Greetings and welcome to the Gaming and Leisure Properties Third Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this call is being recorded. It is now my pleasure to introduce your host Kara Smith, Investor Relations. Thank you. You may begin.

Good morning. We would like to thank you for joining us today for Gaming and Leisure Properties' third quarter 2016 earnings call and webcast. The press release distributed earlier this morning is available in the Investor Relations section on our Web site at www.glpropinc.com. On today’s call, managements' 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. Examples of forward-looking statements 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 relating to these forward-looking statements contained in the company’s filings with the SEC and the definitions and reconciliations of non-GAAP financial measures contained in the company’s earnings release. On this morning’s conference call, we are joined by Peter Carlino, Chairman and Chief Executive Officer; and Bill Clifford, Chief Financial Officer of Gaming and Leisure Properties. Also joining are Steve Synder, Senior Vice President of Development; Desiree Burke, Chief Accounting Officer; and Brandon Moore, Senior Vice President, General Counsel and Secretary. And now I'd like to turn the call over to Peter Carlino. Peter?

Thank you, Kara, and good morning everyone. As is our normal practice, my comments will be very brief and we’ll quickly turn this over to you folks and find out what interests you today. I think our quarter is well summarized in our press release, but I would of course highlight quite happily that in this quarter we closed on the Meadows transaction and we’re pleased with that sign and operating arrangement with Pedicle Gaming which is terrific, I am really pleased about that. We also raised some $46 million in equity under our ATM program with an appetite for more at the right prices and as opportunity presents itself. And finally, as always we’re scouring the earth for other appropriate transactions which is about as precise as we can be about the things we are looking at and working on. But we remained very active and busy as we worked to grow this business. So with and those few comments, let's open it up for questions.

Thank you. [Operator Instruction] Our first question is coming from Steven Wieczynski of Stifel. Please proceed with your question.

So I guess -- Peter, I guess one of the thing, you -- in the release, you had a comment in there, I thought that was pretty interesting, where you said regional gaming remains -- transactional activity remains pretty lumpy. Could you just expand on that a little bit and then maybe what you’re seeing in terms of interest from smaller operators out there willing to sit down and have discussion with you guys?

Well Steve, I mean lumpy just characterizes the nature of our business. We are not buying shopping centers which of course dot the highways and byways of every city and town in America. So there are limited possibilities. Gaming is much more limited, and -- so we need to be more focus as we look state-to-state. At least the nature of things, you saw the Pinnacle transaction, admittedly a very unusual one, but a very large one. We’ll do some small ones and the key is finding transactions that are accretive and that fit well with our stated goals, and to that end we remain focused. I’ll anticipate a question by saying that, we have looked outside of gaming on occasion, at other possibilities, haven't yet seen something that make sense for us. But look we’re not down to the box and so we continue to remain focused on gaming properties around the United States, and have planted seeds or even sometimes we’ve gone beyond that in trying to solicit interest. And we have looked outside the gaming business as well. So, I mean, this is always the frustrating part for us, I wish we could tell you a lot more on this call, but the only thing we can say is that we remain pretty focused on growth. And Bill, do you want to add anything to that?

No. I think we are out talking to people, I think we have diligent -- couple of diligent meetings scheduled. But candidly that’s a long ways from getting a deal signed. So I think the reality is we’re active, but getting to resolution is always tough, sometime it happens, sometimes it doesn’t, right? I would like to say that every time we did a diligent call or meeting that's going to turn into a deal, but the reality is that, I think you got to be practical about it and recognize that if they’ll happen, they’ll probably happens either in surges or there will be periods where there is nothing happening. And quite candidly we are always rooting for us to have six deals a month. That’s not realistic. But I think looking forward, I think, as we’ve said before there is transactions that will happen going way back to the spin we have the 500 million a year work of transactions. We said at the time that those transactions would be infrequent and large and different sizes. And if we look back since we did the spin, we’ve done well north of 500 million a year.

Bill, I think we are good for another six years.

Yes, we’ve got like four or five years to go. Obviously, we don’t look at it that way. But I do think that if I were to reset the clock and say over the next three to five years, am I going to average 500 million a year in transactions. I think the -- I feel very comfortable with that business. So yes, we will. So I still think that our prospects are bright and I think we will get really good opportunity to get some transactions done, it could be small, medium or large. But as we look forward, we’re as optimistic as ever that we’re going to be able to continue to grow and defined transaction we’ll make henceforth.

So that’s a usual non-answer. And if I can paraphrase the bible, many are called, but few are chosen. So we remain as discerning as ever. So you should be sorry you asked that question Steve.

Not really, but you did somewhat answered the second part of it, was -- and you touched on a little bit, if you look -- and I think you’re probably not going to answer this question, but as you say you are starting to look or you have looked outside of gaming, would you than comment in terms of what kind of areas you’re looking at?

I am going to say no, I mean obviously we are going to start with Leisure activities because it’s in our name, but we’ll go beyond that. Again it’s just a question of where we can make a difference, pay a price that is still significantly accretive. I mean, you know the answers of that. Look it’s our challenge to be alert to any possibility, we get that question all the time. When we go outside and the answer is, of course show us the right deal. That call is tomorrow and then share what we got, because we’d be thrilled to look at it. So I wish I can give you a better answer, obviously it's frustrating for us on this kind of calls, but it's the nature of our business.

Sure. And then last question just real quick on the TRS. You guys always have pretty good color in terms of the -- just the general gaming consumer. Maybe give us your high level comments there in terms of what's you’re seeing. And I guess maybe with Baton Rouge as well I'm surprised that the TRS EBITDA in terms of your guidance is held up so well given some of the issues that they've seen down there. And then I guess last part of that would be I assume you guys are expecting no impact what so ever at Perryville given the distance once National Harbor opens up?

That’s a big no.

Yes, as I think taking the last question first. I mean relative to Perryville. We do expect that there will be -- we’ll lose a trip, but over the course of the year obviously everybody who is anywhere around the Baltimore-Washington area is going to make a trip to go look at the property. But I think given the distance that we’re aware that we wouldn’t expect to lose any repeat customers -- certainly -- I'm not saying you can't lose somebody who becomes so infatuated with it, but at the end of the day, I think the impact would be very small. In Baton Rouge we had obviously as you said we have some issues in Baton Rouge, none of which were our doing. Primarily the things that impacted us the most was the flood in August, that was a really bad month. We also as a company decided to provide some support for our employees which amounted to roughly 300,000 of incremental expense that we spend in the third quarter helping our employees that were affected by the floods, many of those people who lost their homes, lost all of their blowing et cetera, et cetera. And obviously demonstrating event for them. But as we look -- so that’s included in the results. And then by the time September rolled around, it’s bounced back quite nicely. October is also very encouraging, looks very good, well, it's over. It was a very good month in October and I think that's somewhat the offset and the impact of even though the event is a horrible event for the town and the city, there has been an awful lot of -- people from outside the town has come in to help, insurance claims come in, repair works has gotten done, there is lot of us, we see it because we're losing some employees or have lost some employees who've found opportunities to make more money in the clean-up process around the floods. So clearly there is an economic stimulus that happens in town, I don’t know how long that will last, I don’t think it will be that long. But I think when it’s all said and done, we’ll look back and I don’t think that will be one of the things -- it will, when we look back on the year that we’re going to say wow Baton Rouge was adversely effected by the flooding. Now generally across United States, I think it's can't be lumpy right I think there is ups and downs and I know everybody is always looking for the last fluctuations to determine if it’s a trend, but quite candidly I don’t see trends that are very concerning I think we feel pretty comfortable and good. There have been some good months and some bad months, but that's generally the history of regional gaming and as we see it, we think that quite candidly things are fine, not spectacularly great, but steady.

Thank you, great. All good color guys, appreciated.

Thank you. Our next question is coming from Shaun Kelley of Bank of America/Merrill Lynch. Please proceed with your question.

Hi. This is Barry Jones. Just couple of questions, is the 168 million still the right number of where you’re are going to hit on the ATM and when do you think you could get there?

Yes, well that’s for the total amount that we said. Listen, I think I don’t know that we look at that number as like an absolute number we need to get to. I mean yes, it's in the 160-170 range that’s certainly our goal. As far as part of ATM, part of the down side of ATM, you’re only allowed to be in the market during your open windows. So we are going to be looking at somewhere from November to early December. So the most we have got is a month. I am not sure that we are going to be hyper aggressive in the next month given where our stock price is right now. We believe that there is -- that it will come back, so I am not saying we won’t put some -- we won’t sell some shares, but I think we’ll be pretty disciplined about how many shares we put out. But we will get there, listen I don't in any way want anybody to walk away thinking that we are not going to issue all of the shares. But I would expect that probably to happen sometime first, second quarter, maybe third quarter next year. The pace of that may well be effected, we sign up a deal and we know a deal is coming, we may accelerate the pace a bit. But we’ll be -- we are very focused that our activity in the market should not have any impact other than psychological, but it's not going to have any actual impact on the trading price of our stock, that is our number one criteria that we give to our underwriter. Because the last thing we want to do is have them pushing out stock that would have an adverse impact on where our trading volumes are. So to the extent that we ever see any trades that happen that look like it's impeding the market, on that day we’ll pull back. So that’s been our approach all along and it will continue to be our approach.

Great. And just a follow-up on the strategic question. With another read out there and increased strategic competition, where are M&A and multiples trending right now? And then maybe just on top of that, any general thoughts on the El Dorado acquisition of Isle of Capri?

It's kind of hard to say where trends are, there is not [multiple speakers] transactions to develop this trend. Certainly if you look at what we paid for the Meadows and that was obviously under duress and bad circumstances. We ended up paying a little higher multiple than we would normally pay. I think it's all deal specific, right, at the end of the day when we look at transactions and what multiple we are going to pay, is just part of a mass, is it a conglomerate of assets, is it a one off asset, what's markets it’s in and what's it's challenges, what's it's opportunities to grow the rent. All of those factors come into play. So I wouldn’t necessarily walk away and say there is an exact defined multiple for transactions that are going to happen in the future.

Certainly, I think the prospect of the higher interest rate is actually, if anything maybe caused some people to be a little more thoughtful about making sure they get a transaction. Or if they’re going to do a transaction that there seems to be a little bit more openness to a transaction, given the prospect of rising interest rates. Because obviously rising interest rates will cause multiples to come down, there is no if, and, or but about that in the triple net space. So I think smarter people are acknowledging that and that probably why you are starting to see transactions happen not necessarily particularly in our space, but certainly in other spaces inside the weak community.

Great. And then the El Dorado acquisition of Isles. Is that something you kicked the tires on? And any general thoughts there.

Well, we certainly, I think, we were certainly involved we've spent good amount of time and energy and efforts and diligence on Isle. I will say that I think they paid a very full price, not that we couldn't theoretically paid a fuller price. The challenge we had is the challenge we had is that the friction cost around the Isle transaction for us as a REIT were outrageously high. And that involves the tax basis of the assets or the separation of the assets and other implications around tax that quite candidly caused based on the price they paid, plus those other incremental cost to be a transaction that didn’t work for us. Now we've been there earlier, I'm not going to say we were an active parts at the very last minute, but we’ve certainly looked to Isle when it comes to our views on what was a fair price and that they got a price that this headline number that was higher than the price that we were willing to offer.

Great, thanks so much guys.

Thank you. Our next question is coming from Cameron McKnight of Wells Fargo. Please proceed with your question.

Just turning to fourth-quarter guidance that assumes the escalator's in operation in the fourth quarter. Can you talk to rental coverage for the third quarter and the last 12 months?

Sure. Rent coverage through the third quarter, u won’t actually talk about it in the third quarter. But through the third quarter for PENN was basically what's you’re seeing in their press release is that their expectation is that there will be a partial escalator, which tells us you that after the rents done we’ll be at exactly 1.80 through the end of the year. The Pinnacle rent coverage is also in the just slightly north of the 1.8 certainly rounds down to 1.80. But I don’t really want to give exact numbers. There first of all, we are early into the process, it's only been since the close of the transactions, it's really effectively for a full month was May, sometimes about four months and I think we’ll have numbers again at the end of the fourth quarter which I think will be much more relevant to whether we’ll get an escalator out of Pinnacle or not on their renewals. So that's I think we are in good shape there. The Meadows obviously doesn’t matter or it's only a partial month so, I think that’s helped or not.

Got it. Thanks. And then back to the question of acquisitions. The bid-off spread has remained consistently wide in gaming. Do you think it could take another recession to really crack open some opportunities for you guys?

I would hope we don’t have to have a recessions to make that happened. Just from a general perspective, I think it's hard to say I've said this before and I'll probably get hit over the head for saying it again, but at the end of the day it takes a willing seller and a motivated seller who is not looking for just the biggest highest price at the end of the day it's because it's at the end of the funds life, it's with the end of the management teams life, for the ownerships willingness and desire to run the business, there is family discord, there is any number of things that cause people to want to monetize a transactions, but have potentially being over leveraged and when that time comes they recognize that it's time to sell and yes they’re going to go look to get the very best price that they can get, but they are going to do a transaction. Right now what we’re confronted with is we’re confronted with sellers that are saying, if you hit the right price, I am willing to sell and that price is generally stupid. So if you are willing to pay a stupid price, I am willing to sell, that’s generally doesn’t yield transaction, but make a lot of sense. And when we have a -- if on the other hand the guy says, I am selling and it's either going to go to you, Party A or Party B, I think we have an excellent chance of being the winning party. Now, didn’t happen in Isle, but that’s another party took a different view that I think was pretty optimistic. And potential they’ll -- I am not saying they won’t get there, but there is some basically, I would argue, on their parts and assumptions that are pretty much best case scenario.

Also the tax issues.

Right. And we have tax issues obviously on the Isle. You combine the two of them, we did not win that one. But listen if we start losing transactions on a regular basis than we’ll have to do some retro or some introspected looks at ourselves and say what's happening. So I don’t think that’s going to be the case to be, quite honest.

Bill says it well. Every deal that we ever did, and we purchased a lots of gaming assets over the years. There is a reason somebody was selling. Maybe, as Bill highlights, the change in the circumstances or they want to get out of the business, so going to retire or -- there is a thousand reason, or family dispute I could highlight a couple of those that we have benefited from. And sometime you work at it, you work at it, you work at it, and you hang in there long enough to get lucky, waiting for the right timing. So I mean that’s really the nature of this stuff, there are not a lot of these assets out here. So it's massaging process and being prepared, keeping your capital in the best possible shape, so you can be competitive and ready which is something we’re working very hard at, and just being on top of everything that’s sort of breeze that could be an opportunity and we are doing that. So it's the same kind of non-answer that we give I think most of the time and feel we have another work.

And I’ll just throw one more topic on for Isle. The Isle transaction was a transaction that happened where, it's still assets that are still in play, I mean not just to say that they’re going to a transaction with us in the near future. But it's basically when two companies who now own a lot more assets in real estate. And at some point in time down the future there is the potential that they may do a transaction involving monetizing their land and building. Had we done the transaction at the price we’d done it at, we would have done at it a price that we wouldn’t be happy with, and we would have never had an opportunity to ever get the asset again at a more reasonable price. To say that in future we could end up paying more than we paid last time. But it will be a better price that we’ll be happier with it when we pay it.

Got it. Understood. Thanks, guys. Just on leverages, is 5.5 a hard target or could you see yourselves going below that next year to give yourselves a little bit of dry powder?

It's our expectation that we are going to go below that. We have indicated where we’re going to be at the end of this year and that’s without any future ATM proceeds. We do expect that the ATM proceeds, we’ll have some more of those and that will accelerate the deleveraging as well as the free cash flow that we are going to basically generate over the course of next several or next coming years, will be used to be de-lever certainly down, to get us down below 5.5. Again it's a little bit about you have to measure it in terms of the environment, but our current thoughts, I don’t think we would be looking to take it much below 5, but who knows, we’ll feel it when and if we get to that point, which as it will take while -- a wow few years. We’ll revisit to topic at the time. But somewhere in that period between the 5.5 and down and I think having some cushions so that we can do a transaction on all cash basis and not have to worry about our leverage going above 5.5 it is actually a very prudent position to take.

Thank you. Our next question is coming from Carlo Santarelli of Deutsche Bank. Please proceed with your question.

Bill, you made the statement earlier, you talked about conversion of diligence to actual deals. Could you talk maybe, or maybe even just give us kind of an idea of how many deals you guys have gotten to the diligence stage on since going public?

Well there is different levels of diligence. There is diligence where are you have conversations and you look at some what I would call public information, then there is getting into the more -- you might file an NDA and get some access to non-public information and then you get into the diligence level where your hiring outside resources to help you whether that's on the financial tax or legal side. So I mean there has been a number of each categories, I’m not really sure I want to go out and do a dissection of every opportunity we've ever looked at and why it fails or didn’t fail and why we were successful. Clearly we try to not spend a lot of money on outside resources unless we think we've got a deal that's likely. To be fair we did spend the quite of good money on Isle over the course of time, that was one that didn’t work. But I'm not going to really I don’t think it's really that productive to get through, because some of these deals even if their sale doesn’t mean they’re over.

Understood. And if I could, obviously Casino Queen was involved in a transaction. You guys clearly have a relationship with them. My question is, you mentioned obviously the friction cost involved with Isle. Does any of that change with Isle having been acquired now with a new entity? Does any of that change kind of the setup from our perspective on a go forward basis?

Lot of it will depend quite candidly there is going to be a whole new tax characterization created on the transaction with the new acquirer. So I don’t know -- we haven’t been a lot, we haven’t done any work on terms of what they are doing, in terms of how they are accomplishing the merger between the two company. There will be a lot of steps and how they monetize and how they push down debt, will they do step up asset basis in the assets. A lot of stuff will happen in that merger that quite candidly until it's completed and I doubt they even have that completely nail down as we sit here today. So it's hard to say, it's hard to characterize. I would hope that if they are forward-looking that they would be taking advantage of the opportunity to fix some of the tax basis and some their real estate that they’re purchasing so that it and when they ever decide they want to monetize their assets, they would have done it in a way it will be more tax efficient. Having said that I have no idea whether they’re doing that at all. So but this might be a hopeful hint

Thank you. Our next question is coming from Daniel Politzer from JPMorgan. Please proceed with your question.

Hey, guys. To what extent do you think there's been any pause in sellers willing to transact because of the election? And it's kind of on a related note. Have you noticed any change in tone lately, given the somewhat choppy regional TGI numbers that have come out?

I can’t say we’re seeing any of that dollars, or Steve’s right around the table. Again I am not sure that if the economy or anything down in that vein, or the election that really affect somebody’s desire to sell, there is usually a reason they want to see and Bill has highlighted there is several, I mean would be a reason they want to sell. And Bill has highlighted this several -- I mean times on the road. We are not knocking on a couple of doors, Steve, I know you have and I have couple of things in mid where there is a perfectly of good property, single asset in State X that we’d love to get. And the seller has got a lot of money, life is good. He is making a lot of money, life is good, this is typical. I'm talking apocryphally about any number of people in that category. Look and I’m having a good time, why should don’t have any good time, why should I sell. So I mean it's a process, you sow seeds and then you kind of keep at it, massage it and hopefully get something at the other end because overtime attitude change. But in the absence of a desire to sell, I mean they don’t kind of have to do it. So this is going to be, what’s the work we use in our release? Our lumpy process and that’s just a nature of things. I mean 20 guys out there and looking to sell their properties today, probably not even 10, they might not be five at this give instant. So our job is to be on a top of everything that might be pried loose.

Understood.

Steve, you any comment about that? You are in front line with these guys?

No, but in answering the question specifically there is nothing about the election as motivated people either to sell or not to sell. If there is tax policy that comes out in 2017, it looks like capital tax rates might go up those are the kinds of things that could participate a little bit greater motivation of the parts of sellers. If people thing that interest rates are going to up dramatically therefore cost to capital will rise and multiples will compress, those are of the kinds of events that could lead people to rethink their strategy To Peter's point, the first question any seller always - question any seller always ask if they were not really a seller, what an going to do with the cash make easy with the cash? And that’s the way you should think about, if people better usage for the cash, they are going to come through table as willing and participating.

Okay. And I'm not sure if you guys will answer this one, but I figured I could throw it out there. Has there been any additional ATM activity here in the fourth quarter?

Even if we want to, we couldn’t. We’re in a close window until the earnings release. So the answer is no.

Got it. All right, thanks a lot guys.

Thank you. At this time I would like to turn the floor back over to management for any additional or closing comments.

Thanks operator. And well, look we thank you all for tuning in this quarter. We look forward to seeing you again after the end of the year. So thanks very much.

Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. You may disconnect your lines at this time. And have a wonderful day.