What happened

Shares of casino-owning real estate investment trust (REIT) Gaming and Leisure Properties (GLPI -0.02%) rose an impressive 22% in May according to data from S&P Global Market Intelligence. That continued the turnaround from the deep drop that occurred in February and March, which pushed the stock down nearly 70% at one point. A lot has happened in the first five months of 2020.

So what

The big story for Gaming and Leisure Properties is the effort to slow the spread of COVID-19, only it wasn't exactly a direct impact. The REIT owns casinos that it leases out to casino operators. Basically, it just collects rent checks. As long as its properties remain occupied it should get paid. Only nobody really considered what would happen during a pandemic that shut non-essential businesses and led to widespread social distancing efforts. With the operators of the REIT's casinos forced to shut their doors, the idea that the rent wouldn't get paid was suddenly a very real issue. Investors, perhaps realistically, dumped Gaming and Leisure Properties' shares.

A woman at a slot machine

Image source: Getty Images.

That's the first half of the story, of course, because the outlook has slowly started to improve. It appears that closing non-essential businesses and asking people to stay home has helped get the United States past the worst of the coronavirus outbreak. Businesses, including casinos, are starting to reopen again. In fact, when the REIT reported first-quarter earnings, it noted that it was able to collect all of its April rents -- a very positive sign. Meanwhile, there has been upbeat news about the development of a potential vaccine. Such a treatment could allow casinos to operate as they did before the pandemic, and would further strengthen the outlook for Gaming and Leisure Properties. All of this upbeat news has gotten investors excited again about the REIT.   

Now what

Dividend-focused investors shouldn't get too excited by what's going on today; there are still big issues for the casino industry to deal with. The facilities are, at least initially, going to have to run below historic capacity levels, face increased costs (for things like cleaning), and convince perhaps reluctant customers to return. All of that could easily weigh on Gaming and Leisure Properties as it tries to collect future rents from potentially struggling lessees. Note that the REIT cut its dividend by roughly 14% in the second quarter, recognizing that there could be notable headwinds in front of it. Those headwinds are diminishing, but they aren't gone.