Executive Summary / Key Takeaways

• Core Investment Thesis: Gaming and Leisure Properties, Inc. (GLPI) offers investors a compelling opportunity through its specialized triple-net lease REIT model in the resilient gaming sector, characterized by stable cash flows, disciplined capital deployment, and strategic expansion into high-growth development and tribal gaming segments.
• Robust Financial Health & Growth: GLPI reported a strong third quarter 2025, with total income from real estate increasing by over $12 million year-over-year, driven by recent accretive acquisitions and lease escalations. The company maintains a healthy balance sheet with a leverage ratio of 4.4x, well below its target range, and has secured over $3 billion in its transaction pipeline.
• Advanced Risk Management: A key differentiator for GLPI is its advanced analytical framework, utilizing an econometric default and loss rate model for credit loss estimation. This proprietary technology enhances risk assessment, supports disciplined capital allocation, and contributes to the stability of its long-term cash flows.
• Strategic Expansion & Diversification: Recent transactions, including the acquisition of Sunland Park Racetrack and Casino, the commitment to Live! Virginia, and significant progress on Bally's Chicago, underscore GLPI's strategy to expand partnerships and diversify its portfolio, notably with a growing focus on tribal gaming opportunities.
• Outlook & Shareholder Value: With full-year 2025 AFFO guidance ranging from $3.86 to $3.88 per diluted share, GLPI is positioned for continued growth. The company's proactive capital management and focus on accretive investments are designed to maximize long-term intrinsic value for shareholders, even as it carefully manages market volatility and tenant-specific risks.

The Foundation of a Gaming Real Estate Powerhouse

Gaming and Leisure Properties, Inc. (GLPI) stands as a specialized real estate investment trust (REIT) with a singular focus on the gaming sector. Its core business revolves around acquiring, financing, and owning real estate properties that are then leased back to gaming operators under triple-net lease arrangements. This model ensures that tenants bear the brunt of operational costs, including maintenance, insurance, and property taxes, providing GLPI with a predictable and stable revenue stream. The company's overarching strategy is to capitalize on the growth opportunities within the gaming industry while delivering the consistent cash flow characteristics inherent to a REIT structure.

GLPI's journey began on November 1, 2013, with a tax-free spin-off from PENN Entertainment, Inc. (PENN), inheriting a substantial portfolio of real property interests. This foundational event immediately established GLPI as a significant player. Over the years, GLPI strategically expanded its footprint and diversified its tenant base through key acquisitions and partnerships. Notable milestones include the acquisition of Pinnacle Entertainment's real estate in April 2016, followed by transactions in October 2018 that led to new master leases with Boyd Gaming Corporation (BYD) and Caesars Entertainment Corporation (CZR). By 2021, GLPI had evolved into an umbrella partnership REIT, streamlining its operational framework through GLP Capital, L.P.

The company's strategic evolution continued into the 2020s, marked by significant partnerships with Bally's Corporation (BALY) and Cordish, and a notable venture into development funding and tribal gaming. This history underscores GLPI's commitment to a specialized, lease-based model, which has consistently aimed for stable cash flow and long-term value creation.

Advanced Analytics: GLPI's Technological Edge in Risk Management

In an industry where risk assessment is paramount, GLPI differentiates itself through an advanced analytical framework that can be considered its core proprietary technology. The company employs an econometric default and loss rate model to estimate its Current Expected Credit Losses (CECL) allowance. This sophisticated model integrates lease and property-specific credit and performance metrics with forward-looking economic forecasts to project estimated credit losses over the life of each lease or loan.

The tangible benefits of this data-driven approach are significant. By estimating the probability of default (PD) and loss given default (LGD) for its instruments, GLPI gains a more precise understanding of its portfolio's risk profile. The company leverages a nationally recognized data analytics firm to assist in these estimations, drawing upon historical default and loss rates from over 100,000 commercial real estate loans with similar credit characteristics dating back to 1998. This rigorous methodology allows GLPI to make more informed capital allocation decisions and manage its balance sheet with greater precision. For investors, this translates into a stronger competitive moat, as GLPI's enhanced risk management capabilities contribute directly to more stable cash flows, disciplined capital allocation, and ultimately, a more resilient long-term growth strategy.

Competitive Landscape and Strategic Positioning

GLPI operates within a competitive landscape dominated by a few key players in the gaming and experiential REIT sectors. Its primary direct competitors include VICI Properties (VICI), EPR Properties (EPR), and to a lesser extent, Realty Income Corporation (O). GLPI's specialized focus on gaming real estate sets it apart, offering a deep expertise in this niche.

VICI Properties, a leading gaming and hospitality REIT, boasts a broader entertainment portfolio and larger scale. While VICI's diversification may offer resilience across economic cycles, GLPI's gaming-centric expertise allows for potentially greater efficiency and stronger operator relationships within its core segment. EPR Properties, focused on experiential real estate, including gaming, offers a diversified portfolio that reduces risk but may expose it to broader shifts in consumer spending beyond gaming. GLPI's strategy emphasizes gaming stability, potentially leading to lower operational risks in its specific area compared to EPR's wider scope. Realty Income, a large triple-net lease REIT, has some gaming exposure but lacks GLPI's specialized focus, making it less of a direct competitor in GLPI's core market.

GLPI's competitive advantages stem from its triple-net lease model, which provides predictable cash flows and reduced operational burdens, and its regulatory expertise in gaming, which offers access to specialized markets. These advantages enable GLPI to maintain strong customer loyalty and potentially achieve improved gross margins in its gaming segments. However, GLPI faces vulnerabilities, including a higher dependence on gaming operators and inherent regulatory risks. The company mitigates these by rigorously underwriting each property on its own merits, focusing on "four-wall coverage" to ensure assets are strong enough to attract alternative tenants if needed, rather than solely relying on parent guarantees. This disciplined approach is evident in its handling of tenant-specific credit profiles, such as Bally's, where GLPI structures deals to cap its exposure and directly fund hard costs.

Financial Performance and Operational Momentum

GLPI has demonstrated consistent financial performance, reflecting its strategic focus and operational effectiveness. For the three months ended September 30, 2025, total income from real estate increased by 3.2% to $397.61 million, up from $385.34 million in the prior year period. This growth was primarily fueled by a $20 million increase in cash rental income from recent acquisitions and lease escalations. Over the nine months ended September 30, 2025, total income from real estate rose by 4% to $1.19 billion, compared to $1.14 billion in the corresponding period of 2024.

Profitability metrics remain robust, with a trailing twelve-month (TTM) Gross Profit Margin of 88.21%, Operating Profit Margin of 72.67%, and EBITDA Margin of 91.46%. Net income attributable to common shareholders for the three months ended September 30, 2025, was $241.19 million, a significant increase from $184.69 million in the same period last year. For the nine months, net income attributable to common shareholders was $557.81 million.

Operating expenses saw a notable decrease of $53.5 million for the three months ended September 30, 2025, primarily due to a non-cash benefit for credit losses of $34.5 million, reflecting an improved forward-looking economic outlook. This contrasts with a provision of $27.7 million in the prior year, which included the initial establishment of a credit loss reserve for the Tropicana Las Vegas Lease. Management emphasizes that these credit loss provisions are non-cash adjustments based on macroeconomic forecasts and do not reflect actual payment delays, with all tenant rent payments remaining current.

Liquidity, Capital Allocation, and Strategic Initiatives

GLPI maintains a strong liquidity position and a disciplined approach to capital allocation, enabling it to pursue accretive growth opportunities. As of September 30, 2025, the company's leverage ratio stood at 4.4x, comfortably below its target range of 5.0x to 5.5x. This robust balance sheet provides significant flexibility, with management indicating the ability to fund its entire current pipeline of future commitments solely with debt financing while remaining at approximately 5.1x leverage.

In the third quarter of 2025, GLPI proactively managed its capital structure by executing a forward sale agreement for 7.6 million shares, raising $363.3 million at an average price of $47.87 per share. Additionally, the company issued $1.3 billion in new senior unsecured notes (5.25% due 2033 and 5.75% due 2037) and redeemed $975 million of its 2026 maturity, raising over $680 million for its development and acquisition pipeline. This strategic refinancing extends debt maturities and optimizes interest expense.

GLPI's strategic initiatives are focused on expanding its portfolio and diversifying its tenant base. Recent highlights include:

• Live! Virginia Casino & Hotel: GLPI intends to acquire the real estate and fund hard costs for this new development in Petersburg, Virginia, expanding its partnership with Cordish. The transaction involves a $27 million land purchase and $440 million in hard cost funding at an 8% capitalization rate, with a 1.75% rent escalator.
• Sunland Park Racetrack and Casino: In October 2025, GLPI acquired the real estate assets of Sunland Park for $183.75 million, adding it to the Strategic Gaming Leases and increasing annual rent by $15 million.
• Bally's Chicago Casino Resort: Significant progress has been made on this development, with GLPI extending its first tranche of capital in October 2025. The company is committed to funding up to $940 million for real estate construction costs, with rent commencing as advances are made at an annual yield of 8.50%.
• Tribal Gaming: GLPI is actively pursuing opportunities in the tribal gaming sector, as evidenced by the Ione Loan ($110 million delayed draw term loan) and a $225 million commitment for Caesars Republic Sonoma County with the Dry Creek Rancheria Band of Pomo Indians. These ventures represent a new avenue for growth and diversification.
• Bally's Twin River Lincoln Option: The option and call right to acquire Bally's Twin River Lincoln Casino Resort for $735 million was extended by two years to December 31, 2028, and October 1, 2028, respectively. This extension allows GLPI to reassess market dynamics and growth plans for the asset.

Outlook and Guidance

GLPI's full-year 2025 AFFO guidance ranges from $3.86 to $3.88 per diluted share and OP units. This guidance incorporates anticipated funding of $150 million for the M Resort hotel tower and approximately $280 million for other development projects in the fourth quarter of 2025, including $125 million for Bally's Chicago funded in October. The company's outlook is underpinned by its robust pipeline, which includes over $3 billion in announced transaction activity.

Management acknowledges the inherent challenges in forecasting the precise timing of tenant fund draws for development projects, which can lead to quarterly adjustments in funding expectations. For instance, some Chicago development funding was pushed from late 2025 into 2026 due to timing adjustments. Despite these timing nuances, GLPI remains confident in its ability to meet its commitments and capitalize on future opportunities. The company's focus on long-term, accretive investments, coupled with its strong balance sheet and advanced analytical capabilities, positions it for sustained growth.

Risks and Considerations

While GLPI's investment thesis is compelling, several risks warrant consideration. Economic conditions, including inflation and interest rates, could impact discretionary consumer spending on gaming, potentially affecting tenant performance and variable rent escalators. Construction and development projects, such as Bally's Chicago, are subject to delays, cost overruns, and regulatory approvals. Tenant financial health, particularly for operators with higher leverage, remains a key risk, although GLPI mitigates this through rigorous property-level underwriting and strong lease coverages.

The proliferation of iGaming also presents a dynamic risk. While some states have seen iGaming co-exist with bricks-and-mortar casinos without significant deterioration, GLPI expresses concern about states allowing iGaming operators without physical investments, which could cannibalize traditional casino revenues. The company actively lobbies against such policies. Furthermore, GLPI's ability to maintain its REIT status is crucial, given the complex tax provisions.

Conclusion

Gaming and Leisure Properties, Inc. presents a compelling investment case built on a foundation of stable, triple-net lease revenue from a diversified portfolio of gaming properties. The company's disciplined capital allocation, robust balance sheet, and advanced analytical framework for risk assessment provide a distinct competitive advantage in the specialized gaming real estate sector. Strategic expansions into development projects and tribal gaming, coupled with proactive capital management, underscore GLPI's commitment to long-term value creation. While the company operates within a dynamic environment characterized by economic uncertainties and evolving industry trends like iGaming, its focus on strong property-level fundamentals and enduring tenant relationships positions it for continued success. Investors seeking exposure to the resilient gaming industry, backed by a REIT with a clear growth trajectory and a commitment to shareholder returns, will find GLPI's story particularly attractive.