The VICI Properties First Quarter 2024 Earnings Conference Call is being held and is being recorded. Samantha Gallagher, the company's General Counsel, reminds participants to exercise caution when interpreting forward-looking statements and discusses the use of non-GAAP measures. She also references the company's SEC filings for a more detailed discussion of risks. Additionally, she mentions the availability of reconciliations for non-GAAP measures and directs participants to refer to the respective company's public filings for information on certain tenants and counterparties.

The paragraph discusses the first quarter of 2024 in the American equity marketplace and how REITs were not invited to the party that took place. The Move Index and VICI's equity volatility index were relatively steady during the first quarter but have recently spiked, indicating a potential end to the party. The paragraph is presented by Ed Pitoniak, the CEO, and his team, and they will be taking questions after their opening remarks.

In the midst of a noisy investment marketplace, VICI continues to focus on their income and capital appreciation goals. In the first quarter of 2024, they saw growth in AFFO per share and focused on three key strategic imperatives. These included expanding their scope and TAM through investments in sports and recreation, being prepared to refinance maturing debt, and having good timing in the market. This demonstrates their ability to adapt and make strategic moves for the long-term benefit of stakeholders.

In the fourth paragraph, the speaker introduces the third imperative for Q1 2024, which involves working with partners to develop a plan to invest up to $700 million into the Venetian property. They also acknowledge the current state of the REIT market and emphasize the potential for dividend growth and compounding. John then speaks about the importance of relationships in VICI's success.

VICI's focus on trust in their partnerships has led to mutually beneficial solutions, such as their successful relationship with Apollo and the Venetian. Despite the challenges of the COVID pandemic, the Venetian has exceeded expectations and VICI has announced a $700 million investment to further improve the property. Gaming remains a core focus for VICI, with strong tenant credit and healthy growth in Las Vegas. There have been 12 consecutive quarters of increased gaming revenue since the market emerged from the pandemic.

Las Vegas has seen 12 consecutive quarters of growth in gambling revenue and a 4.2% increase in visitation numbers in the first quarter. A recent study shows that Las Vegas is the only city in North America to surpass pre-pandemic visitation numbers. In the regional gaming market, consumer spending remains steady, driven by middle and high-end consumers. Despite interest rate volatility, VICI is actively seeking real estate opportunities in the gaming sector and is also open to investing in other experiential sectors. They are closely monitoring the performance of two unique assets in Indiana and are working towards gaining necessary gaming approvals. VICI has expanded their investment scope and criteria to include low cyclicality, low secular threat, and favorable supply and demand dynamics.

VICI recently expanded its investment in the youth sports sector by providing a construction loan for the development of a Margaritaville Resort within Homefield's youth sports complex. The resort is expected to be completed in 2025 and the facilities are already being used for tournaments. This partnership adds to VICI's investment in eSports and has contributed to a 6.1% growth in AFFO per share. VICI values its relationships with partners and is confident in their underwriting standards. The company is also looking to develop new relationships with top operators to continue growing its experiential real estate portfolio. The call was then turned over to David to discuss financial results and guidance.

In the first quarter, the company successfully executed a refinancing of their $1.50 billion notes due in May 2024. They issued $550 million of 10-year notes and $500 million of 30-year notes at a blended yield of 5.9%. They also bolstered their liquidity by selling 9.7 million shares and currently have approximately $3.5 billion in total liquidity. The company believes they are well positioned to navigate the current macro environment and do not need to raise any additional capital. Their total debt is $17.1 billion with a net debt to annualized adjusted EBITDA ratio of 5.4x. The weighted average interest rate is 4.36% and the maturity is 6.8 years.

The article discusses VICI Properties' financial performance for the quarter, including an increase in AFFO per share and a low G&A ratio. The company reaffirms its AFFO guidance for 2024 and mentions that its guidance does not include the impact of potential future transactions or non-recurring items. The article also mentions that VICI's partners' growth and expansion can lead to potential deals for the company. A question is asked about identifying and completing deals in this way.

John Payne and Ed Pitoniak discuss the growth opportunities for their partners in Las Vegas, particularly with the recently announced partnership with the Venetian. They believe Las Vegas is the fastest-growing city in hospitality and provides a range of opportunities for their partners to expand and add amenities to their assets. They also mention potential opportunities in regional markets and with other partners, such as Century.

Ed Pitoniak and Caitlin Burrows discuss VICI's potential investment in the MGM asset in Yonkers, as well as the status of their construction loan for the Homefield partnership. David Kieske mentions that the team recently visited the sports facilities in Kansas City and there may be opportunities for future expansion. A question from Anthony Paolon prompts discussion about return requirements, cost of capital, and the importance of the relationship with Venetian.

Ed Pitoniak, CEO of VICI Properties, discusses the company's strategy for achieving a blended yield on their investments and creating value for shareholders. John Payne, President and COO, mentions that the company is going through the appropriate regulatory process for the potential acquisition of Harrah's Hoosier Park and Horse Indianapolis. A question is asked about the pipeline for additional partner property growth investments and the potential for ROI improvements to convert to sale leaseback in the future.

Ed Pitoniak, CEO of VICI, discusses the company's position as the largest owner of hotel room real estate, convention space, and other entertainment spaces in America. With 130 million square feet of existing property, even a small percentage of potential reinvestment opportunities is significant. The company is particularly excited about the potential for growth at the south end of the strip, where they are partnered with MGM and own five assets. VICI and MGM are looking forward to the potential densification opportunities in the coming years. Additionally, the operators of these assets are constantly seeking ways to attract more consumers and generate more business.

The gaming operators in Las Vegas are known for their hospitality and constantly strive to innovate and improve their businesses. The property growth fund allows for continued growth without the need for sale leasebacks. The competitive environment remains the same in Las Vegas.

The speaker asks the VICI Properties executives about their net exposure to the market following their investment in the Venetian and their potential plans for the Mirage in Las Vegas. The executives mention their interest in growing in the regional and downtown markets of Las Vegas and their ongoing discussions with the Hard Rock team about potential opportunities at the Mirage. The speaker also notes the industry trend of prioritizing development and project capital expenditures.

The interviewer asks the CEO why there has been more investment in existing properties and new development in the casino industry rather than mergers and acquisitions, despite competitive financing options. The CEO speculates that it could be due to interest rate volatility and the current low stock prices of operators. However, he suggests asking the operators themselves for a more accurate answer. He also mentions the possibility of peak earnings and the sustainability of current economic performance.

The speaker believes that the earnings power of their operating partners will continue, but acknowledges the concern of buying at a peak and seeing economic performance normalize after the COVID effect wears off. The next question from David Katz asks about the durability of non-gaming initiatives, such as Valero and Canyon Ranch, compared to their core in Las Vegas. The speaker explains that they have four key criteria for evaluating these initiatives, including a healthy supply/demand balance, low to no secular threat, durability of the end-user experience, lower-than-average cyclicality, and economic dynamism. They also look for operators who are energetic and economically savvy. The speaker gives an example of an asset class that may not meet these criteria, such as pickleball, which is currently popular but hasn't been around for long.

The speaker discusses the open question of the supply-demand balance for pickleball courts, citing the disappearance of the popular sport racket ball as an example. They emphasize the importance of durability and mention that revenues in regional markets are being driven by the middle and high-end consumers. They also mention the possibility of lower-end consumers returning if operators offer incentives.

The speaker discusses how VICI collected 100% of their rent during the pandemic and how they monitor downturns in the business. They focus on the big picture and long-term goals. The interviewer asks about potential consumer pullback and reports of MGM Resorts selling operating rights at MGM Springfield. VICI's role in the process would involve retaining the asset and entering into a lease with any transfer of the asset. This has happened in other instances with VICI's assets.

The speaker discusses how they have successfully navigated lease processes with both current and new tenants. When asked about potential risks to the portfolio, they mention monitoring the behavior and spending power of lower-income consumers compared to higher-end consumers. They also mention monitoring the economy and credit markets, citing comments from the Fed about tensions in the economy. Finally, they briefly touch on development financing in the loans and securities category.

The speaker, David Kieske, answers a question about recent headwinds or tailwinds from teams they regularly communicate with. He explains that they have a thorough asset management and loan administration process and have not seen any issues with development or asset performance. The next question is from Michael Herring about the Venetian deal, which the speaker, Ed Pitoniak, and John Payne discuss as a win-win for both companies. They mention that discussions started during the pandemic and that they talked about potential opportunities for growth through the property growth fund.

The speaker discusses the recent deal with Venetian and how they always strive for mutually beneficial agreements. They stress the importance of relationships in business and how it led to a successful deal with Venetian. The initial disbursement of $400 million will be used for upgrades and additional amenities, with the potential for an additional $300 million to be used in the future. Venetian has already laid out plans for value enhancement well beyond the initial $700 million. The timing of when the additional $300 million will be used will depend on their progress and needs.

Ed Pitoniak and Michael discuss the $1.5 billion investment into the Venetian, with the possibility of the REIT contributing half of that amount. They also mention that no other REIT has tenants putting as much capital into their assets as this one. The next question is from Greg McGinniss about the potential for more investments in the future, and David Kieske and John discuss the possibility of more than $700 million coming from their agreement.

The original billion dollar agreement in 2022 has been modified as the team worked through the details of the asset. The announcement from Venetian yesterday stated their plans to invest $1.5 billion into the assets, with an incremental $700 million investment being made today. The uniqueness of VICI's assets allows for this type of growth opportunity, and they are confident in their ability to maintain their guidance. There was no additional drawdown on loans without final draw structure in Q1, but it did not have a significant impact on the full year guidance.

A question is asked about the impact of higher interest rates on the company's activity, and the CEO responds that it is having a chilling effect on trading across all asset classes. He also mentions the company's alternative growth strategies, such as their property partner growth fund and credit book. The company is also spending time on non-gaming sectors, but the majority of their rent still comes from gaming assets.

The speaker reiterates the value of the company's recent investment in the Venetian with their partner Apollo. They quote a note expressing the attractiveness of the investment and emphasize their ability to capitalize on relationships and make strategic acquisitions. They thank the listeners for their time and express confidence in the VICI team's ability to continue achieving success.

This summary was generated with AI and may contain some inaccuracies.