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Leases | 9 Months Ended
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Sep. 30, 2020
Leases [Abstract] |
Leases | Leases Master Leases The components contained within the Master Leases are accounted for as either (i) operating leases, (ii) finance leases, or (iii) financing obligations. Changes to future lease payments under the Master Leases (i.e., when future escalators become known or future variable rent resets occur), which are discussed below, require the Company to either (i) increase both the ROU assets and corresponding lease liabilities with respect to operating and finance leases or (ii) record the incremental variable payment associated with the financing obligation to interest expense. In addition, monthly rent associated with Hollywood Casino Columbus (“Columbus”) and monthly rent in excess of the Hollywood Casino Toledo (“Toledo”) rent floor, which are discussed below, are considered contingent rent. Pursuant to the Term Sheet, we agreed that, in the future, we would exercise the next scheduled five-year renewal under the Penn Master Lease as well as the Pinnacle Master Lease, and GLPI agreed they would grant us the option to exercise an additional five-year renewal term at the end of the lease term on the Penn Master Lease and the Pinnacle Master Lease, subject to certain conditions. In the future, upon exercising each of these renewal options, the term of the Penn Master Lease would extend to November 30, 2033 and the term of the Pinnacle Master Lease would extend to April 30, 2031; and if all renewal options contained within the Penn Master Lease and the Pinnacle Master Lease were exercised, inclusive of the these renewal options, the term of the Penn Master Lease would extend to November 30, 2053 and the term of the Pinnacle Master Lease would extend to April 30, 2056. Penn Master Lease Pursuant to the triple net master lease with GLPI (the “Penn Master Lease”), which became effective November 1, 2013, the Company leases real estate assets associated with 19 of the gaming facilities used in its operations. The Penn Master Lease has an initial term of 15 years with four subsequent, five-year renewal periods on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 35 years. The payment structure under the Penn Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the Penn Master Lease) of 1.8:1, and a component that is based on performance, which is prospectively adjusted (i) every five years by an amount equal to 4% of the average change in net revenues of all properties under the Penn Master Lease (other than Columbus and Toledo) compared to a contractual baseline during the preceding five years (“Penn Percentage Rent”) and (ii) monthly by an amount equal to 20% of the net revenues of Columbus and Toledo in excess of a contractual baseline and subject to a rent floor specific to Toledo. The next annual escalator test date is scheduled to occur effective November 1, 2020 and the next Penn Percentage Rent reset is scheduled to occur on November 1, 2023. Pinnacle Master Lease In connection with the acquisition of Pinnacle Entertainment, Inc., on October 15, 2018, the Company assumed a triple net master lease with GLPI (the “Pinnacle Master Lease”), originally effective April 28, 2016, pursuant to which the Company leases real estate assets associated with 12 of the gaming facilities used in its operations. Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial ten-year term, with five subsequent, five-year renewal periods, on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 32.5 years. The payment structure under the Pinnacle Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the Pinnacle Master Lease) of 1.8:1, and a component that is based on the performance, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”). Effective May 1, 2020, the Pinnacle Percentage Rent resulted in an annual rent reduction of $5.0 million, which will be in effect until the next Pinnacle Percentage Rent reset, scheduled to occur on May 1, 2022. Upon reset of the Pinnacle Percentage Rent, effective May 1, 2020, we recognized an additional operating lease ROU asset and corresponding lease liability of $14.9 million. We did not incur an annual escalator for the lease year ended April 30, 2020. The next annual escalator test date is scheduled to occur on May 1, 2021. Operating Leases In addition to the operating lease components contained within the Master Leases (primarily land), the Company’s operating leases consist mainly of (i) individual triple net leases with GLPI for the real estate assets used in the operations of Tropicana Las Vegas (the “Tropicana Lease”) and Meadows Racetrack and Casino (the “Meadows Lease”), (ii) individual triple net leases with VICI Properties Inc. (NYSE: VICI) (“VICI”) for the real estate assets used in the operations of Margaritaville (the “Margaritaville Lease”) and Greektown (the “Greektown Lease” and collectively with the Master Leases, the Meadows Lease, the Margaritaville Lease, and the Tropicana Lease, the “Triple Net Leases”), (iii) ground and levee leases to landlords which were not assumed by our REIT Landlords and remain an obligation of the Company, and (iv) building and equipment not subject to the Master Leases. Certain of our lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation, and rental payments based on usage. The Company’s leases include options to extend the lease terms. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. On April 16, 2020, we entered into the Tropicana Lease with a subsidiary of GLPI for the real estate assets used in the operations of Tropicana for nominal rent and will continue to operate the Tropicana for two years (subject to three one-year extensions at GLPI’s option) or until the real estate assets and the operations of the Tropicana are earlier sold, as discussed in Note 6, “Acquisitions and Dispositions.” In the event that GLPI sells the real estate assets used in the operations of Tropicana, the Tropicana Lease will automatically terminate. Upon execution of the Tropicana Lease, we recorded an operating lease ROU asset of $61.6 million, which is included in “Lease right-of-use assets” within the unaudited Condensed Consolidated Balance Sheets. On February 1, 2020, the Margaritaville Lease was amended to provide for a change in the measurement of the annual escalator from an Adjusted Revenue to Rent Ratio (as defined in the Margaritaville Lease) of 1.9:1 to a minimum ratio of net revenue to rent of 6.1:1. As a result of the annual escalator, which was determined to be $0.3 million, effective February 1, 2020, an additional operating lease ROU asset and corresponding operating lease liability of $3.1 million were recognized. The following is a maturity analysis of our operating leases, finance leases and financing obligations as of September 30, 2020:
(in millions) | Operating Leases |  | Finance Leases |  | Financing Obligations
Years ending December 31, |  |  |  |  |
2020 (excluding the nine months ended September 30, 2020) | $ | 105.4 |  |  | $ | 5.4 |  |  | $ | 91.8 |
2021 | 412.7 |  |  | 21.7 |  |  | 367.3 |
2022 | 404.3 |  |  | 21.6 |  |  | 367.3 |
2023 | 398.7 |  |  | 20.8 |  |  | 367.3 |
2024 | 382.4 |  |  | 16.7 |  |  | 367.3 |
Thereafter | 8,158.4 |  |  | 393.5 |  |  | 9,270.6 |
Total lease payments | 9,861.9 |  |  | 479.7 |  |  | 10,831.6 |
Less: Imputed interest | (5,360.3) |  |  | (258.6) |  |  | (6,720.8) |
Present value of future lease payments | 4,501.6 |  |  | 221.1 |  |  | 4,110.8 |
Less: Current portion of lease obligations | (120.4) |  |  | (6.8) |  |  | (35.3) |
Long-term portion of lease obligations | $ | 4,381.2 |  |  | $ | 214.3 |  |  | $ | 4,075.5 |
Total payments made under the Triple Net Leases, inclusive of rent credits utilized, were as follows:
| For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) | 2020 |  | 2019 |  | 2020 |  | 2019
Penn Master Lease (1) | $ | 120.3 |  |  | $ | 114.0 |  |  | $ | 343.4 |  |  | $ | 342.9 |
Pinnacle Master Lease (1) | 81.3 |  |  | 82.3 |  |  | 245.6 |  |  | 245.6 |
Meadows Lease (1) | 6.7 |  |  | 6.6 |  |  | 20.2 |  |  | 19.7 |
Margaritaville Lease | 5.9 |  |  | 5.8 |  |  | 17.6 |  |  | 17.3 |
Greektown Lease | 13.9 |  |  | 13.9 |  |  | 41.7 |  |  | 19.9 |
Total (2) | $ | 228.1 |  |  | $ | 222.6 |  |  | $ | 668.5 |  |  | $ | 645.4 |
(1)During the three and nine months ended September 30, 2020, we utilized rent credits to pay $83.0 million, $54.2 million and $4.5 million and $155.1 million, $108.4 million, and $9.0 million of rent under the Penn Master Lease, Pinnacle Master Lease and Meadows Lease, respectively. (2)Rent payable under the Tropicana Lease is nominal. Therefore, it has been excluded from the table above. The components of lease expense were as follows:
| Location on unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) |  | For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) |  | 2020 |  | 2019 |  | 2020 |  | 2019
Operating Lease Costs |  |  |  |  |  |  |  |  |
Rent expense associated with triple net operating leases (1) | General and administrative |  | $ | 109.0 |  |  | $ | 96.3 |  |  | $ | 310.3 |  |  | $ | 271.0 |
Operating lease cost (2) | Primarily General and administrative |  | 3.9 |  |  | 4.2 |  |  | 11.9 |  |  | 13.2 |
Short-term lease cost | Primarily Gaming expense |  | 10.3 |  |  | 14.4 |  |  | 26.5 |  |  | 42.9 |
Variable lease cost (2) | Primarily Gaming expense |  | 0.8 |  |  | 1.0 |  |  | 1.8 |  |  | 2.8 |
Total |  |  | $ | 124.0 |  |  | $ | 115.9 |  |  | $ | 350.5 |  |  | $ | 329.9 |
Finance Lease Costs |  |  |  |  |  |  |  |  |
Interest on lease liabilities (3) | Interest expense, net |  | $ | 3.8 |  |  | $ | 3.8 |  |  | $ | 11.5 |  |  | $ | 11.5 |
Amortization of ROU assets (3) | Depreciation and amortization |  | 2.0 |  |  | 2.0 |  |  | 6.0 |  |  | 5.9 |
Total |  |  | $ | 5.8 |  |  | $ | 5.8 |  |  | $ | 17.5 |  |  | $ | 17.4 |
Financing Obligation Costs |  |  |  |  |  |  |  |  |
Interest on financing obligations (4) | Interest expense, net |  | $ | 103.7 |  |  | $ | 97.6 |  |  | $ | 300.2 |  |  | $ | 293.6 |
(1)Pertains to the operating lease components contained within the Master Leases (primarily land), the Meadows Lease, the Margaritaville Lease, the Greektown Lease, and the Tropicana Lease, inclusive of the variable expense associated with Columbus and Toledo for the operating lease components (the land), which was $4.8 million and $9.5 million for the three and nine months ended September 30, 2020, respectively, pertaining to Columbus, and $2.3 million and $15.4 million for the three and nine months ended September 30, 2019, respectively, pertaining to Columbus and Toledo. (2)Excludes the operating lease costs and variable lease costs pertaining to our triple net leases with our REIT landlords classified as operating leases, discussed in footnote (1) above. (3)Primarily pertains to the Dayton and Mahoning Valley finance leases. (4)Pertains to the components contained within the Master Leases (primarily buildings) determined to be financing obligations, inclusive of the variable expense associated with Columbus and Toledo for the finance lease components (the buildings), which was $5.0 million and $10.6 million for the three and nine months ended September 30, 2020, respectively, pertaining to Columbus, and $2.1 million and $14.1 million for the three and nine months ended September 30, 2019, respectively, pertaining to Columbus and Toledo.
Leases | Leases Master Leases The components contained within the Master Leases are accounted for as either (i) operating leases, (ii) finance leases, or (iii) financing obligations. Changes to future lease payments under the Master Leases (i.e., when future escalators become known or future variable rent resets occur), which are discussed below, require the Company to either (i) increase both the ROU assets and corresponding lease liabilities with respect to operating and finance leases or (ii) record the incremental variable payment associated with the financing obligation to interest expense. In addition, monthly rent associated with Hollywood Casino Columbus (“Columbus”) and monthly rent in excess of the Hollywood Casino Toledo (“Toledo”) rent floor, which are discussed below, are considered contingent rent. Pursuant to the Term Sheet, we agreed that, in the future, we would exercise the next scheduled five-year renewal under the Penn Master Lease as well as the Pinnacle Master Lease, and GLPI agreed they would grant us the option to exercise an additional five-year renewal term at the end of the lease term on the Penn Master Lease and the Pinnacle Master Lease, subject to certain conditions. In the future, upon exercising each of these renewal options, the term of the Penn Master Lease would extend to November 30, 2033 and the term of the Pinnacle Master Lease would extend to April 30, 2031; and if all renewal options contained within the Penn Master Lease and the Pinnacle Master Lease were exercised, inclusive of the these renewal options, the term of the Penn Master Lease would extend to November 30, 2053 and the term of the Pinnacle Master Lease would extend to April 30, 2056. Penn Master Lease Pursuant to the triple net master lease with GLPI (the “Penn Master Lease”), which became effective November 1, 2013, the Company leases real estate assets associated with 19 of the gaming facilities used in its operations. The Penn Master Lease has an initial term of 15 years with four subsequent, five-year renewal periods on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 35 years. The payment structure under the Penn Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the Penn Master Lease) of 1.8:1, and a component that is based on performance, which is prospectively adjusted (i) every five years by an amount equal to 4% of the average change in net revenues of all properties under the Penn Master Lease (other than Columbus and Toledo) compared to a contractual baseline during the preceding five years (“Penn Percentage Rent”) and (ii) monthly by an amount equal to 20% of the net revenues of Columbus and Toledo in excess of a contractual baseline and subject to a rent floor specific to Toledo. The next annual escalator test date is scheduled to occur effective November 1, 2020 and the next Penn Percentage Rent reset is scheduled to occur on November 1, 2023. Pinnacle Master Lease In connection with the acquisition of Pinnacle Entertainment, Inc., on October 15, 2018, the Company assumed a triple net master lease with GLPI (the “Pinnacle Master Lease”), originally effective April 28, 2016, pursuant to which the Company leases real estate assets associated with 12 of the gaming facilities used in its operations. Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial ten-year term, with five subsequent, five-year renewal periods, on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 32.5 years. The payment structure under the Pinnacle Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the Pinnacle Master Lease) of 1.8:1, and a component that is based on the performance, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”). Effective May 1, 2020, the Pinnacle Percentage Rent resulted in an annual rent reduction of $5.0 million, which will be in effect until the next Pinnacle Percentage Rent reset, scheduled to occur on May 1, 2022. Upon reset of the Pinnacle Percentage Rent, effective May 1, 2020, we recognized an additional operating lease ROU asset and corresponding lease liability of $14.9 million. We did not incur an annual escalator for the lease year ended April 30, 2020. The next annual escalator test date is scheduled to occur on May 1, 2021. Operating Leases In addition to the operating lease components contained within the Master Leases (primarily land), the Company’s operating leases consist mainly of (i) individual triple net leases with GLPI for the real estate assets used in the operations of Tropicana Las Vegas (the “Tropicana Lease”) and Meadows Racetrack and Casino (the “Meadows Lease”), (ii) individual triple net leases with VICI Properties Inc. (NYSE: VICI) (“VICI”) for the real estate assets used in the operations of Margaritaville (the “Margaritaville Lease”) and Greektown (the “Greektown Lease” and collectively with the Master Leases, the Meadows Lease, the Margaritaville Lease, and the Tropicana Lease, the “Triple Net Leases”), (iii) ground and levee leases to landlords which were not assumed by our REIT Landlords and remain an obligation of the Company, and (iv) building and equipment not subject to the Master Leases. Certain of our lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation, and rental payments based on usage. The Company’s leases include options to extend the lease terms. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. On April 16, 2020, we entered into the Tropicana Lease with a subsidiary of GLPI for the real estate assets used in the operations of Tropicana for nominal rent and will continue to operate the Tropicana for two years (subject to three one-year extensions at GLPI’s option) or until the real estate assets and the operations of the Tropicana are earlier sold, as discussed in Note 6, “Acquisitions and Dispositions.” In the event that GLPI sells the real estate assets used in the operations of Tropicana, the Tropicana Lease will automatically terminate. Upon execution of the Tropicana Lease, we recorded an operating lease ROU asset of $61.6 million, which is included in “Lease right-of-use assets” within the unaudited Condensed Consolidated Balance Sheets. On February 1, 2020, the Margaritaville Lease was amended to provide for a change in the measurement of the annual escalator from an Adjusted Revenue to Rent Ratio (as defined in the Margaritaville Lease) of 1.9:1 to a minimum ratio of net revenue to rent of 6.1:1. As a result of the annual escalator, which was determined to be $0.3 million, effective February 1, 2020, an additional operating lease ROU asset and corresponding operating lease liability of $3.1 million were recognized. The following is a maturity analysis of our operating leases, finance leases and financing obligations as of September 30, 2020:
(in millions) | Operating Leases |  | Finance Leases |  | Financing Obligations
Years ending December 31, |  |  |  |  |
2020 (excluding the nine months ended September 30, 2020) | $ | 105.4 |  |  | $ | 5.4 |  |  | $ | 91.8 |
2021 | 412.7 |  |  | 21.7 |  |  | 367.3 |
2022 | 404.3 |  |  | 21.6 |  |  | 367.3 |
2023 | 398.7 |  |  | 20.8 |  |  | 367.3 |
2024 | 382.4 |  |  | 16.7 |  |  | 367.3 |
Thereafter | 8,158.4 |  |  | 393.5 |  |  | 9,270.6 |
Total lease payments | 9,861.9 |  |  | 479.7 |  |  | 10,831.6 |
Less: Imputed interest | (5,360.3) |  |  | (258.6) |  |  | (6,720.8) |
Present value of future lease payments | 4,501.6 |  |  | 221.1 |  |  | 4,110.8 |
Less: Current portion of lease obligations | (120.4) |  |  | (6.8) |  |  | (35.3) |
Long-term portion of lease obligations | $ | 4,381.2 |  |  | $ | 214.3 |  |  | $ | 4,075.5 |
Total payments made under the Triple Net Leases, inclusive of rent credits utilized, were as follows:
| For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) | 2020 |  | 2019 |  | 2020 |  | 2019
Penn Master Lease (1) | $ | 120.3 |  |  | $ | 114.0 |  |  | $ | 343.4 |  |  | $ | 342.9 |
Pinnacle Master Lease (1) | 81.3 |  |  | 82.3 |  |  | 245.6 |  |  | 245.6 |
Meadows Lease (1) | 6.7 |  |  | 6.6 |  |  | 20.2 |  |  | 19.7 |
Margaritaville Lease | 5.9 |  |  | 5.8 |  |  | 17.6 |  |  | 17.3 |
Greektown Lease | 13.9 |  |  | 13.9 |  |  | 41.7 |  |  | 19.9 |
Total (2) | $ | 228.1 |  |  | $ | 222.6 |  |  | $ | 668.5 |  |  | $ | 645.4 |
(1)During the three and nine months ended September 30, 2020, we utilized rent credits to pay $83.0 million, $54.2 million and $4.5 million and $155.1 million, $108.4 million, and $9.0 million of rent under the Penn Master Lease, Pinnacle Master Lease and Meadows Lease, respectively. (2)Rent payable under the Tropicana Lease is nominal. Therefore, it has been excluded from the table above. The components of lease expense were as follows:
| Location on unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) |  | For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) |  | 2020 |  | 2019 |  | 2020 |  | 2019
Operating Lease Costs |  |  |  |  |  |  |  |  |
Rent expense associated with triple net operating leases (1) | General and administrative |  | $ | 109.0 |  |  | $ | 96.3 |  |  | $ | 310.3 |  |  | $ | 271.0 |
Operating lease cost (2) | Primarily General and administrative |  | 3.9 |  |  | 4.2 |  |  | 11.9 |  |  | 13.2 |
Short-term lease cost | Primarily Gaming expense |  | 10.3 |  |  | 14.4 |  |  | 26.5 |  |  | 42.9 |
Variable lease cost (2) | Primarily Gaming expense |  | 0.8 |  |  | 1.0 |  |  | 1.8 |  |  | 2.8 |
Total |  |  | $ | 124.0 |  |  | $ | 115.9 |  |  | $ | 350.5 |  |  | $ | 329.9 |
Finance Lease Costs |  |  |  |  |  |  |  |  |
Interest on lease liabilities (3) | Interest expense, net |  | $ | 3.8 |  |  | $ | 3.8 |  |  | $ | 11.5 |  |  | $ | 11.5 |
Amortization of ROU assets (3) | Depreciation and amortization |  | 2.0 |  |  | 2.0 |  |  | 6.0 |  |  | 5.9 |
Total |  |  | $ | 5.8 |  |  | $ | 5.8 |  |  | $ | 17.5 |  |  | $ | 17.4 |
Financing Obligation Costs |  |  |  |  |  |  |  |  |
Interest on financing obligations (4) | Interest expense, net |  | $ | 103.7 |  |  | $ | 97.6 |  |  | $ | 300.2 |  |  | $ | 293.6 |
(1)Pertains to the operating lease components contained within the Master Leases (primarily land), the Meadows Lease, the Margaritaville Lease, the Greektown Lease, and the Tropicana Lease, inclusive of the variable expense associated with Columbus and Toledo for the operating lease components (the land), which was $4.8 million and $9.5 million for the three and nine months ended September 30, 2020, respectively, pertaining to Columbus, and $2.3 million and $15.4 million for the three and nine months ended September 30, 2019, respectively, pertaining to Columbus and Toledo. (2)Excludes the operating lease costs and variable lease costs pertaining to our triple net leases with our REIT landlords classified as operating leases, discussed in footnote (1) above. (3)Primarily pertains to the Dayton and Mahoning Valley finance leases. (4)Pertains to the components contained within the Master Leases (primarily buildings) determined to be financing obligations, inclusive of the variable expense associated with Columbus and Toledo for the finance lease components (the buildings), which was $5.0 million and $10.6 million for the three and nine months ended September 30, 2020, respectively, pertaining to Columbus, and $2.1 million and $14.1 million for the three and nine months ended September 30, 2019, respectively, pertaining to Columbus and Toledo.
Leases | Leases Master Leases The components contained within the Master Leases are accounted for as either (i) operating leases, (ii) finance leases, or (iii) financing obligations. Changes to future lease payments under the Master Leases (i.e., when future escalators become known or future variable rent resets occur), which are discussed below, require the Company to either (i) increase both the ROU assets and corresponding lease liabilities with respect to operating and finance leases or (ii) record the incremental variable payment associated with the financing obligation to interest expense. In addition, monthly rent associated with Hollywood Casino Columbus (“Columbus”) and monthly rent in excess of the Hollywood Casino Toledo (“Toledo”) rent floor, which are discussed below, are considered contingent rent. Pursuant to the Term Sheet, we agreed that, in the future, we would exercise the next scheduled five-year renewal under the Penn Master Lease as well as the Pinnacle Master Lease, and GLPI agreed they would grant us the option to exercise an additional five-year renewal term at the end of the lease term on the Penn Master Lease and the Pinnacle Master Lease, subject to certain conditions. In the future, upon exercising each of these renewal options, the term of the Penn Master Lease would extend to November 30, 2033 and the term of the Pinnacle Master Lease would extend to April 30, 2031; and if all renewal options contained within the Penn Master Lease and the Pinnacle Master Lease were exercised, inclusive of the these renewal options, the term of the Penn Master Lease would extend to November 30, 2053 and the term of the Pinnacle Master Lease would extend to April 30, 2056. Penn Master Lease Pursuant to the triple net master lease with GLPI (the “Penn Master Lease”), which became effective November 1, 2013, the Company leases real estate assets associated with 19 of the gaming facilities used in its operations. The Penn Master Lease has an initial term of 15 years with four subsequent, five-year renewal periods on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 35 years. The payment structure under the Penn Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the Penn Master Lease) of 1.8:1, and a component that is based on performance, which is prospectively adjusted (i) every five years by an amount equal to 4% of the average change in net revenues of all properties under the Penn Master Lease (other than Columbus and Toledo) compared to a contractual baseline during the preceding five years (“Penn Percentage Rent”) and (ii) monthly by an amount equal to 20% of the net revenues of Columbus and Toledo in excess of a contractual baseline and subject to a rent floor specific to Toledo. The next annual escalator test date is scheduled to occur effective November 1, 2020 and the next Penn Percentage Rent reset is scheduled to occur on November 1, 2023. Pinnacle Master Lease In connection with the acquisition of Pinnacle Entertainment, Inc., on October 15, 2018, the Company assumed a triple net master lease with GLPI (the “Pinnacle Master Lease”), originally effective April 28, 2016, pursuant to which the Company leases real estate assets associated with 12 of the gaming facilities used in its operations. Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial ten-year term, with five subsequent, five-year renewal periods, on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 32.5 years. The payment structure under the Pinnacle Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the Pinnacle Master Lease) of 1.8:1, and a component that is based on the performance, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”). Effective May 1, 2020, the Pinnacle Percentage Rent resulted in an annual rent reduction of $5.0 million, which will be in effect until the next Pinnacle Percentage Rent reset, scheduled to occur on May 1, 2022. Upon reset of the Pinnacle Percentage Rent, effective May 1, 2020, we recognized an additional operating lease ROU asset and corresponding lease liability of $14.9 million. We did not incur an annual escalator for the lease year ended April 30, 2020. The next annual escalator test date is scheduled to occur on May 1, 2021. Operating Leases In addition to the operating lease components contained within the Master Leases (primarily land), the Company’s operating leases consist mainly of (i) individual triple net leases with GLPI for the real estate assets used in the operations of Tropicana Las Vegas (the “Tropicana Lease”) and Meadows Racetrack and Casino (the “Meadows Lease”), (ii) individual triple net leases with VICI Properties Inc. (NYSE: VICI) (“VICI”) for the real estate assets used in the operations of Margaritaville (the “Margaritaville Lease”) and Greektown (the “Greektown Lease” and collectively with the Master Leases, the Meadows Lease, the Margaritaville Lease, and the Tropicana Lease, the “Triple Net Leases”), (iii) ground and levee leases to landlords which were not assumed by our REIT Landlords and remain an obligation of the Company, and (iv) building and equipment not subject to the Master Leases. Certain of our lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation, and rental payments based on usage. The Company’s leases include options to extend the lease terms. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. On April 16, 2020, we entered into the Tropicana Lease with a subsidiary of GLPI for the real estate assets used in the operations of Tropicana for nominal rent and will continue to operate the Tropicana for two years (subject to three one-year extensions at GLPI’s option) or until the real estate assets and the operations of the Tropicana are earlier sold, as discussed in Note 6, “Acquisitions and Dispositions.” In the event that GLPI sells the real estate assets used in the operations of Tropicana, the Tropicana Lease will automatically terminate. Upon execution of the Tropicana Lease, we recorded an operating lease ROU asset of $61.6 million, which is included in “Lease right-of-use assets” within the unaudited Condensed Consolidated Balance Sheets. On February 1, 2020, the Margaritaville Lease was amended to provide for a change in the measurement of the annual escalator from an Adjusted Revenue to Rent Ratio (as defined in the Margaritaville Lease) of 1.9:1 to a minimum ratio of net revenue to rent of 6.1:1. As a result of the annual escalator, which was determined to be $0.3 million, effective February 1, 2020, an additional operating lease ROU asset and corresponding operating lease liability of $3.1 million were recognized. The following is a maturity analysis of our operating leases, finance leases and financing obligations as of September 30, 2020:
(in millions) | Operating Leases |  | Finance Leases |  | Financing Obligations
Years ending December 31, |  |  |  |  |
2020 (excluding the nine months ended September 30, 2020) | $ | 105.4 |  |  | $ | 5.4 |  |  | $ | 91.8 |
2021 | 412.7 |  |  | 21.7 |  |  | 367.3 |
2022 | 404.3 |  |  | 21.6 |  |  | 367.3 |
2023 | 398.7 |  |  | 20.8 |  |  | 367.3 |
2024 | 382.4 |  |  | 16.7 |  |  | 367.3 |
Thereafter | 8,158.4 |  |  | 393.5 |  |  | 9,270.6 |
Total lease payments | 9,861.9 |  |  | 479.7 |  |  | 10,831.6 |
Less: Imputed interest | (5,360.3) |  |  | (258.6) |  |  | (6,720.8) |
Present value of future lease payments | 4,501.6 |  |  | 221.1 |  |  | 4,110.8 |
Less: Current portion of lease obligations | (120.4) |  |  | (6.8) |  |  | (35.3) |
Long-term portion of lease obligations | $ | 4,381.2 |  |  | $ | 214.3 |  |  | $ | 4,075.5 |
Total payments made under the Triple Net Leases, inclusive of rent credits utilized, were as follows:
| For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) | 2020 |  | 2019 |  | 2020 |  | 2019
Penn Master Lease (1) | $ | 120.3 |  |  | $ | 114.0 |  |  | $ | 343.4 |  |  | $ | 342.9 |
Pinnacle Master Lease (1) | 81.3 |  |  | 82.3 |  |  | 245.6 |  |  | 245.6 |
Meadows Lease (1) | 6.7 |  |  | 6.6 |  |  | 20.2 |  |  | 19.7 |
Margaritaville Lease | 5.9 |  |  | 5.8 |  |  | 17.6 |  |  | 17.3 |
Greektown Lease | 13.9 |  |  | 13.9 |  |  | 41.7 |  |  | 19.9 |
Total (2) | $ | 228.1 |  |  | $ | 222.6 |  |  | $ | 668.5 |  |  | $ | 645.4 |
(1)During the three and nine months ended September 30, 2020, we utilized rent credits to pay $83.0 million, $54.2 million and $4.5 million and $155.1 million, $108.4 million, and $9.0 million of rent under the Penn Master Lease, Pinnacle Master Lease and Meadows Lease, respectively. (2)Rent payable under the Tropicana Lease is nominal. Therefore, it has been excluded from the table above. The components of lease expense were as follows:
| Location on unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) |  | For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) |  | 2020 |  | 2019 |  | 2020 |  | 2019
Operating Lease Costs |  |  |  |  |  |  |  |  |
Rent expense associated with triple net operating leases (1) | General and administrative |  | $ | 109.0 |  |  | $ | 96.3 |  |  | $ | 310.3 |  |  | $ | 271.0 |
Operating lease cost (2) | Primarily General and administrative |  | 3.9 |  |  | 4.2 |  |  | 11.9 |  |  | 13.2 |
Short-term lease cost | Primarily Gaming expense |  | 10.3 |  |  | 14.4 |  |  | 26.5 |  |  | 42.9 |
Variable lease cost (2) | Primarily Gaming expense |  | 0.8 |  |  | 1.0 |  |  | 1.8 |  |  | 2.8 |
Total |  |  | $ | 124.0 |  |  | $ | 115.9 |  |  | $ | 350.5 |  |  | $ | 329.9 |
Finance Lease Costs |  |  |  |  |  |  |  |  |
Interest on lease liabilities (3) | Interest expense, net |  | $ | 3.8 |  |  | $ | 3.8 |  |  | $ | 11.5 |  |  | $ | 11.5 |
Amortization of ROU assets (3) | Depreciation and amortization |  | 2.0 |  |  | 2.0 |  |  | 6.0 |  |  | 5.9 |
Total |  |  | $ | 5.8 |  |  | $ | 5.8 |  |  | $ | 17.5 |  |  | $ | 17.4 |
Financing Obligation Costs |  |  |  |  |  |  |  |  |
Interest on financing obligations (4) | Interest expense, net |  | $ | 103.7 |  |  | $ | 97.6 |  |  | $ | 300.2 |  |  | $ | 293.6 |
(1)Pertains to the operating lease components contained within the Master Leases (primarily land), the Meadows Lease, the Margaritaville Lease, the Greektown Lease, and the Tropicana Lease, inclusive of the variable expense associated with Columbus and Toledo for the operating lease components (the land), which was $4.8 million and $9.5 million for the three and nine months ended September 30, 2020, respectively, pertaining to Columbus, and $2.3 million and $15.4 million for the three and nine months ended September 30, 2019, respectively, pertaining to Columbus and Toledo. (2)Excludes the operating lease costs and variable lease costs pertaining to our triple net leases with our REIT landlords classified as operating leases, discussed in footnote (1) above. (3)Primarily pertains to the Dayton and Mahoning Valley finance leases. (4)Pertains to the components contained within the Master Leases (primarily buildings) determined to be financing obligations, inclusive of the variable expense associated with Columbus and Toledo for the finance lease components (the buildings), which was $5.0 million and $10.6 million for the three and nine months ended September 30, 2020, respectively, pertaining to Columbus, and $2.1 million and $14.1 million for the three and nine months ended September 30, 2019, respectively, pertaining to Columbus and Toledo.

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