we've been making for a long time. People look at our concentration as a negative. For us, it's actually been a positive. We’ve got our eggs in the right basket. Going forward, that, and you saw it with Twin River too, is going to be a key thing that we look for and should be appreciated for, and are starting to be. There's certainly a lot of road ahead of us on that front.

Thank you, Peter. Thank you, Matt, for those answers. Just one quick up. Obviously in the release, with respect to the acquisition, you guys talked about several kinds of financing drivers as options for you. With kind of your leverage in kind of the middle of the range you guys have often talked about, obviously noting that this transaction won't close until kind of middle of next year, what are some of the drivers in terms of your thought process as to how you finance that, how it relates to kind of bringing the dividend back and other uses of free cash flow?

Yes, Carlo, I mean, it's a balancing act, and we're looking through this at the lens of prudent balance sheet management. We tried to make that pretty clear in the introductory remarks, and always being thoughtful about our leverage level. Remember the date of this anticipated to close is not till mid next year. I think we've shared the menu of options to us, and that's really all I'm sharing on the topic today.

Understood. Thank you.

Our next question is with Nick Yulico from Scotiabank. Please proceed with your question.

Thanks, and hey everyone. So a couple of questions on the acquisitions. For Dover Downs, I know you didn't mention it is a large land site. Do you think that there were some development opportunities at that site? And I guess, how did you factor that into your underwriting?

Yes. This is Steve. There's plenty of land there. There's 70 acres of land, but the surrounding area is pretty well built up. There are a lot of storefronts. It sits right off the highway. I would say there's probably - at this point, I would not say that there was any thought about development as we looked at this project and maybe underwriting determination. What the future may hold, there's definitely land there and there's definitely the ability for something to happen, but it's not like an undeveloped area. It’s pretty built up.

That’s a fair question. We have occasionally suggested that we have lands in a lot of locations, but have not aggressively sought to look for development opportunities. That is something that I'd like to think in the next 12, 18 months, will move up on our list of focus to consider possibilities. Industrial, there's a couple of - well, without going through possibilities, there are a number of sites that offer opportunity, perhaps in joint ventures with others, perhaps developed directly. We'll see. So it's not at the top of our list, but it's moving up, and I think it's a hidden opportunity that we have.

Okay. Thanks. Second question is just about the coverage that you quoted on the acquisitions, expected to be a little over two times on the first year after closing. So I know you talked about normalized coverage. How should we think about how you underwrote these assets? And clearly, it's not - and you got comfortable with rent that is clearly not at that coverage today. Maybe you can give us a feel for how you underwrote getting back to normalized operations at these assets.

Yes, Steve.

As far as underwriting goes and the coverage, I think in our presentation that we have put out, I think we note that $60 million—and it's in all the press releases—$60 million is the actual EBITDA that was produced at Evansville. The $23 million number that was provided by Twin River in public statements previously around a run rate ‘19. One thing I would want to point out is in ‘19, they closed their transaction in ‘19. So they did not operate the property the entire year, and the gaming tax rate changed throughout the year. So I think when we're looking forward, we're looking backwards to make that decision. If we looked at the actual performance and we excluded the three COVID months, I think we're very comfortable that we're in the same coverage level that we're indicating we expect going forward.

Okay. Thank you. That's very helpful, everyone.

Our next question is with Spencer Allaway with Green Street Advisors. Please proceed with your question.

Thank you. In regards to your guys' Louisiana project, can you guys just provide some more color on whether there's more opportunity within the existing portfolio for similar expansions, particularly given the growth we're seeing in sports betting?

Could you start with the early part of that question, Spencer? I didn't hear it.

Yes. Pardon me. Yes. No. just in regards to the Louisiana project and Baton Rouge, can you guys provide some more color on whether there's more opportunities to do similar projects?

Yes. I mean, look, I think that's a unique situation there. You might recall, that was a boat that used to float up and down the Mississippi River at some danger. Years ago, they finally let us go dockside. Of course, with the full Coast Guard crew, we've been fortunate to—and the staff locally has just done a terrific job in getting the Gaming Commission to approve the ability to come landside. I’ve looked very carefully because as you know, at Penn, I pretty much did all the construction of new projects and architecture and interiors and the like. There's a lovely design to bring this landside. We’ve given you a budget between $21 million and $25 million. It really will optimize the potential of that site. Look, it's going to be easy access as they get to sports betting. In fact, they'll have the best access in town and the greatest ease of entry and so forth. And keep in mind that one part of this is that Viking Cruise Line wants to make that a stop along the way as they cruise up and down the Mississippi River. I understand they've got heavy bookings, which is amazing, as that route will develop. The arrangement would be that they would take advantage of our sophisticated docking system there for their boats. People would disembark but have to come right through our facility to get to the front door, or head straight out. I think on balance, it's a terrific opportunity for the property, for the site, and couldn't be more bullish about its potential. Again, the key with a lot of these things is controlling spend, and we're pretty good at making sure we do not overinvest. So, I've seen what we're going to do there. It looks terrific. We're excited about getting it underway.

I would just add, that was an easy decision for us because that's one of the assets we actually own and operate. With respect to the rest of our portfolio, many of the assets are land-based or are barges. They would not have the same impact on the customer experience. If we have tenants that are looking to move their property landside, off of the boat, we would be more than happy to work with them on that.

Okay. And then just on the Lumière acquisition, so you guys have effectively assumed the real estate in exchange for the previous mortgage. But after looking at the differences in term, and then the interest payments versus what is now rent payments, it appears that the actual real estate is worth less than the mortgage. Am I understanding that correctly? Or can you provide a little bit more color on the implied pricing here and how you thought about that?

Do you want to take that, Des?

Sure. So the actual rent and the interest payments are the same. That’s $22.8 million that we've disclosed throughout our documents. The value that - the way we have accounted for it, we feel the value is the same. The $246 million of the note also came into our land and building and our financial statements at the same value.

Our next question is with Jay Kornreich from SMBC. Please proceed with your question.

Hi. Thanks for taking the question. As regional casinos are performing quite well, despite having a purchase option at your end, would you consider expanding your portfolio to additional regional casinos?

As of now, Jay, no. We had those two assets for strategic reasons. When we got spun out originally, the IRS needed them to be part of our portfolio. They give us effectively the ability to keep our finger on the pulse of operations. For other reasons, we thought it would be a little better to right-size our exposure to that and have clean exposure to lease income because that's our core business.

Well, let me squeeze in here. Matt's always been a fan of stability and stability of earnings. Quite candidly, and I say this with humor, I don't mind the volatility of up and down because that's what I'm used to over the years. Having a couple of lovely properties that we would love to operate forever would make me quite happy. But I've been persuaded that getting ourselves right down to be a pure REIT is easier on investors, an easier story to tell and so forth. We're committed to going down that road. That having been said, I would say, we're not shy about a whole co-purchase, if and when that opportunity came again, if that's what it took to make a deal on a great property and we didn't have an operator in hand, although we've got literally the best operators on the planet right now in our portfolio. If we didn't, we would not hesitate to bring a property in again and run it as we do now. So we're committed to a path, but it's not a closed door by any means.

Got it. Thank you for that color. And then, as sports betting necessitates being tied to a physical casino, has there been any dialogue with Penn as they may look toward getting access to new states, whereby GLPI can assist with the real estate portion of acquisition?

Well, if I understand the question, I mean, we're always talking to Penn and to all of our other operators about the future. As I think Steve pointed out earlier, we're ready, willing, and able to invest in any expansion that a tenant would want to do. I can't speak for what Penn's ambitions are today. I'm sure for the right opportunity, they would be a buyer among others. But I think I have a strong suspicion that a lot of their focus right now is on the cyber world. At least until they get things up and rolling, that seems to be where a lot of their focus is. But yes, I would imagine in the right circumstance, any one of our existing operators would be a first-rate partner for an asset that fits their portfolio.

Okay. Thanks very much. That's it for me.

Our next question is with David Katz with Jeffries. Please proceed with your question.

Good morning, everyone, and thanks for all the commentary. I wanted to go back to the interesting topic of available land. I am quite sure that it's all disclosed, et cetera, but if you could talk about specific parcels or specific chunks in there that you consider to be among the most interesting or relevant, that would be helpful. And the second part of the question is, Peter, I think you may have said that development is something that was within the spectrum of possibilities for GLPI's capital. I want to make sure I heard that correctly.

Okay. Well, yes. No, listen, within reason, we're always open to any opportunity. For example, pick, let's say a new license state, we were willing to be a partner, for example, in Massachusetts with multiple bidders. It turned out we ended up with the Penn site. I forget the timing; I was still at Penn at the time because it had the initial conversations with the owners of that property that led to Penn getting that property. We would develop under the right circumstances. If you saw a new state emerge, I don’t know, pick Texas or Georgia, would we show up as a potential bidder on a site directly? Absolutely, with a partner, without a partner, or with a partner on one hand and independently on another. Our hands are not tied. I can't give you specific illustrations of properties we own, because frankly, I haven't looked at them in a while, but they are there. There is significant ground that could be developed, though we have not been in a hurry to pursue that. As to bidding on new projects, absolutely. Look, we have a great track record of development, certainly on the Penn side. The key is knowing your market, not overestimating what the market can sustain, and controlling what you spend. Every property we build in Ohio, and there's four of them there, does better than 20% cash-on-cash. We're not in the monument building business. We're in the cash flow business, and that's kind of what we look at. If we're satisfied that we have that kind of potential, sure. Why would we not? Done it before, do it again.

I appreciate that and concur. Just looking at the release, there's obviously kind of a flurry of activity, and I'm curious if that is circumstantial and things have just worked out that made sense and are of interest to you, or if there has been any sort of change in hurdles or standards or activity level, or outbound interest, et cetera, that maybe a driver of that at the moment.

Steve, you might want to take a whack at that, but I do think these are the things that we work to cultivate with our tenants and new prospective tenants all the time. Nothing happens overnight, and it represents work that’s been done over a fair amount of time. Steve, why don’t you take a whack at that?

Yes. I mean, I think the exchange agreement was a necessary evil. We had to supply them with Evansville back, and that obviously facilitated our ability to repurchase it. So that was something that we worked out in June to facilitate the Eldorado and Caesar's merger. With respect to the acquisitions, yes, rest assured what Peter said is accurate. Everyone, I think it was widely known that Caesars had divestitures they were going to have to take care of in Indiana. The fact that we were able to buy Dover Downs as part of this transaction shows that we've had ongoing dialogue. This didn't just pop up overnight and somehow a three-party deal happens. We have ongoing dialogue with tenants and potential tenants, and we're constantly trying to cultivate those relationships and foster new ones.

Yes. And David, I'll add. When you talk about our standards, so our key standards are to get a risk-adjusted spread on our cost of capital, which we did in this transaction and also to have a margin of safety built into the transaction. The cap rate of 8.3 is inside the last deals we did, but frankly, the world's evolved. The market's shifted, and we checked our two most important boxes. What I don't think you're going to see from us, and you should not expect, is us to sacrifice that margin safety piece when you think about the credit enhancements that are important to us in building this durable income stream.

Yes. Look, I have said many times, and many of you have heard, look, we're not in the mining and building business, as I said earlier. Reliable cash flow, there's no deal we have to do. I don't feel any pressure. I look around the table. I don't think anybody here feels pressured to do— as I have said, sort of uncharitably, any moron can do a bad deal. It's remarkably easy. Remaining disciplined and careful, and remember that this is a long-term game. Look, I'm a shareholder first and foremost, and sustaining the kind of cash flows that we've enjoyed over the last years is paramount in my mind. Remaining focused on the prime objective to be careful, prudent and so forth, stewards of your capital, as well as mine, is what drives our every day here at this company.

Appreciate that. Thanks very much.

Our next question is with Thomas Allen from Morgan Stanley. Please proceed with your question.

Perfect. Thank you. Just asking that last question maybe in a more direct way, has the transaction discussions picked up considerably, and would you expect another deal by year end? Thank you.

Yes. This was a unique set of circumstances, Thomas, when you think about the substitution, the regulatory—that was the site that kind of played into that. Outside of this, a lot of the themes that we talked about on last quarter's calls are still in the marketplace. The large operators are focused on operations. They've been helped by the recapitalization and the Fed ultimately on the debt side. Because of that, there's not a lot of pieces that have to move. It’s really a question of, for strategic reasons, who wants pieces to move? We just saw the rumor elsewhere. I mean, we didn't expect to see it, but we saw the rumor on Las Vegas Sands. We'll see if there are more headlines like that as people have time to step back and reconsider their business models over the coming years.

That's very clear. Thanks, Matt. And then just a follow-up, obviously really good trends in Ohio properties, the TRS Properties in the third quarter. Has that continued into October? And, Peter, from your experience operating properties, what's your feeling now on kind of long-term margin gains that we're seeing now and how sustainable they are?

Well, look, to guess, but I don't - I'm not believing that they can remain at these lofty levels forever. We don't know where the new normal is going to be. I just saw on the news today that Penn—just picking on them for a moment—announced some more cuts in Las Vegas that will affect the Trop property and will affect the M. Obviously, they have not seen the bottom yet, or at least hit that point of stability. Do I think that's where they're going to be forever? No, I don't think so. I think Las Vegas will come back. But look, it's going to be long and painful. You see what's going on with this wretched COVID stuff. And who wants to get on an airplane and fly to Las Vegas today? I can't imagine there's a whole lot of folks who are anxious to do that. Or who's going to set up a corporate event in Las Vegas today and bring all their people together under one roof? I mean, it just—I think we all see the obvious, and it's pretty untenable. On a local level, though, the corner store, as we like to describe it, people can get in their car and drive 30 minutes and get some entertainment. Happily for us, even with restricted access, these places are doing remarkably well. I think you're going to see a new norm. These properties are going to operate at margins never—look, Penn always was the best at that and operated at the very highest end. They were determined, following the Pinnacle acquisition, to tighten things down even more. They were well on their way to doing that, and I think now this has just accelerated that. We’ll have to see where the new level will be. Do I think it'll be quite what it is now? Probably not. Do I think it's going to hit levels that were never before imagined? Yes, I really do. I don't think it's going back. Look, the two biggest costs that casinos have are people, right, and marketing. You’re seeing a lot of discipline around marketing, and you’re certainly seeing, unfortunately, discipline around people. I think that's the real tragedy, the people who won't come back now. This business, when it settles out, is going to be a different business than it was before we entered this.

Thank you. And then just Boyd's comments earlier this week that things were consistent in October versus the second quarter, is that similar to what you're seeing?

Well, we're good. Des, you want to go ahead and get that? I'm getting sign language across the table here.

No. So clearly we only have our Twin River properties that we can talk to, but we’re seeing continued strong results in our Twin River properties.

Yes. You're going to get Penn's announcement soon. I mean, we have no inside information there today. So I really can't tell you, but I'm expecting it's going to be still very strong.

Our next question is with John DeCree from Union Gaming. Please proceed with your question.

Hi, everyone. Thanks for taking my question. I think between the press releases, you mentioned, Peter, being quite exhaustive in the conversation so far and has covered a lot of ground. So, maybe a small one.

We haven't worn you out yet?

We've got one left for you. On Casino Queen, I think in the press release, you've mentioned still working on a deferred rent agreement, but collecting full payments now. Just wanted to confirm the collecting currently, and then if you could give us any insight or update on how that negotiation is going.

Steve, why don't you take that?

The collecting currently is accurate. Since they've reopened, they've been paying the rent on a monthly basis. Those payments are current. With respect to deferred rent, it's still an ongoing matter that we hope to have resolved in the coming months.

Got it. That's it for me. I think you covered everything else. Thanks, everybody.

Our next question is with John Massocca with Ladenburg Thalmann. Please proceed with your question.

Good morning. Can you all hear me?

Yep. We hear you fine, John.

So that was a bit of a difficult question because every transaction, the space is kind of bespoke, but how would you view the Twin River acquisition full seg as a market cap rate? And how have you seen maybe market cap rates or broader cap rates trend, now that we have a couple of months of regional gaming rebound under our belt?

Yes. Matt, you want to that?

John, there really hasn't been a lot of price discovery yet. For a few reasons, I'm not sure this is—you call this a full market cap rate. I mean, we saw deals before COVID in the high sevens, and you see the cost of capital of our peers. The world may be in that seven handle place; we'll see as it evolves, but for us, this was a very strong deal with an 8-plus 8.3 cap rate. I think it's going to be interesting. The real question here is, what EBITDA are you underwriting, and what coverage are you putting on that? That's where we were very focused here because you could play with the numbers and cut the coverage and put a lot of higher cap rate on the deal. I will point out, I think this coverage was a bit off market when you consider it in the context of the few deals we saw pre-COVID. That said, cap rates in the market are probably going to be a function of where the public companies are priced, but with some spread to that. We watched that play out in healthcare years ago. It seems like now with three players in the space looking at all the transactions, we'll see those trends going forward. But I think we have to wait and see if there's going to be more data points, frankly, because there's not a lot else in the market that's fully marketed that we can point to and say, here's a sample size that we have confidence the cap rates have compressed by X basis points.

Okay. That makes sense. And then I know Zia Park is in the Penn master lease, and obviously that limits your exposure to whether they're open or closed. But do you have any rights there potentially if that asset remains closed to force some kind of substitution, particularly if let's say Penn does expand its kind of wholly owned portfolio?

We'll let Brandon handle that.

I think the good news with respect to Zia Park as relates to us is, that's a unitary lease. Whether that facility is open or closed, we will continue to pay rent under that lease. Now, obviously it will have an impact down the road on the percentage rent. That's a five-year reset. So that impact will be diluted a little bit over those five years, depending on how long that property is actually closed. To answer your question, we don't have any right to force them to come up with another asset to replace the Zia asset. I think that this is quite an anomaly. The fact that it's still closed, it's the only one still closed in our portfolio, I think it hopefully will be open soon, but there's no evidence currently that it'll be open. It's not something that Penn has an obligation to put in a open facility to replace a closed one.

Okay. And then kind of a quick accounting question. On the redevelopment in Baton Rouge, how should we think about that impact on AFFO? I mean, will the CapEx costs flow through AFFO as you guys calculated, or is that maybe a separate item given …?

Go ahead.

So the CapEx costs will be considered what we call project capital and not maintenance capital. So, will not affect your AFFO. The cost will be capitalized and put into the land and building there and then depreciated in the future once it opens.

Perfect. Very helpful, and that's it for me.

Our next question is with Robin Farley with UBS. Please proceed with your question.

Great. Thanks for fitting me at the end here. Also, some of Peter's introductory comments cut out on the phone broadcast. So if you covered this already, we can just circle back after, but I don't know if you talked about how you thought about risk from potential gaming in Kentucky as part of Evansville, how you kind of thought about factoring that risk in. And then just some other Caesar's assets that you think could end up becoming available, or kind of shake loose here? Thanks.

Steve, do you want to take that?

Sure. I'll start with the Caesars assets. At this point, we're in discussions. We touch base with them frequently, but I'm not aware at this time of any other assets shaking loose. With respect to Evansville, you're right. Oak Grove just opened. Churchill opened that property. It's roughly a 90-minute drive time, 100 miles from Evansville. There's probably—there's some area that includes Clarksville and Madisonville that are probably going to be a little bit of a battleground. But we were comfortable, based on our diligence, that ultimately this property will perform. Enough of its business comes from closer into the property. The only other cost competitive point I'd made from a Kentucky standpoint is, Ellis Park, that's ironically a five-mile distance, and it takes about 10 minutes to get there, based on our diligence and I think our expectation is that that property exists today, has existed in the past, and there has been limited impact on the property in Evansville, and we don't expect there to be an accelerated impact from that in the future.

Okay, great. Thanks very much.

Thanks, Robin. We’ll take one more question, if there is one, and then we'll—operator?

Ladies and gentlemen, we have reached the end of the question-and-answer session, and I would like to call back Mr. Carlino for closing remarks.

Well, in closing, I’d say, thank you for all who took the time to dial in this morning. Obviously, this is kind of fun for us. It's always nice to report a good quarter. It’s a whole lot more fun than the opposite. So, I thank you for dialing in and let's hope for good stuff when we meet at the end of the year. Thanks a lot.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.