Leadership of Vici Properties, a real estate investment trust (REIT), played up its non-gaming investments in a February 21 earnings call. Particular emphasis was laid on a new deal to develop One Beverly Hills in California.
The mixed-use development is a joint venture among Vici, Cain International, and Eldridge Industries. Vici CEO Edward Pitoniak said it will sit on 17.5 of “the best-located acres in Beverly Hills.” The CEO later clarified that Vici wasn’t looking to own One Beverly Hills. “When it trades, it will trade at stratospheric value.” However, he thought other Cain/Eldridge real estate would be available for purchase.
COO John Payne observed that the deal with Cain and Eldridge had opened up a world of potential partnerships to Vici, with some deliberately seeking out the company. He said they were no longer saying, “You’re just that gaming REIT.”
Cain and Eldridge usually partner with each other, with the former managing $18 billion in real estate assets. Vici has signed a letter of intent with the two companies to pursue additional experiential investments.
“We share conviction in the strength, in years to come, of experiences,” said Pitoniak. Added Payne, “Deep relationships are at the core of Vici’s investment strategy.” These included the $700 million renovation of the Venetian, which is “being proactively reimagined across several verticals.”
Payne noted recent record levels of Las Vegas tourism, up two percent in 2024 with 42 million visitors. He also pointed to MGM Grand’s $300 million room refresh and its addition of the Palm Tree Beach Club, as well as such non-Vegas upgrades as the $435 million Caesars New Orleans and a $100 million makeover of Harvey’s Lake Tahoe.
In the seven years since Vici’s initial public offering, offered CFO David Kieske, the REIT has grown from “a very unnatural balance sheet,” starting with a 10-times debt-to-cash flow ratio. Kieske added that “one straggler” from the bond markets had been brought into the fold: Moody’s Investor Service. Moody’s recently upgraded Vici’s bonds.
Added Payne, “We were really more of a casino REIT. Today, we continue to diversify our portfolio.”
Kieske also pointed to Vici’s new $2.5 billion credit facility and $3.3 billion of liquidity. Its indebtedness now stands at 5.3 times cash flow at a 4.4 percent interest rate. “Our margins continue to remain strong,” the CFO said, “in the high 90 percent range.”
Asked about other potential new transactions, Pitoniak responded, “Last year, we didn’t see anything resembling a flow” of new deals. High-quality assets tended not to be for sale, as opposed to new developments.
Casino mergers and acquisitions, Payne remarked, “aren’t trending in Las Vegas at this time.” Pitoniak chimed in that new investments had to be done with precision. “We’re highly conscious of new competition and supply. It’s a case of, What would you want to own? We’re highly selective.”
“We’re quite busy,” Payne assured the assembled stock analysts. “The funnel is wide. We’re looking at quite a bit of things in the casino-gaming and experiential spaces.”
Payne was noncommittal on Vici’s upcoming option to buy Caesars Forum in Las Vegas. “It’s definitely an asset that we’re well aware of. It anchors the empty acreage that we have. It’s definitely on our radar.”
Pitoniak was pressed on whether Vici would get into actual casino operations. “Any casino would have to have zero — repeat, zero — hotel rooms,” he responded. “We don’t see that happening.”
Staying in Las Vegas, Vici executives noted that the Venetian had yet to draw down the last $300 million set aside for property revisions. “The assets are absolutely incredible,” enthused Payne, saying the Venetian was “bigger than some companies’ whole portfolio. Las Vegas has bigger boxes than the regionals,” he said of provincial casinos, adding that conversations were continuing about regional expansions, however.
As for the HHR market, Payne said, “Whether it’s historical racing machines or Class III machines, they’re all areas that we would add investment to,” in addition to new markets.
The conversation turned to Vici’s MGM Empire City in Yonkers, which is seeking an upgrade to a Class III casino. “There’s news almost every day,” Payne said of the casino-selection process. “It does seem like there’s progress being made, [but] your guess is as good as mine,” although he thought a final decision was possible by year’s end.
Pitoniak, meanwhile, clarified that a recent sale of casinos in Alberta was not done by Vici, but by Canadian Onex Corp., to nascent Indian Gaming Partners. “It also signifies that OpCos are marketable,” he emphasized.
“We had a great relationship with the owners and management,” Payne elaborated. IGP, he said, was looking to grow its portfolio. “You’ll see us grow with them over time.”
