Q4 2023 VICI Properties Inc Earnings Call
Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the VICI Properties fourth quarter and full year 2023 earnings conference. At this time, all participants are in their respective rooms. Please note that this conference call is being recorded today, February 23rd, 2020. I will now turn the call over to Samantha Gallagher, General Counsel with VICI Properties. Thank you, operator, and good morning.
Good day, ladies and gentlemen, thank you for standing by welcome to the BG properties fourth quarter and full year 2023 earnings conference call.
Time, all participants are in listen only mode.
Please note that this conference call is being recorded today February 22024.
I'll now turn the call over to Samantha Gallagher General counsel with <unk> properties.
Samantha Sacks Gallagher: Thank you operator, and good morning, everyone should have access to the company's fourth quarter and full year 2023 earnings release and supplemental information.
Samantha Sacks Gallagher: Everyone should have access to the company's fourth quarter and full year 2023 earnings release and supplemental information. The release and supplemental information can be found in the Investor section of the VICI Properties website at www.viciproperties.com. Some of our comments today will be forward-looking statements within the meaning of the Federal Security System. Forward-looking statements, which are usually identified by the use of words such as will, believe, expect, should, guidance, intends, outlook, projects, or other similar phrases, are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Therefore, you should exercise caution in interpreting and relying on it.
Samantha Sacks Gallagher: The release and supplemental information can be found in the investors section of the Vg properties website at Www Dot BG properties Dot com.
Samantha Sacks Gallagher: Some of our comments today will be forward looking statements within the meaning of the federal Securities laws forward looking statements, which are usually identified by the use of words, such as will believe expect should guidance intend outlook projects or other similar phrases are subject to numerous risks and uncertainties that could cause.
Samantha Sacks Gallagher: Actual results to differ materially from what we expect therefore, you should exercise caution in interpreting and relying on them I refer you to the company's SEC filings for a more detailed discussion of the risks that could impact future operating results and financial condition.
Samantha Sacks Gallagher: I refer you to the company's SEC filings for a more detailed discussion of the risks that could impact future operating results and financial conditions. During the call, we will discuss certain non-GAAP measures, which we believe can be useful in evaluating the company's performance. However, these measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available on our website in our fourth quarter and full year 2023 earnings release, our supplemental information, and our filings with the SEC. For additional information with respect to non-GAAP measures of certain tenants and or counterparties discussed on this call, please refer to the respective company's public filings with the SBA.
Samantha Sacks Gallagher: During the call we will discuss certain non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.
Samantha Sacks Gallagher: Reconciliation of these measures to the most directly comparable GAAP measure is available on our website and our fourth quarter and full year 2023 earnings release, our supplemental information and our filings with the SEC for additional information with respect to non-GAAP measures a certain tenants and our Counterparties discussed on this call. Please refer to the respective companies public filings with the.
Speaker Change: SEC hosting the call today, we have Ed <unk>, Chief Executive Officer, John Payne, President and Chief Operating Officer, David <unk>, Chief Financial Officer, Gabe Wasserman, Chief Accounting Officer, and Maureen Rykowski Senior Vice President of capital markets, Ed and team will provide some opening remarks, and then we will open the call to questions with that.
Samantha Sacks Gallagher: Hosting the call today, we have Ed Pitoniak, Chief Executive Officer, John Payne, President and Chief Operating Officer, David Kieske, Chief Financial Officer, Gabe Wasserman, Chief Accounting Officer, and Moira McCluskey, Senior Vice President of Capital Markets. Ed and his team will provide some opening remarks, and then we will open the call to questions. With that, I'll turn the call over to Ed. Thank you, Samantha, and good
Speaker Change: I'll turn the call over to Ed.
Ed: Thank you Samantha and good morning, everyone. I will start this morning with a few words about 2023, VGA accomplishments and the way forward John Payne will share our 2024 growth approach and David <unk> will discuss our 2023 financial results and our 2020 for guidance.
Edward Baltazar Pitoniak: I'll start this morning with a few words about 2023 VICI accomplishments and the way forward. John Payne will share our 2024 growth strategy, and David Kieske will discuss our 2023 financial results and our 2024 guidance. Last week, Last night, we announced the final 2023 AFFO per share of $2.15, representing year over year per share growth of 11.8%. VICI's 2023 AFFO growth will likely make it one of the 2023 income growth leaders among the 29 S&P 500 REITs that report AFFO per share. There are 30 S&P 500 REITs overall, representing approximately 90% of the U.S. REIT equity market capitalization at year-end.
David: Lastly, last night, we announced final 2023 <unk> per share of $2 15.
David: Representing year over year per share growth of 11, 8% <unk> 2023, <unk> growth will likely make vg one of the 2023 income growth leaders. Among the 29, S&P 500, Reits that report <unk> per share.
David: There are 30, S&P 500 rates overall, representing approximately 90% of the U S REIT equity market capitalization at year end.
Edward Baltazar Pitoniak: VG's 2023 growth is largely the result of work we did in 2022, forging new relationships and new investments in both gaming and non-gaming, both property acquisitions and property credit investment. I'm proud of our 2023 AFFO per share growth, but I'm also proud of what the VICI team did in 2023 to continue to produce growth for 2024 and beyond. Our investment activities in 2023 produced growth in our portfolio quality, geographic diversity, tenant diversity, and income. Indeed, when it comes to 2024 income growth, as David will discuss in a moment regarding our 2024 guidance, we expect our projected 2024 AFFO per share growth should put VICI well into the top half of the S&P 500 REIT 2024 AFFO per share growth table.
David: In 2023 growth is largely the result of work we did in 2020 to forging new relationships and new investments in both gaming and non.
David: Both property acquisitions and property credit investments.
I am proud of our 2023 <unk> per share growth, but I'm also proud of what the BG team did in 2023 to continue to produce growth for 2024 and beyond our investment activities in 2023 produced growth in our portfolio of quality geographic diversity tenant diversity and.
David: Income in.
David: Indeed, when it comes to 2020 for income growth as David will discuss in a moment regarding our 2024 guidance. We expect our projected 2024 <unk> per share growth should put <unk> well into the top half of the S&P 500, REIT 2024, <unk> per share growth table.
Edward Baltazar Pitoniak: It wasn't easy to produce future growth in 2023. It was tough to navigate in 2023. Most days in 2023, and, frankly, most days in 2024, so far, remind me of my days living and working in Whistler, British Columbia, where a very challenging coastal mountain environment could result in days so foggy and whited out that we describe such days as skiing inside a milk bottle.
David: It wasn't easy to produce future growth in 2023.
David: It was tough to navigate in 2023, most days in 2023 and frankly most days in 2024, so far remind me of my days living and working in Whistler, British Columbia were very challenging coastal mountain environment could result in days, so foggy and wait it out that we described.
David: Stays as skiing inside of milk model.
Edward Baltazar Pitoniak: But even amidst this low visibility, the VICI team kept pioneering in 2023. We invested in new geographies, including three new countries, and through our Bolero acquisition in U.S. non-commercial gaming states such as Texas, California, and North Carolina. We invested in new categories, such as family recreation and youth sports. We expanded our partnerships with pilgrimage brands like Cabot and Canyon Ranch. We acquired the primary leasehold interest in New York's incomparable Chelsea Piers.
David: But even amidst this low visibility the BT team kept pioneering in 2023, we invested in new geographies, including three new countries and through our bolero acquisition in U S. Non commercial gaming states, such as Texas, California, and North Carolina.
David: We invested in new categories, such as family Recreation and youth sports, we expanded our partnerships with pilgrimage brands like Cabot and Canyon Ranch, we acquired the primary lease hold interest in New York and comparable Chelsea piers.
Edward Baltazar Pitoniak: Through our position as the leading owner of real estate on the Las Vegas Strip, we continue to work with our Las Vegas partners to capitalize on Las Vegas's leadership position in global entertainment and hospitality. I strongly believe VICI's investment in Las Vegas is one of the most compelling investments in the current global commercial real estate investing landscape, period, false stop. As we set out in our earnings release last night, in 2023, we announced and closed $1.8 billion of capital acquisitions and investments within the year. Note that these figures do not include the $2.8 billion closing of our Mandalay Bay MGM Grand joint venture in early January 2023, which we announced in early December 2022, including our assumption of the remaining $1.5 billion of CMBS debt. Of fundamental importance, our 2023 investing in gaming and non-gaming was accretive. Our announced 2023 capital investments were made at a blended initial unlevered investment yield of 7.7%.
David: Through our position as the leading owner of real estate on the Las Vegas strip, we continue to work with our Las Vegas partners to capitalize on Las Vegas as leadership position in global Entertainment and hospitality.
David: I strongly believe <unk> investment in Las Vegas is one of the most compelling investments in the current global commercial real estate investing landscape period full stop.
David: As we set out in our earnings release last night in 2023, we announced and closed $1 $8 billion of capital acquisitions and investments within the year note that these figures do not include the $2 $8 billion closing of our Mandalay Bay MGM Grand Joint venture in early January 2023, which we announced.
David: Early December 2022, including our assumption of the remaining $1 $5 billion of <unk> debt.
David: A fundamental importance our 2023 investing in gaming and non gaming was accretive our announced 2023 capital investments were made at a blended initial unlevered investment yield of seven 7%.
Edward Baltazar Pitoniak: Our 2023 investing was also balance sheet enhancing. We funded this $1.8 billion of investment with approximately $1.6 billion of cash and equity and only about $200 million of incremental debt, achieving an equity to debt funding ratio on that investment activity of eight to one, demonstrating our commitment to our long-range net leverage target of 5.0 to 5.5 times net debt to adjusted EBITDA.
David: Our 2023 investing was also balance sheet enhancing we funded this $1 8 billion of investment with approximately $1 6 billion of cash and equity and only about $200 million of incremental debt achieving an equity to debt funding ratio on that investment activity of 8% to one demonstrating our commitment.
David: <unk> to our long range net leverage target of <unk>.
David: 5.0 to five five times.
David: Net debt to adjusted EBITDA.
Edward Baltazar Pitoniak: As we look ahead within 2024, despite the continued cloudy macroeconomic conditions and outlook, we begin 2024 with approximately $1.2 billion of cash and forward equity resources to deploy into continuing accretive growth. Needless to say, in a macro environment of constrained capital conditions, we believe our capital resources can and will be attractive to gaming and experiential operators who want to grow and or need liquidity. Finally, in 2024, we will continue to build a portfolio of quality. You've heard me say before that I believe VICI is the pioneer in bringing Class A real estate to net lease. By Class A, we mean real estate of great scale, great quality, and high mission criticality. And VICI enables investors to own Class A real estate within the strong economic transparency and integrity of the net lease model.
David: As we look ahead within 2024, despite the continued cloudy macroeconomic conditions and outlook. We begin 2024 with approximately $1 $2 billion of cash and forward equity resources to deploy into continuing accretive growth.
David: Needless to say in a macro environment of constrained capital conditions, We believe our capital resources can and will be attractive to gaming and experiential operators, who want to grow <unk> need liquidity.
David: Finally in 2024, we will continue to build a portfolio of quality.
David: You've heard me say before that I believe <unk> is the pioneer and bringing class a real estate two net lease by class AA, We mean real estate, a great scale, great quality and high mission criticality and Vg enables investors to own class a real estate within the strong economic transparency.
David: Fee and integrity of the net lease model, while we can must and will do is continue to enable existing and potential <unk> investors to understand fully the scale quality and mission criticality of our class a real estate to that end, we are proud to announce that we're launching today the vg.
Edward Baltazar Pitoniak: 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. To that end, we are proud to announce that we're launching today the VICI Properties Photo Book, a digital coffee table style book that brings to life the magnificence of the real estate owned by VICI. You can view this book online at our website, www.viciproperties.com. And I thank Hayes Honey, on our team, for her great work in producing and publishing this book. I strongly encourage you to give this book a good read.
David: Properties photo book, a digital coffee table stylebook that brings to life. The magnificence of the real estate owned by Vinci you can view. This book online at our website Www Dot Vg properties Dot com and I think <unk> of our team for her great work in producing and publishing this book.
David: I strongly encourage you to give this book a good viewing if you're a beachy sharp shareholder I believe the book will give you a great pride in what you own and with that I'll now turn the call over to John Thanks, Ed. Good morning to everyone. In 2023, <unk> was able to navigate a volatile broader market backdrop, particularly for Reits and consistently dipped.
Edward Baltazar Pitoniak: If you're a VICI shareholder, I believe the book will give you great pride in what you own. And with that, I'll now turn the call over to John. Thanks, Ed. Good morning, everyone.
John W. R. Payne: In 2023, VICI was able to navigate a volatile broader market backdrop, particularly for REITs, and consistently deploy capital in accretive ways throughout the year. Over the course of 2023, we deployed $1.8 billion at a blended yield of approximately 7.7% across investments that expanded our geographic reach domestically and internationally, broadened our investable universe across gaming, hospitality, and family entertainment, and deepened our ability to invest creatively through property-related Our ability to transact successfully last year was due in part to the multi-year effort I've mentioned before on our earnings calls. Every day at VICI, our team shows up for work and focuses on developing and maintaining relationships with best-in-class, growth-oriented operators. While some REITs describe themselves simply as a landlord and position themselves to extract value from their tenants, we view ourselves as a long-term capital partner collaborating with our tenants to create value. This philosophy of serving as a capital partner and prioritizing relationships with operators who pursue growth energetically serves as our compass as we assess and underwrite opportunities in the current environment. An environment that is characterized by low visibility and fluctuating costs of capital.
John W. R. Payne: Lloyd capital in accretive manner throughout the year.
John W. R. Payne: Over the course of 2023, we deployed $1 $8 billion at a blended yield of approximately seven 7% across investments that expanded our geographic reach domestically and internationally broadened our investable universe across gaming hospitality and family Entertainment and deepened.
John W. R. Payne: Our ability to invest creatively through property related credit investments our ability to transact successfully last year was due in part to the multi year effort I've mentioned before on our earnings calls every day at Vg our team shows up for work and focuses on developing and maintaining relationships with.
John W. R. Payne: Best in class growth oriented operators, while some rates describes themselves simply as a landlord and position themselves to extract value from their tenants, we view ourselves as a long term capital partner collaborating with our tenants to create value. This philosophy.
John W. R. Payne: We are serving as a capital partner and prioritizing relationships with operators, who pursue growth energetically serves as our compass as we assess and underwrite opportunities in the current environment, an environment that is characterized by low visibility and fluctuating cost of capital to that Ed.
John W. R. Payne: To that end, many of you have heard me speak over the years about our focus on growth, and it's also important to understand that there have been numerous situations in which we elect not to pursue opportunities. VICI is in the very fortunate position to have created significant shareholder value over the years. For example, we've grown our AFFO per share at an 8.5% CAGR from 2018 through 2023, while our dividend has grown at a comparable high single-digit rate. And we do not believe we need to pursue growth just for the sake of growth.
John W. R. Payne: And many of you have heard me speak over the years about are focused on growth and it is also important to understand that there have been numerous situations in which we elected to not pursue opportunities.
John W. R. Payne: <unk> is in the very fortunate position to have created significant shareholder value over the years. For example, we've grown our <unk> per share at eight 5% CAGR from 2018 through 2023, while our dividend has grown at a comparable high single digit rate and we do not believe we need to pursue.
John W. R. Payne: Growth surely for the sake of growing for those of you who may be newer to our story I would I would like to touch on a few elements of our growth pillars that have allowed us to successfully complete $36 billion of accretive transaction volume and a little over six years number one we work collaboratively with.
John W. R. Payne: For those of you who may be newer to our story, I would like to touch on a few elements of our growth pillars that have allowed us to successfully complete $36 billion of accretive transaction volume in a little over six years. Number one, we work collaboratively with operating partners, investing in growth opportunities and funding high ROI capital projects in order to achieve mutually beneficial outcomes. Number two, as the only S&P 500 REIT predominantly invested in the gaming industry, given 90% of our rent is derived from gaming investments, our team travels far and wide, visiting properties, studying new markets, assessing the landscape, and meeting with operators across regional, Las Vegas, and even international locations.
John W. R. Payne: With operating partners investing in growth opportunities and funding high ROI capital projects in order to achieve mutually beneficial outcomes number two as the only S&P 500, REIT predominantly invested in the gaming industry, given 90% of our rent roll is derived from gaming investments our team travels.
John W. R. Payne: Foreign wide visiting properties studying new markets assessing the landscape and meeting with operators across regional Las Vegas, and even international locations number three we are supplementing our gaming investments with opportunities and experiential sectors that we believe we are positioned to benefit from secular <unk>.
John W. R. Payne: Number three, we're supplementing our gaming investments with opportunities in experiential sectors that we believe are positioned to benefit from sexual or head-tail winds. We focus on sourcing transactions with operators who are positioning themselves for growth, including through roll-ups in an industry, such as you saw with our Cabot and Bolero transactions announced in October of last year. And finally, number four, we constantly keep our eyes open for opportunities where VICI can get better by getting bigger, as demonstrated through the acquisition of MGM Growth Properties in 2022, which significantly expanded our footprint in Las Vegas, added Class A market-leading regional assets to our portfolio, improved our balance sheet to investment grade, and has positioned us for a long-term partnership with MGM Resorts, a world-class gaming, hospitality, and leisure operator. As we In particular, we are adhering to prudent underwriting standards, ensuring your capital is appropriately compensated as we assess risk and pursue opportunities across different properties, markets, and asset classes.
John W. R. Payne: Tailwind.
John W. R. Payne: We focus on sourcing transaction with operators, who are positioning themselves for growth, including through roll up in an industry. Much as you saw with our cabinet and Valero transactions announced in October of last year, and finally number four we constantly keep our eyes open for opportunities, where <unk> can get better by getting bigger as <unk>.
Emmons traded through the acquisition of MGM growth properties in 2022, which significantly expanded our footprint in Las Vegas added class a market, leading regional assets to our portfolio improved our balance sheet to investment grade and has positioned us for a long term.
John W. R. Payne: Our partnership with MGM resorts, a world class gaming hospitality and leisure operator.
John W. R. Payne: As we dive further into 2024, we hold firm hit the criteria that has driven much of our track record to date, while executing across our strategic pillars.
John W. R. Payne: In particular, we are adhering to prudent underwriting standards, ensuring your capital is appropriately compensated as we assess risk and pursue opportunities across different properties markets and asset classes.
David Kieske: And, as I said earlier, we maintain a preference for growth-focused operators, with our entire team evaluating a partner's track record and, importantly, their use of proceeds, which typically explains intentions behind pursuing a transaction. We ultimately believe the right partnerships lead to the right opportunities, which feeds the flywheel of value creation through collaboration. We believe 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 to execute creative deals during a time when other REITs may be stuck, quote, skiing inside a milk bottle, unquote. Now I'll turn the call over to David, who will discuss our financial results and guidance. David
John W. R. Payne: And as I said earlier, we maintain a preference for growth focused operators with our entire team are evaluating a partner's track record and importantly, their use of proceeds which typically explains intentions behind pursuing a transaction. We ultimately believe the right partnerships lead to the right opportunities, which feeds the flywheel of valley.
John W. R. Payne: New creation through collaboration we believe 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 rates rights maybe.
John W. R. Payne: Stuck quote skean inside a milk bottle unquote now I'll turn the call over to David who will discuss our financial results and guidance David.
David Kieske: Thank you, John. It's great to speak with everyone today, and we appreciate your time. I want to start with our balance sheet. 2023 exemplifies the continued discipline we have maintained over our six-plus years of existence by ensuring that we allocate capital creatively, have a balance sheet and liquidity profile designed to weather all cycles, and provide the safety and protection our equity and credit partners deserve. During the year, we raised over $1.6 billion in forward equity.
David: Thank you John Great to speak with everyone today and we appreciate your time I want to start with our balance sheet 2023 exemplifies. The continued discipline. We have maintained over six plus years of existence by ensuring that we allocate capital accretively have a balance sheet and liquidity profile designed to weather all cycles will provide the safety and protection.
David: Our equity and credit partners deserve.
David: During the year, we raised over $1 6 billion and forward equity in January of 2023, we raised approximately $1 billion in gross forward equity proceeds at a $33 <unk> per share those proceeds were used throughout the year to Accretively fund our transactions.
David Kieske: In January of 2023, we raised approximately a billion dollars in gross forward equity proceeds at a $33 price per share. Those proceeds were used throughout the year to accretively fund our transactions. We utilized our ATM program throughout 2023, raising $643 million in gross forward proceeds. That amount includes $390 million, which was raised in Q4 through the sale of 13.2 million shares via the forward and remains outstanding today.
David: We utilized our ATM program throughout 2023, raising $643 million in gross forward proceeds that amount includes $390 million, which was raised in Q4 through the sale of $13 2 million shares via the forward and remains outstanding today and subsequent to year end and Q1 2024, we sold $9 7 million.
David Kieske: Subsequent to year end, in Q1 2024, we sold 9.7 million shares, raising $306 million in gross proceeds under our ATM via the forward. This brings our total outstanding forward equity to just under $700 million, bolstering our overall liquidity. Currently, we have approximately $3.5 billion in total liquidity, comprised of $523 million in cash, cash equivalents, and short-term investments as of December 31, 2023, $696 million of proceeds under our outstanding forwards, and $2.3 billion of availability under the revolving credit facility.
David: Shares raising $306 million in gross proceeds under our ATM via the forward. This brings our total outstanding forward equity to just under 700 million bolstering our overall liquidity.
David: Currently we have approximately $3 5 billion and total liquidity.
David: Comprised of $523 million in cash cash equivalents and short term investments as of December 31, 2023, 696 million of proceeds under our outstanding forwards and $2 $3 billion of availability under the revolving credit facility. In addition, our revolving credit facility has an accordion option, allowing us to recur.
David: First additional lender commitments of up to $1 billion.
David: As we begin 2024, we believe we are extremely well positioned to navigate the current environment and do not need to raise any incremental capital as we sit here today in.
David Kieske: In addition, our revolving credit facility has an accordion option, allowing us to request additional lender commitments of up to $1 billion. As we begin 2024, we believe we are extremely well positioned to navigate the current environment and do not need to raise any additional capital as we sit here today. In terms of leverage, our total debt is currently $17.1 billion.
David: In terms of leverage our total debt is currently $17 1 billion.
David: Our net debt to fourth quarter adjusted EBITDA annualized for a full year of activity from our recent acquisitions and excluding the impact of unsettled forward equity is approximately five five times within our target leverage range we.
David: We have a weighted average interest rate of 435% taking into account our hedge portfolio that we utilized in connection with our April 2022 inaugural investment grade offering at a weighted average five nine years to maturity.
David Kieske: Our net debt to fourth-quarter adjusted EBITDA annualized for a full year of activity from our recent acquisitions and excluding the impact of unsettled forward equity is approximately 5.5 times within our target leverage range. We have a weighted average interest rate of 4.35%, taking into account our hedge portfolio that we utilized in connection with our April 2022 inaugural investment grade offering, and a weighted average 5.9 years to maturity. As of December 31st, we entered into a series of forward starting interest rate swap agreements ahead of our May 1st $1.05 billion bond maturity, which has an aggregate notional amount of $500 million. This portfolio has an effective treasury rate of 4.04%. Just touching on the income statement, AFFO per share was $0.55 for the quarter, an increase of 8.8% compared to $0.51 for the quarter ended December 31, 2022. For the full year 2023, AFFO per share was $2.15, an increase of 11.8% compared to $1.93 for the full year 2022.
David: As of December 31, two we have entered into a series of forward starting interest rate swap agreements ahead of our May one one point over $5 billion bond maturity, which has an aggregate notional amount of $500 million. This portfolio has an effective treasury rate of four 4% with.
David: Just touching on the income statement <unk> per share was <unk> 55 for the quarter, an increase of eight 8% compared to 51 for the quarter ended December 31 2022.
David: For the full year 2023, <unk> per share was $2 15, an increase of 11, 8% compared to $1 93 for the full year 2022, and as Ed mentioned, making BT one of the leaders across the S&P 500 Reits.
Our results once again highlight our highly efficient triple net model given the increase in adjusted EBITDA as a proportion of the corresponding increase in revenue and our margins continue to run strong in the high 90% range when eliminating noncash items.
David: Our G&A was $15 3 million for the quarter and as a percentage of total revenues was only one 6%.
David: This continues to be one of the lowest ratios in not only the triple net sector, but across all rights.
David: Turning to our guidance and as you saw in our release last night, we are initiating <unk> guidance for 2024 in both absolute dollars as well as on a per share basis.
David Kieske: And, as Ed mentioned, making VICI one of the leaders across the S&P 500 REITs. Our results, once again, highlight our highly efficient triple net model, given the increase in adjusted EBITDA as a proportion of the corresponding increase in revenue. And our margins continue to run strong in the high 90% range when eliminating non-cash items. Our G&A was $15.3 million for the quarter, and as a percentage of total revenues, it was only 1.6 percent. This continues to be one of the lowest ratios in not only the triple net sector but across all retail.
David: <unk> for the year ending December 31, 2024 is expected to be between $2 $3 2 billion in $235 5 billion or between $2 22 per share and $2 25.
Per share based on the midpoint of our 2004 guidance, which you're expected to deliver year over year <unk> per share growth of 4% very attractive starting point as we begin 2024.
David: As a reminder.
David: Our guidance does not include the impact on operating results from any announced but unclosed transactions interest income for many loans that do not yet have final draw structures possible future acquisitions or dispositions or capital markets activity or other nonrecurring transaction or items and as we've mentioned previously we recorded noncash season.
David Kieske: Turning to our guidance, and as you saw in our release last night, we are initiating AFFO guidance for 2024 in both absolute dollars as well as on a per share basis. AFFO for the year ending December 31, 2024 is expected to be between $2.32 billion and $2.355 billion, or between $2.22 per share and $2.25 per share. Based on the midpoint of our 2024 guidance, VICI expects to deliver year-over-year AFFO per share growth of 4%, a very attractive starting point as we begin 2024. And just as a reminder, our guidance does not include the impact on operating results from any announced but unclosed transactions, interest income from any loans that do not yet have final draw structures, possible future acquisitions or dispositions, capital markets activity, or other non- And as we've mentioned previously, we record a non-cash CECL allowance on a quarterly basis, which, due to its inherent unpredictability, leaves us unable to forecast net income and FFO with accuracy.
David: Allowance on a quarterly basis, which due to its inherent unpredictability, we've just unable to forecast net income and <unk> with accuracy Accordingly, our guidance as <unk> focused as we believe <unk> represents the best way of measuring the productivity of our equity investments in evaluating our financial performance and ability to pay dividend.
Speaker Change: With that operator, please open the line for questions.
Speaker Change: Thank you.
Speaker Change: Ask a question. Please press star followed by one on your telephone keypad.
Speaker Change: If you would like to withdraw your question. Please press star followed by two one.
Speaker Change: When preparing to ask a question please ensure devices on mute.
Speaker Change: Okay.
Speaker Change: Our first question comes from Anthony <unk> with JP Morgan. Your line is open. Please go ahead.
Yes. Thank you good morning.
Anthony: Yes. My first question is just whether or not you could put some dimensions around your deal pipeline right now either whether it's skewed somewhere geographically.
Anthony: Size and maybe yields.
Operator: Accordingly, our guidance is AFFO focused, as we believe AFFO represents the best way of measuring the productivity of our equity investments and evaluating our financial performance and ability to pay dividends. With that, Operator, please open the line for questions. Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If you would like to withdraw your question, please press star followed by 2. When preparing to ask your question, please ensure your device is unmuted locally.
Speaker Change: I'll start Tony and good morning, good to speak with you and then John and David can kick in.
Speaker Change: I would say that.
Speaker Change: In the spirit as our opening remarks.
Speaker Change: We're obviously silver as you have heard from other Reits in recent weeks like Agri and royalty income.
Speaker Change: We are about the marketplace our silver about.
Speaker Change: The capital markets.
Speaker Change: And we're pretty silver about what kind of activity, maybe available to us and yet having said that.
Speaker Change: John and the team continue to work the trap lines in such a way that we have a number of conversations going on both in gaming and non gaming that have us very excited and John can talk about that in a moment. The other point I want to emphasize Tony is that the magnitude of what we own brings with it opportunities you wouldn't necessarily find.
Anthony Paolone: Your first question comes from Anthony Paolone with J.P. Morgan. Your line is open, please go ahead. Yeah, thank you. Good morning.
Edward Baltazar Pitoniak: I guess my first question is just whether or not you could put some dimensions around your deal pipeline right now, whether it's skewed somewhere geographically, size, and maybe yield. I'll start, Tony, and good morning, good to speak with you, and then John and David can kick in. I would say that in the spirit of our opening remarks, we're obviously sober, as you've heard from other REITs in recent weeks, like Agri and Realty Income. We're sober about the marketplace. We're sober about the capital markets, and we're pretty sober about what kind of activity may be available to us. And yet, having said that, John and the team continue to work the trap lines in such a way that we have a number of conversations going on, both in gaming and non-gaming, that have us very excited, and John can talk about that in a moment.
Speaker Change: Other Reits given the nature of the property they own.
Speaker Change: Especially when we look at Las Vegas, where we've got I think John 40 odd thousand hotel rooms.
Speaker Change: You look just at an asset like the Venetian which including parking at 17 million square feet.
Speaker Change: Given what's going on there given the impact of the sphere the opportunity of Patrick.
Speaker Change: <unk> team to continue to to asset manage and maximize the productivity of that asset.
Speaker Change: So so strong I mean, it's.
Speaker Change: It's a magnitude of building and again this goes back to my opening remarks that we're going to continue to help the investment marketplace to understand the magnitude of building such that there are <unk>.
Speaker Change: 300000 square feet inside the 17 million square feet that have never gone past the concrete stage concrete floors concrete walls concrete ceiling 300000 unfinished square feet and with the job that the team at the Venetian is doing.
Edward Baltazar Pitoniak: The other point I want to emphasize, Tony, is that the magnitude of what we own brings with it opportunities you wouldn't necessarily find in other REITs, given the nature of the property they own, especially when we look at Las Vegas, where we've got, I think, John, 40-odd thousand hotel rooms. If you look just at an asset like the Venetian, which, including parking, is 17 million square feet... Given what's going on there, given the impact of this fear, the opportunity for Patrick and Nicol and the team to continue to asset manage and maximize the productivity of that asset is so, so strong. I mean, it's the magnitude of building. And again, this goes back to my opening remarks, that we are going to continue to help the investment marketplace understand the magnitude of building such that there are 300,000 square feet inside the 17 million square feet that have never gone past the concrete stage.
Speaker Change: To maximize that asset, especially taking advantage of this fear.
Speaker Change: That represents incremental investment opportunity or our growth opportunity for us that you wouldn't likely find in most other east generally and certainly not in triple net lease Reits generally which tend to have assets of 10000 square feet, not 17 million square feet, but John you want to add to this Tony you can hear from Ed's comments here.
Speaker Change: Some time in Las Vegas recently.
John W. R. Payne: Got it.
Speaker Change: Which I have as well.
Speaker Change: To ask a question about what sectors and I also think what locations. We obviously have been spending a lot of time in Las Vegas.
Speaker Change: We're very proud of are our partners success there.
Speaker Change: It looks like 'twenty four is going to be a great year as well and as you heard from my remarks, we continue to look at different target sectors, whether in wellness and indoor water parks.
Edward Baltazar Pitoniak: Concrete floors, concrete walls, concrete ceiling, 300,000 unfinished square feet. And with the job that the team at Venetian is doing to maximize that asset, especially taking advantage of this sphere, that represents an incremental investment opportunity or growth opportunity for us that you wouldn't likely find in most other REITs generally and certainly not in triple net lease REITs generally, which tend to have assets of 10,000 square feet, not 17 million square feet. But John, you want to add to this? Tony, you can hear from Ed's comments. He spent some time in Las Vegas recently, which I did as well.
Speaker Change: Mitch Golf family Entertainment Center, we made our first investment in <unk> sports.
Speaker Change: Which we like the mix use of these sports.
Speaker Change: I continue to spend my time with my team and really the whole company looking at a variety of these and checking the boxes of which ones could make for long term investments and there are some sectors that we don't talk about that we've kind of checked off the list that says this is not right for our capital at this time, but we shouldnt confuse the casino business continues to be a real focus of ours.
Speaker Change: Our company and one that we just can't be more proud of the operators and what they've done in 'twenty, three and what we see in 'twenty four.
John W. R. Payne: You ask a question about what sectors and, I also think, what locations. We obviously have been spending a lot of time in Las Vegas. We're very proud of our partner's success there. It looks like 24 is going to be a great year as well.
Speaker Change: Okay. Thanks, and then just.
Speaker Change: One kind of detailed follow up maybe for David because I was asked this a couple of times overnight just in your guidance like how do you just remind us how you are treating the forward equity in the guidance share count.
John W. R. Payne: And as you heard in my remarks, we continue to look at different target sectors, whether wellness and indoor water parks, pilgrimage, golf, and family entertainment centers. We made our first investment in youth sports, and we like the mixed use of youth sports. So I continue to spend my time with my team and really the whole company looking at a variety of these and checking the boxes of which ones could make for long-term investments. And there are some sectors that we don't talk about that we've kind of checked off the list that say this is not right for our capital at this time. But we shouldn't confuse that the casino business continues to be a real focus of our company and one that we just can't be more proud of the operators and what they've done in 23 and what we see in 24. Okay, thanks.
David: It goes in there or not.
David: Yes, Toni there's no.
David: Wide use of proceeds or drawdown theres, a little bit of impact from treasury stock dilution and the ultimate share count.
David: The only impact.
David: Okay.
David: Another way of putting it Tony is we're not assuming any any credit or horsepower.
David: From the funding and we're taking actually a marginal penalty by virtue of having an honor.
David: While we technically we don't have it on our balance sheet, but given.
David: Given the Treasury stock method.
Okay I understand thank you.
Yes.
David: We now turn to Barry Jonas with true Securities. Your line is open. Please go ahead.
Barry Jonas: Hey, guys good morning.
Wanted to start with.
The Caesars since our call option could you maybe just walk through different considerations as you're thinking about exercising it in specifically timing of that thanks.
Barry Jonas: Well clearly very we want to be as opportunistic as we can be within our timing given the nature of the inherent nature of a call option.
Anthony Paolone: And then just I have one kind of detail follow up, maybe for David, because I was asked this a couple of times overnight, just in your guidance, like, how do you just remind us how you're treating the forward equity in the guidance share count, like, like what goes in there or not? Yeah, Tony, there's no implied use of proceeds or drawdown. There's a little bit of impact from treasury stock dilution on the ultimate share count, but that's the only impact.
Barry Jonas: And obviously that timing will be predicated on what our cost of funding is and I don't think it would come as any surprise to anybody that we certainly would not choose to exercise our call option. If in doing so we were creating dilution, which we don't ever want to do.
And so going back to the theme of skiing inside a milk bottle the visibility through 2024, given its current state is such that its hard to predict with any kind of exactitude.
David Kieske: OK. Another way of putting it, Tony, is we're not assuming any credit or horsepower from the funding, and we're taking actually a marginal penalty by virtue of having it on our, well, technically, we don't have it on our balance sheet. Given the treasury stock method, Okay, I understand. Thanks. We now turn to Barry Jonas with Truist Securities. Your line is open, please go ahead. Hey guys, good morning. I wanted to start with the Caesars Center call option. Can you maybe just walk through different considerations as you're thinking about exercising it and, specifically, timing of that?
Barry Jonas: Exactly when the right time would be.
Got it got it and then maybe just more of a higher level question, you've done deals with tribes Native American tribes on commercial land before but I was hoping you could talk more about the puts and takes with doing some type of deal structure and tried to land. It is clear our risks there, but its something banks.
Barry Jonas: That investors have been able to overcome and I think.
Barry Jonas: It's a sizable market with clear financing needs.
Speaker Change: Yes, I'll start and I'll turn it over to John Barry I read the notes from that recent that recent session that you had which were really interesting to read I know one of the participants in your assertion.
Edward Baltazar Pitoniak: Thanks. Well, you know, clearly, we want to be as opportunistic as we can be within our timing, given the nature of it, the inherent nature of a call option. And obviously, that timing will be predicated on what our cost of funding is. And I don't think it would come as any surprise to anybody that we certainly would not choose to exercise our call option if, in doing so, we were creating dilution, which we don't ever want to do. And so going back to the theme of skiing inside a milk bottle, the visibility through 2024, given its current state, is such that it's hard to predict with any kind of exactitude exactly when the right time would be.
Speaker Change: Sounded rather.
Speaker Change: I won't say bullish but seem to say that they are.
John W. R. Payne: There may be means to do it I will tell you with complete candor, we haven't exactly figured out how that would work yet John.
Speaker Change: John.
Speaker Change: But Barry you touched on we've been really excited to build relationships with three tribes in the commercial.
Speaker Change: In the commercial sector.
Speaker Change: Thing that we can continue to talk with them and other travel partners that we've gotten to know the C could there be an opportunity to help them grow on their nations land, but we have primarily been focused with our partners on the commercial sector and we'll continue to study that opportunity because as Ed said, we saw this study of the report that came out as well.
Barry Jonas: Got it, got it. And then maybe just more a higher level question. You know, you've done deals with tribes, Native American tribes on commercial land before, but I was hoping you could talk more about the puts and takes with doing some type of deal structure on tribal land. There are clear risks there, but it's something banks and debt investors have been able to overcome. And, you know, I think it's a sizable market with clear financing needs. Thanks.
Speaker Change: Great. Thank you so much.
Speaker Change: Our next question comes from Caitlin Burrows with Goldman Sachs. Your line is open. Please go ahead.
Caitlin Burrows: Hi, Good morning, everyone. I guess you guys have made it clear that a significant part of your business could be repeat business. So can you talk about maybe the pipeline and if we should see some repeat business in 2024 and are continue to see new operator partners pop up.
Edward Baltazar Pitoniak: Yeah, I'll start, and I'll turn it over to John. Barry, I read the notes from that recent session you had, which were really interesting to read. I know one of the participants in your session sounded rather, I won't say bullish, but seemed to say that, you know, there may be means to do it. I will tell you with complete candor, we haven't exactly figured out how that would work yet, John, right? But Barry, you touched on, we've been really excited to build relationships with three tribes in the commercial sector. And it's something that we can continue to talk with them and other tribal partners that we've gotten to know to see if there is an opportunity to help them grow on their nation's land. But we have primarily been focused with our partners on the commercial sector, and we'll continue to study that opportunity because, as Ed said, we saw the study or the report that came out as well. Great, thank you so much.
Yes. Good morning, Caitlin very good question you asked no question that we continue to meet with our <unk> partners currently in gaming and non gaming and talk about how our capital can help them grow over the coming years.
Speaker Change: Ed alluded to the boxes that are in I shouldn't even call them boxes in Las Vegas, the amazing resort sorts, we owned with partners in Las Vegas for could provide with a lot of opportunity in the relatively near future and the coming years as those partners look to grow whether thats in.
Speaker Change: Hotel rooms, new restaurants, new attractions, Ed mentioned, obviously the sphere.
Speaker Change: Sits on our land we weren't involved in the building or they are not necessarily our direct tenant.
John W. R. Payne: Our next question comes from Caitlin Burrows with Goldman Sachs. Your line is open, please go ahead. Hi, good morning, everyone.
Speaker Change: But we see that as a pillar of growth for our company over the coming years, not only in Las Vegas, but in our regional offices, because there are large regional assets, whether thats the MGM assets in National Harbor in Detroit.
Caitlin Burrows: I guess you guys have made it clear that this is a significant part of your business. So can you talk about maybe the pipeline and if business will be in 2024 and or continue to see new operator partners? Yeah, good morning, Caitlin. Very good question you asked.
Speaker Change: There are opportunities to grow as well and then I think your second part of the question is are we looking to continue to expand our tenant roster and the answer is absolutely.
Me and my team Ed David Sam anyone else in the company.
Speaker Change: Is out.
John W. R. Payne: No question that we will continue to meet with our 13 partners currently in gaming and non-gaming and talk about how our capital can help them grow over the coming years. And as Ed alluded to, the boxes that are in, I shouldn't even call them boxes in Las Vegas, the amazing resorts we own with partners in Las Vegas could provide a lot of opportunities in the relatively near future and in the coming years as those partners look to grow, whether that's in hotel rooms, new restaurants, new attractions. Ed mentioned, obviously, the sphere that sits on our land.
Speaker Change: Forging new relationships to see if theres new sectors, our new company that we can use our capital to help them grow so I wouldn't be surprised if you see some new new operators or new tenants and our roster over the coming year and Keith Let me just add on to that a little bit. Obviously, there has been there have been questions.
Keith: And understandably <unk> why.
Speaker Change: Why don't you just wondering if you can just do gaming and only gaming.
John W. R. Payne: We weren't involved in the building, or they're not necessarily our direct tenant. But we see that as a pillar of growth for our company over the coming years, not only in Las Vegas but in our regional assets, because there are large regional assets, whether that's the MGM assets in National Harbor or in Detroit; there are opportunities to grow as well. And then I think your second part of the question is, are we looking to continue to expand our tenant roster? And the answer is absolutely.
Keith: And as we have emphasized on many many occasions, we are still for all the time remaining going to be.
Keith: <unk> focused on gaming given what a great business. It is.
Keith: And then with selling real estate.
Keith: But one of the real benefits of investing in other experiential categories.
Keith: Well first of all comes with the fact that it's just fundamentally great real estate occupied by operators, who offer very rich and.
Keith: And profitable experiences to their end customers. So that's the fundamental reason to invest in other experiential it's fundamentally good real estate.
Edward Baltazar Pitoniak: Me, my team, Ed, David, Sam, and anyone else in the company is out forging new relationships to see if there are new sectors or new companies that we can use our capital to help them grow. So I wouldn't be surprised if you see some new operators or new tenants on our roster over the coming year. And Caitlin, let me just add on to that a little bit. Obviously, there have been questions, understandably, as to why don't you just do gaming and only gaming.
Keith: Second dimension to that is it gives us a chance to grow when growth may not be available for gaming and related to that and this goes back to your initial question Caitlin one of the advantages we see in experiential operators like Cabot Leica Canyon Ranch Leica bolero like.
Keith: Great Wolf is they have network growth opportunities that are not as readily available to our gaming operators the nature of growth in new stores and gaming is such that it is always subject to very strict regulatory control.
Edward Baltazar Pitoniak: And, you know, as we have emphasized on many, many occasions, we are still, for all the time remaining, going to be intensely focused on gaming, given what a great business it is within Wichita real estate. But one of the real benefits of investing in other experiential categories is, well, first of all, the fact that it's just fundamentally great real estate occupied by operators who offer very rich and profitable experiences to their end customers. So that's the fundamental reason to invest in other experiential activities. It's fundamentally good real estate. The second dimension to that is that it gives us a chance to grow when growth may not be available for gaming. And related to that, and this goes back to your initial question, Caitlin, one of the advantages we see in experiential operators like a Cabot, like a Canyon Ranch, like a Bolero, like a Great Wolf, is that they have network growth opportunities that are not as readily available to our gaming operators. The nature of growth in new stores in gaming is such that it is always subject to very strict regulatory control.
Keith: For Cabot as an example on the other hand, they have a global growth opportunity that can be seized with great energy and does not suffer the restrictions.
Keith: Or the slowing down of cadence that tends to apply to gaming operators attempting to grow their network other than through M&A.
Speaker Change: Got it no that makes a lot of sense.
Speaker Change: And then maybe just back to the pipeline a bit you guys were active with both sale leasebacks and lending over the past 12, or so months. Despite a quiet CRE transaction market and I know you mentioned higher silver to the current situation but.
Speaker Change: But you guys continue to invest in 'twenty three so I was wondering if you could give some more detail on the pipeline today, maybe size mix and how that makes you think more specifically maybe like the first half of 'twenty four activity could end up.
Edward Baltazar Pitoniak: For Cabot, as an example, on the other hand, they have a global growth opportunity that can be seized with great energy and does not suffer the restrictions or the slowing down of cadence that tends to apply to gaming operators attempting to grow their network other than through M&A. Got it, no, that makes a lot of sense. And then maybe just back to the pipeline a bit, you guys were active with both sale-y specs and lending over the past 12 or so months, despite a quiet CRE transaction market. And I know you mentioned how you're sober about the current situation, but you guys continued to invest in 23. So I was wondering if you could give some more detail on the pipeline today, maybe size mix, and how that makes you think more specifically, maybe like the first half of 24. For more information, visit www. FEMA.gov, I don't know what that could be like.
Speaker Change: Or what that could be like.
David Great Great to hear from you and thanks for joining today.
The nature of our capital is relationship capital and that's where we've been active both as you just mentioned on the loan side as well as the sale leaseback side and it's John.
Speaker Change: John talked about it in his comments solving our partners objectives and being a source of growth capital and sometimes that growth capital comes in the door day, one like you saw with our Homefield opportunity, where they're building a facility in going to construct a very very very attractive experiential sports in hotel asset.
Speaker Change: Which will lead to a sale leaseback so it's.
Speaker Change: It's we're always out talking about ways that we can help our partners grow and to kind of put it in a percentage basket of X amount of loans that X amount and sale leasebacks Thats just how we look at it and how we kind of parts of our pipeline. It's about finding the great partners that we've talked about on this call.
Caitlin Burrows: Kayla, David, great to hear from you. Thanks for joining us today. Look, the nature of our capital is relationship capital, and it's where we've been active both, as you just mentioned, on the loan side, as well as, say, on the leaseback side. And it's, as John talked about in his comments, solving our partners' objectives and being a source of growth capital. And sometimes that growth capital comes in the door day one, like you saw with our home field opportunity, where they're building a facility and going to construct a very, very, attractive, experiential, both sports and hotel asset, which will lead to, say, a leaseback. We're always out talking about ways that we can help our partners grow and kind of put in a percentage basket of X amount of loans and X amount of sale leasebacks That's just how we look at it or how we kind of parse our pipeline. It's about finding the great partners that we've talked about on this call. Okay, thank you. We now turn to Haendel, just with Mizuho.
Speaker Change: Okay. Thank you.
We know that Theyre handelsbanken Juste with Mizuho. Your line is open. Please go ahead.
Speaker Change: Hi, Good morning. This is Ravi gave you on the line for Honeywell I Hope you all are doing well.
Ravi: Notice that the Mezz lending and construction financing is becoming a larger proportion of capital deployment strategy. How should we think about the sizing of that relative to your broader acquisition pipeline and how you're underwriting those return requirements.
Ravi: That has changed over the last six to 12.
Ravi: 12 months.
Ravi: Hey, Robyn, it's David good to hear from you.
Your question is how do we think about kind of the spread on those mezz loans, especially around development.
David: There's a couple of ways that we look at it.
David: It's a little bit more art than science at the end of the day, but what's the cost of the senior is our senior lender ahead of US are we achieving the right risk adjusted spread to the senior.
David: What's the duration of our capital, what's the cadence of our capital that ultimately.
David: Most everyone looks at what's the.
David: It was the equity sponsor and how much equities in the transaction.
David: Ensuring that we are protected from a credit standpoint at the end of the day feel good about the projects and then to go back to the first part of your question.
Haendel Emmanuel St. Juste: Your line is open, please go ahead. Hi, good morning, this is Robbie Gage on the line for Haendel. Hope you all are doing well. I just noticed that the MES lending... is becoming a larger proportion of the capital deployment strategy. How do you think about the sizing of that relative to the sizing of that relative YouTube.com.uk for the lab? Hey, Robbie, it's David.
David: It will always be a minor percentage of our assets under management.
David: And we will use it we will use it to forge relationships. We have an example, obviously right in front of us of using lending to establish a relationship with Chelsea piers that led to the acquisition of the primary leasehold interest in December. So we will use it both as a strategic tool to develop relationships and a strategic tool.
David Kieske: Good to hear from you. It's how we think about kind of the spread on those mezzanines, especially around development. Look, we always have there's a couple ways that we look at it. And, It's a little bit more art than science at the end of the day.
David: Create a steadier cadence to our capital allocation, we're very proud of the fact that we got capital out the door every single month in 2023 and I can tell you in our early years there were whole quarters that went by where we did not get capital out the door given what was true back then which was at the nature of our capital allocation was.
David Kieske: But, you know, what's the cost of the senior? Is there a senior lender ahead of us? Are we achieving the right risk-adjusted spread to the senior? Obviously, what's the duration of our capital?
David: Big and lumpy tied to big lumpy gaming acquisition. So it is it is a tool that can generate growth and return.
David Kieske: What's the funding cadence of our capital? And ultimately, how much, you know, what most every lender looks at, what's the equity sponsor and how much equity is in the transaction, and ensuring that we are protected from a credit standpoint at the end of the day is so good about the project. And then to go back to the first part of your question, it will always be a minor percentage of our assets under management, and we will use it.
David: On a very steady basis. It is a strategic tool to forge relationships and again given some of the spreads we have been able to achieve in recent years. It is very lucrative very accretive and driving earnings growth and again, we're about creating earnings growth that others may not be able to achieve.
Edward Baltazar Pitoniak: We will use it to forge relationships. We have an example, obviously, right in front of us of using lending to establish a relationship with Chelsea Piers that led to the acquisition of the primary leasehold interest in December. So we will use it both as a strategic tool to develop relationships and as a strategic tool to create a steadier cadence for our capital allocation. We're very proud of the fact that we got capital out the door every single month in 2023. And I can tell you, in our early years, there were whole quarters that went by where we did not get capital out the door, given what was true back then, which was that the nature of our capital allocation was big and lumpy, tied to big, lumpy gaming acquisitions. So it is a tool that can generate growth and return on a very steady basis. It is a strategic tool to forge relationships.
David: If theyre not as energetic and.
David: And pioneering as we have been both in terms of how we grow the business in terms of asset classes and through the use of our balance sheet.
Got it that's very helpful. Just one more here could you. Please discuss the opportunity with the Indiana asset in your view how attractive is the 77 call and current market and how would you theoretically fund something like that.
Yes, well as I as I said in response to Berry.
David: Obviously 707 is not as attractive as when it was struck a few years back when the call agreement was struck a few years back and it will be a call opportunity.
David: Excited about executing if it's an accretive opportunity and if it is not an accretive opportunity. If in fact that would be a dilative opportunity at 707.
Speaker Change: I would not do it.
Edward Baltazar Pitoniak: And again, given some of the spreads we've been able to achieve in recent years, it is very lucrative, very accretive to driving earnings growth. And again, we're about creating earnings growth that others may not be able to achieve if they're not as energetic and pioneering as we have been, both in terms of how we grow the business in terms of asset classes and through the use of our balance. Thank you, Scott, that's very helpful. Just one more here.
Speaker Change: Got it thank you.
Speaker Change: Our next question comes from Chris <unk> with Green Street. Your line is open. Please go ahead.
Chris: Thanks, Good morning, everybody.
Chris: Just going back to the Caesars call options again, let's just for argument's sake assume that you do exercise those options I'm. Just curious how would you think about the deal structure from a rent coverage standpoint. So I'm wondering would you possibly structure tighter rent coverage on a standalone basis, if it made sense within kind of the larger master lease.
Edward Baltazar Pitoniak: Can you please discuss the opportunity with the Indiana... In your view, how attractive is the 7-7 call in the current market, and how would you theoretically fund it? Yeah, well, as I said in response to Barry, obviously 7-7 is not as attractive as when it was struck a few years ago when the call agreement was struck a few years ago. And it'll be a call opportunity we'll be excited about executing if it's an accretive opportunity and if it's not an accretive opportunity, if, in fact, it would be a dilutive opportunity at 7 We would not do it.
Chris: <unk>.
Speaker Change: Well, yes, Chris so the rent coverage by virtue of the current call agreement is set.
Speaker Change: But it is a subject of discussion.
Speaker Change: One we have and we'd like to continue to explore with Caesars such that on an overall basis. They and we are are at rent coverages, everybody feels really good about for decades to come.
Speaker Change: Alright fair enough.
Chris: One more for you just touching on the Homefield agreement just hoping you can elaborate on the scope of the project potential future expansion. So I'm wondering what the total estimated investment is for the current development. How the team is thinking about scaling two additional locations over time and just trying to wrap my arms around what the scope of inverse.
Edward Baltazar Pitoniak: Thank you. Our next question comes from Chris Darling on Green Street. Your line is open, please go ahead. Thanks. Good morning, everybody.
Chris Darling: But just going back to the Caesars call options again, let's just for argument's sake assume that you do exercise those options. I'm just curious; how would you think about the deal structure from a rent cover perspective? I'm wondering, you know, would you possibly structure tighter rent coverage on a stand-alone basis if it made sense within kind of the larger... Well, yeah, Chris, so the rent coverage, by virtue of the current call agreement, is set, but it is a subject of discussion and one we have and would like to continue to explore with CSRS, such that, on an overall basis, you know, they and we are at rent coverages Alright, fair enough.
Chris: <unk> might look like from BTG overtime.
John: Yes, Chris its John.
John: When we made the announcement a few months ago, we talked about spending a couple of years studying the youth sports business.
John: And we learned a lot in that process. We've also found an amazing partner in home field, we announced our first opportunity with them.
John: And the Kansas City area.
John: And they are building not only the youth sports facility, but connected to a Margarita Bill resorts, that's one of the things that I.
John: I think youll continue to see is if we place other investments into the youth sports spaces, having numerous cash registers, not just having the fields to rent or the stadiums to rent, but also having connected to one operator, who controls the restaurants, who controls the hotel rooms and controls the sports field.
John W. R. Payne: One more for you, just touching on the home field agreement, just hoping you can elaborate on the scope of the project, potential future expansion. So I'm wondering what the total estimated investment is for the current development, how the team's thinking about scaling to additional locations over time. I'm just trying to wrap my arms around what the scope of investment might look like. Yeah, Chris, it's John.
John: So this is a $110 million ish initial investment with Homefield, we've not announced any further development not only on that site, which does have opportunity to expand over time, but also other sites around the Midwest or the United States, but.
John W. R. Payne: As when we made the announcement a few months ago, we talked about spending a couple years studying the youth sports business. And we learned a lot in that process. We've also found an amazing partner in Home Field. We announced our first opportunity with them in the Kansas City area. And they're building not only the youth sports facility, but it's connected to Margaritaville resorts. That's one of the things that I think you'll continue to see is if we place other investments into the youth sports spaces, having numerous cash registers, not just having the fields to rent or the stadiums to rent, but also having it connected to one operator who controls the restaurants, who controls the hotel rooms, and controls the sports fields. So this is a $110 million-ish initial investment with Home Field. We've not announced any further development, not only on that site, which does have the opportunity to expand over time, but also other sites around the Midwest or the United States.
John: As with any partner that we've talked about whether thats with casino partners or with cabinet or Canyon Ranch and now Homefield, we hope that it's not just.
John: Our only investment with them and we purposely took so much time to study the business to find the right partner to grow.
Speaker Change: I appreciate the thoughts thank you.
Speaker Change: We now turn to Greg Mcginniss with Scotiabank. Your line is open. Please go ahead.
Greg Mcginniss: Hey, good morning.
Greg Mcginniss: So as we continue to invest in non gaming assets, how should investors get comfortable with more opaque and financials, there and what sort of premium are you receiving from an investment yield standpoint.
Greg Mcginniss: That compares to.
Greg Mcginniss: Potential gaming investment.
Greg Mcginniss: Yeah. So you are right.
Greg Mcginniss: Greg.
Greg Mcginniss: If we're partnering with an experiential operator that is not public.
Greg Mcginniss: Tenant financials are not are not crystal clear in the same way, they're not crystal clear across a whole lot of net lease portfolios.
Chris Darling: But as with any partner that we've talked about, whether that's with casino partners or with Cabot or Canyon Ranch and now Home Field, we hope that it's not just our only investment with them. And we purposely took so much time to study the business to find the right partner to grow. I appreciate the thoughts.
Greg Mcginniss: At the end of the day, we obviously have to exercise our fiduciary responsibility to the greatest degree possible in ensuring that the fundamental business is very very supportive of the rent and the way in which our operating partners manage their balance sheets and liquidity.
Greg McGinnis: Thank you. We now turn to Greg McGinnis with Scotiabank. Your line is open, please go ahead. www.larryweaver.com Hey, good morning.
Greg Mcginniss: Is also of the strength that ensures that they won't be in positions, where they are unable to meet the rent.
Greg Mcginniss: We've got a very rigorous underwriting practice, we obviously you can take advantage of history in many of the categories experiential categories that we're investing in.
Edward Baltazar Pitoniak: As you continue to invest in non-gaming assets, how should investors get comfortable with more opaque and financial fare? And what sort of premium are you receiving from an investment yield standpoint, as it compares to Vice-Presidential Gaming Investments? Yeah, so you are right, Greg. If we're partnering with an experiential operator that's not public, the tenant financials are not crystal clear in the same way they're not crystal clear across a whole lot of net lease portfolios. And at the end of the day, we obviously have to exercise our fiduciary responsibility to the greatest degree possible in ensuring that the fundamental business is very, very supportive of the rent. And the way in which our operating partners manage their balance sheets and liquidity is also of a strength that ensures that they won't be in positions where they're unable to meet the rent. We have a very rigorous underwriting practice. We obviously can take advantage of history in many of the categories, experiential categories that we're investing in. But again, at the end of the day, it's...
Greg Mcginniss: And.
Greg Mcginniss: Again at the end of the day.
Greg Mcginniss: It's up to us to make sure that they are of a strength that's going to enable them to weather whatever should come their way, but I will also emphasize that our key criteria. Our first of four criteria in evaluating all investments gaming and experiential widely is at the businesses be a lower than <unk>.
Greg Mcginniss: Average cyclicality versus consumer discretionary at large, which we think is another risk mitigate when it comes to ensuring that they can cover the rest through thick and thin.
Speaker Change: Just to follow up on that in the cases, where you are.
Speaker Change: Riding construction loans.
Speaker Change: There is not kind of in place cash flows to be underwriting or evaluating whats. The process look like there when youre trying to get comfortable in terms of lending that money and the ability to collect in the case that maybe cash flows don't.
Speaker Change: Quite the targets that were expected.
David Kieske: It's up to us to make sure that they are of a strength that's going to enable them to weather whatever should come their way. But I will also emphasize that our key criteria, our first of four criteria in evaluating all investments, gaming and experiential broadly, is that the businesses be of lower than average cyclicality versus consumer discretionary at large, which we think is another risk mitigant when it comes to ensuring that they can cover the rent through thick and thin. Just to follow up on that in the cases where you're providing construction loans, you know, where maybe there's not kind What's the process look like there when you're trying to get comfortable in terms of lending that money and the ability to recoup in the case that, you know, maybe cash flows don't hit quite the target that we're looking for? Last dollar exposure is obviously one of the key criteria in ensuring that our last dollar exposure is at a level whereby, if we did end up owning the asset, the operating economics are such that at the Yeah, Greg, and then it comes down to, as I mentioned, the quality of the sponsor, the amount of equity, so the overall loan to cost or loan to value, and then the protections that are, obviously, ultimately documented in our agreements.
Speaker Change: Well last dollar exposure is obviously one of the key criteria in ensuring that our last dollar exposures at a level.
Speaker Change: Whereby if we didn't end up owning the asset that the operating economics are such that at the last dollar exposure level that we would be lend.
Speaker Change: Lending at we're still in good shape.
Speaker Change: Hey, Greg and then it comes down.
Speaker Change: Quality of the sponsor to the amount of equities overall output.
Speaker Change: Loan to cost or loan to value.
Speaker Change: And then the protections that are obviously ultimately documented in our agreements, but a lot of the sectors.
Like our sale leaseback investments, we study the sectors indoor Waterpark we've studied for.
Speaker Change: Nine months led by certain members of our team with deep into that sector before we did anything and so it's getting gaining conviction whether it be through direct real estate ownership or the lending platform that we have.
Speaker Change: Who the operator is the durability of the sector and then the ultimate protections that we.
Speaker Change: Can put in place.
Speaker Change: Okay.
Speaker Change: Okay. Thanks, and just a final one for me.
Speaker Change: Now I'd like to preface this question by acknowledging the great work with John and the team have done so far we know that you've added some great members to the investment team as well.
Speaker Change: But given your sector low G&A, how do you balance that shareholder friendly.
Speaker Change: Spence line versus investing in a larger acquisitions team that could maybe help source and underwrite more investment opportunities.
Greg McGinnis: But a lot of the sectors, and we, as, Like our sale leaseback investments, we study the sectors, you know, indoor water parks. We studied for 18 odd months, led by certain members of our team, and went deep into that sector before we did anything. And so it's gaining conviction, whether it be through direct real estate ownership or the lending platform that we have of who the operator is, the durability of the sector, and then the ultimate protections that we can put in place. Okay, thanks. And just a final one for me.
Speaker Change: No. It's a very it's a very fair strategic question, Greg and it's a question we regularly wrestle with I would say one of the ways in which we we deal with if you will the underinvestment risk in G&A is by I think having forward some of the strongest partnership relationships with anybody out there.
Speaker Change: From day, one we have treated our advisors.
Speaker Change: Best as we possibly can.
Speaker Change: This means the investment banks the other parties the real estate advisory firms.
Speaker Change: We are always the first they call when they think there is a compelling opportunity. They are a force multiplier for us.
Edward Baltazar Pitoniak: I'd like to preface this question by acknowledging the great work that John and his team have done so far. We know that you've added some great members to the investment team as well. But given your sector's low DNA, how do you balance that shareholder-friendly,,,,,,, No, it's a very fair strategic question, Greg, and it's a question we regularly wrestle with. I would say one of the ways in which we deal with, if you will, the underinvestment risk in G&A is by, I think, having forged some of the strongest partnership relationships of anybody From day one, we have treated our advisors as best as we possibly can.
Speaker Change: And we.
Speaker Change: We have great respect for them, we engage with them intensely.
Speaker Change: We reward them.
Speaker Change: When they do great work for us and.
Speaker Change: <unk>.
Speaker Change: In the event, we ended up saving on G&A, which in an inflationary period.
Has really two medicines overall, LOE G&A to begin with and less less inflationary impact on our G&A load if it ever gets to the point, where we feel were shortchanging shareholders by running too thin, we will certainly add resources in the way. We've obviously added resources here in the last couple of years.
Edward Baltazar Pitoniak: This means the investment banks, the other parties, and the real estate advisory firms, such that we are always the first they call when they think there's a compelling opportunity. They are a force multiplier for us, and we have great respect for them. We engage with them intensely, and we reward them when they do great work for us. In the end, we end up saving on G&A, which in an inflationary period has really two benefits: overall low G&A to begin with and less inflationary impact on our G&A load.
Speaker Change: Thank you Greg we'll move onto the next question.
Speaker Change: Our next question comes from Nick Joseph with Citi. Your line is open. Please go ahead.
Speaker Change: Thanks.
Nick Joseph: Thank you.
Nick Joseph: Kind of commentary or thoughts on performance, thus far of the Fontainebleau.
Nick Joseph: It looks like the mainstream media favor.
Nick Joseph: Favorable on it but there is also local articles.
Nick Joseph: Outperformance.
Nick Joseph: Nick.
Nick Joseph: Not necessarily you talked about the financial performance, but what I will make a comment about is.
What a beautiful asset.
Nick Joseph: That was built by the team there.
Nick Joseph: <unk> industries, the Fontainebleau team the operating team.
Edward Baltazar Pitoniak: If it ever gets to the point where we feel we're shortchanging shareholders by running too thin, we will certainly add resources in the way we've obviously added resources here in the last couple of years. Thank you, Greg. We'll move on to the next question, Elliot. Our next question comes from Nick Joseph with City. Your line is open, please go ahead. Uh, why don't we get your commentary or shot? The Bulletproof Executive 2013, favorable on Nick, I won't necessarily talk about the financial performance, but what I will make a comment about is what a beautiful asset that was built by the team there, Koch Industries, the Fountain Blue team, the operating team there. I haven't met anyone that walks through the place and says, oh, this is a myth.
Nick Joseph: There.
Nick Joseph: Haven't met anyone that walks through the place and says Oh. This is a miss I think most people walk through the place and say Wow.
Nick Joseph: What an amazing place and I think for those of US who have spent time operating in Las Vegas over the years. It takes time it takes time to build up a database and it takes time, but they sure do have a facility that I think everyone is proud of and we sure are proud of.
Nick Joseph: And Nick you're giving me the opportunity to event a little bit about.
Nick Joseph: Bob.
Nick Joseph: Elderly wary I am around the negativity of so much of the media coverage, which regularly against proven to be way overly negative Oh My God. This fear is going to be a disaster.
I was in the UK realized I was struck by how many people wanted to talk about the sphere, because they've either already been or they are determined to go and again media coverage around that Oh, My God Oh F. One is going to be a disaster well guess what it wasn't the drivers love to teams loved it it was amazing.
Nick Joseph: I think most people walk through the place and say, wow, what an amazing place. And I think for those of us who have spent time operating in Las Vegas over the years, it takes time. It takes time to build up a database, and it takes time, but they sure do have a facility that I think everyone is proud of, and we sure are proud of it. Yeah. And Nick, you've given me the opportunity to vent a little bit about how utterly weary I am around the negativity of so much of the media coverage, which regularly gets proven to be way overly negative. Oh, my God, this fear is going to be a disaster. I was in the UK earlier this week.
Nick Joseph: The weekend of business for our operating partners all Super Bowl.
Again, just just a phenomenal.
Nick Joseph: Phenomenal event for Las Vegas, and for the NFL. So.
Nick Joseph: I absolutely agree with you some of the press coverage has been quite negative, but we know the people involved we know how hard they are working we know how challenging what it is that they have set forth for themselves to open our unaffiliated property on the strip.
Edward Baltazar Pitoniak: I was struck by how many people wanted to talk about this fear because they'd either already been or were determined to go. And again, the media coverage around that, oh, my God. Oh, F1 is going to be a disaster. Well, guess what? It wasn't.
Nick Joseph: And yet again that asset is utterly magnificent and theyre doing the right things to bring business to it over time and with the backing of Coke.
Edward Baltazar Pitoniak: The drivers loved it. The teams loved it. It was an amazing weekend of business for our operating partners. Super Bowl, again, was just a phenomenal event for Las Vegas and for the NFL. So I absolutely agree with you. Some of the press coverage has been quite negative, but we know the people involved.
Nick Joseph: You can be sure that the backing is strong enough that they have the patients, but Moreover, the firepower.
Maintenance work in due course.
Nick Joseph: Okay.
Speaker Change: Thanks, that's very helpful.
Speaker Change: Just I know, we've talked a lot on the pipeline of investment opportunities.
Edward Baltazar Pitoniak: We know how hard they're working. We know how challenging it is that they've set forth for themselves to open an unaffiliated property on the Strip. And yet again, that asset is utterly magnificent, and they're doing the right things to bring business to it over time. And with the backing of Coke, you can be sure that the backing is strong enough that they have the patience, but moreover, the firepower, to make this work in due course.
One of the more silver environment out there, but just thinking about kind of the stickiness of cap.
Speaker Change: Cap rates I mean, where are you seeing the most.
Speaker Change: Our expansion there.
Speaker Change: It makes a little more sense.
Speaker Change: Today's environment.
Speaker Change: Some others are.
Speaker Change: Thank you Sir.
Speaker Change: Okay.
Speaker Change: Nick.
Nick Joseph: Excuse me are you talking about cap rate variability across various experiential asset classes.
Nick Joseph: Thank you. That was very helpful. We've talked a lot about the pipeline. Sober Environment out there, but you know, if I just think about it.
Nick Joseph: Exactly.
Nick Joseph: Yeah, I don't know John or David I don't know that we've seen a tremendous amount of variability across asset classes. We're obviously not seeing a tremendous amount of trading and yet you obviously saw with our unlevered seven 7% yield for the $1 8 billion, we put out the door in 2023.
Edward Baltazar Pitoniak: The Bulletproof Executive 2013, Nick, are you... Excuse me, are you talking about cap rate variability across various experiential asset classes? Yeah, I don't know, John and David, I don't know that we've seen a tremendous amount of variability across asset classes. We're obviously not seeing a tremendous amount of trading, and yet, you obviously saw with our unlevered 7.7% yield for the $1.8 billion we put out the door in 2023, that we have obviously been able to acquire income at higher yields. I would have a tough time generalizing, but David and John, I don't know if you want to add anything.
Nick Joseph: We have obviously been able to acquire income at higher yields.
Speaker Change: I would have a tough time, generalizing, but David and John I don't know if you want to add.
Speaker Change: I think you covered it well.
Speaker Change: No different than any other any other asset class.
Speaker Change: The broader net lease.
Speaker Change: Bid ask spreads and buyers, obviously willing or sorry, sellers' willingness to transact around.
Speaker Change: In a backdrop, where theres the volatility and variability that we've talked about and so.
Edward Baltazar Pitoniak: I think you covered it well, but Nick, it's no different than any other asset class in the broader net lease. You have bid-ask spreads and buyers' willingness to transact in a backdrop where there's the volatility and variability that we've talked about; there's opportunity out there, but it's no different than the broader CRE market; it's somewhat of a bit of a quieter environment and just an air of caution on both sides until we kind of figure out where the tenure is going to where the broader economy is going. We Your line is open; please go ahead. Good morning.
Speaker Change: There is opportunity out there, but it's no different than the broader CRE market at somewhat of a.
Speaker Change: But of a quieter environment and just an air of caution cautious from both sides until we kind of figure out where the where the 10 years going over the broader economy is going.
Speaker Change: Thank you.
Speaker Change: We now turn to Jim comments with Evercore ISI. Your line is open. Please go ahead.
Jim: Hi, Good morning. Thank you, obviously <unk> is going to remain very much gaming focused investing and operating company, but you mentioned that you've vetted thoroughly some sort of other verticals didn't pan out which is all logical could you quantify do you think that your total addressable market or investment opportunities.
Jim Cammett: Thank you. Obviously, VICI is going to remain very much a gaming-focused investing and operating company. But you mentioned that you vetted thoroughly some sort of other verticals that didn't pan out, which is all logical. But could you quantify, do you think that your total addressable market or investment opportunity set for new potential verticals continues to expand? I'm just trying to figure out if your overall catch base is sort of winnowing or
Jim: You said four new potential verticals continues to expand just trying to figure out if your overall catch basin.
Jim: Or a widening thank you.
Jim: Oh, it's definitely widening yes definitely widening.
Jim: As there are a few that were saying hey, we ultimately not right for us today.
Edward Baltazar Pitoniak: Oh, it's definitely widening, yeah, definitely widening. We, as there are a few that were saying, hey, this is ultimately not right for us today. There are other opportunities that come about that we study, learn who the operators are, we learn where their locations are, we spend time with them, so no question the funnel is getting wider. Yeah, and I'll give you an example of that, Jim.
Jim: There is other opportunities that come.
Jim: Come about that we study and learn who the operators are we learn where their locations are we spend time with them. So no question. The funnel is getting wider.
Speaker Change: And I'll give you an example of that Jim when you really begin to know a category as David has spoken of as you get to know that if.
Edward Baltazar Pitoniak: When you really begin to know a category, as David has spoken of, as you get to know the, if you will, the water experience category, which we first invested in through Great Wolf, what's really been remarkable over the last few years is the way in which really creative, innovative operators are taking water experiences and continuing to innovate around them, not simply for kids losing their minds and spending their parents' money at Great Wolf, but also water experiences that are more focused on And that's really exciting to witness because of the growth opportunities it represents within the category and across multiple geographies. Great, thank you. And one small item.
Speaker Change: If you will the water experienced category, which we first invested in through great Wolf.
Speaker Change: What's really been remarkable over the last few years is the way in which.
Speaker Change: Really creative innovative operators are taking water experiences and continuing to innovate around them not simply for kids, losing their mines and spending their parents money at Graywolf, but also water experiences that are more focused on adult crowd.
Speaker Change: And that's that's really exciting to witness because of the growth opportunities. It represents within the category.
Speaker Change: Across multiple geographies.
Speaker Change: Great. Thank you and one small item that's been in the press that there are some tax dispute underway at MGM National Harbor, It's obviously, an important asset for each EBIT would that have any details around that and would it have any implications for you as landlord. Thank you.
Jim Cammett: It's been in the press that there is some tax dispute underway at MGM National Harbor. It's obviously an important asset for VICI, but would that have any details around that, and would it have any implications? Yeah, that would be a tenant matter, so we wouldn't comment on it. Okay, thank you.
Speaker Change: Yes that would be a tenant matters. So we wouldn't comment on that.
Speaker Change: Okay. Thank you.
Wes Golladay: Thank you, Jim. Our next question comes from Wes Golladay with Baird. Your line is open, please go ahead. Hey, good morning, everyone.
Speaker Change: Thank you Jim.
Speaker Change: Our next question comes from Wes Golladay with Baird. Your line is open. Please go ahead.
Wes Golladay: Hey, good morning, everyone just looking at the photo book you sent out to everyone.
John W. R. Payne: Just looking at the photo book you sent out to everyone, more specifically looking at the Mirage in Las Vegas. Is there anything that's going to happen over the next year on this asset? So what would be the scope and time to build? Yeah, Wes. It's John.
More specifically looking at the Mirage and Las Vegas is there anything thats going to go on over the next year on this asset.
Wes Golladay: So what would be the scope and time to build.
Wes Golladay: Yes, Wes it's Jon it's nice to nice to talk to you and probably a question for the.
John W. R. Payne: It's nice to talk to you, and probably a question for our great partner in Hard Rock on timing, but I think they've, as you've probably been following the story, they acquired the operations of the Mirage a little over a year ago from MGM and have been operating, but have also been out getting approvals and designing the opportunity to change the facility from the Mirage to Hard Rock Las Vegas. As it pertains to timing and budget and construction and that, it's probably something that they'll lead that charge, but we, of course, as the owner of the property, are excited to watch that asset get repositioned over time. It's obviously an amazing asset for a long period of time, but I think everyone would think that a Hard Rock Las Vegas would do great on that site. Visit us at www. Fareoisoverall.com Yeah, Wes, it's David.
Speaker Change: Great partner and hard rock on timing, but I think Dave as you've probably been following the story they acquired the operations of the Mirage a little over a year a year ago from from MGM and had been operated but have also been out.
Speaker Change: And getting approvals in designing the opportunity to change the facility from the Mirage to the hard rock Las Vegas.
Speaker Change: As it pertains to the timing and budget and construction and that it's probably.
Speaker Change: Something that they will lead that charge, but we of course as the owner of the property. We're excited to watch that asset get repositioned over time.
Speaker Change: An amazing asset for a long period of time.
Speaker Change: But I think everyone think hard rock Las Vegas would do great on that site.
Speaker Change: Okay. Thanks for that and then maybe just one on the financing front and do you have the $1 billion returned this year you have the $500 million swaps are you looking at doing unsecured to take those out or maybe a mix of term loans and unsecured how are you thinking about that.
Speaker Change: It's David we will focus on continuing to access the unsecured market and extend our maturity tenor and increase the overall size of our investment grade basket. Those are legacy <unk> high yield notes. So moving those two unsecured investment grade notes benefits, our overall credit complex for the long run.
David Kieske: We will focus on continuing to access the unsecured market and extend our maturity tenor and increase the overall size of our investment grade basket. So moving those to unsecured investment grade notes benefits our overall credit complex for the long run. In our center, Daniel Guglielmo with Capital One Security. The line is open, please go ahead. Hi everyone, thanks for taking my ques- Just just thinking about the credit opportunities and experiential, y'all have been on the journey for some time now and thinking about the opportunity in the process for closing on the partner. What type of competition is in the other room these days and at a high level? How has that changed over the last few years? And Daniel, you're talking about how the competitive landscape of lending has evolved over the last few years? Yeah, like the fun.
Speaker Change: Yeah.
Speaker Change: Thank you.
Now sensor time yogurt glamour with capital one Securities. Your line is open. Please go ahead.
Yogurt Glamour: Hi, everyone. Thanks for taking my question, just thinking about the credit opportunities and experiential all been on the journey for some time now and thinking about the opportunity and the process for closing on the partnerships.
Speaker Change: What type of competition in the other these days and high level of how has that changed over the last few years.
Speaker Change: And then you are talking about how is the competitive landscape of lending.
Speaker Change: Over the last few years.
Speaker Change: Yes, yes.
Daniel Guglielmo: Yeah, well, obviously, you know, we were looking at a period over the last couple years in which conventional bank financing has definitely diminished as a source of funding for experiential placemakers and operators. And at the same time, obviously, you've seen the upsurge of private credit of which we are part. And I would say that, in many cases, we are invited to the funding opportunity because of our track record in experiential and the endorsement that our underwriting process brings to a project that we choose to be involved in. We obviously look at them really rigorously.
Speaker Change: Yes, well obviously.
Speaker Change: We're looking at a period over the last couple of years in which conventional bank financing.
Speaker Change: Is definitely diminished as a source of funding for experiential place makers and operators.
And at the same time, obviously, you've seen the upsurge of private credit of which we are part.
Speaker Change: And I would say that in many cases, we are being invited in to the funding opportunity because of our track record and experiential and.
Speaker Change: And the endorsement that our underwriting process brings to a project that we choose to be involved in we obviously look at them really rigorously and.
Edward Baltazar Pitoniak: And we, again, I would say we get invited to participate in a lot of processes as opposed to having to scour the landscape and throw our hats in the ring. Great, thank you. And then you all have.
Speaker Change: And we again I would say, we get invited in a lot to processes as opposed to having to scour the landscape.
Speaker Change: And through our hats in the ring.
Speaker Change: Great. Thank you and then you all have had such tremendous growth with them.
Daniel Guglielmo: Are there areas that you see kind of, I would say, big hitter opportunities or transactions out there, not just thinking next year but maybe down the line five years from now? http://TheBusinessProfessor.com Dan, nice to talk to you this morning. I'll just go back to our assets in Las Vegas, and I don't know how you're describing a big hitter, but if there are opportunities for us to continue to invest in assets that we already own and help the operator grow with accretive new projects, I'll consider that a big hit because I'm not sure there's a better place in the world to invest in right now. than Las Vegas.
Some pretty big deals over the last few years and thinking about kind of similar risk adjusted opportunities are there are there areas that you see kind of I would say like right.
Speaker Change: Big hitter opportunities or transactions out there not just thinking next year, but maybe down the line five years from now.
Speaker Change: Horizon.
Speaker Change: Dan Nice to talk to you. This morning, I will just go back to our assets in Las Vegas, and I don't know, how youre, describing big big hitter, but if there are opportunities for us to continue to invest in assets that we already own and help the operator grow with accretive.
Speaker Change: New projects.
Speaker Change: I would consider that.
Speaker Change: Big Big hitting because im not sure Theres, a better place in the world to invest in right now than Las Vegas, Obviously, we've got a portfolio there.
John W. R. Payne: Obviously, we've got a portfolio there, but there are some amazing assets. Ed referred to the Venetian, that has a lot of footprint to continue to be developed. I think, John, we can add in, obviously, the MGM property in Yonkers, should they be granted a full gaming license. That's property we already own, Daniel, and that would obviously represent a significant incremental investment opportunity, but contingent, of course, on how the license award process plays out. Thank you. We now turn to Jake Hornrike with Wedbush Securities. Your line is open, please go ahead. Hey, thanks so much. Good morning. As you look to expand the non-gaming segment, should we continue to expect loans on the relatively smaller side for you as a way to step into longer-term relationships, or should we take a larger bite into either the real estate or debt, and then do ascetides and a bunch over a billion dollars? Oh, boy. That would be a pretty big number, Jay. But the check sizes you're referring to, they may look small in relation to our overall scale, but I would tell you in return, they're pretty big checks.
Speaker Change: But there are some amazing asset that had referred to the Venetian that has a lot of footprint to continue to be developed so.
Speaker Change: Okay.
Speaker Change: John we can add and obviously.
Speaker Change: MGM.
Speaker Change: MGM property in Yonkers should they be granted a full gaming license that will obviously thats property, we already owned Daniel that would obviously represent a significant incremental investment opportunity, but contingent of course on how how the license award process plays out.
Speaker Change: Yes.
Great. Thank you.
Speaker Change: We now turn to Jay Kornreich with Wedbush Securities. Your line is open. Please go ahead.
Jay Kornreich: Alright, thanks, so much good morning.
Jay Kornreich: You look to expand the non gaming segment should we continue to expect loans on the relatively smaller side for you as a way to Scott.
Jay Kornreich: Longer term relationships or would you be willing to take kind of a larger bite into either real estate or debt and then do appetite a much bigger way say over $1 billion.
Speaker Change: Oh boy that would be a pretty big number Jay.
Speaker Change: But.
Speaker Change: Check sizes, you're referring to they may look small in relation to our overall scale.
Speaker Change: But I would tell you in REIT terms they are pretty big checks. These these are not small assets and they are certainly not small and economic productivity.
Jake Hornrike: These are not small assets, and they're certainly not small in terms of economic productivity. And so if we can do $50 to $100 million and up loans on assets that we either have a direct path to ownership on or a potential path to ownership on, you add those up, and you can get to $1 billion in aggregate. But obviously, by not having it all in one single investment, we are obviously spreading out our risk and amplifying our opportunities to develop new relationships. Okay, I appreciate that. And then just a quick follow-up on... Leverage. You're now at 5-1-0 time. Toronto 2015 VOLUNTEERS, PRESENTED BY CHEVROLET Please see the complete disclaimer at https://sites.google.com or at www.sites.google.com/policies/. The Bulletproof Executive 2013, Now get that leverage further down. David, I'm sorry.
Speaker Change: And so if we can do this needed a $100 million and up.
Speaker Change: Loans on assets that we either have a direct path to ownership on or a potential path to ownership on you add those up.
Speaker Change: Can get to $1 billion in aggregate, but obviously by not having it all in one single investment we are obviously spreading out our risk and amplifying our opportunities to develop new relationships.
Speaker Change: Okay I appreciate that and then just a quick follow up on I guess the leverage Youre now at five five times, which is in your five to five times range. So should we expect new transactions funded I guess incrementally more debt capital at this point or do you intend to continue the over advertise new deal.
Then I will get that leverage further down.
Yes.
Yeah, Jay it's David.
David: We will continue to migrate our leverage down we're obviously within our target range just to recap everybody post MVP, we take the leverage up to five eight times and worked very hard to get that back down to five five times at the end of last year. So that will continue to drift downward both from a full requisite over equity.
David Kieske: We will continue to migrate our leverage down. We're obviously within our target range and, you know, just to recap everybody's post-MGP, we took the leverage up to 5.8 times and worked very hard to get that back down to 5.5 times at the end of the last year. So that'll continue to drift downward, both from an over-equitization of transactions and then, depending on the size, leverage-neutral transactions. All right, thanks very much.
David: Nation of transactions and then depending on the size leveraged neutral transactions.
Speaker Change: Okay, alright, thanks very much.
John Decree: Our next question comes from John DeCree with CBRE. Your line is open; please go ahead. Title Microsoft Office Word Document MSWordDoc Word.
Our next question comes from John Decree with CBRE. Your line is open. Please go ahead.
Good morning, everyone.
John Decree: It will capture almost an hour here and I think only one mentioned of F. One.
John Decree: Document.8, Good morning, everyone. Um, you know, we got through almost an hour here and I think we only made one mention of F-1. Ed, kind of go back to your sports triangle, um, in Las Vegas and you guys have some land near the F-1 paddock and, you know, you talked about this every once in a while, but curious about your thoughts on professional sports. www.TheBusinessProfessor.com? Yeah, you know, I would say, John, it, It's obviously the emergence of this fear that worries us.
John Decree: So add to kind of go back to your sports triangle.
John Decree: In Las Vegas, and you guys have some land there.
John Decree: The F. One paddock and you talk about this every once in a while but curious your thoughts on on professional sports.
John Decree: <unk> that type of investment and maybe specifically in the context of Las Vegas, given all the development around professional sports that we're seeing there and your land and partners.
John Decree: Yes.
Speaker Change: I would say John.
Speaker Change: As professional sports. It's obviously the emergence of this fear it's the overall growth of Las Vegas, and we obviously have the vacant land, but probably even more valuable is the land we already own you referred to the triangle formed by a stadium T mobile and Allegiant, we own everything inside that.
Edward Baltazar Pitoniak: It's the overall growth of Las Vegas, and we obviously have vacant land. But probably even more valuable is the land we already own.
Edward Baltazar Pitoniak: You referred to the triangle formed by A Stadium, T-Mobile, and Allegiant. We own everything inside that triangle. MGM operates everything inside that triangle. If you think about where the A Stadium would be, is going to go, we own three of those four corners in MGM Grand, Excalibur, and New York, New York. I know MGM is very excited about the repositioning opportunities at those four corners, and it applies to so many of the other assets that we own up and down the strip, as well, as you say, that vacant land. I just can't, again, emphasize enough how incredibly valuable it is to have the position we have in Las Vegas because Las Vegas is reaching a global critical mass that really no other place on earth right now rivals, not Orlando, not Macau, the way things have evolved there. Las Vegas is a category of one.
<unk> MGM operates everything thing inside of that triangle, if you think about where the stadium.
Speaker Change: Is going to go we own three of those four corners in MGM Grand Excalibur, and New York New York.
Speaker Change: I know MGM is very excited about the about the repositioning opportunities.
Speaker Change: Four corners and it applies to so many of the other assets that we own up and down the strip as well as you say that making land I just again emphasize enough how incredibly valuable it is to have the position we have in Las Vegas, because Las Vegas is reaching a.
Global critical mass that really no other place on Earth right now rivals not Orlando.
Speaker Change: Not Macao the way things have evolved there Las Vegas is a category of one and we are very happy to be leading.
John Decree: And we are very happy to be the leading owner of real estate in a place that is a global category of one. Very good, thanks. That may be just one, since a lot of people are asking me, is the photo book going to be available in hard copy? We actually have printed a few, and if anybody really, really wants one, they should give me a call at their earliest convenience.
Speaker Change: Owner of real estate in a place that is a global category of one.
Speaker Change: Very good thanks, Ed maybe just once it's a lot of people are asking me is the photo book going to be available in hard copy.
Ed: We actually afternoon a few.
Ed: And if anybody really really wants when they should that should give.
Speaker Change: If you give me a call at the earliest convenience.
John Decree: Thanks, that's awesome. Thanks, John. Elliot, I think we're probably about wrapped up, right? Yes, this concludes our Q&A, and I'll hand it back to Edward Pitoniak, CEO, for final remarks. Thank you, Elliot, and thanks, everyone, for your time today, and please, please do go to www.viciproperties.com under our portfolio heading to view our brand-new Vici Properties photo book. It's a magnificent book about your magnificent properties.
Speaker Change: Fantastic.
Ed: Thanks, John Elliot I think we're probably about wrapped up right.
Ed: This concludes our Q&A I'll now hand back to Edward <unk> CEO for final remarks.
Edward: Thank you Elliot and thanks, everyone for your time today and please please do go to Www Dot Vg properties Dot com under our portfolio heading to view our brand new Vg properties photo book, It's a magnificent book about your magnificent properties.
Edward Baltazar Pitoniak: Bye for now. Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your line.
Edward: I have for now.
Ladies and gentlemen, today's call is now concluded. Thank you for your participation you may now disconnect your lines.
Edward: Okay.