VICI Properties marks a year of expansion, growth potential

February 25, 2024 8:35 AM
Photo: Shutterstock
  • Matthew Crowley, CDC Gaming Reports
February 25, 2024 8:35 AM
  • Matthew Crowley, CDC Gaming Reports

Real estate investment trust VICI Properties finished 2023 strong, with 20%-plus year-to-year increases in funds from operation and revenue, both of which topped Wall Street forecasts. Company officials celebrated a year of portfolio growth and diversification.

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In a statement Thursday, VICI Properties said its funds from operation totaled $747.8 million, or $0.72 per share, for the three months ended Dec. 31, up from $614.1 million, or 64 cents per share, a year earlier.

The latest result topped the 63-cents-per-share consensus forecast of analysts surveyed by Seeking Alpha. Funds from operation is a closely watched fiscal yardstick for real estate investment trusts that 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, were $570.4 million, or 55 cents per share for the quarter, up 17.0% from $487.6 million, or 51 cents per share, a year earlier.

Fourth-quarter revenue rose 21% to $931.9 million from $769.9 million to top the $921.1 million consensus forecast of Seeking Alpha-polled analysts.

The latest fourth-quarter revenue included $131.8 million of noncash leasing and financing adjustments and $18.3 million of other income.

The REIT forecast 2024 adjustable funds from operation of $2.32 million to $2.36 million, or $2.22 to $2.25 per diluted share.

During the quarter, VICI Properties agreed to provide a mezzanine loan of up to $212.2 million to Kalahari to fund development of an indoor waterpark resort in Thornburg, Virginia, and said it acquired the leasehold interest of Chelsea Piers in New York City for $342.9 million.

In a conference call with analysts and journalists, VICI Properties President and Chief Operating Officer John Payne said VICI’s $1.8 billion in 2023 transactions expanded the REIT’s geographic reach domestically and internationally and broadened its “investable universe” across gaming, hospitality, and family entertainment.

“Our commitment to developing and deepening relationships with great operators of all shapes and sizes, combined with our strong balance sheet and liquidity position, will afford us the ability to continue executing accretive deals during a time when other REITs may be stuck ‘skiing inside a milk bottle,’” Payne said. (“Skiing inside the milk bottle” was his expression for navigating an uncertain future.)

Chief Executive Officer Edward Pitoniak said the REIT started 2024 with about $1.2 billion in cash and forward equity resources to use toward continued growth. “What we can, must, and will do is continue to enable existing and potential VICI investors to understand fully the scale, quality, and mission criticality of our Class A real estate.”

During the question-and-answer session, Pitoniak said the company might deliver some of this understanding by wringing more potential out of already prospering properties. He pointed to The Venetian in Las Vegas, which with parking spans 17 million square feet. Amid that expanse, he said, are 300,000 unfinished square feet that he said have never gone past the concrete stage — concrete floors, walls, ceilings.

“With the job that the team at the Venetian is doing to maximize that asset, especially taking advantage of Sphere, it represents an incremental investment opportunity or growth opportunity for us that you wouldn’t likely find in most other REITs,” Pitoniak said.

For the full year, VICI Properties had $2.51 billion, or $2.47 per share, in net income, up from $1.12 billion, or $1.27 per share, a year earlier. Full-year revenue was $3.6 billion up from $2.6 billion. The company said it deployed capital in every month.

VICI Properties shares rose 35 cents, or 1.18%, to close at $30.05 on the New York Stock Exchange. The shares added 12 cents, or 0.4% after hours to settle at $30.17.