Aftereffects of Venetian, MGM Growth Properties deals help VICI double third-quarter revenue

October 30, 2022 10:46 AM

Aftereffects of Venetian, MGM Growth Properties deals help VICI double third-quarter revenue

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  • Matthew Crowley, CDC Gaming Reports
October 30, 2022 10:46 AM
  • Matthew Crowley, CDC Gaming Reports
  • United States
  • Nevada
  • Commercial Casinos

VICI Properties touted deals, including the acquisition of a Maryland casino’s land and the financing for a Texas wellness resort, as it reported third-quarter earnings. The New York-based real estate investment trust’s (REIT) adjusted per-share funds from operations missed Wall Street forecasts, although revenue beat them.

In a statement, VICI Properties, spun off from Caesars Entertainment in 2017, reported $340.6 million, or 35 cents per share, in funds from operation for the three months ended Se­­pt. 30, up from $161.9 million, or 28 cents per share, a year earlier.

The REIT’s adjusted funds from operation, which exclude one-time charges, were 49 cents per share, which missed the consensus 57 cents-per-share forecast of analysts surveyed by Seeking Alpha.

Funds from operation, a closely watched fiscal yardstick for real estate investment trusts, takes net income and adds back depreciation and amortization.

Adjusted earnings before interest, taxes, depreciation, and amortization, a cash-flow measure that excludes one-time costs, nearly doubled to $638.6 million from $324.5 million.

Revenue doubled to $751.5 million from $375.7 million and topped the consensus $738.2 million forecast of Seeking Alpha-polled analysts. VICI Properties said the latest results reflected the full effect of its $17.2 billion buyout of MGM Growth Properties and its acquisition of The Venetian, part of a $4 billion deal.

Last month, VICI entered a delayed-draw term-loan facility for up to $200 million to fund the development of Canyon Ranch’s wellness resort in Austin, Texas, which is expected to open in 2025. The transaction includes a call right to acquire Canyon Ranch Austin’s real estate. The deal also includes a purchase option for the real estate of Canyon Ranch Tucson in Tucson, Arizona, and Canyon Ranch Lenox in Lenox, Massachusetts, should Canyon Ranch opt to sell either property’s real estate. If the call right or purchase options are exercised, Canyon Ranch, a Tucson, Arizona, company, would continue to operate the wellness resorts, subject to a long-term triple-net lease with VICI.

In July, VICI Properties agreed to provide a mezzanine loan for up to $59 million to Chicago-based Great Wolf Resorts for the development of Great Wolf Lodge South Florida in Collier County. The $250 million family-resort project includes a 500-room indoor water park resort, expected to open in summer 2024.

The mezzanine loan has an initial four-year term with one 12-month extension option.

In August, VICI agreed to acquire the real estate assets of the Rocky Gap hotel-casino in Flintstone, Maryland, for $204 million. Century Casinos agreed to buy the Rocky Gap’s operations for $56 million and amend its triple-net-lease agreement with VICI to add Rocky Gap; the lease amendment includes an initial annual rent of about $15.5 million for the Rocky Gap.

In a conference call with analysts and journalists, VICI Chief Executive Officer Edward Potoniak said VICI’s partnership with Canyon Ranch reflected a belief in the power of pilgrimage experiences.

“These are experiences that tend to attract within that experiential category, the most valuable and loyal clientele, able and willing through all cycles to pay a premium for the purest realization of the experience to which they are devoted,” he said.

VICI shares rose $1.14, or 3.68%, Friday to close at $32.13 on the New York Stock Exchange. The shares fell 3 cents, or 0.09%, after hours Friday to settle at $32.10.

Follow Matthew Crowley on Twitter @copyjockey.