The paragraph is the introduction to the VICI Properties Third Quarter 2024 Earnings Conference Call. The operator announces the call and hands it over to Samantha Gallagher, General Counsel at VICI Properties. She mentions that participants can access the company's earnings release and supplemental information on their website. Samantha highlights that some statements made during the call will be forward-looking and carry risks that may cause actual results to differ. She advises caution when interpreting these statements and refers participants to SEC filings for more details. Non-GAAP measures will also be discussed, and reconcilements to GAAP measures are available on their website and filings.

In the conference call, Ed Pitoniak, the CEO of VICI Properties, introduces his team and discusses the unpredictability of current economic conditions, particularly referencing recent changes in U.S. interest rates. He introduces a conceptual tool used by VICI, involving a chart with two axes to assess and anticipate shifts in consumer economic conditions and REIT capital market conditions. This tool helps the company understand and potentially predict their economic environment and strategy.

The paragraph discusses VICI's adaptable capital allocation strategy that allows the company to generate growth regardless of market conditions. Over seven years, VICI has operated in varying financial environments and is prepared for potential changes. The company has developed a robust strategy of capital allocation, ensuring independence from external capital markets through internal funding capabilities and loan repayments. This approach provides significant investment power, even in unfavorable market conditions, supported by their strong same-store NOI growth, rent escalation rates, and full occupancy, which outperform typical net lease REITs.

The paragraph discusses VICI's strategy of utilizing sustained funding to invest regularly, highlighting Q3 2024 as a period with significant capital deployment despite no new transactions. The company emphasizes the importance of compounding growth in earnings, dividends, and returns, aiming for consistent progress through varying economic and market conditions. John Payne highlights that VICI's focus remains on casino gaming, notably in Las Vegas, due to the evolving experiences and investment opportunities it presents, exemplified by their recent investment in the Venetian Partner Property Growth Fund.

The paragraph discusses the strategic investment opportunities in Las Vegas, focusing on VICI's substantial ownership of real estate in the area, including the Sports Triangle on the Las Vegas Strip. It highlights the importance of physical experiences in the city's entertainment, sports, and live performance offerings. VICI aims to be a key partner with operators like MGM Resorts, anticipating further investments due to increased foot traffic. Additionally, VICI is utilizing its partner property growth fund to support regional developments, such as funding a new casino resort in Caruthersville, Missouri, demonstrating its commitment to growing a high-quality investment portfolio with valued partners.

The paragraph outlines VICI's capital allocation strategy and financial performance in the third quarter. VICI deployed $230 million in capital through loans and property growth fund agreements, marking 13 consecutive quarters of capital deployment. They emphasize their strategy for sustainable growth. David Kieske, the speaker on the call, highlighted the company's financial position, mentioning the settlement of 7 million shares resulting in $201 million used for the Venetian Capital investment. VICI has $2.9 billion in liquidity, including cash, forward sale proceeds, and a revolving credit facility with a $1 billion accordion option. Their total debt is $17.1 billion with a leverage ratio of 5.4x, within their target range. The weighted average interest rate on their debt is 4.36%, with an average maturity of 6.3 years. AFFO per share increased to $0.57, reflecting a 4.9% growth from the previous year's quarter.

The paragraph discusses the financial performance and guidance updates from a company in the triple net lease sector, highlighting strong margins and low G&A expenses. The company has updated its Adjusted Funds from Operations (AFFO) guidance for 2024, projecting between $2.36 billion and $2.37 billion, or $2.25 to $2.26 per diluted share, excluding potential impacts from unclosed transactions or other non-recurring items. During a Q&A session, Barry Jonas from Truist Securities inquires about the company's stance on Tribal Gaming, and Ed Pitoniak responds by expressing their positive relationships with American tribal nations and their interest in partnerships with tribes in commercial gaming projects off tribal land.

The paragraph discusses the complexities and unique structures involved in conducting business, particularly gaming, on tribal land. It highlights that the idiosyncrasies stem from the legal and operational framework governing tribal gaming, not the tribes themselves. To better understand and manage these complexities and associated risks, the author proposes creating a counterfactual scenario involving a commercial gaming operator on freehold land. This scenario involves a "sandwich lease," similar to a recent transaction by GLPI. While acknowledging GLPI's successful announcement, the author emphasizes that their company, VICI, is still learning how to assess and price the risks of such structures, with a particular focus on managing tail risk.

In the conversation, Barry Jonas inquires about the sale of the LINQ by Caesars and the potential for development on the adjacent land owned by VICI. Ed Pitoniak clarifies that VICI did not own a rooftop on the LINQ promenade, which is not considered a net lease property, and expresses optimism about the redevelopment potential under TPG and Acadia. Anthony Paolone from JPMorgan then shifts the discussion to opportunities in property reinvestment versus new acquisitions. John Payne responds that the focus has not changed significantly in recent quarters.

The paragraph discusses the company's growth strategy, featuring three pillars: real estate acquisitions, property partner growth funds, particularly in Las Vegas, and VICI Experiential Credit Solutions, which aims to convert credit solutions into real estate ownership. Anthony Paolone asks about the impact of a recent 70 basis point move in the 10-year Treasury yield on transactions and pricing. Ed Pitoniak acknowledges that, while not directly impactful, it reflects a period of market volatility causing indecision and inaction. He illustrates this by comparing the frequency of significant fluctuations in the 10-year yield across recent years, expressing hope for stabilization soon.

The paragraph discusses recent market volatility, illustrating it with the fluctuation of a certain index over the past few years and the impact on investor behavior. It mentions broader societal distractions, like reduced NFL ratings attributed to election stress. The focus then shifts to a conference call where Chris Darling from Green Street asks Ed Pitoniak about the potential for acquiring gaming assets in off-strip Las Vegas locations. Ed clarifies the question and refers it to John Payne, indicating ongoing work in that area.

The paragraph discusses a company's strategy of engaging with operators in Las Vegas and regional markets to assess various qualities such as operator, asset, and credit quality, while exploring potential growth opportunities through partnerships. It also references a book recommended by Mike Simanovsky, highlighting the importance of identifying investment categories with low risk of overinvestment and excess capacity. In American regional gaming, the focus is on understanding market dynamics and regulatory risks associated with potentially unsustainable capacity expansions.

The paragraph discusses the regional gaming market, highlighting considerations for investment in areas like Illinois and Indiana where saturation might be a concern. John Payne emphasizes the importance of understanding market history, such as the addition of new gaming licenses and historical horse racing machines, which resemble slot machines. He notes the unexpected growth in gaming markets in states like Nebraska, Virginia, and Kentucky. The focus is on being thoughtful and disciplined in evaluating regional assets. The text then shifts to a question from Smedes Rose of Citi about the impact of consumer weaknesses on tenants' willingness to reinvest or participate in funds, with John Payne indicating openness to discuss further.

The paragraph discusses the company's approach to growth, particularly through partnerships in various markets. It mentions the potential for growth in areas like property development and gaming, despite some regional market slowdowns. The conversation shifts to considering future strategies for 2025, weighing the benefits of pursuing smaller, frequent deals versus larger, impactful ones, particularly in non-gaming sectors. The importance of strategic trade-offs is emphasized, as part of the company's daily considerations and long-term goals.

The paragraph discusses the company's focus on experiential investments, both in gaming and non-gaming sectors. It highlights the challenges of finding and acquiring these types of assets, as they are not typically marketed through traditional real estate channels. The team, led by John, David, and Samantha, actively seeks unmarketed opportunities, aiming for significant projects. The company acknowledges the sporadic nature of its deal flow compared to more conventional investments, but maintains confidence in their long-term growth strategy. Looking towards 2025, they plan to pursue both large and small deals to continue their growth trajectory. Following this, John Dave from CBRE asks a question about regional gaming trends and market dynamics.

The paragraph discusses the considerations for investing and underwriting in the regional gaming market. Ed Pitoniak acknowledges the need to evaluate each market individually to understand the competitive landscape and an operator's ability to carve out a profitable position. He emphasizes that smaller assets can be attractive if managed by operators who know how to compete effectively. Ed highlights the importance of assessing an operator's capacity to compete profitably for market share, especially in the current environment. John Payne adds that when they founded VICI in 2017, he questioned whether insights from an operator's perspective would influence the way they underwrite real estate within a REIT.

The paragraph discusses the strategic approach to investing in regional markets, emphasizing the importance of understanding consumer sources and potential disruptions from market changes, like new casinos. It highlights the focus on long-term investments and disciplined evaluation of asset, operator, and credit quality. John Dave asks about non-gaming investment opportunities in the Las Vegas metro area, given its growth as a sports town, to which Ed Pitoniak responds by handing the conversation back to John.

The paragraph discusses a conversation about investing in experiential assets in Las Vegas, focusing on opportunities beyond casinos. Jose Bautista, owner of the Las Vegas Lights soccer team, and John Payne highlight interest in youth sports facilities and real estate projects. Ed Pitoniak addresses market volatility and its impact on lending opportunities, noting that while there's substantial capital for lending, frequent changes in the market create uncertainty about interest rates and spreads.

The paragraph discusses the challenges in predicting market conditions, particularly in capital and consumer markets, due to recent volatility. The speaker shares a personal experience of preparing long-term goals amidst fluctuating stock prices and U.S. 10-year rates over a tumultuous four-month period. This volatility has impacted deal flow and underwriting processes. However, they express hope for stabilization to allow for more confident decision-making. In a conversation with Jim Kammert, the speaker, Ed Pitoniak, indicates that they believe they are in a favorable position within the real estate and REIT capital markets but are cautious about consumer sentiment and its impact on investment decisions looking towards 2025.

The paragraph discusses consumer economic conditions, noting a mixed picture but generally positive overall. It mentions that REIT capital market conditions have been good since mid-July, albeit volatile recently. The focus is on predicting future trajectories due to deal preparation time. John Kilichowski from Wells Fargo asks about put options related to Harrah's Hoosier Park, which expire in December, and whether these affect capital decisions. Ed Pitoniak clarifies that Caesars has no intention of exercising these options, so it doesn't impact their capital strategy. Kilichowski also inquires about anything election-related affecting regional gaming, to which Ed Pitoniak and John Payne respond without concerns of major impacts.

The paragraph covers a discussion of gaming activities and investments, highlighting quiet developments in certain states like Missouri, Arkansas, and Virginia compared to previous years. John Kilichowski inquires about capital allocation, specifically regarding loans and investments, which David Kieske clarifies were mainly additional draws under loans for projects like Great Wolf, Foxwoods, Homefield, Cabot, and Canyon Ranch. Dan Guglielmo then asks about how Vegas trends impact cap rates for casino real estate, to which Ed Pitoniak responds that cap rates are influenced more by broader real estate market conditions rather than short-term operator performance. John Payne adds that understanding performance in Vegas requires considering the broader context of MGM and Caesars' operations.

The paragraph discusses MGM's strong performance with a 94% occupancy rate in Q3, noting that such numbers would be cause for celebration for a hotel company. However, evaluating large assets like hotels and casinos on a quarterly basis can be challenging. Despite past difficulties, such as the COVID shutdowns, MGM has managed to run its casinos more profitably post-pandemic. The overall outlook for Las Vegas and its operators is positive. Additionally, the conversation shifts to experiential partners like Great Wolfs, emphasising their unique offerings and the challenges and opportunities they face.

The article discusses the solid performance of a company, highlighting how their offerings are attractive to both the lower-end consumer and avid golfers. Despite some decline in lower-end consumer spending, the company's business remains strong, with several new assets opened and another one planned soon. This includes partnerships with Pilgrimage Golf and Cabot, which cater to high-end golfers. Additionally, wellness destinations like Canyon Ranch are thriving due to a growing interest in mindfulness and longevity. In response to a question from Goldman Sachs, it is noted that there is an ongoing focus on investing in existing assets, particularly in Las Vegas, though specific partner property growth opportunities are not detailed.

The paragraph discusses potential investment opportunities in the Sports Triangle area, where MGM and VICI own assets amidst a growing region in Las Vegas. While there are no announcements currently, there is optimism about future investments. It highlights MGM's expected significant benefits from the area's development, especially with the upcoming A-Stadium. The discussion shifts to VICI's strategy, exploring both gaming and non-gaming opportunities globally. Non-gaming ventures may be smaller, leading to more frequent transactions, yet gaming opportunities remain abundant. The New York gaming license approval process is briefly mentioned but not elaborated on.

In this excerpt from a conversation, the speakers discuss the future growth potential of MGM's gaming license in Yonkers and the impact on VICI's property partnership opportunities. They also address the growth of non-gaming opportunities in VICI's portfolio over the next three to five years. Ed Pitoniak explains that while non-gaming deals currently form a small part of VICI's portfolio, they are evaluated based on their contribution to rent growth, aiming for an annual increase of around three percent. These non-gaming deals, though smaller compared to VICI's gaming deals, represent significant investments relative to conventional net lease deals.

In the article's paragraph 26, the discussion focuses on the growth potential of the youth and recreational sports sector, both in Las Vegas and nationwide. Ed Pitoniak acknowledges the increasing investment in this sector by private equity firms, like David Blitzer's family office. He highlights the significant role youth sports play in family culture and suggests that despite unclear future demographic data, there are many young children currently participating in sports, indicating a growing need for sports facilities. The discussion transitions to a question about talent diversification at VICI, with the analyst inquiring about any specific sectors where the company aims to broaden or enhance its talent base. John Payne is invited to comment on this topic.

In the paragraph, David Kieske and John Payne discuss their interest in expanding into the Canadian market, noting that they've made their first foreign investment there and have also entered markets in Scotland and St. Lucia. Kieske emphasizes the potential for both gaming and non-gaming investments in Canada but notes that there are no immediate plans. Ed Pitoniak then concludes the call by mentioning an upcoming NAREIT event in Las Vegas and encourages attendees to participate in related activities. The call is then officially closed by the operator.

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