VICI posts forecast-topping results for Q2, joins S&P 500

VICI posts forecast-topping results for Q2, joins S&P 500

  • Matthew Crowley, CDC Gaming Reports
July 31, 2022 7:08 PM
  • Matthew Crowley, CDC Gaming Reports
  • United States
  • Commercial Casinos

VICI Properties in the past year has pushed business writers to search their thesauruses for new superlatives. Major, super, mega, they all fit.

The New York-based real estate investment trust swung a $4 billion deal for the real estate and buildings of Las Vegas Sands Corp.’s Las Vegas Strip hotel-casinos, and a $17.2 billion buyout of MGM Growth Properties. Last month, the REIT joined stock market royalty with entry to the S&P 500.

The REIT, which now has 45 properties in 15 states, joined the benchmark index June 8. Company officials touted the news Thursday as they announced adjusted funds from operation and revenue that rose from a year earlier and topped Wall Street forecasts.

In a statement, VICI Properties, spun off from Caesars Entertainment in 2017, said it had adjusted funds from operation, which exclude one-time costs, of $430.1 million, or 48 cents per diluted share, for the three months ended June 30, up from $256.1 million, or 46 cents per diluted share, a year earlier.

The latest adjusted funds from operation topped the 54 cents per share average forecast of analysts surveyed by Seeking Alpha. Funds from operation are a closely watched fiscal yardstick for real estate investment trusts, taking net income and adding back depreciation and amortization.

Adjusted earnings before interest, taxes, depreciation, and amortization, a cash-flow measure that also excludes one-time costs, rose 72.5% to $564.5 million from $327.2 million.

Revenue rose 76% to $662.6 million from $376.4 million and topped the $595.5 million estimate of analysts surveyed by Seeking Alpha.

VICI Chief Financial Officer David Kieske touted the REIT’s S&P 500 entry.

“VICI was the fastest REIT to be added to the S&P 500 index from IPO to inclusion,” he said. “And we believe being added to the index will broaden our investor base and improve our access to equity capital.”

Chief Executive Officer Edward Potoniak noted that VICI was elevated to investment-grade credit status by S&P and Fitch and added a new chief investment officer (Kellan Florio), a new vice president of capital markets (Moira Mccloskey), and a new management committee to broaden and deepen strategic resources and reach.

Potoniak said resiliency, from gamblers and the gambling operators that rent VICI’s properties, continue to prove resilient.

“The gaming customer has proven to be more resilient … than just about any other discretionary consumer out there. That was proven through both the great financial crisis and throughout the COVID-19 pandemic,” he said. “Our operators are responsible – responsive and agile in dealing with changing conditions.”

If customers and clients have been resilient, VICI itself has been nimble, Potoniak said.

“VICI moves quickly and decisively in market conditions that may cause others to pause,” he said. “Current and especially prospective market conditions could yield VICI, we believe, highly attractive growth opportunities in the quarters ahead.”

VICI reaffirmed adjusted funds from operation estimates of $1.66 billion to $1.69 billion, or between $1.89 and $1.92 per diluted common share for the year ending Dec. 31. And Potoniak said sports may offer future opportunities.

In the question-and-answer session, he said sports training centers might be one area to invest capital. He added that sports betting will continue to let gaming operators expand competitiveness.

“Sports betting has enabled the gaming operators to activate the next-generation of customers,” he said. “And people are losing sight of the fact that it is going to be a key means by which gaming competes in the American consumer marketplace.”

VICI Properties shares rose 39 cents, or 1.15%, Friday to close at $34.19 on the New York Stock Exchange. The shares added a penny per, or 0.03 percent, to settle at $34.20 after hours.

Follow Matthew Crowley on Twitter @copyjockey.

Follow Matthew Crowley on Twitter @copyjockey.