Master Lease Financing Obligation

9 Months Ended

Sep. 30, 2015

Master Lease Financing Obligation

Master Lease Financing Obligation

8.  Master Lease Financing Obligation

The Company’s lease obligation with GLPI is accounted for as a financing obligation. The obligation was calculated at the inception of the transaction based on the future minimum lease payments due to GLPI under the Master Lease discounted at 9.70%, which represents the estimated incremental borrowing rate 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 under the Master Lease for the three and nine months ended September 30, 2015 was $109.0 million and $327.3 million as compared to $104.6 million and $313.5 million for the three and nine months ended September 30, 2014, respectively.  The interest expense recognized for the three and nine months ended September 30, 2015 was $97.8 million and $291.9 million as compared to $94.6 million and $281.6 million for the three and nine months ended September 30, 2014, respectively.  The interest expense recognized for the three and nine months ended September 30, 2015 includes $10.8 million and $32.9 million from contingent payments associated with the monthly variable components for Hollywood Casino Columbus and Hollywood Casino Toledo, as compared to $10.3 million and $31.0 million for the three and nine months ended September 30, 2014, respectively. As well as $0.8 million and $2.4 million from contingent payments associated with the annual escalator during the three and nine months ended September 30, 2015.