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Gaming and Leisure Properties Inc (NASDAQ:GLPI)
Q1 2019 Earnings Call
May. 7, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to Gaming and Leisure Properties' First Quarter 2019 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Joe Jaffoni. Thank you. You may begin.

Joseph Jaffoni -- Founder and President

Thank you, Matt, and good morning, everyone, and thank you for joining Gaming and Leisure Properties' first quarter 2019 earnings call and webcast. The press release distributed yesterday afternoon is available in the Investor Relations section on 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 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 forward-looking statements contained in the Company's filings with the Securities and Exchange Commission, 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; and Steve Snyder, Chief Financial Officer at Gaming and Leisure Properties. Also joining today's call are 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 Vice President of Investments. Thank you for your patience.

With that and it's now my pleasure to turn the call over to Peter Carlino. Peter?

Peter M. Carlino -- Chairman and Chief Executive Officer

Well, thanks, Joe, and good morning, everyone. As usual, we have our entire talented team present willing and able to contribute to this call. And by the way, we would -- before I get started, we were jokingly talking that we got to find some livelier (ph) music to keep you guys entertained, we thought, we can't started on this call, something a little more contemporary because it was killing me.

Listen we are happy to report another strong quarter here at Gaming and Leisure Properties, and of course, that reflects the benefit of the acquisition of the properties now operated by Boyd Gaming and Eldorado Resorts, and of course, our adjusted arrangement with -- with Penn National. There is a lot of activity, as you probably have heard, there is a lot of activity this quarter and we are probably as busy as we have ever been. We'll see what shakes out from that, but I think we do need to highlight that, as I've said over many, many years if it's alive and breathing you can imagine that we're looking at it and -- and aggressively so. Look our criteria is very, very strict. We -- as I have long said are not in the business of building monuments, but doing profitable business that will build value for our shareholders, which I consider myself to be first and foremost in my role at this Company kind of shareholder and chief and that's the way I think about it, and I expect that you to do the same.

I think we'll highlight a few things. Our quarterly release, I think was pretty robust and thorough, but nonetheless Steve Snyder will highlight a couple of points that might be helpful to you. Steve, why don't you start?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Thanks, Peter, and good morning everybody. Before I get started, just a quick housecleaning matter. This morning, we did file our quarterly financial report on Form 10-Q with the Securities and Exchange Commission. So to the degree, there are any questions feel free to cruise that at your leisure, it may address some things that will probably come up on the phone call.

In addition to the 10-Q, which we filed this morning, you've already noticed that the level of disclosure and transparency in our Q1, 2019 press release, which we're discussing this morning, it is probably more user friendly than any of our previous press releases, as it relates to the real estate portfolio here at Gaming and Leisure Properties. Part of that is, thanks to some accounting pronouncements, which have gone into effect, so that you don't see the gross-up of real estate on the revenue side or the real estate tax expenses on the expense side.

Likewise, as a result of the Penn-Pinnacle transaction at year-end, we were able to reclassify the Pinnacle -- amended Pinnacle lease out of the deferred financing lease category and categorize it as an operating lease making our disclosures much easier and more straightforward to convey to you our investor community.

Just touching on a couple of portfolio highlights, obviously, it goes without saying that our portfolio is 100% occupied and all of our tenants are current with respect to their rent obligations, I'll get into that in a little greater detail in a moment. In Q1, we've realized almost $255 million in income from real estate. You will see the reconciliation of the cash rent and interest income to GAAP in the financial -- in the press release, in one of the newer tables that's been added.

One thing I will highlight during the quarter, as a result of the Penn-Pinnacle merger and the amended Pinnacle master lease and the new Boyd master lease, we did working with our tenants end up with a reallocation of some of the base rent components in the amended Pinnacle lease between Boyd and Penn National such that in the quarter, there was a $330,000 reduction from our Q1 guidance in the Boyd occupancy costs that moved over to the amended Pinnacle master lease that -- that PENN has now assumed that $330,000 quarterly number will roll through for the balance of the year from our Q4 or from our earlier guidance that was provided in conjunction with our Q4 earnings release.

As it relates to the Casino Queen transaction, I just want to remind folks that we did lend $13 million to the parent of Casino Queen. We also own the real estate, as a result of the sale lease-back transaction, which we did with the Casino Queen entity back in 2014. They did paid (ph) their rent in May, so they are current on their rental obligations under the lease pursuant to accounting convention and as a result of the undertakings at Casino Queen, they have been in a process to identify a purchaser that process has slowed down materially and the outcome of that process has become much less clear than it was when we filed our year-end financial statements.

As a result of that, we have chosen in the quarter to write-off the full amount of the subordinated loan that we've made to the Casino Queen parent entity, as a result of the senior loan that is in front of us and the indications of value that we've seen throughout that sales process. We are engaged directly with the Queen management team and are monitoring the situation closely. As you see in the exhibit, they were right under the 1.4 times coverage at year end that has resulted in obviously, us being in an even greater dialog with they and their outside consultants at this point in time.

Additionally, in the quarter or subsequent to the quarter, you've heard PENN's announcement of their intent to close the resorts facility in Tunica, Mississippi that will have no impact whatsoever on the rent that we will continue to collect from PENN under that master lease that was amended in 2017, when they acquired those two properties in Tunica. There will be -- it's likely that there will be a non-cash charge that the Company will take in Q2 of this year to reflect that asset writedown, but again no impact whatsoever with respect to our rental income from PENN under that master lease.

Lastly, I'll touch briefly on the taxable REIT subsidiary. You saw in the press release that we've reduced our guidance in the taxable REIT subsidiary, as a result of legislative action in Maryland. I'm sure a few of you know this, but the Perryville facility is the highest taxed facility in the State of Maryland. The gaming tax on slot revenue at Perryville is 61%. There was legislative relief that was provided. The Lottery Commission granted us the relief of 500 basis points at the end of last year, but the legislature through its budget process provoked that relief and that's why you saw the reduction in guidance from the TRS and the reduction in the performance in the quarter.

As to the balance sheet, you see the revolver balance has been paid down modestly from year-end. As a result at quarter end, our gross leverage based on the trailing 12 months EBITDA, pro forma for the transactions that closed in the quarter -- in fourth quarter 2018, our gross leverage was 5.6 times and our net leverage after taking into account $30 million (ph) approximately of cash on the balance sheet was 5.57 times, and we are comfortably in compliance with all of our debt covenants based on those outstanding balances.

Finally, on the balance sheet, there was no activity in the quarter on the at-the-market program. We still feel in spite of the improvement that we've seen in our equity price, we still feel that the underlying fundamentals of our business are not fully reflected in the equity values that we are seeing in the equity markets, as we speak.

Lastly on guidance, I just want to give you a little color on our guidance. The guidance has been impacted as was the quarter by some modest weakness in the Ohio Casino, as PENN mentioned on its earnings call. We hope that as the year progresses, they will get back closer to where their plan was at the beginning of the year. But based on the weather impact in the quarter and their projections for the balance of the year, we do see some modest declines, as to that revenue stream compared to where we were when we issued our guidance at the end of last year.

Finally, on the two bands of guidance, the lower end of the band, you will see that it includes the Eldorado Resorts escalator on the Tropicana lease, and it also includes the escalator on the Boyd properties under the amended Pinnacle lease those properties that are retained -- were retained by Boyd and it covers the escalators associated with the loans to those two entities.

Lastly, on the upper end of the guidance. As a result of PENN's earnings call last Thursday, we've removed The Meadows escalator from the upper band of guidance, just to give you a little bit more specificity around the -- the background in the bands of guidance that we've provided.

So with that, operator, I would turn it over to you to entertain any questions that I'm sure exist from the members of the call.

Questions and Answers:

Operator

Great. Thank you. At this time, we will be conducting a question-and-answer session. (Operator Instructions) Our first question is from Carlo Santarelli from Deutsche Bank. Please go ahead.

Carlo Santarelli -- Deutsche Bank -- Analyst

Hey, thanks, everybody. And just a -- a quick one, Peter on the comment you made earlier, which -- which was you've kind of that you guys are very busy and it's busy as you've been. I'm just wondering, not necessarily what you're working on because I know you won't answer that, but more along the lines of what's -- what's changed. What do you think has changed in the environment out there that's maybe triggered an onslaught of new -- of new kind of actionable stuff?

Peter M. Carlino -- Chairman and Chief Executive Officer

Well, I wouldn't call it an onslaught. I mean, look, there's some big companies that you know, which companies are involved. They are kind of out there and open, and I think everybody is aware of that. And then around the fringes, there's a number of properties that we're looking at in various states. I -- I don't know that anything has changed. Steve would you have a comment. I mean I thought about that or Steve Ladany, you spend a lot of time looking at this stuff. I don't sense that there has been a material change. It's the lot of little stuff we're playing with.

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Yeah, I mean, clearly the -- the environment with the activism has created some of the -- the -- the items you see now publicly are rumored to be public. With the exception of that, I believe that the -- the valuations and the liquidity interest of ownership is probably driven by the fact that the transaction multiples, the comparable multiples have -- have driven valuations, as well as low cost of borrowing. And at this point, the -- the equity valuations of all the gaming industry has also performed well. So I feel like there is a good environment for sellers to look to try to find liquidity events. And I think just as much as there are -- are these formal processes out in the market, I think that we continue to believe that the informal discussions that are constantly ongoing are what will ultimately drive many additional transactions, which are, maybe not as well known.

Carlo Santarelli -- Deutsche Bank -- Analyst

Great. Thanks.

Peter M. Carlino -- Chairman and Chief Executive Officer

Yeah. I mean, we look at the big stuff I could consider that home run territory, if we can find it, but we're perfectly willing to hit singles, just solid safe transactions that boost AFFO and from my greedy point of view boost dividends, which is hugely important I think and to me as a shareholder, so and I -- and that's our -- that's our focus.

Carlo Santarelli -- Deutsche Bank -- Analyst

Great. Thank you. Thank you very much. And then, Steve, if I could, just on the guidance. With respect to the Pinnacle escalator is that in the high end of the range right now?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

It is. Meadows is not, but Pinnacle is.

Carlo Santarelli -- Deutsche Bank -- Analyst

Pinnacle is and Pinnacle is not in the -- at the lower end, I would imagine then?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

That's correct.

Carlo Santarelli -- Deutsche Bank -- Analyst

Okay. Thank you very much.

Operator

Our next question is from Robin Farley from UBS. Please go ahead.

Robin Farley -- UBS -- Analyst

Hi, yeah. I just wanted to hear your thoughts on theoretically, if there were larger company that were to sell some assets, how would you think about when you sort of unplug a property from a large marketing database and from a large maybe sourcing, cost saving synergies have been (ph) much larger company. How would -- how would you factor in what that could do. In other words, if you're -- would you be factoring in that -- that a property sort of unplugged from a larger company might see a decline in EBITDA or is the idea that there would be -- could be something done better with it then what's currently down and you'd be actually factoring an increase in EBITDA. I guess just to think about what your expectations would be in that scenario?

Peter M. Carlino -- Chairman and Chief Executive Officer

Robin, it probably depends on where that property is. And look if they are (ph) Las Vegas, I mean, let's -- let's be real clear, that's one thing because again you're typically looking at properties with way higher CapEx needs, bigger coverage are hugely depending on database marketing and so forth as opposed to a regional property and so it's property to property. But one would have to be much more careful, as you look at a property on the script (ph) for example. Steve or --

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Yeah. Robin to your question specifically, we've done it right. When PENN spun-off, as a result of the Pinnacle merger, the three, four properties to Boyd, you'll recall Pinnacle had their My Choice rewards program, they had a central database, central warehouse for everything. It really comes down to what is the strategy that the new operator has for the asset and what access does that new operator have to the database. Does the database stay with the parent? Does the database go with the selling parent and the property, the property get those unique visits or those customers, who are unique visitors to their properties. So there -- there is no template whatsoever that is consistent across transactions. But suffice to say, it is something that we do consider in underwriting the acquisition of real estate.

Robin Farley -- UBS -- Analyst

Okay. Great. That's -- that's helpful. Thank you. And I don't know if you have any more color to add. I know you talked about Casino Queen in your opening remarks, but is there a way to think about what your total exposure there might be. And like in other words, you -- you talked about the Tunica property and kind of no impact on rent and just the non-cash charge. What's the sort of -- if Dubai or a new operator, could you sort of talk about what your exposure is to, I don't want to say, worst case scenario, but the -- the downside case?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Yeah. Robin, it's 1.4% of the Company's EBITDA and that 1.4% is the rent that we collect from our current tenants CQ Holdings, the parent of Casino Queen. They jumped a little too far when they bought an asset in Iowa. Their management team was stretched in and their management team has since departed. So we do feel that anybody coming in will probably be in a position to improve the operating performance of the assets, such that our $14 million plus in annual rent, we would hope will survive. It is, as I said earlier, a work in progress and that progress is something that we are heavily involved with and we'll do everything within our power through the remedies available to us under the lease to influence.

Robin Farley -- UBS -- Analyst

Okay, great. Thank you very much.

Operator

Our next question is from David Katz from Jefferies. Please go ahead.

David Katz -- Jefferies -- Analyst

Hi, good morning, everyone.

Peter M. Carlino -- Chairman and Chief Executive Officer

Good morning, David.

David Katz -- Jefferies -- Analyst

Good morning. I -- look, I think the -- the details are all relatively clear. What I wanted to raise was a discussion I started to have with you offline that may be productive and in our travels when we discuss the Company with investors, the question comes up around the downside scenarios for regional gaming and what happens and where the protections are and where it fits in the capital stack. I think it might be helpful to discuss some of those and how yours may compare to other competing companies et cetera and sort of where you fit in the capital structure?

Peter M. Carlino -- Chairman and Chief Executive Officer

Although I mean it's -- we'd love to talk about that. Although, I'm surprised that this late day, David that -- that's still even a question. The regional properties we argue of course are infinitely more stable, reliable, dependable than let's say Las Vegas properties by and large. With the neighborhood store, some of our properties don't have hotels. So CapEx is much more moderate, yet we have monopoly positions in -- in a whole host of markets. I mean, I -- it's not a hard case to make that our property and our portfolio are some of the finest properties in the United States with I -- I should point out some of the best operators in the United States. Steve you want to --

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

David, let -- let me give you a couple of data points. I'm looking at pricing from Friday I'm looking at the longest dated senior unsecured credit of our three largest tenants. And those yields toward (ph) as of Friday range from 5.07% (ph) for Eldorado out to 5.81% (ph) for Penn National Gaming on their senior unsecured notes. Our equity closed yesterday with a dividend yield of 6.71%. And I assure you the experience that we're going through in Casino Queen, we hope not to repeat, but we certainly understand, where our tenants occupancy cost live with respect to priority. If they don't pay our lease expense, they don't have a building to operate. If they don't pay their unsecured creditors, they run into bankruptcy court and they reorganize, but even when that happens, I am not aware of any lease payment that was not made throughout dependency of the Caesars bankruptcy to any ground landlord or anyone else, who had a real property interest in anything that Caesars operated through its bankruptcy.

So to your point in terms of where we stand with the capital stack and then to your second point, in terms of regional gaming, we feel strongly that these regional gaming assets because of the tax they generate for the states in which they operate, and the employment that they create in the communities in which they operate is something that will be -- it won't be protected, but in some way, shape or form will be preserved because of the reliance of those communities in those states on those income and employment stream. So time will tell.

And unfortunately, we've talked about this, as you mentioned offline maybe cycle testing our business will alert people to the durability and the resiliency of the cash flows that we have and to the value of the master leases and the cross collateral and co-terminus features of our master leases. But we -- we remain added every hour of every day educating people on the merits of this business.

Matthew Demchyk -- Senior Vice President of Investments

This is Matt. I'll just add to Steve's point. On the master lease point, we've added the table in the release, so it's easy to follow, but 40 out of our 46 properties are in these master leases, as Steve referred to with these high credit quality tenants. And if you look at what happened at Tunica, it's probably a great example. There is a very different risk profile at the individual asset level and at the master lease level.

So in that situation, we have an asset that's closed that actually should enhance the EBITDA and improve the coverage of our rent versus if it were a one-off asset that we held outside of a master lease, there would be a lot greater option for the tenant to do what they wanted and wouldn't have that outcome. And our goal is really to focus, as we do our underwriting and capital allocation on getting more capital into that master lease credit enhanced bucket because I think you're right, there is a significantly greater value and should be a lot greater multiple applied to that.

Peter M. Carlino -- Chairman and Chief Executive Officer

Let me highlight too that the closure in Tunica was not unanticipated. It was something that was considered from the very, very first as a possibility. They share our parking lot, look closely at -- at cost structures. So we went into that transaction frankly with a -- with a clear awareness that -- that may have been the smarter choice and eventually evolved to be that. So there is no surprise to us here around that probably a good move for PENN, it doesn't hurt us.

David Katz -- Jefferies -- Analyst

Got it. I -- I -- look I appreciate the repetition of the information I hope that's constructive we sort of all repeat ourselves for living a little bit. Thanks for your answer and for taking my questions.

Peter M. Carlino -- Chairman and Chief Executive Officer

We're all happy to do that. That's why we're here. Thanks, David.

Operator

Our next question is from Barry Jonas from SunTrust. Please go ahead.

Barry Jonas -- SunTrust -- Analyst

Yeah. Good morning, guys. Would -- would love to get your thoughts on another REIT reportedly interesting -- interested in gaming assets?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Hey, Barry -- Barry, it's Steve. Listen any institutional investor, whether they are an investor in public securities or in private real estate that looks at our asset class and sees the underlying value of the asset class and makes an informed decision that they see an opportunity to deploy capital there, should over time help us compress the cap rates on our business such that it enhances our buying power.

So at -- at the end of the day everybody start panicking oh, there's another entrant here. Well, first of all, when there's a Corners, CBS that's up for the bid, there are probably 100 bidders, when there's a casino up for the bid today there are three or casino-style real estate, there are three and maybe there will be four with some folks out of Kansas City dabbling, it remains to be seen. But I think anything that brings attention to the asset class and lends credence to the institutional quality, the cash flow that these leases produced is over time a good thing for us at GLPI.

Peter M. Carlino -- Chairman and Chief Executive Officer

Yeah. But let me highlight that and we did a report, we got to (ph) unearth that -- that again, a couple of years ago looking at the experience of non-gaming people buying in the gaming sector, it is a wasteland of huge loss of people who thought it would be fun, kind of keen to get the gaming business isn't this exciting and look at the results, I mean. So as I said, there is lot of dead bodies lying out there were folks, who've tried to get into this space and done some stupid things.

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

I'd also add to Peter's point that there is -- there is hurdles that make entry uncomfortable especially in the majority of the limited license jurisdictions that we find most mispriced and that typically means going through the licensing process for the management team and the Board members. In addition to that, it is clear that when you've got an institutional cash flow trading at a -- at a significant discount to all their institutional cash flows is inevitable because you're going to have other -- other folks that validate those cash flows. But the reality here is that our management team has something like 95 years, I did this math of collective gaming experience and that means better relationships, the better operational understanding, better underwriting capabilities than anyone. And our goal is not to do the most deals, but to do the best deals and we're structured to do that regardless of the number of competitors.

Barry Jonas -- SunTrust -- Analyst

Great. And then just on Casino Queen. I think you're clear in terms of limited exposure, but is there a scenario, where you would take over operations and maybe put this into TRS?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Barry, we are exploring all options.

Barry Jonas -- SunTrust -- Analyst

Got it. Okay. And then (multiple speakers)

Peter M. Carlino -- Chairman and Chief Executive Officer

(multiple speakers) but pretty clear Steve. Thank you.

Barry Jonas -- SunTrust -- Analyst

Okay. Last one from me just -- just on the guidance range. So just to be clear the difference between the high end and the low end, that's all escalators or is there anything else around Ohio or anything else in there?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

No, it's all escalators, Barry pretty straightforward math.

Barry Jonas -- SunTrust -- Analyst

Got it. All right. Thanks -- thanks for the questions and thank you for the new improved disclosures.

Peter M. Carlino -- Chairman and Chief Executive Officer

Thanks for dialing in.

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Thank you.

Operator

Our next question is from Thomas Allen from Morgan Stanley. Please go ahead.

Thomas Allen -- Morgan Stanley -- Analyst

Hi, good morning. So when you bought the Tunica assets, you obviously paid a lower price than any other REIT -- the gaming REIT transaction that's happened. Have you looked at it assuming the revenue goes away and that it impacts the five year reset, have you looked at what the new -- what the -- like the implied multiple is, I think there is only going in multiple with 9.2 times. Have you -- have you thought about what the -- the new multiple would be?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Yeah. Again, Thomas, PENN made a conscious decision that it appeared that they were performing at an EBITDA neutral level. They made the decision to close this facility recognizing that they have two others in the market, I believe and you'll have to ask Jay and the operating team at PENN, I think they are very optimistic that they will capture most of the revenue from the closed facility at the two facilities that remain open. And I am certain, they expect to enhance margins market wide with two properties compared to the three that they've been performing at historically. So there is no impact first of all on our lease income currently.

Your question is, at the five-year reset for variable rent, which will not be until 2023 at this point in time, do we believe Tunica will have an impact on the variable reset? The Resorts Casino in Tunica is -- I'll say this, it's really immaterial, it's relatively modest. I would not expect that to drive the outcome of the variable rent reset in Q4 of 2023 in any way, shape or form.

Thomas Allen -- Morgan Stanley -- Analyst

All right, guys. So -- so worst case scenario has probably went from again 9.2 multiple to still sub 10 times multiple I'm guessing?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Yeah, absolutely. Absolutely.

Thomas Allen -- Morgan Stanley -- Analyst

Okay. And then just in the press release, you highlighted, you added some new language here highlighted that you -- you may -- we simultaneously pursue transaction for assets owned and operated by entrepreneurs that entrepreneur coming kind of stood out to me. Can you just talk about like the underwriting thought process by partnering with the entrepreneurs versus one of like the -- the more institutionalized operators? Thanks.

Peter M. Carlino -- Chairman and Chief Executive Officer

Yeah. Go ahead.

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

I mean, I think the key thing is to break it into pieces. The first thing we look at the operational competency of the operator and we try to ascertain, how well they run the operations and then separate from that we do have to consider the things we've brought out. So -- so ideally, we have a master lease, ideally we have credit enhancement. There's also a market exposure question that we need to kind of consider and we need to risk adjust all those factors that come up with what the appropriate multiple on pricing would be for any transaction.

And the other piece of it is to consider any potential or future business that we could do with the tenant and how that could be structured and how we should value that as well. So it's kind of a holistic consideration with all those attributes. But all things considered, I mean given our starting point, it's important to us the balance, the credit enhancement, strengths of our public tenants was also a potential growth vehicle and best potential partners that could be larger companies in the future.

Thomas Allen -- Morgan Stanley -- Analyst

Thanks, Steve (ph). Thank you.

Operator

Our next question is from Shaun Kelley from Bank of America. Please go ahead.

Shaun Kelley -- Bank of America -- Analyst

Good morning, everyone. Maybe just to stick with the same kind of -- the same thing as the last question. We obviously see, I think pretty liquid market as it relates to the interest in cost of capital for all of the gaming REITs and as was referred to as well maybe some other non-gaming triple nets looking to get into this space. But what's the appetite right now you're seeing from the OpCo side because I think in some of the transactions that some of us know are being contemplated out there we struggle a little bit with a really deep bench on some of the operator side just given some of the same challenges that present the barriers to entry, being the licensing and all the things that you guys know well from your time as operators. So could you just comment on that? Are you guys seeing appetite from any new or incremental parties that -- that could be interesting here that those of us in the public markets may not be as familiar with?

Peter M. Carlino -- Chairman and Chief Executive Officer

Yeah. We're looking at each other. I mean it's -- it's still a pretty small crowd there is no doubt about that. And I'll say, there are some states, where certain companies are maxed out. So well, you have to look a little bit more selectively at who is left and who's left standing. It's going to be interesting in the next couple of years. I think I said 5 years or 6 years ago that eventually have five major gaming companies and maybe fewer when the smoke settles down the road. It's a consolidating industry, a very mature industry for the days we first got involved. So I mean if your point is that -- that the selection of operators is narrow, I kind of have to agree that's the case.

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

No, it is to Peter's point, Shaun it is a shortening -- it is a list that shortens itself every calendar year it seems. But then you see folks like the Seminoles (ph) stepping into Cincinnati, you see the tribal interest that is going to be stepping into Bethlehem, Pennsylvania. There are a number of non-traditional, let me say it this way, non-public operators that do continue to remain interested in and do continue to deploy capital into the gaming space. So I'm not worried that our list of potential tenants is too finite to facilitate our continued growth by any stretch of the imagination.

Shaun Kelley -- Bank of America -- Analyst

Thank you for that. And then, just the other area, I wanted to touch on maybe was obviously the Company's name being Gaming and Leisure Properties, we've heard a little bit more going on the leisure side, as we look out there and some names being starting to be thrown around -- turnaround there. So could you just talk about broad activity levels on things that we would -- that would be non-gaming or is your plate pretty full just by sticking with the knitting on the gaming side, right now?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Look I mean, I think we will always be primarily focused on gaming. We look at various leisure things, a whole host of things almost from the day we split these companies. It's been an ongoing process. The problem is finding something that has the stability, longevity and certainty of the kind of cash flow, we get in the gaming world is on -- is very, very difficult. We're looking at horizons that in gaming that we expect to be here 20 years, 30 years from today. There aren't a lot of businesses, where you can say the same thing with any real certainty. So we look and I suspect that somewhere down the road, we'll find another place to be. I think it's almost inevitable. We're going to keep this Company growing. But at the moment, we haven't seen a better opportunity than what we've got in hand.

Shaun Kelley -- Bank of America -- Analyst

Thank you very much.

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Yeah.

Peter M. Carlino -- Chairman and Chief Executive Officer

Thanks, Shaun.

Shaun Kelley -- Bank of America -- Analyst

Thank you.

Operator

Our next question is from Joe Greff from JPMorgan. Please go ahead.

Joseph Greff -- JPMorgan -- Analyst

Hey, guys, most of the things I want to ask have been addressed, but there is two quick ones for you. With respect to the Tunica closing obviously it doesn't impact the rent, but it impacts the numerator in the rent coverage. If we were to go back over the last four quarters, what would that sensitivity in -- in rent coverage be, if we zero out the property level EBITDA related to that asset?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Joe, it's -- it's immaterial. So -- has been commented on by Penn National, they made the conscious decision to close the facility because it was -- I think they've stated publicly EBITDA neutral or very modest. So in terms of any negative impact from either the variable rent or the coverage, and therefore our ability to realize escalators, I would hope long term that this is a decision that's being made with an expectation, as I said earlier to improve market level margins in Tunica across the two remaining properties and should be portfolio enhancing for us, even though it is really a small component of what we do with PENN.

Joseph Greff -- JPMorgan -- Analyst

Great. Okay. And then another sort of relatively non-essential, but smaller question is, with respect to the guidance, you mentioned the change versus the last quarter relates to PENN, Ohio Casinos. Can you just quantify that amount, how much of that relates to weather in 1Q versus anticipation performance there in the 2Q to 4Q?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

I would have to leave that Joe to the PENN guys to address, and I think they touched on it briefly in their call.

Joseph Greff -- JPMorgan -- Analyst

Okay. And then the rent impact fee than versus a quarter ago?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

A quarter ago or year-over-year --

Joseph Greff -- JPMorgan -- Analyst

Just the guidance today versus in February?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

The guidance in the quarter, it ended up being about just short of $1 million in negative impact.

Joseph Greff -- JPMorgan -- Analyst

Thank you, guys.

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Sure.

Operator

Our next question is from John Massocca from Ladenburg Thalmann. Please go ahead.

John Massocca -- Ladenburg Thalmann -- Analyst

Good morning.

Peter M. Carlino -- Chairman and Chief Executive Officer

Good morning.

John Massocca -- Ladenburg Thalmann -- Analyst

So most of my questions have already been answered as well. But on a detailed level, has there been any progress on making kind of regulatory headway toward getting Lumiere on a true lease or to kind of finding a suitable substitution property?

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

John, as you know, Lumiere has a mortgage under it to its first anniversary. It's got a note that matures on its second anniversary. We have had some discussions with our tenant, with our operating partner Eldorado about the various alternatives that are available. There has been no material progress. When there is, we'll rest assure, you will hear from us.

John Massocca -- Ladenburg Thalmann -- Analyst

Okay. Understood. And then do you have any powers, the landlord, the kind of influence, the sustainability of a lease and therefore, who a tenant is -- who the tenant -- who the tenant -- I'm sorry can sell their operations to both with regards to maybe Casino Queen specifically, given the current situation there? And then maybe more broadly across the portfolio.

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Yes, we do. Each lease has different successor tenant stipulations built into it, some are straightforward hurdles, I wasn't going to say simple hurdles, but straightforward hurdles with respect to licensing, with respect to operating history, with respect to size and scale and scope because obviously, we're much more concerned with a Boyd successor and Eldorado successor, than a Casino Queen successor. But each lease has its own unique set of standards and stipulations for successor tenant.

John Massocca -- Ladenburg Thalmann -- Analyst

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

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Thank you. Thanks, John.

Operator

This concludes the question-and answer session. I'd like to turn the floor back to management for any closing comments.

Peter M. Carlino -- Chairman and Chief Executive Officer

Well, that's it, we thank you all for dialing in today. I hope it was helpful, and we'll look forward to seeing you next quarter. Thanks, again.

Operator

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

Duration: 43 minutes

Call participants:

Joseph Jaffoni -- Founder and President

Peter M. Carlino -- Chairman and Chief Executive Officer

Steven T. Snyder -- Senior Vice President and Chief Financial Officer

Matthew Demchyk -- Senior Vice President of Investments

Carlo Santarelli -- Deutsche Bank -- Analyst

Robin Farley -- UBS -- Analyst

David Katz -- Jefferies -- Analyst

Barry Jonas -- SunTrust -- Analyst

Thomas Allen -- Morgan Stanley -- Analyst

Shaun Kelley -- Bank of America -- Analyst

Joseph Greff -- JPMorgan -- Analyst

John Massocca -- Ladenburg Thalmann -- Analyst

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