VICI | Q3 2024

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Overview

• FFO/share of $0.70 beats by $0.03.

• Revenue of $964.67M (+6.7% Y/Y) beats by $10.21M.

Takeaways

In Q3 2024, VICI Properties delivered another killer performance, reporting AFFO per share of $0.57, a 4.9% increase over the previous year.

Total debt is currently $17.1 billion, with a leverage ratio of 5.4x, which falls within VICI’s target range of 5x to 5.5x. The company’s weighted average interest rate is 4.36%, and the debt maturity averages over six years.

VICI also maintains impressive operating margins in the high 90% range. Notably, general and administrative costs were only 1.7% of total revenue, making VICI one of the most cost-effective REITs in the triple net sector and across the entire REIT industry.

CFO David Kieske reiterated the benefits of VICI’s triple net lease model, which contributed to their impressive adjusted EBITDA growth relative to revenue. This highly efficient model, coupled with strong margins and low G&A costs, enables VICI to maximize returns while keeping operational expenses low.

CEO Ed Pitoniak highlighted the company’s strategy of maintaining “capital markets independence,” allowing VICI to fund growth even when external capital markets aren’t favorable.

This independence is supported by internal cash resources generated from retained cash flow and what VICI calls “regained cash flow”—loan repayments from VICI’s experiential credit solutions. Depending on the volume of loan repayments, these internal cash flows give VICI $350 million to $500 million annually, which can be further leveraged with debt to reach $500 million to $1 billion of investment power.

Pitoniak noted that this flexibility allows VICI to sustain its growth strategy in any economic environment, supported by solid same-store NOI growth that benefits from VICI’s triple net lease structure, rent escalation rates, and 100% occupancy.

This reliable funding capability enables the company to make regular investments, as demonstrated in Q3 2024, where they invested nearly $250 million through their property partner growth fund and lending initiatives, even without announcing new property acquisitions.

COO John Payne explained that VICI’s strategic focus remains on experiential real estate, particularly casino gaming, which drives much of its growth. Gaming assets, especially in Las Vegas, offer one-of-a-kind investment opportunities due to their scale and ongoing evolution as entertainment hubs.

Payne referenced a Financial Times article by IAC Chairman Barry Diller, who highlighted the appeal of Las Vegas as an unmatched destination for live performances, sports, and entertainment, further reinforcing VICI’s commitment to the city. As a local to Las Vegas, I can certainly attest to that!

VICI’s significant Las Vegas holdings, particularly within the Sports Triangle on the Strip, position the company as a key partner for operators like MGM who may want to reinvest in these high-traffic areas.

An example of this ability to reinvest is the Venetian Partner Property Growth Fund, announced in Q2, which reflects VICI’s intent to strengthen its gaming portfolio in Vegas.

Additionally, VICI is expanding regionally through investments like a $52 million commitment to Century’s Caruthersville, Missouri casino, which is transitioning from a riverboat to a land-based casino. This is an example of VICI’s targeted growth beyond Vegas.

Overall, VICI Properties continued its streak of strong performance in Q3 2024. With disciplined capital management, substantial financial flexibility, and a portfolio built around high-growth experiential real estate, VICI looks poised to deliver continued growth and income for investors.

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