VICI continues to show range, tops Street forecasts for cash flow, revenue in third quarter

October 27, 2023 4:19 PM
Photo: Shutterstock
  • Matthew Crowley, CDC Gaming Reports
October 27, 2023 4:19 PM
  • Matthew Crowley, CDC Gaming Reports

VICI Properties, which has ventured beyond its core gambling and entertainment business into wellness retreats, continued to show its range this week, announcing a $433 million sale-leaseback deal for 38 bowling centers operated by Mechanicsville, Virginia’s Bowlero Corp.

Story continues below

VICI, a New York-based real estate investment trust, which in Las Vegas is landlord to properties including Caesars Palace, The Venetian, MGM Grand, and Mandalay Bay, also continued to show steady performance. The REIT on Wednesday posted third-quarter cash flow and revenue that topped Wall Street forecasts and raised adjusted funds from operations guidance for 2023.

In a statement, VICI said its funds from operation were $556.3 million, or 55 cents per share, for the three months ended Sept. 30, up from $340.6 million, or 35 cents per share, a year earlier. The latest result topped the 53-cent-per-share consensus 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 different cash-flow measure that excludes one-time costs, rose 13.7% to $726.4 million from $638.6 million.

Revenue rose 20.3% to $904.3 million from $751.5 million and topped the $902 million consensus forecast of Seeking Alpha-polled analysts.

Oppenheimer analyst Ian Zaffino told Seeking Alpha that the Bowlero deal would boost VICI. “This deal greatly accelerates the company’s capital-deployment plan and could fund a large buyback, particularly at these levels,” he said.

In June, VICI closed a $203.9 million deal for the Rocky Gap Casino, Resort & Golf property in Maryland from Golden Entertainment and in May acquired the real estate of Century Casinos’s four gaming properties in Alberta, Canada — Century Hotel-Vasino, Edmonton; Century Casino St. Albert; and Century Mile Racetrack and Casino and Calgary’s Century Downs Racetrack and Casino for about US$164.7 million.

VICI also expanded its partnership with wellness-retreat operator Canyon Ranch through a mortgage loan, a preferred equity investment, and call rights to acquire Canyon Ranch Tucson and Canyon Ranch Lenox.

VICI increased its full-year 2023 adjusted FFO guidance to between $2.17 billion and $2.18 billion, or between $2.14 and $2.15 per diluted share. (Adjusted funds from operation is a cash-flow measure that excludes one-time costs.)

“We played offense selectively. We played defense,” Chief Executive Office Edward Pitoniak said Thursday in a conference call with analysts and journalists. “We capitalized on certain current conditions. We prepared for potential future conditions. … We played defense by using close to $1 billion of equity in cash and only about $55 million of debt to fund our new capital commitments, demonstrating our commitment to our long-range leverage targets.”

VICI President and Chief Operating Officer John Payne said the REIT positioned itself to continue its business, expand into new sectors and geographies, and draw value from its core Las Vegas properties.

“Las Vegas continues to open new world-class attractions, while diversifying its revenue stream and customer base,” he said. “The opening of the must-see entertainment venue, the Sphere, world-famous events like Formula 1 and the 2024 Super Bowl, and a diverse and robust convention and conference schedule all helped showcase that there’s no city performing like Las Vegas, clearly the entertainment epicenter of the world.”

VICI Properties shares fell 1 cent, or 0.04%, Thursday to close at $27.55 on the New York Stock Exchange.