Executives of Vici Properties were upbeat on their experiential-real estate portfolio and especially on Las Vegas during their second-quarter earnings call held July 30.
CEO Edward Pitoniak led off by emphasizing the importance to Vici of relationship-building. COO John Payne followed up on that with shout-outs to partners Golden Entertainment and Clairvest, terming them “experienced and tenured operators.”
He continued by turning to the Las Vegas Strip, where gambling revenue is running ahead of 2025. Payne highlighted the “massive growth in professional sports” in Sin City. “Every new revenue driver makes Las Vegas that much harder to bet against.”
Payne also emphasized Las Vegas’s centrality to conventions, including Vici’s own Venetian Expo convention center. Saying a real estate investment trust (REIT) is only as good as its tenants, he added, “This quarter we got better.”
Asked about the prospect of regional acquisitions in light of Churchill Downs’s recent decision to downsize its casino portfolio, Payne said Vici would be looking at some of the cast-off assets. “The business is resilient,” he said of regional gambling. “There’s been an amazing rebound in the regional markets in the last six years or so.”
Calling regional casinos “the people’s country club,” Payne said their success was a function of ever-more-creative game products and operators reinvesting in their properties. “All that plays into why we’re seeing an uptick.”
Interjected Pitoniak, “The amount of live entertainment in America now that takes place in casinos didn’t exist 30 or 40 years ago.”
The aforementioned ferment in gaming included Vici’s primary tenants, Caesars Entertainment and MGM Resorts International, both of which are undergoing takeover talks. “Our conversations haven’t fundamentally changed,” Pitoniak said of relationships with the two.
Payne added that one specific discussion involved the possibility of an NBA team coming to Las Vegas. He pointed out that Vici holds 50 acres behind Paris Las Vegas, which could be positioned for a new basketball arena.
“We continue to be very excited about the market, the number-one entertainment epicenter in the world,” Payne continued. “We really like what the operators are doing,” especially with event-driven marketing.
Pitoniak picked up the thread, hailing MGM’s 93 percent Strip occupancy rate in the second quarter. He called the figure “outstanding” and highlighted the effect of MGM’s all-inclusive pricing efforts at its lower-end properties. “They respond as energetically and creatively as any hospitality operator I have known,” Pitoniak said.
Asked whether Vici would engage with non-Vegas convention centers, Pitoniak demurred, praising the Strip’s convention facilities. “I don’t know that anyone is terribly worried” about outside competition, he said. “The entire [Las Vegas] ecosystem, there’s really nothing in America that comes close,” especially when one takes into account the “beat-up” condition of the non-Vegas lodging industry.
Pressed to engage in share repurchases, CFO David Kieske responded that putting money out on loan for asset development is a “more attractive” use of Vici’s capital: “A buyback for a REIT is just not something that makes a lot of sense.”
The question was posed whether privately held companies were more flexible partners than public ones. “It’s somewhat understandable,” Pitoniak said, citing a lack of love for the gaming group on Wall Street. “In the private markets, they really can do what they think is right” to grow their firms.
Payne added that, operationally, “being in a private entity is quite beneficial to this industry.” He recalled that when he was a casino executive, he had defer property renovations, “because it was going to be detrimental to the quarter. In a private setting, you don’t have to worry about those 90 days.”
