VICI Properties Inc. (NYSE:VICI), the largest casino landlord, raised its full-year funds from operations (FFO) guidance following its third-quarter earnings report late Wednesday.
The owner of Caesars Palace lifted its 2023 FFO forecast to $2.14 to $2.15 a share from a prior range of $2.11 to $2.14. During the September quarter, the real estate investment trust (REIT) generated FFO of 54 cents per share, up from 49 cents a year earlier. That beat the consensus estimate of 53 cents. Revenue increased to $904.3 million from $751.5 million, beating the consensus forecast of $902 million.
VICI’s third quarter financial performance reflects our sustained, sustainable commitment to accretive growth and capital deployment through acquisitions and strategic financing activity, exemplified by approximately 20% revenue growth and nearly 11% growth in AFFO per share year-over-year,” said CEO Edward Pitoniak in a statement.
New York-based VICI, a member of the S&P 500, owns the real estate assets of 54 gaming venues across the US and Canada. It’s also the largest landowner on the Las Vegas Strip, where in addition to Caesars Palace, it owns the Venetian and related assets and the property assets of most MGM-operated casino hotels.
Why VICI FFO Bullishness Matters
REITs like VICI are not structured as traditional corporations. Rather, REITs’ earnings are not taxed by the federal government, but the trade-off for that favorable treatment is that the companies must payout at least 90 percent of those earnings in the form of dividends.
That requirement prompts investors to evaluate real estate companies based on how much cash is being generated, which FFO measures. The metric is arrived at by adding net income, amortization, and depreciation and subtracting property sales.
VICI’s client roster includes Apollo Global Management, Century Casinos, and Hard Rock International, among others, confirming the gaming REIT is diverse across regions and casino sizes. MGM and Caesars, the two largest operators on the Las Vegas Strip, combine for 76% of VICI’s adjusted revenue.
“During the three months ended September 30, 2023, the Company entered into forward-starting interest rate swap agreements with an aggregate notional amount of $150.0 million, intended to reduce the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period ended December 2024,” according to the statement.
The New York-based REIT had approximately $17.1 billion in total debt as of the end of the third quarter.
Acquisitions Boosting VICI FFO
VICI has long been one of the most acquisitive companies in the commercial real estate space and deal-making is one catalyst behind the REIT’s bolstered financial outlook.
Among other third-quarter transactions, VICI wrapped up the purchase of the real estate of Rocky Gap Casino Resort in Flintstone, Md. as well as the real estate tied to four casinos in Canada.
The REIT concluded the quarter with $3.7 billion in liquidity, comprised of $510.9 million in cash and cash equivalents, $807.2 million of estimated net proceeds available upon settlement of outstanding forward sale agreements, and approximately $2.3 billion of availability under the revolving credit facility,” it added in the statement.
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