Yahoo Finance VICI Properties Inc (VICI) (Q1 2024) Earnings Call Transcript Highlights: Strategic Growth and ...
AFFO per Share Growth: 6.1% increase over Q1 2023.
Revenue Growth: Continued flow through to EBITDA line, high rates among S&P 500 REITs.
Strategic Investment: Up to $700 million in The Venetian for property enhancements.
Debt Refinancing: Successful refinancing of $1.50 billion maturing in May 2024.
Liquidity: Approximately $3.5 billion total, with $515 million in cash and equivalents.
Total Debt: $17.1 billion, with net debt to adjusted EBITDA at approximately 5.4x.
Interest Rates: Weighted average of 4.36%, considering hedge portfolio.
AFFO Guidance for 2024: Between $2.32 billion and $2.355 billion, or $2.22 to $2.25 per diluted share.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
VICI Properties Inc (NYSE:VICI) reported a 6.1% growth in AFFO per share over Q1 2023, demonstrating strong financial performance.
The company successfully refinanced $1.50 billion of maturing debt, capitalizing on favorable market conditions to secure a blended yield of 5.9%.
VICI Properties Inc (NYSE:VICI) continues to expand its investment scope, notably with a $700 million investment opportunity in The Venetian, enhancing a key Las Vegas asset.
The company maintains a robust liquidity position with approximately $3.5 billion available, ensuring readiness for future investments and market fluctuations.
VICI Properties Inc (NYSE:VICI) has a diversified portfolio with ongoing growth in both gaming and non-gaming sectors, including significant investments in youth sports and wellness.
Negative Points
Despite strong performance, the broader REIT sector was not invited to the 'party' in the equity markets, indicating potential sector-wide challenges.
The company faces ongoing market volatility, with potential impacts on investment and refinancing activities highlighted by fluctuations in the MOVE and VIX indices.
Interest rate volatility continues to affect transaction volumes in the gaming market, potentially impacting future growth opportunities.
VICI Properties Inc (NYSE:VICI) noted challenges in the regional gaming markets, including weather-related impacts and potential shifts in consumer discretionary spending.
The broader economic environment remains uncertain, with potential impacts on consumer spending and investment returns, as noted in discussions of market conditions and Federal Reserve comments.
Q & A Highlights
Q: Can you give some color on how your partners are doing and to what extent they're in the position to be expanding right now? A: (John W. R. Payne - President & COO) In Las Vegas, our partners are exploring ways to reinvent their businesses and add amenities to their assets. Outside Las Vegas, regional markets continue to grow, offering potential for using our capital to expand our partners' businesses. We've previously announced opportunities with Century, and there could be opportunities with both larger and smaller operators.
Q: Can you talk a bit about return requirements and your cost of capital, especially in relation to the Venetian investment? A: (Edward Baltazar Pitoniak - CEO & Director) We aim for a blended yield on our investments. While the Venetian investment might not offer a vast accretive spread, it's balanced by other investments that provide higher yields. This strategy allows us to create substantial value for shareholders.
Q: How deep is the pipeline for additional partner property growth investments? A: (Edward Baltazar Pitoniak - CEO & Director) We own significant real estate assets, and even a small percentage of these properties represent substantial reinvestment opportunities. The Strip in Las Vegas, particularly the south end, offers compelling densification opportunities with assets like MGM Grand and Mandalay Bay.
Q: What is the status of your current construction loan with Homefield, and how do you see the potential growth and scope of that relationship? A: (David Andrew Kieske - CFO & Treasurer) The construction loan is funding the Margaritaville Hotel as part of the Homefield sports complex. While there are no immediate plans to expand beyond what is currently being built in Kansas City, the success of the project could lead to future opportunities.
Q: How are you managing the impact of higher interest rates on your investment activities and pipeline? A: (Edward Baltazar Pitoniak - CEO & Director) Higher interest rates are having a chilling effect on asset trading across various classes. However, we leverage other growth avenues such as our property partner growth fund and credit book, which allow us to generate growth even when traditional asset trading is challenging.
Q: Can you discuss the potential for additional investments in The Venetian beyond the announced $700 million? A: (David Andrew Kieske - CFO & Treasurer) The Venetian has plans to invest a total of about $1.5 billion into the property, of which our contribution could be about half. This investment underscores the unique opportunities we have to reinvest in our properties, unlike many other REITs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
