VICI Properties Inc. (VICI) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Investment in Experiential Real Estate: VICI Properties made significant investments, including up to $950 million in the Venetian and Great Wolf Resorts, emphasizing the value of experiential real estate.

• Las Vegas Market Strength: Highlighted the enduring appeal and growth of Las Vegas, where VICI collects 45% of its rent, showcasing strong visitation numbers and the potential for a second airport due to high demand.

• AFFO Growth and Guidance Raise: Announced an increase in AFFO guidance for 2024, reflecting confidence in continued growth and operational efficiency.

• Diverse Investment Opportunities: Discussed exploring international opportunities and expanding into new experiential sectors, indicating a broadening of investment horizons.

• High-Quality Tenant and Asset Focus: Emphasized commitment to investing in high-quality assets with strong tenants, ensuring long-term value and resilience.

Pessimistic Highlights

• Consumer Spending Concerns: Acknowledged potential weaknesses in consumer spending, particularly at the lower end, which could impact regional gaming revenues.

• Decision Not to Exercise Call Rights: Chose not to exercise call rights for Harrah’s Hoosier Park and Horseshoe Indianapolis, indicating a strategic shift in capital allocation priorities.

Company Outlook

• Positive Outlook with Strategic Focus: VICI is optimistic about its future, driven by strategic investments in high-quality experiential properties, both domestically and potentially internationally. The company is focused on diversifying its portfolio and enhancing tenant quality, while also being mindful of consumer spending trends and their impact on the gaming sector.

Q & A Highlights

• Q: Can you discuss how the decision not to execute options this year impacts future structuring of options? (Caitlin Burrows, from Goldman Sachs)

  A: The decision was strategic, based on capital allocation and portfolio management. Future options will be considered with an emphasis on tenant and geographical diversity. (John Payne)

• Q: What international opportunities are you exploring? (Caitlin Burrows, from Goldman Sachs)

  A: Actively exploring in Australia, New Zealand, Europe, and the U.K., focusing on both gaming and non-gaming experiential properties. (John Payne)

• Q: How is the international opportunity set split between gaming and non-gaming? (Barry Jonas, from Truist Securities)

  A: While not specified, gaming investments, due to their size, will likely dominate, but non-gaming experiential sectors are also being explored. (Ed Pitoniak)

• Q: How are you thinking about your strip land and development these days, especially with Caesars talking about selling some noncore assets? (Barry Jonas, from Truist Securities)

  A: Very bullish on Las Vegas and open to investing more capital in the assets owned there, including vacant land for future development. (Ed Pitoniak)

• Q: Has the weakness in the consumer led you to change your acquisition pipeline? (Wes Golladay, from Baird)

  A: Not significantly, as the focus is on middle to higher-end experiences, which have shown resilience. (Ed Pitoniak)

• Q: How should we think about the Caesars lease coming up in November with its variable component? (Wes Golladay, from Baird)

  A: The variable component is expected to have a neutral to no impact on escalation. (David Kieske)

• Q: Could you discuss the decision-making process behind not moving forward with Centaur and how it impacts future acquisitions? (John DeCree, from CBRE)

  A: The decision was based on strategic factors that won't change in the near future, focusing on investments that enhance portfolio value. (Ed Pitoniak)

• Q: How are you monitoring the credit solution investments, especially with the growth in mezzanine and preferred investments? (Dan Guglielmo, from Capital One Securities)

  A: Through quarterly investment loan reviews and underwriting based on the strength of the sponsor and property performance, ensuring investments align with strategic criteria. (Gabe Wasserman)