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Gaming and Leisure Properties Inc (NASDAQ:GLPI)
Q1 2020 Earnings Call
May 1, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings. Welcome to Gaming and Leisure Properties First Quarter 2020 Earnings Conference Call. [Operator Instructions]

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

Joseph N. Jaffoni -- Founder And President

Thank you, Sherry, and good morning, everyone, and thank you for joining Gaming and Leisure Properties' First Quarter 2020 Earnings Call and Webcast. The press release distributed yesterday afternoon is available on 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 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 first quarter 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; 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; and Matthew Demchyk, Senior VP of Investments.

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

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

Thank you, Joe, and good morning, everyone, and thank you for joining us today. With us, as Joe indicated, is most of our senior management team, who are equally available to fill in the blanks where Steve and I, may miss something or some detail. So at the outset, I want to say that this is not the first quarter call that I expected to make at the start of this year. We and our tenants were off to a terrific start until the unimagined impact of the COVID-19 virus changed everything. We just concluded a tremendously successful 2019, as you would know, but what a difference week or two can make. We saw our entire portfolio of assets completely closed, which happened virtually overnight.

So we move quickly to try to understand what this shutdown could mean to our tenants and ultimately, to us. And to figure out how to decisively mitigate any risk to our business. We recognize that Penn National as our largest tenant was critical to our success, going forward. Not knowing how long this crisis might last, we made a judgment, that we needed a plan, that we believe could carry us safely into 2021. We met several times with the PENN team, the Penn National team, to fully understand their situation and work to craft a plan, that would give us both companies the ability to outlast any plausible closure period. To that end, again, as you would know, we purchased the Tropicana Las Vegas on, I believe, very favorable terms. In a transaction, where PENN received credit for approximately five months of prepaid rent and consider that for that property beyond an outright sale, which is would be perhaps a priority one, there may be a number of attractive options, that we might consider.

At the same time, we negotiated a new ground lease at Morgantown. And by the way, that property is under roof, stalled now, of course, like so much else, but it's at a terrific location, one of their new properties, at a cap rate or at a 10 cap. We got a lease modification, a number of things that we were anxious to change with PENN. We got master lease renewals at PENN, and we struck an option for PENN to buy Perryville. And just a number of favorable things that came out of this whole package. This outcome accomplished our original goal of giving us and our lenders and our shareholders, visibility and predictability around PENN's rent payments through the end of this year. It also ensured that our shareholders were made economically whole, which is a huge focus of ours in beginning. We weren't giving away something. We got true value, and I think, we got great value for that period of time. We received almost 99% of our overall cash rent in April, with payments in full from PENN, from Eldorado and Boyd. Casino Queen is yet to be settled, but we have had a constructive dialogue with their ownership group to date. And we believe that, that should or could lead to a favorable outcome.

One of the most difficult parts of addressing the impact of the COVID outbreak was the decision to furlough the majority of our casino employees in Baton Rouge and Perryville, which really was a very, very painful, but sadly necessary choice. We have maintained employee benefits, at least through the end of this month. And we have retained certain personnel to help us plan for reopenings as soon as safely possible. Getting our employees back to work is a huge priority for us and we believe, as many of you may be seen, there'll be news soon, that some of our tenants, all of our tenants facilities may open, as early as in the next couple of weeks, albeit with initial restrictions. It could be tough. We don't know yet. And I think, we expect to have a lot more clarity on where this is going to go, even by the end of this month, as states feel increasing pressure to make decisions, choices. We all see it happening. So for additional insurance, you saw that we drew down our revolver this quarter. And we received approval from our directors to change the composition of our second quarter dividend to 80% stock and 20% cash, which is an obvious choice to preserve cash to enhance our liquidity and flexibility, given the impossibility of knowing precisely when these facilities will open, or how quickly they will ramp.

So the change was made in conjunction with the reset to our quarterly dividend run rate as well. The election to reduce the quarterly dividend was made really in an abundance of caution. There's no magic to that number. It is a reason carefully thought-out number, but it's not the final word. We could well adjust positively, later. But we think that prudent suggested that we take a cautious view. These actions, along with others, as Steve Snyder will outline in his following comments should see us through. Our properties are extremely critical to the states, where our tenants do business. The tax revenue that they generate is extremely important to most of them, especially now. So we expect great pressure for states to open their properties as quickly as they think, safely possible. And then finally, thinking about this, as I talked to you all this morning, I want to say, I've been at this business and its predecessors for a very long time. I was Penn National's President when it opened in 1972, and I led our public offering in 1994. And through those years, I have weathered many, many challenges. So this one, I must say, is like no other.

But we have a highly talented team here at Gaming and Leisure Properties, who are more than up to successfully navigating through this crisis. So we do all, that we must to ensure that when this all ends, we're on our way to being bigger, better and stronger than ever. So we believe that, there will likely be much greater opportunity for favorable asset purchases, as we begin to return to normalcy. And that the journey to regain our previous success will be both gradual, but certain. And through this all, you can expect us to maintain the same focused discipline for which we have long been admired. Same company, we always were, very careful.

So with that, Steve?

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

Thank you, Peter, and good morning, everybody. Recognizing these are very unique circumstances that we find ourselves in. Let me just get one housecleaning thing out of the way, first. We did file our quarterly report on SEC Form 10-Q, last evening, with the Securities and Exchange Commission. So that there's exhaustive detail in that 10-Q to the degree there are follow-up questions after this call. Obviously, this is a very unique earnings call, and that the quarter we're reporting, even though it was reasonably strong, and we achieved really all of our objectives in spite of our businesses being closed for two weeks during the quarter. This quarter really isn't the focus. The focus is on the steps we've taken to preserve value, in light of the unprecedented velocity and depth of the disruption to the economy that has resulted in significant impacts on our and our tenants' businesses. COVID-19 has affected everyone. And as a company, we must look at the current circumstances due to the lens of its impact on our employees, our tenants and their employees, the communities in which our facilities operate, our creditors and all of our stakeholders, as we rapidly adapt to a world, that's evolving more quickly than we could have ever imagined.

Historically, the cadence of our earnings calls has been to follow our public tenants after they've provided us with four wall coverages for the completed quarter to incorporate that critical measure of four wall coverage into our release. In an effort to provide more timely transparency, we felt it better to not wait, given the impact that 0 revenue months have in the near term on the coverages of our tenant's lease obligations. We'll continue to work with all of our tenants to forebear covenant defaults, resulting from these closures as long as a collaborative dialogue continues with our tenants. To highlight some of the steps that we've taken, and Peter mentioned a few of these. We've done extensive scenario analysis and had frequent discussions with all of our tenants as well as with all of our credit group. As you saw from the PENN transactions, the series of transactions that were announced, we had prior to announcing that transaction, gotten the cooperation of our banks in amending our credit facility agreement to allow us to recognize non-cash receipts as cash revenue for purposes of all covenant calculations.

We also withdrew our guidance, given the lack of predictability relating to our monthly variable rent at our Columbus, Ohio asset. The upcoming variable rent resets that we will be seeing under our master leases. The lack of escalator realizations here, in light of the COVID-19 pandemic. And the TRS performance due to the duration of closings and reopening trajectory of our facilities. We drew the amounts available under our revolving credit facility to provide enhanced liquidity, providing a quarter-end cash position of nearly $560 million, which has been enhanced by the receipt of cash rents, in April. Finally, as Peter mentioned, we made the very difficult decision to furlough nearly 550 of our TRS employees, which was a very difficult decision to make. But what we've done is we've continued to pay their benefits. We've committed to paying their benefits through the end of May, and we'll evaluate this, as May progresses, as we gain, hopefully, greater visibility as to the timing of the reopenings.

We've maintained the minimum staffing levels for security purposes, but also maintaining staffing levels to prepare for the reopening of these facilities and to provide for the appropriate sanitary and hygiene protocols to be prepared for the safe opening of these businesses for both our employees and our customers. Lastly, we outlined in detail, the financial impact to the company of 0 facility revenue months and the impact on the contractual rent adjustments. Just from the standpoint of our expense structure. Obviously, you all know, our average monthly interest expense is about $23.5 million. We've taken the G&A in the company, down below $2 million per month. And as disclosed in the press release, we've reduced the expenses in our taxable REIT subsidiary to under $1 million per month. So our total monthly cash burn on average is just over $26 million. A real quick portfolio update. Peter mentioned that the Casino Queen did not pay its April rent.

As you recall, they had an item pending in front of the Illinois Gaming Control Board in January, for a change in ownership of that business. Given the impact of COVID-19, the change in ownership of that business has been slowed down. We are in very productive conversations with the sponsor of that reorganization of the business, who is also now the secured lender of that business, and we do contemplate a deferred rent agreement, as part of the recapitalization of that business, as it proceeds forward, once that facility does reopen. In Ohio, we were fortunate to get the Ohio Racing Commission to give approval to our ownership of the Belterra Park real estate, and we're working with Boyd to complete the transaction to include that real estate as owned real estate on our portfolio, rather than the mortgage.

For the current quarter, as Peter mentioned, our Board approved, yesterday, a dividend policy that reflects the impact of the current closures on the business. We're also changing, as Peter mentioned, the composition of our second quarter dividend to be paid 80% in stock, to provide for a matching of our non-cash distributions to non-cash rent receipts. The temporary step also provides a reasonable cushion to maintain our leverage targets and provide future balance sheet flexibility. Obviously, the goal in taking these steps is to both strengthen our current position, while also providing value-enhancing opportunities in the future, among things like, evaluating alternatives with respect to our owned acreage, as a result of the PENN transaction. We consider the current environment to be a temporary interruption in an asset class that, as Peter mentioned, is essential to the state and local governments in which these facilities operate, given the significant tax generation and employment provided by these facilities. We're very confident that the regional markets and our tenants will lead the way in the recovery of these assets, when they do reopen.

Social distancing in the form of virtual weddings or virtual happy hours or a virtual NFL draft will not become the new norm. It's simply the current norm, which we and our tenants are planning for, activity will return to these casino floors. Finally, before I turn it over to you, operator, for questions and answers, I want to call out our team members. The folks at GLPI and in our taxable REIT subsidiary have really stood up and have shown their dedication and talent through these very trying circumstances. Our property management implementing the furloughs. Our property management team working with our affected team members and seeking the support that's available out there, making donations of food and beverage to the local food bank, down in Baton Rouge. We've taken significant steps to help all of us try and get through these uncertain times because there will be another side to this.

So with that, operator, I would turn it over to you for questions and answers.

Questions and Answers:

Operator

[Operator Instructions] Our first question is from Carlo Santarelli with Deutsche Bank. Please proceed

Carlo Santarelli -- Deutsche Bank -- Analyst

Hey Thank you very much If I could just start with as you guys think about the transaction that you've already made with PENN, and you think about the go forward from here and clearly, there's a range of outcomes that are very difficult to handicap from start a new perspective, but acknowledging properties will start to reopen here, in the coming weeks. How are you guys thinking about the ramp and potentially, what levers they are left with some of your primary tenants or larger tenants in the event that we do experience a potentially slower ramp, that doesn't necessarily translate to positive cash flows or cash flows that exceed the ability to kind of make rent payments down the road. Are there levers left to pull or other types of creative transactions that you guys are potentially contemplating?

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

You had actually a multipart question. Let's start first with the Tropicana transaction, itself. And what we got for it. I mean, it's a 35-acre site and probably, main and main, if you will, in Las Vegas. It's a terrific location. And you know, MGM and doing a lot of stuff around it that we think, lends the value. There is PENN had said previously, that they were looking to sell that property. So that's not a new idea. And they were in active discussions with a number of people about that before all this happened at, by the way, significantly higher prices than what we're talking about today. Now that doesn't necessarily mean anything for the future. But we think, that we got more than fair value at the number that we've identified, and we're going to have to play it out. There may be some other things that I won't get into, today, that we could do with that property. The point is, we own it, we control it. And by the way, a simple sale would be fine. In the end, we wont pay. We think, we've got paid. We now have then have to monetize that in the form of hard cash rent. So that's about all I can say, at the moment other than, Steve, why don't you add?

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

Yes. Carlo, the obviously, your question is what's left on the shelf, if there's something necessary. And no one has visibility on when, and nobody has any visibility clear visibility on how these facilities will ramp back up. We are in a constant dialogue with all of our major tenants with all of our tenants. And we recognize none of our tenants planned their balance sheets for 0 revenue months. None of our tenants came into 2020 with the business plan for a series of 0 revenue months. So we will continue the dialogue with all of our tenants. We will look at and evaluate any and all alternatives that they would like us to consider. But clearly, the discussion is going to be, if there is any kind of short-term compromise, it will come with long-term gain. Because we do, at the end of the day, we own these facilities. We own these bricks and mortar. And we do feel we have a portfolio of really the best operators in the business, in terms of realizing the maximum opportunity that exists in this asset class. So I'm not trying to avoid your question. It's one that doesn't have a clear answer, as you can imagine. All we can do is share with you the thought process process.

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

Yes. Let me add to it Carlo, you asked about the ramp question. Well, that is, of course, the toughest answer to provide because the truth is none [Indecipherable]. You have announcements like yesterday, I saw that the governor in Illinois said, there's no date out there for casinos. Simply said, and somewhere down the road, we'll talk about it. So it's indefinite. And you have others, of course, looking to open, much sooner and then the next question is with what kind of restrictions, 10%, 15%, all these things are unknown, and they're going to differ from state to state. But then consider something like West Virginia, we know is very anxious to get open. We're hugely important as a industry, in that state. That might put pressure on our governor, here in Pennsylvania, as an example, to get this show on the road a lot faster than at this instance, it seems he will.

So all of this is a trip into the unknown. I'm utterly confident that all these places are going to get up and running, sooner rather than later, and the only unknown is just how slowly will they come back? We don't know. Gamblers are a pretty active group, desperate group. People are locked up in their houses, and I suspect, they're going to come in, faster numbers than we might first imagined. So that's my best and only answer to that.

Matthew Demchyk -- Investor Relations

And Carlo, this is Matt. I'd also add on the topic. I mean, our operators are, obviously, in a lot better solvency positions, across the board, than they were just a few weeks ago. PENN, in large part due to this transaction, but they've taken meaningful steps to really address the circumstances and move their cash burn to an important and comfortable place. But I'd also point out to add to Steve's comments, I mean, you can look at a few sign posts that were really relevant in the PENN deal and continue to be relevant for us to appreciate how we're thinking. I mean, it was really getting to a point of economic wholeness for our shareholders, with an opportunity for upside, that we're really obligated to get for our shareholders, wherever possible, for any deviation from the norm.

And the bottom line question in all these decisions for us is, is the company's long-term value more or less after the decision is made versus before. And with PENN, I mean, we're very confident that, that answer is yes. And so I hope, that gives a little extra color on how we think about things.

Carlo Santarelli -- Deutsche Bank -- Analyst

That does. And if I could just ask one follow-up, which I think will be a much simpler question. The monthly reset in Columbus and Toledo, with the Greektown deal, there is a floor under Toledo, little less than a 50% of the monthly rent, I believe, that you get from those two assets. How much lower is that floor than kind of where you were trending, say, in 2019, with respect to just the monthly rent on the Toledo piece? Is that disclosed somewhere? Or is that something you guys could provide?

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

It is. It's in the queue. It's $22.9 million is the floor and...

Carlo Santarelli -- Deutsche Bank -- Analyst

On an annualized basis?

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

For Toledo, I'm sorry.

Carlo Santarelli -- Deutsche Bank -- Analyst

Thank you very much

Operator

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

Nick Yulico -- Scotiabank -- Analyst

Thanks for taking question I just want to go with touch on the dividend. Peter, you did mention that, you could maybe adjust the dividend positively, later. You didn't mention negatively. So can you just give us a feel for how you guys how the Board thought about adjusting the dividend, in light of obviously, you had already, the PENN transaction, but if there's any other rent relief, you might have to give to your other operators?

How should we think about that in your comfort level there?

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

Well, of course, we don't have the answers to any of those questions. I'll let Steve walk through the logic, that got us to the number we selected. We just took a conservative view. I used to say, when I rent in, that we are not in the gambling business. Our customers may be, but we're not. And that certainly applies on the gaming and leisure side of things. We're not going to we try to be open. We try to be extra transparent. All that you've seen over the years you've followed us. So we just look at the logic and say, look, things aren't going up any too quickly. Let's look at a number, that looks sustainable. Under almost all measures, all those. And to your other point, could it be worse? Well, sure. I mean, if nobody opens, and this goes on for ever, I mean, who knows what will happen. So but we're not taking that view. We're much more optimistic, take a look at Pennsylvania. Our two properties in Pennsylvania provide over $250 million annually for the state. And that's before income taxes, that's before corporate tax, that's before everything. So the those two properties in the balance, generate almost $2 billion for the State of Pennsylvania. You can bet, somewhere up there in the Government's office. They're thinking about how they get this back. So that's what we rely on, ultimately. But just how it's going to play out, God knows.

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

And Nick, just a follow-up on your question, a little bit. In dealing with our Board and in presenting this to our Board, we basically looked at what the contractual impact is going to be on our business, as a result of these months of negative EBITDA. And what that meant, in terms of coverages, what that means, in terms of the resets of our leases, what it means for the operating performance in our taxable REIT subsidiary. So we think, we arrived at a set a point for our dividend that is reasonable, in light of the current circumstances and will allow us to get back to a growth trajectory, in terms of returning capital to shareholders, in light of where the balance sheet is. Because at the end of the quarter, you see we got, well, below 5.5 times net leverage, which has been our target. So we're inside of our target ranges. We've got a very solid relationship with our bank credit group, and we think, this messaging to all of our constituents signifies our willingness to make difficult decisions and really an approach that allows us a nice runway, going forward, to get back to the trajectory. But we all need to wait and see exactly when these things open and how they open, before we can arrive at a conclusion and tell you with certainty, this is it, no more.

Nick Yulico -- Scotiabank -- Analyst

Okay. And just my second question has to do with your other operators, Boyd, Eldorado. Have you had any conversations with them about rent deferrals? And do you expect to receive full May rent from them?

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

At this point in time, we certainly do hope to receive full May rent, since we are now at May 1. Everyone is certainly focused on maintaining the flexibility to get reopened and get reopened as quickly as possible. And therefore, they don't want to trip any covenants. So you saw PENN got covenant relief when they announced our transaction. As you can imagine, if someone fails to pay rent and there's a default under a lease, that is likely to be a cross-default, under existing credit documents. So everyone is very focused on not allowing for a default, that would cause an acceleration of a lease obligation or cause acceleration of any credit facilities, that they currently have. So at this point in time, we are in a constant dialogue with all of our tenants. But really, as it relates to May, everybody is really now focusing more on opening. And obviously, to open, you've got to pay occupancy cost.

Nick Yulico -- Scotiabank -- Analyst

Great Thank you

Operator

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

Thomas Allen -- Morgan Stanley -- Analyst

Hi, So Peter, you know this industry better than anyone else, probably. What do you think, the outcome will be from a state-by-state perspective of the weaker state budget and potential more state legislation?

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

By new state legislation, are you thinking taxes or something...

Thomas Allen -- Morgan Stanley -- Analyst

I mean, taxes, expansion, shift to online. I mean, how are you thinking about that?

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

Again, you know, as much as I do about what's out there and possible. And frankly, anything is possible. I hate giving vague answers, but this is one time in my life, where I haven't a freaking clue and where this is all going to go. And I think, it's going to be very different, state to state. I mean, I'll make one observation that the those states led by Republican governors seem to be a little bit more ambitious, but you make your own conclusion about that to get these places, up and running than some others. And in fairness, some of the Northeast states have been harder hit than some of the western and southern states. So it's going to be all over the lot. Some states are in big trouble. Illinois, for example, just said, they don't know when they're going to open and offered no guidance. Yet they're a state, it's in one of the worst conditions in the U.S. So I mean, this is just an unknown.

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

But Thomas, to your question, I do think, internet wagering, I do think, sports wagering, I think, things that were being contemplated before COVID-19 are going to be accelerated. I don't think, that anybody expects that taxes will jump, tax rates will jump because, obviously, the operators have been significantly impacted by this event. So raising taxes on an industry, that's already been impacted as negatively, feels like a sort of an attempt to get blood from a stone. And we know that all of our operators in the entire industry is certainly lobbying heavily, to make sure that the industry comes back and gets back to where it was in 2019. So I see opportunities for enhancements. I don't see a real risk, immediately, of a wide expansion, of additional facilities in states, or anything like that, only because I do believe, that these state legislatures will first try and protect their legacy industries and then, of course, try and get them back as quickly as possible.

Thomas Allen -- Morgan Stanley -- Analyst

That's helpful. And then just as a follow-up, has this experience changed your thinking about your long-term leverage targets at all?

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

Look, that's a great question. Given how benign the interest rate environment had been, and I do think, the interest rate environment is going to be pretty favorable, going forward. I mean, with a 10-year treasury at 60 basis points. Obviously, people have made the argument, should you have leverage. And clearly, financial leverage is something, that we as a REIT are going to employ? What is the right leverage level? We felt quite comfortable. The rating agencies felt quite comfortable. Our creditors felt quite comfortable with where we were. And I look at this, again, as a temporary interruption in really just a very sound underlying business. So we have that's a discussion that we had with the Board, as part of the dividend policy, and the dividend policy does preserve the flexibility to migrate further and further, down the leverage scale, as we can imagine.

Thomas Allen -- Morgan Stanley -- Analyst

Thanks very helpful

Operator

Our next question is from Barry Jonas with SunTrust. Please proceed

Barry Jonas -- SunTrust -- Analyst

Thanks I Just wanted to go deeper into the Tropicana, maybe it's too soon, but can you talk about the level of interest, you're seeing here, from potential buyers? And I guess, with that, how are you thinking about timing, if you're going to sell it, given you'll keep more proceeds, the longer it takes? Well, that's an interesting point. First order of business is to get paid, convert what we have, to cash. So there was an ongoing arrangement. As I said, 10 was actively working out, not mention the broker who's involved, but had an agreement to represent this property for sale. There was significant interest. At a much, much higher price than where we are. And we, of course, have now full control of what that disposition gets to be. We insisted that PENN, keep it up and operating, it's kind of hard to sell a house if it got no furniture in it. And they've agreed to do that. And we and they cover all expenses. So the carry costs that we have to deal with, are all borne by them. It's really hard to know. I don't think, there's somebody tomorrow at nine o'clock, although, there may be for all or part of that property. Remember, there's a lot of interest in the frontage, there. So we're just exploring that. It's just too early to say. We've got bigger concerns, and that's getting working with us and get these properties open, get our properties open in Perryville and Baton Rouge. But as soon as we see that there's a forward momentum, within a vast Las Vegas is coming back and so forth, we will. And we've been in touch with those folks. But we'll make the whole court press. We can sell it early. I think, that's what we'll do.

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

Yes, Barry, let me just add to that. I mean, by any metric, in a normal market environment, looking at comps that are in Las Vegas, whether it's off-script properties like the Rio or the Hard Rock, that have traded in recent years. Given our basis in this asset at under $9 million an acre for 35 acres of land, that is just the corner of Las Vegas Boulevard and Tropicana Boulevard and the hotel rooms and the amenities that are on that facility, we feel that we've got a very significant cushion to realize incremental value, as a result of the transaction at an appropriate time. It's just that right now, as you can imagine, everybody is waiting to see, where things are going to go. So to Peter's point, it's not like you should expect anything to show up tomorrow. You should expect us, to look for value-maximizing opportunities, with respect to those holdings.

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

Well, take a good offer tomorrow, somebody wants to take one. But no, Steve answered it very well.

Barry Jonas -- SunTrust -- Analyst

Got it. And then just second for me. How does this crisis kind of influence your thoughts about additional M&A within gaming? And I guess, does it influence your thoughts on, eventually, doing something outside of gaming as well? But from a geography, within gaming, I guess, where I'm getting at?

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

Well, it's hard to know what's going to shake loose. I mean, I don't think, it changes our ambitions, one bit.

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

And Barry, look, I am anxious, as we all are, obviously, to get to the other side of this. But I think, people will come to appreciate the stability that exists in the cash flows from these regional gaming assets, once they do reopen, and once they do get back to a more normalized operating environment. So again, as we've spoken in the past, there's a pretty high hurdle, in terms of finding other assets that have the same characteristics and have the same cash flow quality, as the portfolio that we have been able to build. So it's a high standard, but we will continue to be focused on increasing shareholder value, as we continue to grow our business.

Barry Jonas -- SunTrust -- Analyst

Okay great

Operator

Our next question is from Joe Greff with JPMorgan. Please proceed

Joe Greff -- JPMorgan -- Analyst

Hey, Peter, does it make sense to use some of your liquidity to invest new equity in your tenants? You can think of it as an insurance policy, that has depreciation potential. Are there any restrictions for GLPI to do that?

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

Joe, there are related party tenant issues, that would limit us to owning up to 10% of a tenant. It's an interesting thought, one that we've had discussions about, in the past. It's not one that we have taken action on, at this point in time. But suffice it to say, it is a component of any discussion, that we've had with PENN, as an example, in discussing any kind of, or the transaction that you saw us print. So looking at those kinds of opportunities, taking advantage of the liquidity that we do have are certainly things that we would consider subject to the REIT constraints that exist.

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

It's been great about. So I mean, look, you can always assume, that we're thinking about everything. It's the point, I've made for many, many years. It's alive and breathing, we're looking at it. If it in this case, as you framed that question, sure, we looked at it, maybe should have stepped up, when the price hit bottom, just a short while ago, happily, it's going back in a better direction. But all things are possible. If it makes sense for our company.

Joseph N. Jaffoni -- Founder And President

Got it. And then, Steve, looking back at last year for Columbus and Toledo, the math, that I have for Columbus rent, last year, was about $25 million, and Toledo was something like low 20s. Is that sort of...

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

Yes. The floor was set, based on 2018, the floor is 22.9%, as disclosed in the Q. It's correct.

Joseph N. Jaffoni -- Founder And President

And then in terms of those specific property rent contributions last year?

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

Yes, based on the percentages, that were disclosed in the press release, yes.

Joseph N. Jaffoni -- Founder And President

Got it. Thank you

Operator

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

Jay Kornreich -- SMBC -- Analyst

Hi. Just a follow-up on the sports betting, as PENN made sizable investments into support betting, with partial sports and other similar players. You guys are viewing these types of no-touch gaming going forward, in terms of the recovery and people continue to worry about social distancing.

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

So the question is, what we see is the potential or where you think it's headed?

Jay Kornreich -- SMBC -- Analyst

No. I guess more sorry.

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

Yes. If I understand your question correctly, it's basically, do these remote because I think, your question was not unique to sports betting, but was more about internet wagering? Or am I wrong?

Jay Kornreich -- SMBC -- Analyst

Yes, both of them.

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

Yes. And clearly, all of our tenants are looking at internet platforms for both their sports wagering as well as in Pennsylvania and New Jersey, full-blown casino gaming. And each of them has basically identified that, as a real source of customer ID, customer acquisition and customer retention. So it would feed the real estate would feed the internet business would feed our bricks-and-mortar business, as they continue to develop that internet presence because they're able to identify people at a relatively low cost, that they might not otherwise have identified and be able to drive them into the facility. So if the question is, will sports wagering grow? Yes. Will internet wagering grow? Yes. What impact will it have on our real estate, we expect, over time, it becomes a value driver for our tenants, in terms of driving incremental traffic into our buildings and, therefore, increasing and improving the performance under our leases.

Jay Kornreich -- SMBC -- Analyst

Got it, that's helpful. And then just one follow-up with PENN, the option to buy the Perryville operations and then lease the real estate for $7.77 million, annually. I'm just curious, that if you guys know or announce the cap rate that got you to that $7.77 million.

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

No, we haven't. What we've done in the discussions that we had with PENN were really around what the performance of Perryville will look like, impacted by the category four licensed facilities, here in Pennsylvania, when they open. So it's really a question it's two questions. What's the multiple on the OpCo, right? At the $31 plus million that we're selling, the OpCo for? And then what is the cap rate on the underlying lease. And those are going to be determined, as we get closer to closing, based on the actual performance of the facility.

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

Yes. I Remember, both Morgantown and New York are within range of overlapping customer base. So something we have to account for, they have to account for. But...

Jay Kornreich -- SMBC -- Analyst

Thank you very much

Operator

Our next question is from David Katz with Jefferies. Please proceed

David Katz -- Jefferies -- Analyst

Thanks for taking question I do want to go back to a couple of the prior questions and just go a little bit further, quite frankly, because I find you to be one of the more philosophical management teams about this, right? We do consider this to be a temporary set of conditions, but like in many events, whether it's personally or corporately, we would have to be changed on the other side in some way, right? And how do we answer the question of how the company prepares or positions itself for the next pandemic or for potential resurgence, that may or may not occur, hopefully not, obviously, in September. And specifically, from how you look at a tenant and tenant coverage. And more specifically, how do you think about leverage? I know, you touched on it with Barry's question, but is four to 5, the new five to 6, and that's ultimately what I'd love to hear your perspectives on.

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

I'll take the first part and let you work on the other. Look, I have often said to those of you who have seen me on the road or come and visited us here, there are too many years of this in the racing business and so forth, being through many ups and downs, that you got to consider that Maslow's hierarchy of needs, as I like to say, it's food, it's shelter and it's gambling. It's almost that. In fact, through every recession that we've had over the years, but for '08, '09 time frame, we actually went up during that period of time. People found a relief in entertainment and so forth. And I have absolute confidence, we'll get back to full shoulder to shoulder playing, in time.

Now what I can't guess at, is how long is it going to take the people have the confidence to do it. My bet is going to be shorter than many think, but it's going to take a while. It's going to take a while. There's been a lot of fears sold out there. A lot may depend on which state, which place, what the risk level is. People intuitively know that. So I'm going to be very optimistic about ultimate performance. What I just can't speculate on, is how long is it going to take to get there.

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

Look, David, you're asking the right questions, right? Does this affect our decision-making in the future? And it has to. I mean, the bottom line, living through an experience like this is going to affect everyone's decision-making in the future. Are we going to materially modify the way we approach this business? Look, we own the buildings. At the end of the day, these buildings are key revenue drivers for the states, in which they operate. So we're very comfortable, that there's an alignment of interest between the states, the regulators, our operators and ourselves, in bringing these businesses back as soon and as on as an accelerated a performance level as possible, but I mean, all that being said, are we going to be better prepared for the next shutdown? I don't know, that this is going to cause us to plan for future shutdowns, but time will tell.

Operator

Our next question is from Shaun Kelly with Bank of America. Please proceed

Shaun Kelly -- Bank of America -- Analyst

Okay So I just had a couple of it's more specific one. So there is the first one is just on the stock versus cash dividend, Steve, I think, there was a sense in there, that said something about you only planning to pay the stock dividend in the periods when you're realizing non-cash rent payments. Can you just elaborate a little bit on exactly what that means?

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

Yes. No, as I said in my comments, Shaun, I mean, distributing cash in distributions, when we're not receiving cash rents, obviously, is a levering transaction, and that's something we did not want to go that's a path we did not want to go down. You know from the disclosures that the PENN agreement provides for cash non-cash rent credits in the months that are outlined, May, June, July, August, October and November. So there are impacts in each of the next three quarters, the current one in the next two, based on those non-cash rent receipts. So that was the point with that statement, that we're aligning the distribution of equity with the receipt of non-cash rents. And obviously, for us, what that does then is that, that creates a tremendous amount of flexibility for the company, when we do realize the value in Tropicana. Because we're going to take that onto the balance sheet or have taken that onto the balance sheet, as a non-income-producing asset at this point in time, and we'll amortize its value in those non-cash rent receipts or non-cash rent credits over these months.

Shaun Kelly -- Bank of America -- Analyst

So Steve, what would that allow you to do, exactly? Would that tee you up for the possibility of like a one-time special dividend to return some of those proceeds to catch back up, if Tropicana was actually monetized? Appreciate, we've already talked about the circumstances to actually do that could take a while, but is that the sort of underlying implication?

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

Look, that is an alternative. Obviously, if it's a liquidity event, and we've got substantial liquidity from a sale, we'll evaluate at that point in time, based on market conditions, the best deployment capital, whether it's for value-enhancing transactions, deleveraging or returning it to shareholders.

Shaun Kelly -- Bank of America -- Analyst

Helpful. And then just one other follow-up. But sort of also more on the technical side, would be the broader liquidity profile. So obviously, you've drawn down the line. You've given your cash balances and you're able to preserve a lot through the dividend move. But I believe, the credit facility does come due, in April of next year. So can you just talk about that and any other flexibility levers you have on the liquidity front? And specifically, if you could comment on an ATM program? Do you have one? And is it something how do you think about using it if you do?

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

Yes. Just to clarify, the $1.175 billion revolver is not due until 2023, May. There is a $449 million term loan A1 maturity in April of next year. So obviously, given the continued contractual payments of rents, there is no liquidity issue. Yes, there is a liquidity issue. We have only unsecured debt. So there's an ability to incur secured debt. We do have an accordion feature, under our existing secured unsecured credit facility, with the bank group that allows for up to $2.5 billion, under that accordion feature. And as you saw from the amendments that the banks agreed to in anticipation of the PENN transaction, we've stayed in constant dialogue with our bank group. And they are well aware of our situation and quite supportive of us, as a company. So we think, we're going to have there are no liquidity issues on the horizon, even with that $449 million maturity in April of next year.

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

Let me add one small part to that. Just a simple thought. And that is this, as you measure, use of cash and capital. In the six years that we have spun from PENN, I've been particularly pleased with the dividend growth, that we've managed each and every year, as we got last quarter, last year at $0.70 a quarter. As one of the largest shareholders in this company, that I'm wildly enthused about that. I want to get back there as quickly as we possibly can. So cash dividends mean a lot to me. That having been said, the stability and safety of this company matters more, making sure that we maintain the spend in the engine. So I might even say that maintaining proper leverage is probably the larger driving force. And if we take care of that, do it properly, dividends will be fine. So that's from a philosophical point of view, I'd share it that way.

Shaun Kelly -- Bank of America -- Analyst

Thanks for color.

Operator

Our next question is from Jordan Bender with Macquarie. Please proceed

Jordan Bender -- Macquarie -- Analyst

In terms of the dividend, I see, you guys typically target paying out roughly 80% of your AFFO or somewhere in that range. Over the next couple of quarters, do you plan on staying within that range?

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

Jordan, given the uncertainty that exists in the world today, we've set the $0.60 at a lower payout ratio than historical norms. Based on our internal modeling, we just think, it's the prudent approach to take, at this point in time. So we need to get through these next couple of quarters, but we are and that has been set at a more conservative approach than the historical 80% of AFFO payout ratio.

Operator

Our next question is from Robin Farley With UBS. Please proceed

Robin Farley -- UBS -- Analyst

Great. A lot of my questions have been asked already. I guess, thinking about how the pandemic may kind of limit for a while, the opportunity for others to sell real estate to GLPI because EBITDA and therefore, rent level would be so low. I guess, in the past, others have suggested that maybe a combination with other gaming REITs would make sense. I guess, I just, I'm wondering in this environment with maybe kind of a change in what opportunities might be out there, if you have any thoughts on that, that are different now.

Matthew Demchyk -- Investor Relations

I'll weasel out of that question by simply saying that it's kind of too early to know. Maybe by two quarters from now, I'll have a good answer or a better answer for that. But we're just focused right now in getting this company back on firm ground, again, and that's our driving force. There's really nothing else that is important to me, anyway, Steve?

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

No, Robin, you're asking, obviously, the appropriate question, in light of the current circumstances. Goal number one is, obviously, to preserve and protect the assets of the company. Goal number two is to look for accretive ways to enhance shareholder value. And you can rest assured, as I've said in the past, we will always look at any opportunity that is shareholder value enhancing.

Operator

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

John DeCree -- Union Gaming -- Analyst

I think, you touched on just about all of them, but I wanted to ask about some other dialogues that you may have had, with casino operators, whether it be your tenants or partners you haven't yet reached an agreement with and REITs being a new to the space, relatively speaking, as a financing partner. And we've we seen the loan markets, with pretty wide spreads, particularly for smaller operators. Has anyone approached you? Have you had discussions about providing some liquidity, whether it's through loans or buying call options, or anything a little bit more creative than outright asset sales? I guess, the short question is, are casino operators in this environment looking to you as more a financing partner than they have in the past, in terms of just outright asset sales? And is something like that interesting to you?

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

No, John, it's a great question. And obviously, the depth of the disruption that we're all facing does create opportunity for us. And we will look at and continue to be engaged in dialogues with folks that are looking to extend their liquidity runways. Right now, everybody is still going through the shock, for lack of a better term, of what this dislocation has meant. They're more focused on working with their existing creditors, their existing stakeholders, whomever it might be, even the small private operators, rather than looking at just outright asset sales, but I think, that's just a matter of time before those discussions accelerate and really kind of increase in frequency.

Operator

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

John Massocca -- Ladenburg Thalmann -- Analyst

As we kind of think about the withdrawal of guidance, I mean, I guess, what would you potentially need to see in the kind of market or on a macroeconomic basis to or even within your portfolio, to be kind of comfortable, reinstituting a new guidance?

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

Yes. Look, it's a great question. We I'd like to think, we're more transparent than almost anyone else in the triple-net space, given that we've got almost all public company tenants that you can read through, and we are pretty elaborate, in terms of spelling out all of the terms of our leases. So I think, everyone can model pretty effectively our business, given the moving parts that are in our business. In terms of returning to issuing guidance. Look, we're going to be going through a couple of quarters here, where our tenant's coverage is, as I mentioned or implied in my opening comments, are going to be below thresholds that are required under our leases. So I think, we've got to get back to a much more normalized operations. So I wouldn't want you to take away from this phone call, that as soon as these facilities reopen, we're going to be reinstituting guidance. We just need to see where things first open, then stabilize and ultimately, normalize, before we are probably going to feel comfortable, given what we've just lived through.

Matthew Demchyk -- Investor Relations

Yes. Let me say this as well, that these rollouts are going to be very, very, very different state to state, and that's the problem. We just have to see how it evolves. But I guarantee you that not all states will be alike, not all states move with equal speed, not all states will be will bring customers back as quickly as some others. So again, we scratch our head here, what do we say and what we don't want to do is give misleading information. So we'd rather be silent for the moment until we actually have something, we think, we can firmly tell you.

John Massocca -- Ladenburg Thalmann -- Analyst

Understood. And then maybe kind of longer term, philosophically, as you kind of come out of the current economic situation and understanding that the Perryville option, that was granted to PENN was part of a larger transaction. I mean, has your view on having TRS properties change at all because of what's occurred over the last couple of months? I mean, is the agreement with PENN, maybe an indication of some willingness there, to potentially divest to those assets?

Matthew Demchyk -- Investor Relations

We've always had that willingness if it made sense. Look, we're not operators. That was never goal number one. It was part of the requirement for our spin. But having been said, if it makes sense, we've, I think, said publicly before, to facilitate a transaction, to bring another OpCo back in the day after, let's say, Perryville's goes to PENN, we would do that. So we have no we kind of like having our fingers on the gaming side, working with our people, keeping our remembering that gaming right now underlies our entire business. So I don't necessarily want to lose touch. We just think, it's the right move to get us back to a pure REIT status today, but we'll have no hesitation to do something else in the future.

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

And John, that goes both ways. Maybe people haven't focused on it, but we're actually bringing the Tropicana into our TRS because it is non-income-producing and because it's not we're bringing it in, not necessarily with an expectation of owning it for a long period of time. So moving assets out of, moving assets into operating or real assets into the TRS are going to continue to be tools that we will employ.

John Massocca -- Ladenburg Thalmann -- Analyst

Just a clarification on the last comment that you're not reliable for any of the PENN is going to essentially take all of the risks associated with the actual EBITDA of that property?

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

Absolutely.

John Massocca -- Ladenburg Thalmann -- Analyst

Okay, OK. Just wanted to make sure.

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

There. At electric, you name it all, taxes, God bless them. It's all theirs.

John Massocca -- Ladenburg Thalmann -- Analyst

Just wanted to make sure. And then one last clarification. You kind of alluded to it a little bit with some of the earlier questions, but in the press release, but the rent credits are not going to flow through AFFO. If I'm thinking about it correctly.

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

Oh, no they are.

John Massocca -- Ladenburg Thalmann -- Analyst

So they are.

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

They are because they're flowing through the income statement. So they're going to be flowing through the income statement. And as I mentioned, and as is disclosed in the press release, we did get agreement from our credit facility providers to treat those as the equivalent of cash, since GAAP requires us to.

John Massocca -- Ladenburg Thalmann -- Analyst

No. I mean so essentially, the cash impact of not having that cash rent is not going to be reflected in AFFO? Or will it be reflected in AFFO?

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

It will be reflected in AFFO, as a cash equivalent.

John Massocca -- Ladenburg Thalmann -- Analyst

Appreciate it. Thank you

Operator

And our final question is from Spencer Allaway with Green Street Advisors. Please proceed

Spencer Allaway -- Green Street Advisors -- Analyst

Hi. Just one of your peers reported a notable impact from the current expected credit losses accounting standard. Do you guys anticipate, booking a similar allowance for potential credit losses or a subsequent writedown in the value of any of your real estate this year?

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

We did we evaluated our loans. We, unlike the party that you're referencing, treat our leases as operating leases. So it was only on the loan portfolio. And given the short duration of the loan portfolio, we didn't see an impact, that was material enough or that rose to a level of materiality, excuse me.

Spencer Allaway -- Green Street Advisors -- Analyst

Got it Thank you

Operator

And that concludes your question-and-answer session. I would like to turn the call back over to Peter Carlino for closing remarks.

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

Well, we'll make them short. Again, I want to thank you all for dialing in today. These are very interesting times, but, we, here at GLPI are very optimistic about the future. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 63 minutes

Call participants:

Joseph N. Jaffoni -- Founder And President

Peter M. Carlino -- Chairman of the Board and Chief Executive Officer

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

Matthew Demchyk -- Investor Relations

Carlo Santarelli -- Deutsche Bank -- Analyst

Nick Yulico -- Scotiabank -- Analyst

Thomas Allen -- Morgan Stanley -- Analyst

Barry Jonas -- SunTrust -- Analyst

Joe Greff -- JPMorgan -- Analyst

Jay Kornreich -- SMBC -- Analyst

David Katz -- Jefferies -- Analyst

Shaun Kelly -- Bank of America -- Analyst

Jordan Bender -- Macquarie -- Analyst

Robin Farley -- UBS -- Analyst

John DeCree -- Union Gaming -- Analyst

John Massocca -- Ladenburg Thalmann -- Analyst

Spencer Allaway -- Green Street Advisors -- Analyst

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