VICI Properties President John Payne quoted TV character Ted Lasso, the perpetually positive television soccer coach, to describe his real estate investment trust’s continued record of acquisition and success.
“Coach Lasso said, ‘The harder you work, the luckier you get,’” Payne recited in a conference call with analysts and journalists.
In the first quarter, VICI closed its $1.27 billion and assumed $3 billion in debt to take full ownership of the MGM Grand Las Vegas-Mandalay Bay joint venture and spent $200.8 million to buy four Canadian casinos.
On Monday, the REIT said it was eying more growth as it posted higher cash flow and revenue than a year earlier. VICI Properties’ revenue topped Wall Street forecasts; funds from operation per share, however, missed.
In a statement, VICI Properties, spun off from Caesars Entertainment Corp. in 2017, said funds from operation were $520.2 million, or 52 cents per share, for the three months ended March 31, up from $240.4 million, or 35 cents per share, a year earlier. The latest result missed the 59 cents-per-share consensus funds from operation 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, rising to $710.3 million from $358 million.
Revenue more than doubled, rising to $877.6 million from $416.6 million and topping the $846.5 million consensus forecast of Seeking Alpha-polled analysts.
VICI complemented the aforementioned deals with others in the first quarter. It originated a construction loan of up to $287.9 million for Great Wolf Resorts, bought $85 million in senior secured notes to pay for the redevelopment of the Hard Rock Ottawa Casino, and entered a triple-net lease agreement with Cherokee Nation Businesses related to the Gold Strike Casino Resort in Tunica, Mississippi.
In the conference call, Chief Executive Officer Edward Potoniak said market pundits have said, “Visibility is low. uncertainty is high,” when assessing the macroeconomy, fiscal policy, and the markets. In commercial real estate, he said, the murk is thicker and even more complicated by haggling among would-be sellers and buyers.
“Even amidst this murky trading environment, within Q1, we allocated … $1.6 billion of incremental capital to compelling and accretive experiential property and lending investments,” Potoniak said. “Combine that with $2.4 billion of undrawn revolver capacity and we have the funding in place to seize if further opportunity presents itself in this current environment.”
Payne, meanwhile, said VICI’s team continued to build partnerships to achieve growth goals. He added that VICI aims to deliver at least 10% of adjusted funds from operation. Although he didn’t specify any coming deals, Payne said some growth may look small at first, but spool into something bigger. He cited VICI’s December deal to finance a land-based casino with an adjacent 38-room hotel at Century Casino Caruthersville in Caruthersville, Missouri.
The projects are expected to cost about $51.9 million; annual rent under the master lease with Century will increase by about $4.2 million after the projects are finished.
“We’re chalking up miles, traveling the world, and meeting folks face to face to find opportunities for our company and shareholders,” he said.
VICI Properties shares fell $1.08, or 3.2%, in regular trading Tuesday to close at $32.70 on the New York Stock Exchange. The shares fell 29 cents, or 0.89%, after hours to settle at $32.41.
