Company: GLPI
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0001575965-25-000008
Chunk: 113

Company: Gaming & Leisure Properties, Inc.
Filing Date: 2025-02-20
Form: 10-K
Item: Item 7
Chunk 113
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 the Company under GAAP.  For transactions whereby the Company has a lease reconsideration event and the lease meets one of the five criteria mentioned above, the lease is accounted for as an Investment in leases, sales type.  During 2024, the Tropicana Las Vegas Lease was reassessed and was accounted for as an Investment in leases - sales type.  

Allowance for credit losses

The Company follows ASC 326 “Credit Losses” (“ASC 326”), which requires that the Company measure and record current expected credit losses (“CECL”),  the scope of which includes our Investments in leases - financing receivables, Investment in leases - sales-type, as well as the Company's real estate loans.  

We have elected to use an econometric default and loss rate model to estimate the Allowance for credit losses, or CECL allowance. This model requires us to calculate and input lease and property-specific credit and performance metrics which in conjunction with forward-looking economic forecasts, project estimated credit losses over the life of the lease or loan.  The Company then records a CECL allowance based on the expected loss rate multiplied by the outstanding investment.

Expected losses within our cash flows are determined by estimating the probability of default (“PD”) and loss given default (“LGD”) of our instruments subject to CECL. We have engaged a nationally recognized data analytics firm to assist us with estimating both the PD and LGD. The PD and LGD are estimated during the initial term of the instruments subject to CECL. The PD and LGD estimates were developed using current financial condition forecasts. The PD and LGD predictive model was developed using the average historical default rates and historical loss rates, respectively, of over 100,000 commercial real estate loans dating back to 1998 that have similar credit profiles or characteristics to the real estate underlying the Company's instruments subject to CECL. Management will monitor the credit risk related to its instruments subject to CECL by obtaining the applicable rent and interest coverage on a periodic basis.  The Company also monitors legislative changes to assess whether it would have an impact on the underlying performance of its tenant.  We are unable to use our historical data to estimate losses as the Company has no loss history to date on its lease portfolio.  

We are required to update our CECL allowance on a quarterly basis with the resulting change being recorded in the Consolidated Statements of Income for the relevant period. Finally, each time the Company makes a new investment in an asset subject to ASC 326, we will be required to record an