Master Lease Financing Obligation

12 Months Ended

Dec. 31, 2016

10.Master Lease Financing Obligation

The Company’s lease obligation with GLPI that is described in Note 3 to the consolidated financial statements is accounted for as a financing obligation. The obligation was calculated at the inception of the transaction based on the future minimum lease payments discounted at 9.70%, which represented the Company’s estimated incremental borrowing rate at lease inception over the lease term, including renewal options, that were reasonably assured of being exercised and the funded construction of certain leased real estate assets in development at the date of the Spin-Off. Total payments to GLPI under the Master Lease were $442.3 million, $437.0 million and $421.4 million for the years ended December 31, 2016, 2015 and 2014, respectively, of which $391.7 million, $390.1 million and $379.2 million respectively, were recognized as interest expense. The interest expense recognized for the years ended December 31, 2016, 2015 and 2014 includes $43.8 million, $43.5 million and $40.9 million, respectively from contingent payments associated with the monthly variable components for Hollywood Casino Columbus and Hollywood Casino Toledo.

The future minimum payments related to the Master Lease financing obligation with GLPI, at December 31, 2016 are as follows (in thousands):


2017	$	389,496
2018		378,716
2019		324,819
2020		324,819
2021		324,819
Thereafter		8,715,981
Total minimum payments		10,458,650
Less amounts representing interest at 9.70%		(7,332,321)
Plus residual values		387,751
Present value of future minimum payments		3,514,080
Less current portion of financing obligation		(56,595)
Long-term portion of financing obligation	$	3,457,485