VICI Properties CEO Ed Potoniak was ready to celebrate.
On Wednesday, the real estate investment trust he leads closed the $6.4 billion acquisition of The Venetian and the Venetian Expo’s land, thereby becoming the Strip’s biggest landowner. He called the deal a crowning moment in four years of growth.
First, though, there was the more mundane business of reporting fourth-quarter earnings. VICI posted a drop in a key cash flow from a year earlier that missed Wall Street forecasts, but a rise in revenue that beat them.
In a statement, Las Vegas-based VICI Properties said its funds from operation were $281.5 million, or 44 cents per share, down from net income of $288 million, or 53 cents per share, a year earlier. VICI linked the decline to a 17.6% increase in the weighted average number of common shares outstanding for the quarter.
Analysts surveyed by Seeking Alpha had expected 46 cents per share in funds from operation, a closely watched fiscal yardstick for real estate investment trusts that take net income and add back depreciation and
amortization.
Fourth-quarter revenue rose 2.7% to $383.2 million from $373 million and topped the consensus $380 million in revenue forecast by Seeking Alpha-polled analysts.
VICI shares rose 56 cents, or 2.08%, to close at $27.53 on the New York Stock Exchange. The shares rose $1.41, or 5.12%, after hours to settle at $28.94.
Last calendar year marked VICI’s fourth straight year of growth, Potoniak said, a span that included $29 billion of acquisitions and more than $12 billion of common equity raised. From Oct. 18, 2017, through this past Dec. 31, VICI generated a total return of 100.5%, nearly the Standard & Poor’s 500’s 100.7% return for the period.
Potoniak noted that The Venetian assets acquisition was announced in early March 2021, when the pandemic was still roiling the national economy and slowing Las Vegas tourism. But VICI and Apollo believed the city and its fortunes would rebound, he added.
In the deal, VICI paid $4 billion and Apollo Global Management $1.05 billion in cash, with $1.2 billion in seller financing.
“(The deal) was fundamentally based in the belief that Las Vegas and, moreover, The Venetian would eventually return to 2019 levels of performance,” Potoniak said in a conference call with analysts and journalists. “By looking past the short-term disruption in Las Vegas created by COVID, VICI was able to get one of the most iconic real estate assets in the country for a cap rate that today couldn’t even buy you a well-located Dollar General.”
Potoniak said VICI foresees “a long runway for growth” in gaming and will study and evaluate open-market gaming transactions in the United States and abroad.
For the full year ended Dec. 31, VICI had funds from operation of $1.01 billion, or $1.76 per share, up from $891.7 million, or $1.75 per share, a year earlier.
Twelve-month revenue rose 23.2% to $1.51 billion for $1.23 billion.
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