Gaming And Leisure Properties Beats Q2

Key Points

• - Adjusted Funds from Operations (AFFO) per share rose to $0.96, surpassing both analyst expectations and prior-year levels in Q2 2025.

• - Net income and GAAP earnings per share fell sharply, with net income (GAAP) down 27.2% year over year.

• - Quarterly dividend increased to an annualized $3.12 per share, maintaining the company’s REIT distribution strength as of Q2 2025.

• These 10 stocks could mint the next wave of millionaires ›

Gaming And Leisure Properties (NASDAQ:GLPI), a real estate investment trust specializing in gaming properties, reported Q2 2025 results on July 25, 2025. The most notable headline from the release was the company’s record-high non-GAAP earnings per share, which beat analyst expectations in Q2 2025. AFFO per share reached $0.96. However, the period also saw a significant year-over-year drop in GAAP net income, with net income per share falling to $0.54 compared to the prior-year $0.77. Revenue for the quarter was $394.9 million, coming in just below the consensus GAAP revenue estimate of $397.0 million, a 3.8% increase compared to Q2 2024. In summary, the quarter showcased robust cash flow and leasing growth, but also highlighted rising credit loss provisions and softness in headline net income.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Key Focus Areas

Gaming And Leisure Properties is a real estate investment trust (REIT) that owns and leases out casino properties across the United States. Its business model centers on acquiring gaming-related real estate and leasing these properties to leading gaming operators through long-term, triple-net leases. In these leases, tenants handle property taxes, insurance, and maintenance, which supports predictable cash flow for the company.

The company’s recent strategy has concentrated on portfolio diversification, both geographically and by operator, as well as disciplined capital deployment through development funding and sale-leaseback transactions. Key factors for success are stable lease structures, strong tenant rent coverage, ongoing property development, and full occupancy. Effective management of variable-rate debt and adherence to REIT tax rules are also critical.

Quarter in Review: Financial and Operational Highlights

AFFO per diluted share and OP/LTIP units (non-GAAP) reached a new high at $0.96, up 2.1% from the previous year and Non-GAAP EPS was above analyst expectations. AFFO is a non-GAAP measure frequently used by REITs to track core cash flows, important for assessing dividend strength. Adjusted EBITDA, another key performance indicator measuring recurring earnings before noncash charges and interest expenses, also set a record at $361.5 million, Adjusted EBITDA was $361.5 million, up 6.2% compared to Q2 2024.

While revenue (GAAP) climbed 3.8% year over year, net income saw a sharp decline. Net income (GAAP) fell to $156.2 million, a 27.2% decrease compared to Q2 2024, and net income per diluted share (GAAP) dropped to $0.54. This drop reflected higher non-cash provisions for credit losses: $53.7 million compared to a net benefit in Q2 2024. According to company management, these credit reserves arose from a “more pessimistic forward-looking economic forecast” in Q1 2025.

The lease portfolio and rent coverage ratios remained a focus for stability. Gaming and Leisure Properties holds 68 facilities in 20 states as of June 30, 2025 and has leased them to eight different operating partners, such as PENN, Bally’s, Caesars, and Boyd. For the period, occupancy was 100% as of December 31, 2024. Lease structures commonly feature annual escalators. Recent master lease coverage ratios remained solid, though the Pinnacle Master Lease at 1.69x as of March 31, 2025, edged closer to escalation thresholds set in the agreements.

On the development side, the company advanced several sale-leaseback and funding projects. These included continuing funding toward new ventures like Bally’s Chicago casino, with project oversight ongoing due to construction complexity. Funding also supported the Ione Band tribal gaming project and the landside redevelopment at Bally’s Belle of Baton Rouge. As of June 30, 2025, the company listed over $740 million in growth commitments not yet fully drawn. The Hollywood Casino Joliet move, with $130 million in funding at a 7.75% cap rate, remained on schedule for an August 2025 opening.

Competition in the gaming REIT sector stayed strong, with larger rivals, such as VICI Properties, positioned to influence future deal flow and acquisition pricing. Management reported “renewed interest” from potential partners, as volatility in capital markets increased counterparty engagement in deal discussions. In terms of risk management, the company remained vigilant regarding ongoing state-level gaming and iGaming legislative developments. Management emphasized the importance of bricks-and-mortar operations for rent stability and was “hard against iGaming.”

Financially, the company’s capital structure remained robust. Net debt to EBITDA was reported at 4.7x, within the company’s comfort range in Q1 2025. Significant transactions included a $404.0 million forward equity sale in Q2 2025 and the start of a $1.25 billion at-the-market equity offering program to provide liquidity. Debt maturities are well staggered, averaging 6.1 years with a weighted average interest rate of 5.064% as of June 30, 2025.

Dividend management is a key part of the company’s REIT obligations. The annualized dividend climbed to $3.12 per share, a 2.6% increase from $3.04 in Q2 2024, maintaining a payout yield of 6.7% at period end.

Outlook and What to Watch

For fiscal 2025, management updated Adjusted Funds from Operations (non-GAAP) guidance to a range of $1.112 billion to $1.118 billion, or $3.85 to $3.87 per diluted share and OP/LTIP units. This range represents a slight increase at the low end of previous AFFO guidance. The forecast factors in anticipated funding for major projects, including Hollywood Casino Joliet and second-half 2025 development commitments totaling $338 million. Management noted that AFFO (Adjusted Funds From Operations, a non-GAAP metric) at the lower end of this full-year guidance would assume no escalations on variable-rate master leases and a meaningful rise in variable interest rates.

No other significant changes to fiscal year guidance were given, and management made it clear that future acquisitions or other major deals are not included in the AFFO forecast. Leadership remains focused on measured capital allocation and solid underwriting, carefully monitoring tenant performance and rent coverage ratios as economic conditions develop. Dividend growth and the stability of rental cash flows, through escalated lease terms and diversification, are expected to remain central priorities.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,040%* — a market-crushing outperformance compared to 182% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of July 21, 2025

JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends Gaming And Leisure Properties. The Motley Fool has a disclosure policy.