Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) Q2 2022 Earnings Conference Call July 29, 2022 10:00 AM ET

Company Participants

Joe Jaffoni - Investor Relations
Peter Carlino - Chairman and Chief Executive Officer
Desiree Burke - Senior Vice President, Chief Accounting Officer, and Treasurer
Brandon Moore - Executive Vice President, General Counsel, and Secretary
Steve Ladany - Senior Vice President, Chief Development Officer
Matthew Demchyk - Senior Vice President, Chief Investment Officer

Conference Call Participants

Neil Malkin - Capital One Securities
Barry Jonas - Truist Securities
Haendel St. Juste - Mizuho
Jay Kornreich - SMBC
Ronald Kamdem - Morgan Stanley
John Massocca - Ladenburg Thalmann
Smedes Rose - Citi
David Balaguer - Green Street
John DeCree - CBRE
Robin Farley - UBS

Operator

Greetings. Welcome to the Gaming and Leisure Properties' Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Joe Jaffoni. You may now begin.

Joe Jaffoni

Thank you, Kyle. Good morning, everyone, and thank you for joining Gaming and Leisure Properties' second quarter 2022 earnings call and webcast. The press release distributed yesterday afternoon is available on the Investor Relations section on our Web site 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 10-Q and in the earnings release, as well as the 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 at Gaming and Leisure Properties. Also joining today's call are Desiree Burke, Senior Vice President, Chief Accounting Officer and Treasurer; Brandon Moore, Executive Vice President, General Counsel and Secretary; Steve Ladany, Senior Vice President and Chief Development Officer; and Matthew Demchyk, Senior Vice President and Chief Investment Officer.

With that, it's my pleasure to turn the call over to your host, Peter Carlino. Peter, please go ahead.

Peter Carlino

Thank you, Joe, and good morning to everyone who has dialed in with us today. Happy to report another excellent and impactful quarter and I'll highlight, as I always do, that we have outlined all the activities this quarter pretty thoroughly in our release. And rather than have me go through or read in detail all the stuff that's available there, I think if you look at the bottom of page one right through page four you'll have a perfect idea of everything that we have accomplished this quarter. Notably, we announced significant transactions with Bally's that is in the range of or over $1 billion, which combined with the Cordish transaction in the last eight months, aggregates about $2.7 billion in new business, and potentially as much as $3.1 billion depending upon how the Bally's transactions shakes out.

So, it's been a pretty successful quarter for us, and I do want to highlight that. Again, lots and lots of detail that we provided, and then we'll turn to your questions.

I'm going to ask, now, Desiree Burke, to highlight some financial points that I think will be of value. Des?

Desiree Burke

Sure, thanks, Peter. Good morning. Our total income from real estate outperformed the second quarter of 2021 by over $52 million, that's as a result of the fact that we closed the Cordish Live! transactions, which increased cash rental income by approximately $31 million. We closed the Bally's transactions in June of '21, and then added the Rock Island and Black Hawk properties to that lease, effective April, '22, which resulted in increased cash rental income of $10 million. We completed the sale, the operations of Baton Rouge and Perryville, last year, and leased the real estate which increased their rental income by $4 million. We achieved escalators on our Pinnacle, Boyd, Belterra, and Penn leases, which added $3 million of rent. And also had positive percentage rent resets for the Pinnacle, Boyd, and Belterra leases which were effective May of 2022.

We had higher non-cash revenue gross ups in investment and lease adjustments partially offset by straight line rent adjustments, resulting in a net $5.3 million increase. Our operating expenses decreased by about $16 million, and that was primarily due to the decline of $28 million of gaming expense, NG&A expense related to the sale of the TRS operations. Offsetting this decline, we incurred non-cash charges of $2.2 million related to the provision for credit losses associated with the Cordish leases, and an increase in the lease gross ups and ground rent from the new acquisition, as well as amortization of $3.5 million and an impairment charge on land that we intend to sell shortly for $3.3 million.

We have included in our release full-year 2022 guidance for AFFO per diluted share and OP Units ranging from $3.50 to $3.54, which does not include the impact of pending transactions, other than the Tropicana.

With that, I'll turn it back to Peter.

Peter Carlino

Thank you, Des. One note I'd like to make -- and we'll introduce Matthew Demchyk in just a second. As you look at what we've been able to accomplish and the cap rates that we have been paying for these assets, Matt likes to say that we as a company compete on capability rather than cost of capital, we're proud of that. I think it is one of our great strengths in tacking some very complex transactions, and making them work for our shareholders.

So, with that, Matt, do you want to go ahead?

Matthew Demchyk

Yes, thanks for those thoughts, Peter, and thanks to everyone for tuning in. The current backdrop really serves as a reminder that volatility breeds opportunity. And those of us who have lived through a few cycles have learned that the key, if you want to take advantage of it, is to have staying power, and that means the financial position that enables you to zig while others are forced to zag. As we've watched funding costs for companies diverge, our thoughtfully constructed portfolio, safe, endurable cash flows, combined with our commitments to balance sheet strength and liquidity and capital markets discipline have set that stage for opportunity.

And to that end, this past quarter, we again demonstrated our team's ability to uniquely source and structure a transaction for the benefit of our shareholders. Our team has again created a bespoke solution for a tenant partner with our recently announced Bally's transaction. It really illustrates Peter's point that we compete on capability, not just cost to capital. At a time when few large-scale transactions have been announced, we were able to use structuring and other levers to achieve a noteworthy 7.6% cap rates. We've again demonstrated discipline with our funding for the transactions, locking in adequate equity, a key, in conjunction with our transaction announcement to position our balance sheet well within our target leverage range of five to five-and-a-half times.

Our recent bank backstop equity raise was over five times subscribed, reflecting very strong support from existing and new shareholders. We've also begun the process for a delayed draw term loan to support the funding and tax structuring of our Bally's transaction. Our actions reemphasize our commitment to balance sheet strength and our respect for the role it plays in our long-term success. Our core message to potential counterparties is that despite the macro backdrop and recent volatility, we are emphatically open for business. With our leverage at a comfortable level and benefiting from our continually demonstrated match funding discipline, our team continues in its unrelenting efforts to unearth and create opportunities with the attractive risk-adjusted returns.

Our overarching objective remains the same, increasing long-term intrinsic value per share for all of our shareholders. Thanks for joining today, and I'll turn the call back to Peter.

Peter Carlino

Thanks, Matt. And I think it says it pretty well, it sort of outlines what the ethos of this company is as we think about creating value for our shareholders.

And with that, Kyle, would you open the floor to questions?

Question-and-Answer Session

Operator

Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question is from Neil Malkin with Capital One Securities. Please proceed with your question.

Neil Malkin

Hey, everyone, good morning, nice quarter. I'm sure everyone appreciates you reinstating guidance, so thank you for that. First question, Matt, you talked about being thoughtful and making sure the balance sheet was in a position to be able to perform well in uncertain times, but also be in a position to be opportunistic. And along those lines, do you feel like you have or will see more opportunities with existing or potential new tenants as they look to grow or access the capital markets, but at a time when the high-yield debt market is less attractive than, say, a leaseback opportunity, thus providing them with lower-cost long-term capital to execute any of their discretionary growth endeavors. Is that something that you think will start to occur, and have you see that yet?

Matthew Demchyk

Yes, well, to the first point you made, I'll reemphasize, having a balance sheet and liquidity position that makes us open to the business is certainly the first step in that process. And having all of our connection points with existing and potential tenants is the next key piece. And then beyond that, I'll comment, I mean certainly if you look at our relative all-in cost to capital versus that same metric for the folks we talk to, it would suggest that the backdrop could be ripe for more opportunity. But there's also more to it. I mean, we're not trying to replicate market risk and returns when you just look at the cost of their debt or where that trades, because we could do that by just buying a portfolio of unsecured debt in our potential counterparties.

Our mandate is really to create a superstructure of lease terms and coverage, and credit enhancement, and all the other factors that you watch us continually put into our structures that collectively result in our shareholders getting attractive risk-adjusted returns. And if you look at the deal we just did with Bally's, I think it's a great illustrative example where we're able to thread the needle to achieve something important to them, that there, arguably, the backdrop helped facilitate. I mean, they had, recently, a share repurchase out there that I'm sure they got far better returns on, in their eyes, than we might get on our real estate. But we're looking for a different risk profile.

And when you think about the relevance of that for our counterparties, it's kind of win-win because, to your point, there's certainly a perpetual nature to the capital that we're using. So, big picture, watch us continue to have the relationships, to understand when the stars align to move meaningfully when they do, and to make sure that we're always positioned to move aggressively and quickly when opportunities arise. And continue to use the discipline again on the balance, to your point, to support that.

Peter Carlino

And this is Peter. I think the answer was yes.

Matthew Demchyk

Okay.

Peter Carlino

And Matt highlighted it very well. I stuck my neck out earlier in this year to say, for the first time, that I think there is an increased likelihood and that we'll be able to get together a project or two with one or more of our tenants. I mean we're working hard at it this year, we see that window. The window is open; Matt is very attuned to that. And we could probably say more, but we won't. We take that opportunity very seriously.

Neil Malkin

Okay, I appreciate that, won't push that too much. Other one is just, do you have an update in terms of the Bally's transaction with the regulators or approvals, and is that going to be something where you can actually do both Lincoln and Tiverton or is it going to be looking more like Biloxi, Tiverton, and then, potentially, Lincoln later? Any updates would be great.

Peter Carlino

Brandon Moore, of course, is sitting here with us right now; I think he was hoping to stay silent on this call. But with that, Brandon, why don't you take that, please?

Brandon Moore

Well, I think as it relates to the regulatory process for this transaction as a whole, as you probably know, these are only two assets in Rhode Island. So, Rhode Island Regulatory has not ventured into the REIT world yet, so we're their first foray into that. And I think there is some work that needs to be done to figure out how we're going to be licensed there, and how our lead structure and our governance structure, and all that plays into licensure. That being said, I don't think it differentiates between Tiverton and Lincoln. I think the regulatory process in Rhode Island will be approving a REIT structure in Rhode Island and what we're offering. And so, I don't -- I think it will be both of those likely to be approved at the same time, or neither of them.

And so, I don't think it's a situation where Tiverton gets approved and Lincoln doesn't or vice versa.

Steve Ladany

And if -- and this is Steve. If your question was more around the amendment with respect to Bally's, as you may be aware, they pulled the amendment. They were unable to reach a consensus agreement with their lender group. However, Bally's continues to be open to discussions to try to reengage on that topic if, in fact, circumstances were to change and the parties were to decide to try to pick that back up again. So, I think from our perspective, we have, the way the deal works is, the pivot to Biloxi doesn't happen until November.

And if, in fact, that happens, as you're well aware, we would have then a two-year option on Lincoln, and that's what Peter alluded to in his opening remarks of there's, I guess, an outside chance that we could, in fact, end up with an even larger aggregate transaction if in fact we close Tiverton and Biloxi first, and then came back and closed Lincoln.

Neil Malkin

Yes, I guess, and not to belabor, but wouldn't that not make sense based on -- you just said that you are going to be all or nothing if Lincoln doesn't get approval, Tiverton also will not then get approved?

Peter Carlino

Yes, I think we are mixing concepts. The concept that Brandon discussed was a regulatory concept. And his commentary around Lincoln and Tiverton was that they are both in the same state of Rhode Island, and therefore, expectation that if you were able to get regulatory approval for one, you likely then can get regulatory for both. The delta that I think you are bringing up now is there is lender consent required, not a regulatory consent. A lender consent required for Bally's with respect to the Lincoln asset. And that's why the outcome of Tiverton and Lincoln could be disconnected because you don't need the lender consent to get the Tiverton asset. You just need a regulatory approval.

Neil Malkin

Okay, it makes sense. Thank you.

Peter Carlino

Yes, look, I am going to speculate that that's the minimum possible outcome Tiverton and Biloxi irrespective of what consent they may need from their lender, there is the question of approval in Rhode Island structure, do they license all the management for example or is it as in many states no license required at all? This is that parts unknown, but we expect that ultimately we will get there.

Neil Malkin

Thank you, guys.

Operator

I would now like to introduce Barry Jonas with Truist Securities. Please proceed with your question.

Barry Jonas

Thank you for that introduction.

Peter Carlino

Where is the drum roll?

Barry Jonas

I wanted to start with Tropicana, any sense within the second-half when the deal could close? What are we waiting on? And then, any update on redevelopment opportunities there? Is it kind of you guys or Bally really driving those discussions?

Peter Carlino

I'll tackle the first part, probably the easier part of your question. The regulatory process is a little bit opaque to us because we're no licensed in Nevada as a REIT. But from what we understand that process is coming to a conclusion, so I would think that in the next few months we hope that that transaction will be in a position to close. I'll let others address the reinvestment in the property.

Brandon Moore

Well, sensibly it has nothing to do with us necessarily. It might be an opportunity under some circumstances. But there is defined today. I think you are all generally aware of the kind of things that Bally's is looking at for development at that site. But we don't run that process. We have obviously an interest -- strong interest. We understand it's proceeding at pace, but can't really tell you where that stands today.

Barry Jonas

Got it, got it. And then just as a follow-up, can you give an update on the construction at Baton Rouge whether that's timing or budget? Or, any update there would be great.

Peter Carlino

Steve, you want to take that?

Steve Ladany

Yes, I think the timing expectation is still first quarter of '23. I think as everyone is aware of the macroeconomic and actual just labor situation nationwide, I think that you would imagine there have been some fits -- and we have been dealing with a number of different complications, but projects moving along like I said our tenants looking forward to moving landside there. And we are actively working to make that happen.

Barry Jonas

Great, thank you so much.

Operator

Our next question is from Haendel St. Juste with Mizuho. Please proceed with your question.

Haendel St. Juste

Hey, guys. Good morning. So, I guess first question is a follow-up on Bally. I guess I was hoping to help us understand the tax structuring in the Bally's transaction and the implication for GLPI. Thanks.

Desiree Burke

Sure. So, at a very high level, they will be buying into our operating partnership. And we will be guaranteeing some of their debt to help them delay the payment of any taxation. And the tax structuring is the key to that transaction of how we are pulling that together. But that's at a very high level how the tax structuring will work so that they can -- again, it's a deferral of tax by using the structure.

Haendel St. Juste

Okay, that's helpful. I am just curious how much of the debt you are guaranteeing, just a quick follow-up.

Desiree Burke

Yes. We haven't determined that just yet. We have to wait and look at their tax bases for their assets and some other diligence items that we have to do in order to be able to complete that.

Haendel St. Juste

Okay, fair enough. Matt, maybe one for you, I guess the thoughts on equity, use of the ATM, and leveraging this environment. And if you feel you are in position today to execute on more transactions given I guess with slightly higher cost of capital and your balance sheet objectives?

Peter Carlino

Matt, you want to take that?

Matthew Demchyk

Sure, yes. So, as I stated in the intro, we are happy with the leverage level now. I mean really staying within our 5 to 5.5 range is the key for us. And to the extent we had an opportunity set that made us feel somewhat confident, you certainly could see us use in injunction with that mentality the ATM as a tool in our tool chest. We don't have a goal of delevering for the sake of delevering beyond being within that range. This is certain efficient frontier of our leverage that we want our shareholders to benefit from. But that said, yes, it's certainly a tool that we have. And we will be thoughtful about its use within the context to those other comments.

Haendel St. Juste

Wonderful. Thank you, guys.

Operator

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

Jay Kornreich

Hey, thanks. Good morning. Some new cities have recently legalized our or in a process of legalizing full-scale casinos such New York City, Chicago has led into the recent Bally transaction with the development there. Can you maybe give us an update on any other cities or states that you expect to improve full-scale casinos or add licenses in the near future which could provide additional external growth opportunities for you?

Steve Ladany

Sure, sure. This is Steve. Look, I think the expansion of the gaming TAM is something we are always focused on. So, we are closely watching and eager to try to be helpful and participate. We agree that Chicago and New York seem the most near term. We continue to monitor what's going on in Georgia and some other states such as Alabama. I think as far as near term goes, I probably would not put Texas in that bucket. But I think we constantly look around the country and realize the opportunity not only for the gaming operators and the gaming REITS but more importantly the states and the taxpaying public and the benefits that that can prove. So, we are actively looking -- I think you have named the two that are most near term. But I don't -- I would never suggest that there is no others that could pop up in the medium term.

Jay Kornreich

Okay, thank you. And then, just as a follow-up. Within your current portfolio, are there any expansion opportunities that your tenants are looking into at this time which could be a development opportunity for you to finance?

Brandon Moore

Yes, let me take that. As I suggested before, we are in active discussion with a number of our tenants today about some interesting possibilities I mean it's just that. It's the tenants who decide when and if they want to pull the trigger. But we talk about without naming locations, hotel opportunities this year. And I think the stars may be aligning better than they have been almost from the beginnings. So, we are feeling optimistic. That's the best word I think I can use that you'll see some significant investment with one or more of our tenants in the next 12 months. I will just pull that out of the air. But we're hopeful that that will be case.

Jay Kornreich

Okay, thanks very much for the time.

Operator

Our next question is from Ronald Kamdem with Morgan Stanley. Please proceed with your question.

Ronald Kamdem

Just a really quick on obviously lot of talks of recession and sort of the gaming having very recession-resistant [indiscernible] in spending, question is really when you look at sort of the facilities today, is there something different whether it's diversification of revenues, whether it's marketing, whatever it could be, what are some of the sort of the intangible factors that gives you guys confidence and sort of add those facility is producing as we go into a downturn? Thanks.

Steve Ladany

Yes. Look, Ronald, this is Steve. I appreciate the question. I think if you look back at the last recession and we have a slide. Matt will be able comment if it's still in the desk. It's been in the deck for years now. And it showed what happened from a rent coverage perspective for the regional properties versus the strip. And this is not me saying that the strip is going to act the same way as it did historically.

Obviously, we have seen a nice run up post COVID on the strip. But if you look back at the slide and history I guess, it would suggest that the regional asset held up better in the recession. And I think we attribute that to the fact that there is not the same level of diversification of revenues. The revenues are majorly focused on the gaming business. And therefore, our belief that people do focus on the gaming and enjoy that activity remains true. Their focus on paying $200 for a stake might wane. And so, I think that slide if it's not out there anymore, we'll make sure we will get it out there again. And Matt, do you know if that's in that deck?

Matthew Demchyk

I am sure it's part of the deck. And to just flesh out the answer, simply drive through is better than slide through. If you have a recession, lower fixed operating costs are better than high fixed operating cost. And higher state tax rates are better than lower state tax rates when you think about how it impacts the bottom line. And to Steve's point, the regional asset check always right boxes. And it's also very important for us to be thoughtful about coverage in this environment. And you'll see in the last few transactions we have done whether it's this last deal with blended coverage two times. The deal before that with Cordish, Pennsylvania too and then Maryland has a single asset 2.7 times. We have certainly looked to build in a margin of safety in our underwriting to ensure that we can sleep at night knowing our rent would be collected now and well into the future.

Steve Ladany

Yes, that slide which I think many have seen, Matt, you will recall indicated that the low point always in that whole collapse coverage in Vegas dropped to 1:1 or even slightly below at the nadir, the coverage in the regional market never below 1.4 to 1.5. So, it never got to disaster range even in the worst of times, which is something that I think we've been pretty firm. And I have been clear about it in many many presentations that the regional revenues are essentially bulletproof.

Ronald Kamdem

Helpful. And then my quick follow-up is the Bally's, is that still expected to close end of this year? Or, could that slip into next year?

Peter Carlino

Steve?

Steve Ladany

Yes. The Tropicana you are interested in or the Tropicana Las Vegas or the Rhode Island?

Ronald Kamdem

The Rhode Island.

Steve Ladany

The Rhode Island, I don't think we have enough visibility to know. We are still targeting yearend. I think in the coming weeks and months, we are going to have a much better idea. As you probably can imagine, the regulatory process is usually the long pole in the tent for our transactions. This one is no different. So, as we continue to work with Rhode Island, I think we will have better visibility and to whether or not yearend is possible. But we are certainly targeting it from the business side.

Brandon Moore

Well, it may be a little bit slower or unpredictable simply because they don't have any REIT experience. I think they get it and understand it. But it does add a layer of complexity that they have got to get their arms around.

Steve Ladany

Yes, certainly a layer of uncertainty in the timing. States that already have REITS, we usually have better visibility into how long that process might take, and I think this one we expect to work cooperatively and together with the regulators. And in fact, we have already started that. But, we just don't have enough visibility at the moment to really accurately prudently predict whether that will happen by the end of the year. But that's the goal.

Ronald Kamdem

Thank you.

Operator

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

John Massocca

Good morning.

Peter Carlino

Good morning.

John Massocca

Maybe just turning to the new guidance, I am just kind of wondering I understand there is some seasonality [indiscernible] rent and you had diluted impacted around the share issuance in July that's not deployed, so later this year or even potentially next year. But what are kind of the pushes and pulls that got you to the guidance range on a per share basis just giving -- obviously the annualized 2Q will be way above it. I understand you can't do that. But just maybe kind of factors that are going into that guidance that kind of created the 350 to 354 range for AFFO per share?

Desiree Burke

Sure. So, what's driving the range are different assumptions and so far the interest rate on a very lower debt the assumption that you make on percentage rent and how the Ohio properties repent, perform, as well as we have a reset coming later this year for the Meadows property, assumptions on the timing of the Tropicana transaction, when that occurs, assumptions on escalators, and there's a few left remaining to happen this year.

So, those are the key assumptions and drivers. And I agree, you can't just take the quarter, but you can take year-to-date numbers and almost double them and get close to within the range. But it's really hard to do that because of, as you said, there is some seasonality in the Ohio properties, as well as the fact the timing of when like Black Hawk and Rock Island closed, and that wasn't until April, and when that Cordish transactions closed in January and March. So, those are the big drivers, really four things; what's happening with our interest rate, what's happening -- what are your assumptions on the percentage rent, what's, so your timing of the closing of the Tropicana, and what are your assumptions on escalators.

John Massocca

And I guess maybe just -- there's no other capital market assumptions besides the July closing of the equity offering, correct?

Desiree Burke

That's correct.

John Massocca

Okay. And then maybe if you kind of look out at future deal volume, assuming we still are in a rising interest rate environment, how do you think about timing of deals? It seems like, and kind of net lease, broadly speaking, there's been this idea that cap rates are going to expand in the back-half of the year, and it may be kind of prudent on deploying capital makes sense because of that. I mean is that something you're seeing? Is that something that makes sense strategically or just because of the bespoke nature and the kind of limited nature of assets you can buy, that you kind of take what you can get when you can get it?

Peter Carlino

Yes, let me stick my -- no, I'm going to have Matt answer that question, but essentially, you used the right word, the bespoke nature of the transaction that we've done. Many have been driven by some other thing that one of our tenants or a new prospect might want to achieve. And that's been the drive.

So, Matt, why don't you take that?

Matthew Demchyk

Yes, well, I mean broadly, John, there's clearly a bid-ask gap in a lot of the real estate world, and the structuring and all the things we talked about throughout this call with Bally's enabled us, effectively, to get to our economic ask, which was the 7.5% cap rate that you saw, fees beyond that too that, if you include those, it's even slightly a better return all-in. So, we wouldn't have done that if it didn't get over our return threshold. And we calculate that based on our cost of capital at the time, because you plug the actual numbers in, and the key next piece, which we've now delivered on multiple times, is to lock that in. And I've watched a lot of folks get off sides by getting along a transaction and not locking in the cost to capital, and the world changing.

As long as we follow that discipline, again, we're open for business. There's absolutely no reason for us to say we're just not going to do deals. As long as we get a spread and lock it in, we can do that deal and the better one later in the year, if they come up, to your point, as long as we're in the position to keep doing it, and that's what we've positioned ourselves to do. Remember, we did, to Peter's comments at the beginning of the call, close to $2 billion towards the end of last year, and then another $1 billion in the last few weeks. If you asked us 12 months ago, I think the quantum of transaction volume we might expect could have been much lower, I mean the visibility is not there. But you also -- I mean there's errors of omission too; you can't pass on an opportunity just because of the macro. If you can make the math work and you can lock in the return, it's our job to do that. So, we're -- when things -- when the stars align we know what it looks like, and we're happy to push the buttons at the right time for our shareholders' benefit.

John Massocca

That makes sense. And then one last quick detail one, if -- I guess the timing for the close of the Bally's transaction, how can that roughly be impacted by a switch to the Hard Rock Biloxi deal versus having if you do somehow get Lincoln and Tiverton together? I mean, what's kind of the timing differential if you switch to the smaller transaction?

Matthew Demchyk

I don't think that timing is materially different from a regulatory perspective. As you know, we have several facilities in Mississippi, we're fairly confident that a sale leaseback in Mississippi would be a fairly streamlined process. I think the issue is if Rhode Island approves our entering into a lease for properties in their state and sale leaseback, the only question will be whether or not the Lincoln lender consent has been obtained, and so it won't be a regulatory issue. So, I think that will be the real dictator, is when Rhode Island approves our entering into a lease for properties there, we'll either be buying Tiverton and Lincoln, or we'll be buying Tiverton and Biloxi because Lincoln is impossible because of the lender consent. I think that's the real decision tree.

John Massocca

Okay. Thank you very much. That's it for me.

Matthew Demchyk

Thank you.

Operator

[Operator Instructions] Our next question is from Smedes Rose with Citi. Please proceed with your question.

Smedes Rose

Hi, thanks. I just wanted to understand a little more about how you might be thinking about financing the balance of the Bally's transaction? I mean, you'll generate a lot of cash through year-end, but are you sort of leaning more towards debt issuance, an OP issuance to Bally's? And is the timing really just related to the regulatory process you mentioned going through or are you -- is it more sort of opportunistic around where your cost to capital is? Just trying to think about how those things might match up as we move towards that closure.

Steve Ladany

Yes, I'll -- it's Steve, I'll give that one a shot. I think the timing, as you're hearing from us, is related to regulatory. I think with respect to the funding of the transaction, we obviously issued the equity -- we issued equity already. We do have the proceeds coming from the Tropicana sale, we expect to have those. Then that sale is $150 million, to remind you. And then the remaining portion of the financing need will come from debt. And we expect that form of the debt to be predominantly in the form of bank debt. So, we are, as Matt mentioned, we're in market with that now, and should have, obviously, an update for everyone by next quarter, for certain.

Unidentified Analyst

It's [indiscernible] with Smedes. Just had a quick question just going back to the guidance, and appreciate you putting up both the gross AFFO as well as the per-share numbers, given the equity raise, and those proceeds are obviously dilutive until they can be put to work. And maybe just focusing on the gross AFFO guidance, because I think that may help sort of bridge some of the gap between Street expectations. And you had about $453 million of AFFO in the first-half, and based on that 900 to 920, sort of implies about $460 million in the second-half of the year. And, Desiree, you called out interest expense, percentage rents, the Tropicana sales, and the escalators, can you sort of goalpost each of those items in, effectively, what you've embedded into that second-half midpoint range of $460 million so that we really understand the puts and takes of those items that are already known. So, can you break that out a little bit more for us, please?

Desiree Burke

Yes, we don't have any other detail that we put into the release, so I can't break that out for you. But again, it's just assumptions on those four items, how to get to the guide.

Unidentified Analyst

Yes, but are those -- are those positive or are they negative drags? I recognize those are the items, we knew those items last night, but we actually need the numbers, right? So, are the percentage rents, are you assuming it's how much within there? When are you assuming the Tropicana sale? What are you assuming for [indiscernible] it's -- that's the detail that we really need to really understand how the numbers are going to shakeout?

Desiree Burke

Yes, well, obviously, for the Tropicana, it could either be closed this year. Then we always say, we said the second-half, so it -- there's six months of range where it could be closed this year, or it could not close at all, right. If it closes on December 31, there would be no impact to that one. So, that's how that swings, the percentage rent, it's pretty much an all or nothing when you're looking at the one, whether or not they hit their adjusted revenue-to-rent ratios. And as you can see in the tables on page 14 and 15, you can see that most of the leases look like they're going to hit their percentage rent -- well, they're going to hit, right, their escalation provisions.

Unidentified Analyst

Right, so [multiple speakers] --

Desiree Burke

Other than that, the FFO rate, I -- you pull a forward yield curve, and it's changed significantly. The FFO rate has changed significantly over the last month even. So, it's anybody's guess as to what that will look like when we get to the end of the year.

Unidentified Analyst

I know, but you've provided guidance. So, I'm just trying to get -- you provided the 900 to 920 for the full-year, $460 million midpoint. I am just trying to understand what assumptions you have used. I know it's a lot of volatility, uncertainty; I'm just trying to better understand what you've actually put into those numbers so we can make sense of the guidance. And I don't know why you -- Tropicana, so what's at the low end of the range and what's at the high end? It's not like -- this shouldn't be rocket science.

Desiree Burke

Obviously, it's nothing or it's all of the rent, like it's all or nothing. So, you're right, it's not rocket science.

Unidentified Analyst

Well, that's what I'm trying to get at -- we think that's embedded -- right, I'm just trying to understand what's embedded in the numbers you put out. So, if you can put the goalpost for each of those line items that impact the 900 because you really have a simple -- and most of your rent should be earned, right, that's what makes this company a very easy to understand. But when there's variables that can swing, understanding the impacts to your numbers is obviously important, especially if you are going to provide the bottom-line guidance. Actually, understanding the assumptions that drive it is more important than the bottom line number.

Peter Carlino

Matt, I'm not sure if you have anything you want to add to this, but, frankly, we're just not prepared to go any further with that question now.

Unidentified Analyst

All right, so it sounds like --

Peter Carlino

Frankly, we didn't want to deal with guidance in the first place, because --

Unidentified Analyst

Well, then don't give guidance, I mean like you can't --

Peter Carlino

[Multiple Speakers] --

Unidentified Analyst

Like, I know you didn't want to do it, but you've done it, and we're just trying to understand the impacts to these variables that's embedded in those numbers, and so that's it, like the fact that you said, okay, Tropicana is zero, probably the low end, and at the high end it's the full rent assuming close, I don't know. I don't know if that's closing in -- that's -- understanding what's embedded is much important than the bottom line number. So, that's -- it is where it is.

Peter Carlino

Okay, I think that we have that message.

Unidentified Analyst

Okay, thank you.

Operator

Our next question is from David Balaguer with Green Street. Please proceed with your question.

David Balaguer

Good morning. Sorry if this has been clarified, but I just wanted to ask a clarifying question on this Bally's deal. So, if those two Rhode Island properties are closed, is there anything that would preclude from still being able to pursue the Biloxi property later?

Brandon Moore

The Biloxi will not be part of the transaction if those two close. It doesn't preclude us from participating in a sale leaseback on the Biloxi property down the road, should Bally's elect to do that.

Peter Carlino

Yes, I think the real question is do they feel they have a need or a desire to do that at that time. But it -- clearly, Brandon answered it [technical difficulty] precisely right, that it's not part of the transaction if we get the other two properties, which really were our first goal.

David Balaguer

Got it. So, we could take that as a signal that this is a property that you would be potentially interested in. And if Bally's decided later on that, hey, you know, the sale leaseback makes sense?

Peter Carlino

Absolutely; we're in the business of leasing properties, so you bet.

David Balaguer

Got it. And just wanted to touch on the Meadows lease, just looking at coverage levels, I know with the escalator coming this October, and these coverage levels, I recognize that those are trailing, and the casino business has been pretty strong this year, we don't know where that could go. But could you remind us that end date when that reset would occur, that sort of last date where you look at coverage to decide if it qualifies for that reset?

Desiree Burke

Yes, and it's noted for you on page 14 of the lease, but it is the -- the lease commencement date is, that's the date in which you look at them each year. So, depending on which one you're looking at, it's out there on page 14. I think Meadows is September if I recall correctly.

David Balaguer

Got it, thank you.

Peter Carlino

We will look at it. Thank you.

Operator

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

John DeCree

Hey, everyone. Thank you for taking my questions, I think we covered a lot of ground, so just two. One is just a kind of forward-looking clarifying question, but in the event the alternative transaction is the one that works with Bally's this time and Biloxi is included, between now and when the option expires, is there a mechanism that would require Bally's to get lender consent ahead of time or would that just be addressed at the time that you'd prefer to exercise that option, just curious if Bally's has to kind of actively work towards that amendment?

Peter Carlino

Yes, so the -- we're in the process of negotiating the definitive document. The standard by which Bally's has to act hasn't been fully fleshed out. I think you can assume that we will expect them to pursue that consent whether or not they should be actively doing that all times I think is a business judgment on their part as to how to work with their banks and how best to get it. The option doesn't necessarily require them to be actively pursuing that consent at all times. And I think that's why it has the length that you see; stretching out two years gives them quite a bit of runway to deal with their banks in whatever fashion they believe is best for their business and their relationships.

John DeCree

Yes, that's what I -- that's kind of what I figured, appreciate that clarity. And then just maybe one big picture on perspective deal volume, I think a little bit earlier in the call we've touched on it. But given where interest rates have gone and the market starting to adjust to the new normal, perhaps, at higher cost of capital than what we've been used to, have the phones started to ring more than it has? I imagine it's always a pretty steady flow of conversations, but curious if you've seen maybe some of your partners start to think a little bit more about doing something or maybe folks that you haven't heard from in a long time that are now kind of reassessing their cost of capital relative to what you can offer? So, just curious if you've seen any change yet in kind of inbound flow?

Peter Carlino

Steve? Yes, go ahead, Steve.

Steve Ladany

Yes, sure. So, I think deal flow has been consistent for a few years now to be totally honest. I think that conversations have changed. So, what you're alluding to is, two years ago, if I called someone out of the blue and said, "Hey, you have a bond maturing, and why don't we consider a sale leaseback?" Chances are my sale leaseback rate was higher than whatever their borrowing rate was; that dynamic has shifted. So, it's still the same conversation, it's still the same phone calls that we're having. The discussion is changing slightly because now my cost to capital may be advantageous for them and -- or even just the fact that I'm open to transact might be better than where they find themselves in the current high-yield market environment.

So, the dialogues change. I don't know that the volume of calls has necessarily changed, but the discussions have taken a different angle. And the second point I would make is I do think though, with current tenants and with properties they own in particular already leased, the discussions around reinvestment in those properties has picked up. So, that, I know, was part of your question, and I know Peter made some commentary earlier today suggesting, in the next 12 months, you would expect to see us doing an investment with a tenant. I think that dialogue will continue to trend and be more active going forward.

John DeCree

Thanks, I appreciate the additional color. Thanks, everyone.

Peter Carlino

Thank you.

Operator

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

Robin Farley

Hi, great. Actually, that last question was what I was going to ask as well. So, maybe just the other thing I'd ask about is, I don't know if you can give us any color, i.e., think about the upside for GLPI from -- ultimately gets developed at the [top] [Ph]?

Peter Carlino

Do you mean in participating, Robin, in something that -- yes, I mean, I think the value of the land improves, depending upon what they actually do with it. We're still in early stages. Again, we get paid, we get our lease payments. But what actually is going to happen at the site is still an unknown. I mean, you can bet we've looked at some of the concepts that they're dealing with right now, but until they actually nail it down, I -- we can't quite answer it. You could ask this question, and are we about to do something crazy with our company's capital? The answer is no, we're not. So, we ourselves, we'll wait and see what's proposed. Maybe there's an opportunity for us, maybe there's not. Look, we're in -- we want to do as much business as Bally's as we responsibly can.

Robin Farley

Okay, all right, thank you.

Peter Carlino

Thank you.

Operator

We have reached the end of the question-and-answer session. And I will now turn the call over to Peter Carlino for closing remarks.

Peter Carlino

Thank you, Kyle. Thank you all who have dialed in today. We feel we've had a great, and as I said at the outset, impactful quarter, we're excited about it. Balance of the year is looking good as well. So, we're pleased to share this information. We're always available to your calls, if you like. So, thanks again. Have a great day, everyone.

Operator

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