Bally’s acquisition, tenant expansions, and dividend stability reinforce GLPI’s strategic long-term positioning
Strong AFFO Growth Outpaces Operational Pressures
Gaming and Leisure Properties Inc. (GLPI) delivered a solid Q2 2025 in terms of its Adjusted Funds From Operations (AFFO)—a critical metric for Real Estate Investment Trusts (REITs)—reporting a 4.4% year-over-year increase to $276.1 million. The AFFO per diluted share rose slightly to $0.96, up from $0.94 in the prior year, indicating sustained investor income amid industry headwinds.
However, the company’s net income dropped significantly by 27.1% to $156.2 million, alongside a 17.5% fall in income from operations, pointing to margin compression and rising operational costs. Diluted earnings per share slid from $0.77 to $0.54, largely reflecting increased acquisition-related expenses and capital outflows.
Total revenue grew modestly by 3.8% to $394.9 million, driven by escalators in lease agreements and performance from regional casino tenants.
Bally’s Deal Highlights Strategic Expansion
A standout development for GLPI in Q2 was its $1.585 billion acquisition of Bally’s real estate assets, including properties in Kansas City, Shreveport, and the land for the $1.8 billion Bally’s Chicago casino project. This transaction, structured at an 8.3% blended yield, introduces a 15-year triple-net lease backed by corporate guarantees from Bally’s, reinforcing GLPI’s stable cash flow strategy.
Additionally, GLPI will fund up to $940 million in hard construction costs for the Chicago development at an attractive 8.5% yield, securing long-term returns. The firm now owns 68 properties across 20 U.S. states, underscoring a diversified and expanding asset base.
This deal builds on earlier tenant-driven investments, including $18.4 million toward the Acorn Ridge tribal casino in California and lease extensions with Boyd Gaming and Belterra Park through 2031.
Dividend Coverage and Balance Sheet Strength
GLPI continues to be a compelling dividend stock, paying $0.78 per share in June, fully backed by AFFO. On an annualised basis, this equates to $3.12 per share, yielding 6.68%, which remains competitive versus the REIT sector’s average yield of ~5.8%.
Financially, GLPI maintains solid liquidity, with $1.2 billion available, despite a debt-to-EBITDA ratio of 19.1x. The firm also redeemed $850 million in 5.25% senior notes ahead of maturity, easing interest costs and demonstrating disciplined capital management. The weighted average interest rate stood at 5.064% by the end of Q2.
Credit agencies maintained their ratings, with S&P and Fitch reaffirming GLPI at BBB– (investment-grade) and Moody’s rating it Ba1. Key tenants like Bally’s and PENN showed healthy lease coverage ratios of 2.01x and 2.17x, respectively.
Analyst Views Mixed Amid Broader REIT Pressures
While Stifel downgraded GLPI to “Hold” in July, Barclays and Citizens JMP maintained Buy ratings, citing the REIT’s triple-net lease model, geographical diversification, and tenant quality. The average analyst price target of $54.65 implies a 17.2% upside from the Q2 closing price of $46.63.
Despite elevated leverage and tightening margins, GLPI’s resilient income performance, predictable lease escalations, and tenant-funded development pipeline position it as a defensive REIT in a rising-rate environment.
Looking Ahead: Margin Pressure but Stable Yield
GLPI’s trajectory mirrors Q1 2025 results, which saw AFFO up 5.2% and adjusted EBITDA up 8%, though net income declined then as well. With consistent dividend coverage and new income-generating assets onboarding, GLPI remains a stable income-generating play for REIT investors—even as margin pressures linger due to interest rates and capital expenditure commitments.
In the face of volatility, GLPI’s model continues to prioritize long-term stability over short-term gains—a strategy increasingly attractive to income-focused portfolios.
