During Vici Properties’s fourth-quarter earnings call, President John Payne was at pains to defend the company’s Las Vegas properties. “We view 2025 as more of a normalization than a pullback,” he said of recent declines in Vegas visitation and revenue.
Although Payne acknowledged “a dip in Canadian visitation,” he noted that 2025 saw Harry Reid International Airport’s third-best passenger tally. He also looked ahead to 2026, citing a busy Consumer Electronics Show in January and a strong convention calendar.
“The operating process of our tenants is important,” Payne said, speaking more broadly and stressing relationships. He opined that operational styles filter down to the bottom line, pointing to such Vici tenants as Station Casinos. He hailed the latter for a “thoughtful and creative operating model.”
CFO David Kieske highlighted Vici’s “sustainable per-share returns,” saying that the real estate investment trust (REIT) had generated a 69 percent profit margin, one of the highest in the S&P 500. The company’s debt ratio, Kieske added, was roughly five times cash flow.
CEO Edward Pitoniak was, when asked, reluctant to discuss the status of Caesars Entertainment’s master leases, saying he was “not going to get into any kind of detail. We’re going to do it within the context of our own portfolios and risk management.
“I, as a risk manager, am a little bit hesitant around investment guidance,” Pitoniak continued. He said it “can be a road to trouble,” particularly if business decisions are driven by the need to meet guidance.
Payne added that Vici aims for an eight percent to 10 percent return on its sale/leasebacks and loans. “We’re all very clear here that we need to line up sustainable growth,” driven by purchases, with loans used more as an instrument of building relationships.
One Wall Street analyst pressed Pitoniak for stock repurchases, given that Vici was meeting its return-on-investment targets. The CEO replied that General Counsel Samantha Gallagher “would justifiably smack me if I said we would never do share buybacks.” But he added, it was difficult to prioritize them over improving returns through organic means and that Vici “has a track record of improving returns.”
One early December transaction announced on February 25 was the revision and bundling of the master leases for Hollywood Greektown in Detroit and Margaritaville in Bossier City, Louisiana. Stressing that Vici has no more than 15 tenants, Payne said he saw an opportunity to remove volatility without changing the amount of rent collected by redoing those two leases as one.
“We simplified the escalation structure,” elaborated Kieske, by eliminating a percentage-based rent. “It’s a much cleaner, simpler structure,” summarized Payne.
Another Vici property that came up was MGM National Harbor, where a half-size version of Las Vegas’ Sphere may soon be built. While saying that he didn’t comment on deals that might be in progress, Pitoniak remarked, “We’ve been able to have a ringside seat for Sphere’s success at The Venetian,” praising Sphere management and ownership.
As for non-gaming investments, Payne said the REIT was looking into live entertainment, citing a “large appetite” for it from Generation Z. He added that Vici has approached as many as 70 universities in need of capital for new facilities.
Kieske added that there was “almost a nine-figure need for infrastructure on campus.” Interjected Pitoniak, “As software stock has immolated, there’s a lot of focus on Heavy Assets, Low Obsolescence” or HALO. He said the biggest risk in any major capital investment for Vici was whether it would still be viable in 30 years.
There was slight Vici movement on New York City, with Payne observing that Vici had preexisting relationships with Metropolitan Park operator Hard Rock International. He said Vici was “getting a better handle” on the cost of a New York investment.
Discussion concluded with the subject of Vici backing Blake Sartini’s leveraged buyout of Golden Entertainment. “Every deal we have is just so different,” said Payne, saying that optimal rent coverage was decided on a case-by-case basis. The key, he continued, was “understanding the management team and their plans for the assets. We believe that those operating [Golden] will be successful, based on their future plans.”
