Q2 2024 VICI Properties Inc Earnings Call

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the VICI Properties Stent Home Corridor 2024 earnings conference call. At this time, all participants are in listen-only mode. Please note that this conference call is being recorded today, August 1st, 2024. During the presentation, you can register to ask questions by pressing star followed by one on your telephone keypad. And if you change your mind, please press star followed by two.

Operator: Stanton Corridor 2024 earnings conference call. At this time, all participants are in listen-only mode.

Operator: Please note that this conference call is being recorded today, August 1st, 2024. During the presentation, you can register to ask questions by pressing star followed by one on your telephone keypad, and if you change your mind, please press star followed by two. I will now hand you over to Samantha Gallagher, General Counsel, VICI Properties. Samantha, please go ahead.

I will now hand you over to Samantha Gallagher, General Counsel, VICI Properties. Samantha, please go ahead.

Samantha Gallagher: Thank you, operator, and good morning. Everyone should have access to the company's second quarter 2024 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. Furthermore, some of our comments today will be forward-looking statements within the meaning of the Federal Security Law. 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 them.

Samantha Gallagher: Thank you, operator, and good morning. Everyone should have access to the company's second quarter 2024 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.

Speaker Change: All of our comments today will be forward-looking statements within the meaning of the Federal Securities Law.

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 them.

Samantha Gallagher: I refer you to the company's SEC filing for a more detailed discussion of the risks that could impact future operating results and financial results. 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. The reconciliation of these measures, the most directly comparable GAAP measure, is available on our website and in our second quarter 2024 earnings release, our subfinal information, and our filings with the SEC.

Speaker Change: 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 operating performance.

These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

The reconciliation of these measures, the most directly comparable gap measure, is available on our website, and our second quarter 2024 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 SEC.

Samantha Gallagher: For additional information with respect to non-GAAP measures of certain tenants and or counter parties discussed on this call, please refer to the respective company's public filings with the SEC. Hosting the call today are 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'll open the call to questions. With that, I'll turn the call over to Ed. Thank you, Samantha. Good morning, everyone.

Speaker Change: Hosting the call today, we have Ed Pitoniak, Chief Executive Officer, John Payne, President and Chief Operating Officer, David Kieske, Chief Financial Officer, Dave Wasserman, Chief Accounting Officer, and Moira McCluskey, Senior Vice President of Capital Markets.

Speaker Change: Ed and team will provide some opening remarks, and then we'll open the call to questions. With that, I'll turn the call over to Ed.

Edward Pitoniak: As you may have figured out by now, I enjoy putting my thoughts together for VICI's earnings calls. I try to share in these opening remarks not only what we've done but what we're observing and learning from the market. I may not always succeed in sharing anything genuinely fresh, but at the very least, I don't want my opening remarks to become repetitive.

Ed: Thank you, Samantha. Good morning, everyone.

Speaker Change: I may not always succeed in sharing anything genuinely fresh, but at the very least, I don't want my opening remarks to become repetitive.

Edward Pitoniak: When I began putting these thoughts together in early July, the risk of repetitive remarks was high, given that until a couple of weeks ago, for REITs generally, and NetLease REITs specifically, not a lot had changed since last quarter's earnings call, when I spoke of the big tech investing party that we REITs hadn't been invited to. In Bank of America's most recent fund manager survey, Michael Hartnett showed that fund managers were Then came a welcome CPI print, and REITs had begun a comeback that we believe can endure.

Speaker Change: In Bank of America's most recent fund manager survey, Michael Hartnett showed that fund managers were underweight real estate at a level equal to and not seen since the depths of the great financial crisis.

Edward Pitoniak: Before you hear from John and David, and before we answer your questions, let me say a few words about the principles that guide us in a REIT marketplace like the one we've been living through for a while now. We start by asking ourselves whether what we're going through, whether for all rates generally or net lease rates specifically, is cyclical or secular in nature. There are three sectors that have secular issues right now. Office is an obvious example of a sector with negative secular trends.

Speaker Change: Before you hear from John and David and before we field your questions, let me say a few words about the principles that guide us in a REIT marketplace like the one we've been living through for a while now.

Speaker Change: We start by asking ourselves, is what we're going through, whether for all REITs generally or net lease REITs specifically, cyclical or secular in nature?

Edward Pitoniak: Data centers are the obvious sector with positive secular trends. However, we strongly believe that experiential real estate is another real estate category with positive secular trends, as evidenced by research recently published by McKinsey showing that, indexed back to 1959, the share of consumer discretionary income spent on experiences has grown to an index level of nearly 160, while the share of consumer discretionary income spent on things has shrunk to less than 75. Capitalizing on positive secular trends is fun. Addressing negative secular trends, not so much.

Ed: as evidenced by research recently published by McKinsey showing that, indexed back to 1959,

Edward Pitoniak: Negative cycles for REITs or specific REIT sectors are not so much fun. But it's always key to remember that cycles begin and cycles end, almost always driven by factors that are beyond the control of a REIT management team and board. In a period of lagging stock performance driven by cyclical factors, it can be tempting for REIT management teams and boards to start deviating from the REIT's long-term goals and strategies in hopes that the deviation can somehow overcome the cycle. At VICI, we strive very hard not to deviate.

Ed: At VICI, we strive very hard not to deviate.

Edward Pitoniak: Here's the strategic principle we strive to stay true to in all cycles. We dedicate ourselves to investing in experiential buildings that meet these three fundamental quality factors: location quality. In other words, well located in markets that have sound fundamental demographics and economics; asset quality, meaning designed and built to serve the distinct needs of experiential businesses that have high economic dynamism and economic durability; operator quality, meaning occupied by an experiential operator that has high economic energy, ingenuity, and expertise, and a strong balance sheet and credit profile.

Ed: We dedicate ourselves to investing in experiential buildings that meet these three fundamental quality factors.

Ed: Asset quality, meaning designed and built to serve the distinct needs of experiential businesses that have high economic dynamism and economic durability.

Edward Pitoniak: With every investment we make, we, of course, seek accretion as measured in AFFO per share. But that is not the only accretion we seek and measure. With every investment opportunity we evaluate, in addition to ASFO accretion, we ask, is a given investment opportunity accretive to asset quality? is a given investment accretive to tenant diversity and tenant quality, and is a given investment accretive to geographic and potentially categorical diversity and quality. Finally, can a given investment be accretive to balance sheet quality and, potentially, our credit rating?

Edward Pitoniak: We have not and will not grow for growth's sake if that growth doesn't continuously improve the quality and intrinsic value of our portfolio and balance. We will not, as some of our net lease peers do, tell you we spent X hundreds of millions of dollars and Y percentage cap rate to generate Z dollars of new rent but then never tell you into what we invested that amount of money. We will tell you what we invest in so that you can know what you own.

Edward Pitoniak: The very good news is that our business development team, led by John Payne, is identifying and developing opportunities that meet our broader accretion criteria. And with that, I'll turn the call over to John. Thanks, Ed. And good morning to everyone.

John Payne: We acted on the investment criteria Ed just spoke of when, in the second quarter, we made capital commitments of up to $950 million into highly differentiated experiential buildings that have indispensable value to their occupants, namely the Venetian and a collection of great wolf resorts. These are investments that live up to our quality criteria. And at the same time, $650 million dollars firmly committed to those investments will generate a blended investment yield of 7.9%.

John Payne: Our conviction that we can continue to identify and invest in experiential properties that are accretive against multiple quality factors is a key reason that we have decided that we will not be exercising our call right to acquire Harrah's Hoosier Park in Horseshoe, Indianapolis.

John Payne: We can and are making this decision because of our confidence and conviction that we are actively identifying and pursuing investment opportunities that enable us to generate future AFFO growth and accretion while furthering the strength and diversity of our portfolio and tenant roster. At this time, we believe that we have the opportunity to create greater portfolio value by allocating VICI's capital to other gaming and non-gaming opportunities the team is actively pursuing. This is an approach that we believe will produce 2024 AFSO, and with a really healthy population.

Ed: We can and are making this decision because of our confidence and conviction that we are actively identifying and pursuing investment opportunities.

Ed: This is an approach that we believe will produce 2024 AFFO.

John Payne: We're going to do 2024 and go for... [inaudible] is nearly three times. 2024 ASFO per growth rate guided to last week by our one gaming week peer. One factor that contributes to our overall portfolio quality instructor tenant credit is the success of the dynamic city of Las Vegas, where VICI collects 45% of our rent from assets that we own. Over the years, I've cited one record-breaking stack, Road, and the first half of 2024. Kerry Reid International Airport had back-to-back record months, reporting 5.1 million passengers arriving and departing in June.

Speaker Change: The 2024 ASFO per growth rate guided to last week by our one gaming week peer.

Speaker Change: One factor that continues to accrue to our overall portfolio quality and structure of tenant credit is the success of the dynamic city of Las Vegas, where VICI collects 45% of our rent from assets that we own.

John Payne: June was the third best month ever, trailing May, the second best month ever, and October of 2023 was the best month. In May, international visitation to Vegas also jumped 23% year over year, and in June, it was reported that city officials are contemplating adding a second airport to Las Vegas, with executives from Southwest Airlines stating, and I quote, It feels like any flight we add to Vegas gets filled. It's almost an insatiable appetite for people wanting to come and see Vegas.

Speaker Change: with executives from Southwest Airlines stating, and I quote, it feels like any flight we add into Vegas gets filled. It's almost this insatiable appetite for people wanting to come and see Vegas.

John Payne: Our Las Vegas tenants continue to benefit from this momentum as evidenced by up to $700 million in capital investment to fund extensive reinvestment projects at the Venetian in exchange for increased rent. The size and success of our gaming properties allows us a unique opportunity to put large amounts of money to work into assets we already own. There continues to be a variety of opportunities on the horizon for growth in our portfolio. Casino gaming assets continue to present the largest opportunities both domestically and internationally, inclusive of investment opportunities into the casino resort properties we already own.

David Kieske: The magnitude and consistency of gaming cash flows and the creativity of our gaming tenants continue to drive our conviction in this section and have set the blueprint for our TAM and other experiential sectors. I now will turn..., who will discuss our financial results and guidance. David

Speaker Change: I now will turn the

David Kieske: Thanks, John. That's our balance sheet, liquidity, results, and our updated full year guidance, which we're very excited about. As we work on the right side of the balance sheet, we are constantly focusing on VICI's balance sheet quality, bringing our leverage further down within our target range of five to five and a half times. Diligently working with the rating agencies to improve our credit ratings over time and ultimately lower our cost of capital, balancing the right term right long-term leverage for the company, all while ensuring we have the dry powder to continue to fund accretive growth for our owners.

Speaker Change: That's our balance sheet, liquidity, results, and our updated full-year guidance, which we're very excited about.

Speaker Change: diligently working with the rating agencies to improve our credit ratings over time and ultimately lowering our cost of capital balancing the right term right long-term leverage for the company all while ensuring we have the dry powder to continue to fund accretive growth for our owners

David Kieske: In terms of dry powder, as of today, we have approximately $3.2 billion in total liquidity, comprised of $347 million in cash and cash equivalents, $566 million of estimated proceeds available under our outstanding forward contracts, and $2.3 billion of availability under our revolving credit facility.

Speaker Change: comprised of $347 million in cash and cash equivalents, $566 million of estimated proceeds available under our outstanding forwards, and $2.3 billion of availability under our revolving credit facility.

David Kieske: In addition, our revolving credit facility has an accordion option, allowing us to request additional lender commitments of up to a billion dollars. Subsequent to quarter end, we settled four million shares and received approximately $115 million under our forward sale agreement. These proceeds were used to partially fund the Venetian Capital Investment John mentioned earlier. In terms of leverage, our total debt is currently $17.1 billion. Our net debt to annualized second quarter adjusted EBITDA, excluding the impact of unsettled quarter equity, is approximately 4.4 times, excuse me, 5.4 times, within our target leverage range of five to five and a half times.

Speaker Change: Subsequent to quarter end, we settled four million shares and received approximately $115 million under our forward sale agreements.

Speaker Change: In terms of leverage, our total debt is currently $17.1 billion.

David Kieske: We have a weighted average interest rate of 4.36, taking into account our hedge portfolio, and a weighted average of 6.6 years to maturity. Touching on the income statement, FFO per share was $0.57 for the quarter, an increase of 5.9% compared to $0.54 for the quarter ended June 30, 2023.

Speaker Change: We have a weighted average interest rate of 4.36, taking into account our hedge portfolio, and a weighted average 6.6 years to maturity.

Speaker Change: Touching on the income statement, FFO per share was $0.57 for the quarter, an increase of 5.9% compared to $0.54 for the quarter ended June 30, 2023. We are very proud to deliver this continued consistent growth to our owners.

David Kieske: We are very proud to deliver this continued, consistent growth to our owners. 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. Our margins continue to run strong in the high 90% range when eliminating non-cash items, and we have the highest net income margin in the S&P 500, as noted in an article published by Barron's during the month of July. Our G&A was $15.8 million for the quarter, and as a percentage of total revenues, it was only 1.6%.

Speaker Change: when eliminating non-cash items.

Speaker Change: And we have the highest net income margin in the S&P 500, as noted in an article published by Barron during the month of July .

Speaker Change: Our G&A was $15.8 million for the quarter and as a percentage of total revenues was only 1.6%.

David Kieske: This continues to be one of the lowest ratios in not only the triple net sector but across all retail. Turning to guidance, we are raising our 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 now be between $2.35 billion and $2.37 billion, or between $2.24 and $22.26 per diluted common share.

Speaker Change: We are raising our AFFO guidance for 2024 in both absolute dollars as well as on a per-share basis.

Speaker Change: AFFO for the year ending December 31, 2024 is expected to now be between $2.35 billion and $2.37 billion, or between $2.24 and $2.24.

David Kieske: Based on the midpoint of our updated guidance range, VT expects to deliver year-over-year AFFO per share growth of 4.7%. As a reminder, our guidance does not include the impact on operating results from any transactions that have not closed, interest income from any loans that do not yet have final draw schedules, possible future acquisitions or dispositions, capital markets activity, or other non-recurring transactions or items. And, as we have mentioned in the past, we record a non-cash CECO allowance on a quarterly basis, which, due to its inherent unpredictability, leaves us unable to forecast net income and FFO with accuracy.

Speaker Change: and $2.26 per diluted common share. Based on the midpoint of our updated guidance range, Vici expects to deliver year-over-year AFFO per share growth of 4.7%.

Speaker Change: And as we have mentioned in the past, we record a non-cash CECO allowance on a quarterly basis, which due to its inherent unpredictability, leaves us unable to forecast net income and FFO with accuracy.

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. We will now begin the question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. And if you change your mind, please press star followed by two. Additionally, when preparing to ask your questions, please ensure your device is unmuted locally.

Speaker Change: 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.

Speaker Change: We will now begin the question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad and if you change your mind, please press star followed by two. When preparing to ask your questions, please ensure your device is unmuted locally.

Caitlin Burrows: And our first question comes from Caitlin Burrows from Goldman Sachs. Hi, good morning, everyone. Well, thanks for the update on the plans to not execute the options that you have this year. I guess, just as you think bigger picture on deals you might do going forward and the options that you might create, I guess, does the way that this one ended up kind of working out or turning out in your decision-making process have any impact on, I guess, how you structure options in the future, what the details might be, how far in advance they are, anything like that Thanks. Yeah, good morning, Caitlin.

Speaker Change: And our first question comes from Caitlin Burrows from Goldman Sachs.

John Payne: John or David, would you like to take a first crack at that in terms of how we think about options going forward? Yes, it's a very good question. I do think it's important.

Speaker Change: Yes, it's a very good question. I do think it's important. I heard my comments were broken up a little bit, but it is important to understand that this was a strategic decision.

John Payne: I heard my comments were broken up a little bit, but it is important to understand that this was a strategic decision, really based on capital allocation and portfolio management at this time. We have great conviction, and opportunities that are in front of us that would further our tenant and geographical and category diversity. And as we continue to look at opportunities and we negotiate, call calls, or negotiate votes, we'll think about the length of those and the appropriate times of those. But again, it's important to understand that we have great conviction to continue to grow the business around the world. I got it.

Speaker Change: Really based on capital allocation and portfolio management at this time. We have great conviction.

Speaker Change: And as we continue to look at opportunities, and we negotiate port calls, or we negotiate

Caitlin Burrows: And just as a follow-up on that geographic diversity point, I noticed the prepared remarks also mentioned international potential opportunities. So just wondering if you can comment further on the sort of international opportunities or the size type that you think could come up over the medium term or where, John?

Speaker Change: Got it, and just as a follow-up on that geographic diversity point, I know the prepared remarks also mentioned international potential opportunities, so just wondering if you can comment further on kind of what sort of international opportunities or the size type that you think could come up over the medium term or where?

John Payne: Yeah, another good question. We have been busy traveling, not only domestically but internationally. And I think on other calls, we've talked about countries that we've been studying. We spent some time in Australia and New Zealand.

Speaker Change: Another good question. We have been busy traveling, not only domestically, but internationally.

Speaker Change: And I think on other calls we've talked about countries that we've been studying, we've spent some time.

John Payne: We've spent some time in Europe and the UK and other parts of the world where it makes sense and our capital can work. I don't have anything to announce now, obviously, but we see opportunities to continue to diversify not only in location but with new tenants as well. Thank you. And our next question comes from Barry Jonas from True Security. Hey guys.

Speaker Change: In Australia, in New Zealand, we've spent some time in Europe , in the UK, in other parts of the world where it makes sense and our capital can work. I don't have anything to announce now, obviously, but we see opportunities to continue to diversify

Speaker Change: Not only in location, but with new tenants as well.

Speaker Change: Thank you.

Speaker Change: And our next question comes from Barry Jonas from Trose Security.

Barry Jonas: You know, as you look at that international opportunity set, I was just curious how that split between gaming and non-gaming. John, want to take that once again? It seems like I am answering the first three questions today, Barry, but it's all good. I'm not sure we'll have the exact..., a percentage of what's going to come in gaming and non-gaming, but I think you can imagine when we travel around the world, we spend time in countries that have legalized gaming and understand the real estate of those assets while at the same time meeting with experiential operators.

Barry Jonas: It seems like I am answering the first three questions today, Barry, but it's all good. I'm not sure we'll have the exact.

Barry Jonas: percentage of what's going to come in gaming and non-gaming. But I think you can imagine when we travel around the world, we spend time in countries that have legalized gaming and understanding the real estate of those assets, while at the same time meeting with experiential operators.

Barry Jonas: In my remarks, and I've said this for the past seven years, the greatest opportunity we see is still in casino gaming, both domestically and internationally. But we do spend time with operators in both the experiential sectors and gaming when we travel around. And Barry, I'll just add that Barry, Barry, I'll just add that, pretty much by definition and by logic, the dollar percentage will always tend, whether domestically or internationally, the dollar percentage will very much favor gaming investment, given the magnitude of the assets and the capital required to acquire them. Got it, got it.

Barry Jonas: And Barry, I'll just add that

John Payne: And then just as a follow-up, you know, curious how you're thinking about your strip land and just development these days. You obviously own several acres on the strip and off the strip. And then your tenant Caesars is now talking about maybe selling some non-core assets, which I presume include land. Thanks.

Barry Jonas: Yeah, so Barry, like John talked about in his opening remarks, we are just great believers in the Las Vegas ecosystem, which obviously has gaming at its center. But as we see with almost each passing quarter, the amount of innovation that's going on in terms of the broadening and deepening of Las Vegas experiences truly makes it like no other place on earth. We obviously have a lot of exposure to Las Vegas right now as a percentage of our annual base rent.

Barry Jonas: Yeah, so Barry, we, as John talked about in his opening remarks, we are just great believers.

Barry Jonas: In the Las Vegas ecosystem, which is obviously got gaming at its center, but as we see with really almost each passing quarter, the amount of

Barry Jonas: But we are, and we will be very comfortable in continuing to invest incremental capital, much the way we did with the Venetian investment in Las Vegas, because it is a truly one of a kind destination in the world. And that has implications, obviously, for putting incremental money into the assets we already own, whether with the Venetian, with our Caesars assets, and especially, obviously, given the magnitude of MGM assets we own, particularly at the south end of the Strip, which is seeing more and more demand drivers.

Barry Jonas: We obviously have a lot of exposure to Las Vegas right now as a percentage of our annual base rent. But we are and we will be very comfortable in continuing to invest incremental capital, much the way we did with the Venetian investment.

Barry Jonas: in Las Vegas because it is this truly one-of-a-kind.

Barry Jonas: destination in the world. And that has implications, obviously, for putting incremental money into the assets we already own, whether with the Venetian, with our Caesar's assets.

Barry Jonas: And then, in addition to that, as you alluded to, we do have that vacant land that, over the coming years and decades, obviously represents further potential to invest capital and broaden and deepen our exposure to Las Vegas. Perfect. Thank you for that. Our next question comes from Wes Golladay from the Bears. Hey, good morning, everyone.

Barry Jonas: And then, in addition to that, as you alluded to, we do have that vacant land that over the coming years and decades obviously represents further potential to invest capital and broaden and deepen our exposure to Las Vegas.

Wes Golladay: I know you target full cycle investments with, you know, high quality partners, but there have been some pockets of weakness in the consumer. Has this led you to change how you're looking at the current acquisition pipeline? Yeah, it's a very good question, Wes.

Speaker Change: Hey, good morning, everyone. I know you target full-cycle investments with high-quality partners, but there have been some pockets of weakness in the consumer. Has this led you to change how you're looking at the current acquisition pipeline?

Edward Pitoniak: And obviously, you know, whether it's the McDonald's earnings report or other earnings reports, you are starting to hear about weakness, especially in the lower end consumer. And even recently, there's been some talk among gaming operators about seeing some weakness at the lower end in the regionals. I would not say at this point that it's yet affected how we are thinking about our investments going forward. We are focusing on the categories of experiences that we do, focusing generally on the middle to higher end.

Speaker Change: I would not say at this point it's yet affected how we are thinking about our investments going forward.

Edward Pitoniak: It hasn't caused concern for us yet, especially when, of course, you take in the existential fact that we as a net lease asset owner are not exposed to the variability quarter by quarter in consumer spending. And then you do have a highly predictable business model, but you have the Caesars lease coming up in November. It does have a variable component that's a little bit harder to model. Could you maybe put some goalposts on that? What should we think of that? David?

David Kieske: Yeah, thanks, Wes. It is a good question. We are entering lease year eight with Caesars. Hard to believe we're getting the lease year eight.

Speaker Change: David

Speaker Change: Yeah, thanks Wes. It is a good question. We are entering lease year eight with Caesars. Hard to believe we're getting the lease year eight. Just seems like yesterday we started this company.

David Kieske: It just seems like yesterday that we started this company. But November 1st will be the start of that lease year, and there will be a variable component and a base component, and we are the way that the calculation runs. For the Vegas lease, 80% is the base, and 20% is variable. For the regional lease, it's 70% base and 30% variable.

David Kieske: It's based on a comparison of net revenues for years five through seven versus years zero through one. We are still collecting data from Caesars because the calculation period actually runs through September of 2024. But based on what we're seeing, it should have a relatively neutral to no impact on our escalation on November 1st, 2024. Okay, thanks everyone. Our next question comes from John DeCree from CBRE. Hi everyone. Thanks for taking my questions. Maybe one on your decision today to say that you're not going to move forward with Centaur.

Speaker Change: Okay, thanks everyone.

Speaker Change: Our next question comes from John DeCree from CBRE.

John Decree: Hi everyone, thanks for taking my questions.

John Decree: So I thought you may have had until the end of the year to make a decision. And so we certainly can appreciate, you know, being decisive and looking at your pipeline. But curious if you could talk a little bit about why you make that announcement today with maybe several months ahead to consider that. Yeah, no, it's a very, very good question, John.

Speaker Change: to say that you're not going to move forward with Centaur. So I thought you may have had until the end of the year to make a decision. And so we certainly can appreciate.

Speaker Change: You know, being decisive and looking at your pipeline, but curious if you could talk a little bit about, you know, why make that announcement today with still maybe several months ahead to, you know, to consider that.

Edward Pitoniak: The reason we decided to announce this today is that the strategic factors that went into making our decision are of such a nature that they were not going to change over the ensuing whatever it is now left in the year for, you know, five months of the year. We decided again, because the strategic decision factors will not change in the next five months, decided to announce it today, so that everyone can understand, our team can understand, Caesars can understand, you all can understand that we will not be calling it, and none of us have to spend time wondering if and when we might do it between now and the very end of the year. That's helpful, Ed.

John Decree: Yeah, no, it's a very, very good question, John .

Speaker Change: The reason we decided to announce this today

Speaker Change: is that the strategic factors that went into making our decision are of a nature

Speaker Change: that they were not going to change over the ensuing, whatever it is now, left in the year

Speaker Change: You know five months of the year and so in fairness obviously to our partners at Caesars but also recognizing our need to always be as ruthlessly efficient as we can be.

Speaker Change: with a return on management time.

Speaker Change: decided to announce it today so that everyone can understand, our team can understand, Cesar can understand, you all can understand that we will not be calling it and none of us have to spend time wondering if and when we might between now and the very end of the year.

John Decree: Thanks. And that's probably the last question you'll get from us on Centaur, although there have been many over the last... eight months or so. So I appreciate that. Maybe a bigger, bigger picture in terms of underwriting gaming assets today. So, you know, a lot has happened. We've talked about some tumor trends. We've looked at where some recent deals have gone out, and just kind of curious if there are any kind of updated thoughts on how you think about, you know, full four-wall coverage, kind of cap rates in the gaming space now, if there's a little bit more strict in how you think about four-wall coverage and kind of where you think cap rates are going. I know kind of every asset and transaction is a little different, but it' Yeah, yeah.

Speaker Change: In terms of underwriting gaming assets today, so, you know, a lot has happened. We've talked about some of consumer trends. You know, we've looked at where some recent deals have gone out and just kind of curious if

Speaker Change: There's any kind of updated thoughts on how you think about, you know, full floor wall coverage, kind of cap rates in the gaming space now, you know, if there's...

Speaker Change: be a little bit more strict in how you think about four-wall coverage and kind of where you think cap rates are going. And I know kind of every asset and transaction is a little different, but just...

Edward Pitoniak: So I think our starting point, John, is that, you know, we always want our capital investments to pass the test of, if this was our last dollar of capital, would this be the highest and best use of that capital? And as we have engaged in the continuous learning that has been at the heart of our creation of Vici as both a company and a culture, I think, very much to the point of the question you're asking, we continue to refine our thinking on what will drive the strongest continuous improvement in our access to and our cost of capital. And that really guides our decision making in many different forms, including obviously tenant diversity, geographic diversity, tenant credit quality, strength of the tenant balance sheet, and, very much to your point, rent coverage.

Speaker Change: Yeah.

Speaker Change: Yeah, so I think our starting point, John , is that

John: You know, we always want our capital investments to pass the test.

John: of, if this was our last dollar capital, would this be the highest and best use of that capital? And as we have engaged in the continuous learning that has been at the heart

John: of our creation of VICI as both a company and a culture. I think very much to the point of the question you're asking, we continue to refine our thinking on what will drive

Speaker Change: The strongest continuous improvement in our access to and our cost of capital.

Speaker Change: And that really guides our decision making.

Speaker Change: in many different forms, including, obviously, tenant diversity, geographic diversity.

Speaker Change: and in credit quality.

Speaker Change: Strength of Tenant Balance Sheet, and very much to your point, rent coverage.

Edward Pitoniak: So as we look at that mosaic of factors, we again feel very good about the discipline we've developed around capital allocation and the degree to which it can, again, just to stress the point, lead ultimately to the strongest comparative cost of capital advantage over the long term. Perfect. Thanks so much, Ed.

Speaker Change: So as we look at that mosaic of factors, we again, we feel very good about the discipline we've developed around capital allocation and the degree to which it can, again, just to stress the point, lead ultimately to strongest comparative

Speaker Change: cost of capital advantage over the long term.

Speaker Change: Perfect. Thanks so much, Ed. I really appreciate that.

John Decree: I really appreciate that. Thank you, John. Our next question comes from Nick Joseph from CT. Thanks. Let me just follow up on the Indiana casino question. Is this deal fully dead?

John: Thank you, John .

Nicholas Joseph: And I guess, is there any chance that the assets are put to you? Or is that all put to bed as well, John?

John Payne: The way the contract reads, you are correct that the assets could be put to us, but Tom Reig at Caesars, I think, has been very vocal about this, at least over the past year, that they had no plan to put these two assets to us, but the contract does last until the end of the year, as we spoke about earlier. Thanks, that's helpful. And then, just as we look to November, I'm just curious if there are any legislative issues on any ballots that you're watching that could be important for a regional game.

John Payne: John, we all take that in. Yeah, I'll take that in. We continue to look not only in, I think you mentioned regional gaming, but I think we're looking all over the world where there are changes happening for the better. And I guess it could be bad, but where there are going to be opportunities to deploy capital with new tenants and new locations, possibly a new category. There are some places around the world that are going through quite a bit of change, and we're better.

John Payne: We'll continue to watch opportunities in the United States as well, every year, I think you know. The states of Texas and Georgia, and Kentucky often come out with some form of gaming and then, obviously, with online sports betting, which is spread across the U.S.

Speaker Change: Which is spread across the United States there'll be other states that think about that and usually in some deals they talk about the bricks and mortar casinos, so not specifically, but we stay in touch to see if there ultimately will be some opportunities for us to invest and then I'll finally say we.

John Payne: There'll be other states that think about that, and usually, in some deals, they talk about it. So not specifically, but we stay in touch to see if there ultimately will be some opportunities for us to invest. And then, I'll finally say, we continue to monitor New York, where that process continues to proceed, into 2025. And we'll have a better understanding when the three licenses will be awarded and to whom they are. Hey, Nick, I'll just add that, you know, we obviously do monitor, you know, continuing legislative change and, in many cases, the associated emergence of new supply across American regional gaming.

Speaker Change: To monitor New York.

Speaker Change: We're that process continues to proceed.

Speaker Change: Into 2025, and we will have a better understanding.

Speaker Change: When the three licenses will be award and to whom they are awarded.

John Payne: And I do think, you know, we obviously need to take care as capital allocators that as we allocate capital to regional gaming assets, which we will continue to do, that we're doing so aware of the supply-demand trends on a market-by-market basis, because in regional gaming, the catchment areas for regional gaming obviously tend to be more confined than we would find in Las Vegas because the catchment area for Las Vegas is global. As John said in his opening remarks, international travel to Vegas has rebounded stronger than any place else in the U.S. and probably is one of the strongest international travel rebounds around the world.

Nick: Hey, Nick.

Nick: Yes, I would just add that.

Nick: Nick I'll just add that.

Nick: We obviously do monitor continues continuing legislated change and in many cases, the associated emergence of new supply.

Speaker Change: Across American regional gaming.

Nick: And I do think we obviously need to take care of as capital Allocators and as we allocate capital into regional gaming assets, which we will continue to do it we're doing so aware of the supply demand trends on a market by market basis, because in regional gaming.

Nick: The catchment areas for regional gaming, obviously tend to be more confined.

John: Then we would find in Las Vegas, because the catchment area for Las Vegas is global as John said in his opening remarks international travel to Vegas has rebounded stronger than any place else in the U S and probably one of the strongest international travel rebounds around the world and so while new <unk>.

John Payne: And so while new supply will come to Las Vegas, it will come into a market whose catchment area is again global, and we obviously need to be mindful in regional areas that the catchment areas are somewhat finite, and we need to weigh our capital allocation decisions based upon supply and demand trends on a highly localized basis. Makes sense. Thanks. I appreciate it. Thank you, Nick. And the next question comes from Haendel Sanchezk from METO Home. Hi, good morning. This is Ravi Vaidya on the line for Haendel.

Nick: Supply will come to Las Vegas.

Speaker Change: It will come into a market catchment area again is global and we obviously need to be mindful in regional areas that the catchment areas are somewhat finite and we need to weigh our capital allocation decisions based upon supply and demand trends on a highly localized basis.

Speaker Change: Makes sense, thanks, guys I appreciate it.

Nick: Thank you Nick.

Speaker Change: Yeah.

Speaker Change: And the next question comes from <unk>, St Juste from Mizuho.

Speaker Change: Hi, Good morning. This is Ravi <unk> on the line for Hemdale Hope you guys are doing well I just had a quick couple of quick follow ups here on the Indiana.

Haendel Sanchezk: Hope you guys are doing well. I just had a couple quick follow-ups here in Indiana. Was the cap rate not attractive enough in the current rate environment, and did the emergence of Ballot Chicago coming up in the next five years play a role as it could possibly impact casino operations throughout the Midwest? Yeah, hey, I'll let John take the second part of that. On the first part, the cap rate is a perfectly fine cap rate.

Speaker Change: What was the cap rate not attractive enough in the current rate environment and the emergence of balance Chicago coming up the next five years to play a role as it could possibly impact.

Speaker Change: Casino operations throughout the Midwest.

Speaker Change: Yeah, Hey, I'll, let John take the second part of that on the first part.

John: The cap rate is a perfectly fine cap rate.

Haendel Sanchezk: As we look across our array of investment opportunities and as we contemplated, you know, potentially investing more than $2 billion of capital, or close to 5% of our total capital, we again wanted to be relentless in our scrutiny as to whether this was the highest and best use of our capital, both on a cap rate basis and the associated accretion, but also on the key, if you will, non-financial accretion factors of, So the cap rate by itself was not the gating issue.

Speaker Change: As we look across our array of investment opportunities and as we contemplated.

Speaker Change: Potentially investing more than $2 billion of capital of close to 5% of our total capital.

John: We again wanted to be relentless in our scrutiny as he would this be the highest and best use of our capital both on a cap rate basis and the associated accretion, but also on the key.

Speaker Change: If you will non financial accretion factors.

Speaker Change: Tenant diversity geographic diversity and those secondary factors. So the cap rate by itself was not the gating issue and then I will turn it over to John for his thoughts on Midwestern gaming.

Edward Pitoniak: And then I will turn it over to John for his thoughts on Midwestern Gaming. Yeah, the question about whether the facility that is ultimately built in downtown Chicago will impact Indianapolis casino revenues. The answer is no on that. To Ed's comments earlier about where consumers go to regional gaming and how far they drive, the Indianapolis market is considerably far away from downtown Chicago.

John: Yes. The question about will we will the facility that ultimately is built in downtown Chicago will impact the Indianapolis two casinos answers.

David Kieske: In fact, there are many other casinos between Indianapolis and Chicago that consumers can choose from as well. So that was not a factor in our decision not to call. Thank you. That's helpful. Just one more here.

John: No on that to Ed's comments earlier about where consumers go to regional gaming and how far do they drive.

John: The Indianapolis market is considerably far away from downtown Chicago and factors. Many other casinos between Indianapolis and Chicago that consumers can choose from as well so that was not a.

Speaker Change: Factor in our decision.

Speaker Change: Not call.

Speaker Change: Two Indianapolis asset.

Speaker Change: Thank you that's helpful. Just one more here.

Haendel Sanchezk: How large do you forecast the experiential credit solution strategy to become? And, um, you know, we noticed you have a couple deals with Great Wolf here over the years. How... What's important is that as a defensive entertainment option and during a recession? David, do you want to take the first part of that? Yeah, thanks, Ravi.

Speaker Change: How large do you forecast.

Speaker Change: Spiritual credit solution strategy to become and.

Speaker Change: I noticed there's a couple of deals with great Wolf here over the years.

Speaker Change: How.

Speaker Change: How important is that as a defensive entertainment option is.

Speaker Change: Recessionary environment.

Speaker Change: David you want to take the first part of that.

David Kieske: Yes, Thanks Ravi.

David Kieske: You know, roughly, our credit book today is 2.2 billion. It's, you know, four to 5% of total assets. And, you know, we feel good in and around that area. We developed a credit book as a way to broaden our learnings and to expand our relationships.

David Kieske: We're up with credit.

David Kieske: Credit book today, $2 2 billion, it's 4% to 5% of total assets. So we feel good at around that area.

Speaker Change: We developed the credit book as a way to go.

Speaker Change: Broaden our learnings into.

Speaker Change: Expand our relationships.

David Kieske: And you've heard us talk about, you know, at the end of the day, our capital is relationship capital. And the credit book allows us to develop new partnerships, develop new relationships, ultimately, through some of the deals have call options that are at our discretion. But along the way, we learn about new segments and new businesses. And we learn things that, ultimately, we may not like. But, you know, our loan gets repaid, and we move on. But if we learn things we like, we continue to, you know, want to grow in those areas through either real estate ownership or deepening the existing relationships. So it's been a very, very effective tool.

Speaker Change: You've heard us talk about at the end of the our capital is relationship capital in the credit book allows us to.

Speaker Change: Develop new partnerships develop new relationships ultimately through some of the deals of call options at our discretion.

David Kieske: But along the way, we learned about new segments and new businesses.

David Kieske: If we learn things that ultimately you may not like we were loan gets repaid and we move on but if we learn things. We like we continue to want to grow in those areas through either real estate ownership or deepening existing relationships. So.

David Kieske: It's been a very very effective tool.

David Kieske: And so we're excited about and some of it will.

David Kieske: And we're excited about something that we'll continue to use in our toolkit as we expand both domestically and internationally. Robbie, could you repeat the second half of that question? You know, we've had a couple deals with Great Wolf over the years; hear your comments on how this is a particularly defensive and important entertainment source as we go into a recessionary environment here where the consumer is stressed. Yeah, David, you want to talk about what we have seen historically with Great Wolf's durability through all cycles?

David Kieske: We continue to use in our tool kit as we.

David Kieske: Expand both domestically and internationally.

Robin: Robin could you repeat the second half of that question.

David Kieske: Okay.

Wolf: Was that a couple of deals with great Wolf over the years.

Speaker Change: Just wanted to hear your comments on how this is a.

David Kieske: Particularly defensive and important entertainment source.

Speaker Change: As we go into a recessionary environment here, where the consumer can stretch.

David Kieske: Yes, David you want to talk about what we've seen historically on.

David Kieske: Great Wolster ability through all cycles.

David Kieske: Yeah, in the broader indoor water park sector or broadly, you know, Gabe Wasserman is in the room here, and he did our first white paper back in 18 where we started looking at indoor water parks and the economic vitality of these businesses. You know, when the original Great Wolf went public back in 0405, it was a Thursday through Sunday, Thursday, Thursday through Monday business. Now it's a seven-day-a-week business, and you know we call them casinos without gaming because of the economic levers they have and the multiple cash registers they have both with the water park, the family entertainment center, the food and beverage, the lodging. And as an example, Perryville opened earlier this year, last year, and within three months, it was exceeding its initial underwriting and ultimately went into the broader refi package.

David Kieske: Yes.

David Kieske: The broader indoor waterpark sector or broadly gave Washington is in the room here. They did our first white paper back in 18, where we started looking at indoor Waterpark in the economic vitality of these businesses.

David Kieske: The original Great Wolf went public back in four months.

David Kieske: Five it was a Thursday through Sunday through Thursday through Monday business now its a seven day a week business.

Speaker Change: And we call them casinos without gaming because of the economic leverage they have and the multiple cash registers. They have both with the <unk>.

David Kieske: Waterpark family Entertainment centers food and beverage the lodging.

David Kieske: And.

David Kieske: Example, <unk> opened.

David Kieske: Earlier this year.

David Kieske: Last year end.

David Kieske: Within three months it was exceeding it.

David Kieske: Initial underwriting and ultimately went into the broader refi package. So these things open the open quick and they open.

David Kieske: So these things open, they open quickly, and they produce a lot of cash flow. So we're excited about that. And hopefully, there will be an opportunity someday to own the real estate of some of these indoor waterpark businesses. Thanks so much, guys.

David Kieske: Producing a lot of cash flow. So we're excited about that and hopefully there's an opportunity some data on the real estate of some of these into a waterpark businesses.

Speaker Change: Got it thanks, so much guys.

David Kieske: Yes.

David Katz: The next question comes from David Katz from Jefferies. Hi. Morning, everyone. Thanks for taking my question. How are you?

David Kieske: The next question comes from David Katz from Jefferies.

David Katz: Hi, Good morning, David Thanks for taking my question how are you.

David Katz: So a little bit of a different, great, a little bit of a different kind of question for John, which is, you know, through our window past, you know, a couple of days, we've seen a pretty consistent outlook shift, you know, to something more moderate or even down, specifically around, you know, leisure transient activities across hospitality. And not that it will impact your earnings stream, you know, imminently, but, you know, John, I assume in your travels you have a finger on the pulse as well, and I just would love a little bit of insight from what you're seeing and hearing through your window.

David Kieske: So.

Speaker Change: A little bit of a different.

David Kieske: Great a little bit of a different kind of question for John.

Speaker Change: Through our window passed.

David Kieske: Couple of days.

David Kieske: We've seen a pretty consistent.

David Kieske: Outlook shift.

David Kieske: To something more moderate or even down specifically around leisure transient activities across hospitality.

David Kieske: Not that it will impact your earnings stream.

David Kieske: Imminently, but John I assume in your travels you have a finger on that pulse as well and I just would love a little bit of insight from what you're seeing and hearing through your window.

David Katz: Yeah, David, nice to... talk to you, and hopefully, I'll see you on the road while I'm traveling. Look, you are correct. We're hearing in some businesses some softness and hearing about the consumer, and Ed touched on this earlier in his comment, particularly around the lower end consumer. I was telling my colleagues, David, a story about when I was in Scotland recently. And every person I met talked about visiting the United States.

John: Yeah, David nice to the.

John: Talk to you and hopefully see you on the road.

John: Im traveling.

Speaker Change: Look you are correct. We are hearing in some businesses some softness and hearing about the consumer and Ed touched on this earlier in his comments.

Ed Pitoniak: Particularly around the lower end consumer.

Speaker Change: Was telling my colleague David a story about though I was in Scotland recently.

Speaker Change: And every person I met talked about visiting the United States.

John Payne: And guess which city? If they were only going to two or three cities, they said they had to go. What's become so interesting traveling the world is that ten years ago, that wouldn't have been the answer. Right, everyone would have said I fly into New York, I'm gonna hit Chicago, I'm gonna go on to San Francisco and the West Coast, and you probably wouldn't hear about Las Vegas. The beauty of what our tenants have done is diversified; there are many reasons to come to Las Vegas.

Speaker Change: Guess what city if they were only go into two or three cities. They said they would have to go to.

David: It was Las Vegas.

David: And whats become so interesting traveling the world is that 10 years ago that wouldn't have been answered.

David: Right everyone's et cetera like.

Speaker Change: Fly into New York.

Speaker Change: Yes.

Speaker Change: Chicago I'm going to go on to San Francisco, and the West Coast and you probably wouldn't hear about Las Vegas.

Speaker Change: The beauty about what our tenants have done is diversified.

Speaker Change: The.

John Payne: And no matter what sector, whether you're the high-end sector that comes by private jet or the sector that, like myself, travels by Southwest Airlines, they continue to attract different folks to that city. So I'm not giving you a macro answer about the whole world of the United States.

Speaker Change: Reasons to come to Las Vegas, and no matter what sector, whether youre at the high end sector that comes by private jet.

Myself: Sector like myself travels by southwest Airlines.

Speaker Change: They continue to attract different folks to that city.

Speaker Change: So I'm not giving you a macro answer about the whole world in the United States I'm, giving you an answer about where we'd look to put our money and where our money is right now and that's why we're so bullish on Las Vegas.

John Payne: I'm giving you an answer about where we look to put our money and where our money is right now. And that's why we're so bullish on Las Vegas. As we study other sectors, as we study other parts of the world, we will definitely make sure we understand what the consumer is doing all up and down the spending tree. But I will tell you, in my travels, I'm excited about where we have our money and continue to put it in because I hear that people are traveling to that destination. I agree. Thanks very much.

Speaker Change: As we study other sectors as we've studied other parts of the World, We will definitely make sure we understand what the consumer is doing it all up and down with spending tree.

Speaker Change: But I will tell you my travels I am excited about where we have our money and continue to put money in because I hear that people are traveling to that destination in Las Vegas.

Speaker Change: I agree thanks very much.

Edward Pitoniak: And Operator, before we go to the next question, I'd just like to add to David Katz's question that in a time like this, where we could potentially be looking at a period of economic volatility as measured in consumer spending, it really highlights the value of dividend-paying stocks when it comes to reducing the volatility of the equity versus the volatility of the consumer economy. And that is why, again, we are so careful in what we invest in because we We do not go seeking cigar butt real estate, to use the old Benjamin Graham term.

Speaker Change: And that.

Speaker Change: Before we go to the next question I, just like to add to David Katz. This question.

Speaker Change: That in a in a time like this where we could be potentially looking at a period of.

Speaker Change: Economic volatility as measured in consumer spending it really highlights the value of.

Speaker Change: Of dividend paying stocks.

Speaker Change: When it comes to reducing the volatility of the equity.

Speaker Change: Versus the volatility of the consumer economy and that is why again, we are so careful in what we invest in because we want to make sure we're investing in assets and partner relationships.

Speaker Change: We believe very strongly can endure up and down cycles in consumer spending we do not go seeking cigar butt real estate to use deal Benjamin Graham term.

Edward Pitoniak: We are seeking real estate that we know can endure cycle in, cycle out and has positive secular trends such that we can feel very confident in our ability to continually pay a dividend and steadily grow the dividend, ideally at a rate that is equal to or exceeds inflation. Our next question comes from Michael Harris from Green Street. All right, thanks. Good morning.

Speaker Change: We are seeking real estate that we know can endorse cycle in cycle out and has positive secular trends such that we can feel very confident in our ability to continually pay a dividend and steadily grow the dividend ideally at a rate that is equal to or exceeds inflation.

Speaker Change: Thank you very much.

Speaker Change: Okay.

Michael Harris: Hey Michael. Hey, you know, your VGI is roughly $2 billion in notes coming due in the first half of next year. How did that factor into the decision not to exercise those call rights, particularly as you look to potentially reduce your leverage and earn a better investment grade rate? Yeah, I'll turn it over to David in a moment, Michael, but I would say it really factored in virtually not at all, and not that we're not mindful of the obligation we have to refinance as effectively as we can in the coming year?

Speaker Change: Our next question comes from Michael Harris from Green Street.

Michael Harris: Hi, Thanks, good morning.

Jillian Michaels: Jillian Michaels question balance sheet.

Michael Harris: But we, again, made the decision we made on those call rights because of how compelling our other investment opportunities are, which you should be hearing about, you know, in due course. And so that was not a constraining factor.

Speaker Change: Yeah, Richa is roughly $2 billion in notes coming due in the first half of next year.

Speaker Change: How does that factor into the decision to not exercise those call rights, particularly as you look to potentially reduce your leverage and.

Speaker Change: Better investment credit rating.

Speaker Change: Yeah, I'll turn it over to David in a moment, Mike, but I would say it really factored in virtually not at all and not that we're not mindful of the obligation we have to refinance as effectively as we can in the coming year.

David: We again made the decision we made on those call rights because of how compelling our other investment opportunities are.

David: You should be hearing about in.

David: In due course.

Edward Pitoniak: And David, I don't know if you want to add anything in terms of how we're thinking about leverage and the ratings curve. Yeah, no, you did touch on it in its portfolio management around not exercising the book call. Michael, in terms of the balance sheet, we've got three maturities next year. February, May, and June saw us actively and very successfully refinance our 2024 maturity with a well, well, well, well, well oversubscribed refinancing that we did back in March. We're working and planning towards refining those. Maturities, again, come due first part in the first quarter and then later in the second quarter of 2025.

Speaker Change: So that was not a constraining factor and David how do you want to add anything in terms of how we're thinking about leverage in the ratings curve.

Speaker Change: Yes.

David: You did touch on it at its portfolio management or I'm not exercising the put call Michael in terms of the balance sheet, we've got pretty maturities next year.

Speaker Change: February may and June and as you saw us actively and very successfully a refi or 2020 for maturity with a well well well well well oversubscribed.

Speaker Change: Our refinancing that we did back in March.

Speaker Change: We're working and planning towards refined those.

David Kieske: And then you saw, you know, our peer GLPI had a very, very successful debt offering two days ago. And, you know, being investment grade rated and having a very deep liquid investment grade credit profile is to our benefit. And we feel very good about our ability to refinance those maturities and continue to extend and ladder our maturity profile and, ultimately, over time, migrate up the triple B curve, lowering our cost of capital, being able to continue to compete for asset acquisitions across the globe.

Speaker Change: Maturities that come due first part in the first quarter amendments later in the second quarter of 'twenty five and the needs are.

Speaker Change: Pier.

Speaker Change: <unk> had a very very successful debt offering two days ago.

Speaker Change: The investment grade rated how big they are.

Speaker Change: Very deep liquid investment grade.

Speaker Change: The credit profile is accrues to our benefit we feel very good about our ability to refi those maturities and it continued to extended lateral maturity profile.

Speaker Change: And ultimately over time migrate up to triple B curved lowering our cost of capital.

Speaker Change: Being able to continue to compete.

Speaker Change: For asset acquisitions across the globe.

David Kieske: Thank you. That's all very helpful. Maybe just one more, switching gears a little bit, as there's been some M&A chatter on the operator's side, can you just speak broadly, maybe this is more for John, on just the practical protections that VICI has on its master leases in the event there is a change of control on the operator's side?

Speaker Change: Got it thanks, that's all very helpful. Maybe.

Speaker Change: Maybe just one more switching gears a little bit as theres been some M&A chatter on the operator side can you just speak broadly and maybe this is more for John.

John: Just a practical protections I think he has on its master leases.

John: Change of control on the operator side.

Speaker Change: John.

John: Yes, it's a very good question, Michael it's a hard one to answer simply because we have we used to be.

John Payne: Yeah, it's a very good question, Michael. It's a hard one to answer simply because we have, we used to be a company when we started that had one or two leases. Now we've got over double digits.

John: Company when we started that had one or two leases now we've got over double double digits, but in all our leases we do we do have.

John Payne: But in all our leases, we do have protections; Samantha Gallagher, our general counsel, is on the line that could add to that. But we feel good. We're staying in touch with our operators to better understand what's going on in the market. I think you use the word chatter.

Samantha Gallagher: Protection Samantha.

Speaker Change: <unk>, our general counsel is on the line.

Samantha Gallagher: <unk> could add to that but we feel good we're staying in touch with our operators to better understand.

Speaker Change: What's going on in the market I think you used the word chatter I think thats, probably the best best word.

John: Out there right now, but we do have protections.

Samantha Gallagher: I think that's probably the best word out there right now, but we do have protections in our in our in our many leases that we have. Sam, I don't know if you would like to add anything to the question. Yeah, John, you did a great job.

John: And our many leases that we have Sam I don't know if you would like to add anything to the question.

Samantha Gallagher: I think just to John's point, while we do have a number of different leases, all of our leases are mindful of what happens in a change of control and have strong protections to ensure that. And, just as a reminder, we have gone through a change of control with one of our tenants already, where you see the Cedars-El Dorado merger. So we feel very comfortable with how our leases are structured to address any change of. Got it. Thanks. Our next question comes from James Kammert from Evercore. Good morning.

Sam: Yeah, John you did a great job I think just to John's point, while we do have a number of different leases all of our leases are mindful of what happens in a change of control and have strong protections to ensure and just as a reminder, we have gone through a change of control with one of our tenants already where you see the caesars' Eldorado merger. So we feel very comfortable with how our leases are structured to address any change of control.

Speaker Change: Got it thanks.

Speaker Change: Our next question comes from Jim comment from Evercore.

Jim comment: Hi, good morning, Thank you.

James Kammert: Thank you. David, was there anything in particular that led you to bump the guidance? I mean, the acquisition and that's all well disclosed, don't include prospective activity and guidance. So I was just curious if there were one or two.

David: David was there anything in particular that led you to bump the guidance at this point I mean, the acquisition investing activity has been well disclosed and you don't include prospective activity in guidance I was just curious if you have one or two factors that motivated to do it at this time.

John: David.

John: Jim you touched on it.

David Kieske: [inaudible] and Jimmy Tacharek. I, you know, I think when we did our first quarter earnings call last year, the thing we had was the funding timing and some of how we were going to fund some of the announcements that we had previously made weren't finalized. And so as we talk about in our guidance, you know, we don't project any unknown capital markets activities or any identified or unknown activities. So those announcements plus the continued funding through our loan book have led us to feel very confident about the increasing guidance and feel very good about achieving that guidance. And a lot of it came from the Great Wolf Impact, which closed slightly after our earnings. Second question, please.

Speaker Change: Got it.

Speaker Change: I think when we.

Speaker Change: Lastly, our first quarter earnings call.

Speaker Change: The funding timing and some of the how we were going to fund some of the.

Speaker Change: The announcements that we had previously made.

Speaker Change: Finalized and so as we talked about it in our guidance.

Speaker Change: Reject any unknown capital markets activities are any unidentified.

Speaker Change: Or unknown activities. So.

Speaker Change: Announcements plus the.

Speaker Change: Continued funding through our loan book has led us to.

Speaker Change:

Speaker Change: We feel very confident about the increase in guidance and feel very good about achieving that guidance in light of a.

Speaker Change: A lot of it came from the great Wolf impact, which closed slightly after our earnings.

Speaker Change: Okay and then the second question please.

Edward Pitoniak: Ed, you almost, you're getting, I've obviously been enthused about, you said, your alternatives to investing capital other than the Caesar Option Properties. You're not going to give us a whole lot of color, but are they future opportunities? Ramp up the so-called sort of bucket or opportunity set in dollar value in your mind, and what would the split maybe be between further credit book or... Yeah, it will very much predominantly be fee interest, Jim.

Speaker Change: You almost you can obviously, but Tuesday about you said your alternatives to invest capital other than the seizure option properties.

Speaker Change: So youre not going to give us a whole lot of color, but are the future opportunities.

Speaker Change: As a ramp in these at all sort of bucket or opportunity set in dollar value in your mind and what would the split maybe between further credit book or more fee interest. Thanks.

Jim comment: Yeah, he will very much predominantly the fee interest Jim.

Speaker Change: Sure.

Edward Pitoniak: And I think one thing you can expect is that, you know, as we continue to allocate capital, it will be on a cadence that is not necessarily heavily weighted to one single investment, as would have been the case with the Indiana assets. Again, just to reiterate, that would have been almost 5% of our capital into one deal. And I do think from both a return and a risk management point of view, we will always be very happy to achieve a sustainable capital allocation cadence, which again will be principally in gaming and principally in fees over time. Our next question comes from John Kaliszewski from Wells Fargo. Hi, thank you.

Speaker Change: And I think one thing you can expect is that as we continue to allocate capital.

Speaker Change: We'll be on a cadence that is not necessarily.

Speaker Change: <unk> is heavily weighted to one single investment as would have been the case with the Indiana assets again that just to reiterate that would've been almost 5% of our capital into one deal and I do think as a REIT from both a a return and a risk management point of view.

Speaker Change: We will always be very happy to achieve a sustained and sustainable capital allocation cadence, which again will be principally in gaming and principally in fee.

Speaker Change: Over over time.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: Our next question comes from John can they chose Keith from Wells Fargo.

John Kaliszewski: I'm kind of going back to the embedded growth pipeline, maybe if we can jump down the experiential side, you know, following the comments of Harrow and Caesar. I'm just curious, you know, and I know that these are a little less pressing in terms of timeline, but how are you thinking about the call options for Canyon Ranch and Cabot and Holmfield and Margarita? Yeah, John, I'm happy to start with that. And before I do, I just wanted to add one last comment to the last question that Jim Kammert asked.

Speaker Change: Hi, Thank you.

Speaker Change: Kind of going back to the embedded growth pipeline, maybe if we can jump down to the experiential side following.

John Keith: Following the comments of heroism Caesars I'm just curious.

Speaker Change: I know that these are a little less pressing in terms of timeline, but how are you thinking about the call options for Canyon ranch in Cabot and Homefield a Margarita bill.

John Kaliszewski: And that has to do with not only a sustained and sustainable capital allocation cadence that lends itself to a more sustained and sustainable funding cadence, as opposed to the need to draw a whole lot of funding at one time for one deal. Anyway, to go on to your question about Cabot Canyon Ranch and the others, they have really created a sensation there.

Speaker Change: Yeah, John I'm happy to start with that and before I do I just wanted to add one last comment to the last question that Jim Cameron.

Speaker Change: And that has to do with not only a sustained and sustainable capital allocation cadence that lends itself to a more sustained and sustainable funding cadence as opposed to the need to draw a whole lot of funding at one time for one deal any way to go on to your question about Cabot Canyon Ranch.

Speaker Change: And the others.

Speaker Change: We we obviously do.

Speaker Change: We're talking here about assets that are either under development or otherwise ramping.

Speaker Change: So we will obviously take the time, we need in the time, the operator needs to get the assets to where they can sustain the opco propco model.

Speaker Change: None of which at this point are immediately imminent.

Speaker Change: Very excited about obviously, what Cabot is doing in cabin citrus farms.

Edward Pitoniak: And I think, Samantha, we're pretty confident in saying that we look forward to the day when we can exercise our call right at Cabot Citrus Farms. But in the meantime, Samantha, do you want to add any color to what we're seeing in terms of mine share and market share? Yeah, no, thanks, Ed.

Speaker Change: They have really created a sensation there and I think Samantha we're pretty confident in saying that we look forward to the day when we can exercise our call right in cabinets citrus farms, but in the meantime, Samantha you want to add any color to what we're seeing in terms of.

Samantha Gallagher: Mind share and market share.

Samantha Gallagher: I just, as some of you may know, when we talk about the Cabot relationship, they continue to expand their global portfolio. We're excited about that relationship, and we're excited about our opportunities in the future to exercise our call rights. No changes in our, in our. Thank you.

Samantha Gallagher: Yeah, no. Thanks Ed.

Samantha Gallagher: As some of you may know when we thought we talk about the cabinet relationship they continue to expand their global portfolio.

Ed Pitoniak: We're excited about that relationship and we're excited about our opportunities in the future to exercise our call rights.

Samantha Gallagher: No changes in our in our commitment there.

Speaker Change: Got it. Thank you and then maybe just jumping.

John Kaliszewski: And there was a sentence there that reflects the dilutive effect of the roughly 19 million shares pending under your portfolio agreements. Just wondering what the impact of that dilutive effect will be for the rest of the year? David. Yeah, John. It's David.

Speaker Change: <unk> to your guidance and there has.

Speaker Change: Sentence there.

Speaker Change: Reflects the dilutive effect of the roughly 19 million shares at an.

Speaker Change: Under your forward sale agreements just wondering.

Speaker Change: What's the like the impact of that dilutive effect to the rest of the year.

Speaker Change: David.

David: Yes, John it's David.

David Kieske: Yeah. Very minimal. We've got to account for the forwards under the treasury stock dilution method, and it's a very, very minimal impact on the share count that shows up in our guidance range. Okay. Thank you. Our next question comes from RJ Milligan from Raymond James. Hey, good morning, guys. I think John was probably a little early calling the last question on Centaur.

David: Very minimal if we've got to account for the forwards under the Treasury stock dilution method and it's very very minimal impact to the share count that shows up in our guidance range.

John: Okay. Thank you.

RJ Milligan: I just have one follow-up question. But there was some overhang on the stock given the uncertainty of the Centaur assets. And I'm curious how much of an impact that had on your decision to announce today that you wouldn't be calling the assets. I'm just curious if we can interpret that as you having other opportunities between now and the end of the year that you may pursue and don't want this overhang on your cost of equity. Yeah, RJ, it's always good to hear from you. That was not a deciding factor by any means.

David: Our next question comes from RJ Milligan from Raymond James.

RJ Milligan: Hey, Good morning, guys I think John was probably a little early calling a last question on <unk> I just have one follow up.

RJ Milligan: There was some overhang on the stock given the uncertainty of the center of our assets and I'm curious how much of an impact that had on your decision to announce today that you wouldn't be calling the assets.

Speaker Change: Just curious if we can interpret that as you having other opportunities between now and the end of the year that you may pursue and don't want this overhang on your cost of equity.

RJ: Yeah, RJ always good to hear from you that that was not decide.

RJ Milligan: Deciding factor by any means.

Edward Pitoniak: Obviously, we are aware, and we were aware of the perception of overhang on the stock. And that felt like a more significant factor through much of Q2 and even into their first couple of weeks of Q3, given the general state of the REIT equity market. But no, that wasn't a deciding factor in deciding to announce it now.

Speaker Change: Obviously, we were we are.

Speaker Change: We are aware, we're aware of the perception of overhang on the stock and that was obviously, yes.

RJ Milligan: Felt like a more significant factor through much of Q2 and even into their first couple of weeks of Q3, given the general state of.

RJ: The REIT equity market.

RJ: But no that that that wasn't a deciding factor in deciding to announce it now again the real driving factor was just to make sure everybody understood. We've made a decision.

Edward Pitoniak: Again, the real driving factor was just to make sure everybody understood we'd made a decision. We're comfortable, very comfortable announcing the decision, very comfortable that we have very compelling other opportunities to allocate capital. Then again, I would just go back to the point of, you know, our desire, and we won't achieve it every time, but our desired capital allocation and capital funding strategies are based on being sustained and sustainable. We obviously spent a good number of our early years doing very big deals that had very big funding requirements that generally needed to happen all in one day.

RJ: Very comfortable announcing decision very comfortable that we have very compelling.

Speaker Change: There are opportunities to allocate capital.

Speaker Change: And again I would just go back to the point of you know.

Speaker Change: Mark.

Speaker Change: Our desire and we won't achieve it every time, but our desired capital allocation and capital funding strategies are based on being sustained sustainable obviously.

Mark: A good number of our early years.

Mark: Doing very big deals that had very big funding requirements.

RJ: Generally needed to happen all in one day and as <unk> matures and as we achieve a sustained and sustainable cadence in.

Edward Pitoniak: And as VICI matures, and as we achieve a sustained and sustainable cadence in AFFO growth, we want that to be driven by a sustained and sustainable cadence in both capital allocation activity, i.e., acquisitions and funding. Should we interpret that funding comment as you're likely to be a bigger user of the ATM going forward versus overnight? I'll turn that over to David, but before I do, we obviously want to take care that the market never develops VGATM fatigue. And with that, I'll turn it over to David for any further color he wants to add. Now, Ed, you stole my line.

Speaker Change: <unk> growth, we want that to be driven by a sustained and sustainable cadence in both.

Speaker Change: Capital allocation activity acquisitions and funding.

Speaker Change: It should be interpret that funding comment as you are likely to be a bigger user of the ATM going forward versus overnights.

RJ: I'll turn that over to David but before I do.

Speaker Change: You want to take care.

Speaker Change: Market never develops BG, ATM fatigue, and with that I'll turn it over to David for any further color he wants to add.

David Kieske: That's exactly right. As you heard us say, under Moyer's leadership, we're going to have a balanced approach to raising equity, whether that be in an ATM, blocks, overnights, or marketed deals in connection with larger transactions. So, we want to ensure that we raise capital the most efficiently but also ensure that we are not developing or becoming stale in our style and developing fatigue out there with our owners. I appreciate it.

David: Where do you view stole my line, that's exactly right as you've heard us say and under his leadership.

David: Our balanced approach to raising equity whether that be an ATM of blocks overnight marketed deals in connection with larger transactions. So.

RJ Milligan: Thanks, guys. Thanks, RJ. The next question comes from Dan Guglielmo from Capital One Security. Hello, everyone.

David: We want to ensure that we.

David: Raise capital the most efficiently, but also ensure that we are not developing or becoming <unk>.

Speaker Change: <unk> and our style.

David: Yeah.

David: Developing fatigue out there with our owners.

David: I appreciate it thanks guys.

RJ Milligan: Thanks RJ.

Speaker Change: The next question comes from Don Goodly amount from capital one securities.

Dan Guglielmo: Thank you for taking my question. Just one for me on the credit solution investments. Most of the recent growth has been in the MES and preferred investments, which historically carry more risk.

Speaker Change: Hello, everyone and thank you for taking my question just one from me on the credit solution investments most of the recent growth has been in the Mezz and preferred investments extreme historically carried more risk. How are you monitoring those investments could you call future funding commitments, if the macro economy does get choppy.

Speaker Change: Yeah.

David Kieske: How are you all monitoring those investments? And could you pull future funding commitments if the macroeconomy does get choppy, David?

Speaker Change: David.

Gabriel Wasserman: Yeah, I... I gave the MD of VICI Experiential Credit Solutions, he's here in the room, and also our Chief Accounting Officer, so put his credit solutions hat on and answer that, Dan. Yeah, Dan, thanks for the question. So we're very careful and thoughtful with our underwriting. Even though those certain investments are structured as MES and preferred equity, we're very thoughtful about where our attachment point is and our last dollar, looking at the operating history of the property, the kind of future underwriting projections, and the strength and sophistication of the sponsor.

David: Yes.

David: But Gabe gave AMD of BT experience, so credit solutions here in the room, our chief Accounting officer, So put his credit solutions head on and answer that.

David: Yeah, Dan. Thanks. Thanks for the question. So we're very careful and thoughtful with our underwriting even though certain investments are structured as mezz and preferred equity, we're very thoughtful about where our attachment point is in our last dollar looking at the operating history of the property kind of future underwriting projections and the strength and sophistication of the spa.

Bonser: Bonser, so that all goes into our underwriting.

Gabriel Wasserman: So that all goes into our underwriting. We have quarterly investment loan reviews where we look at the property performance and discuss it as a management team. And then in terms of contractual rights, if there's something that goes sideways in the macro economy, generally, that wouldn't allow us to stop funding, but we certainly have protections under all of our loan agreements that the borrowers have to meet certain conditions precedent in order for us to fund.

Speaker Change: We have quarterly.

Bonser: Investment loan reviews, where we're looking at the property performance and discuss it as a management team and then in terms of contractual rights. If theres something that went sideways in the macro economy generally that wouldn't allow us to funding, but we certainly have protections on our all of our loan agreements that the borrowers have to meet certain conditions precedent in order for us to fund.

Edward Pitoniak: And Dan, Dan, this is Ed. I would just add that we are always lending against experiential assets that, in a worst-case scenario, would meet our strategic investment criteria. If, again, the asset ever came into our hands, we would want, we always want these to be assets that, in the worst case, we would be willing to own. Thanks. Our next question comes from Chad Beynon from Macquarie.

David: And Dan This is Ed I would just add Dan I would just add that.

Dan: We are always lending against experiential assets that that in a worst case scenario would meet our strategic investment criteria. If again in the worst case the asset ever came into our hands. We would want we always want these to be assets in the worst case, we would be willing to own.

Speaker Change: Makes sense.

Dan: Our next question comes from Chad Beynon from Macquarie.

Edward Pitoniak: Morning, thanks for taking my question. You guys have highlighted the strength of Las Vegas, you know, some of the stats in terms of visitation, which is obviously being driven by the casino assets, but also the growth in sports and entertainment that we've seen out there that gets a lot of people who don't visit casino to still come to the city. So with that in mind, you obviously benefit from the visitation, but is there anything changed in terms of you looking to do deals with some of those live entertainment businesses, you know, concert, event, stadium types of businesses? And what do you think about the durability and pricing of that sector? Thanks. Yeah, it's a great question, Chad.

Chad Beynon: Good morning, Thanks for taking my question.

Chad Beynon: You guys a few times have highlighted the strength in Las Vegas.

Chad Beynon: Some of the stats in terms of visitation, which is obviously.

Speaker Change: Being driven by the casino assets, but also the growth in sports and entertainment that we've seen out there that gets a lot of people, who don't visit the casino to still come to the city.

Speaker Change: So with that in mind, you, obviously benefit from the visit visitation, but is there anything changed in terms of you looking to do deals with some of those live entertainment concert event stadiums types of businesses and how do you think about the durability and pricing of that sector. Thanks.

David: John.

David: Yes, it's a great question Chad and.

Chad Beynon: And I think you've heard us over the years talk about the sectors that we're looking at. And obviously, we've made investments in pilgrimage golf, indoor water parks, wellness, and youth sports. I think you're asking us a question about whether we would make an investment in live entertainment, real estate, and facilities? I know you're asking that question about Las Vegas, but would we also... filters out into the rest of the United States.

Speaker Change: And I think you've heard us over the years talk about the sectors that we're looking at and obviously, we've made investments in pilgrimage golf indoor Waterpark wellness E. Sports I think you were asking a question about what do we make an investment in the live entertainment real estate facilities I know youre asking that question about Las Vegas, but would we also.

David: It.

David: Filters out into the rest of the United States. It is it is a sector. We have been spending some time and better understanding we love what has happened in the city of Las Vegas with the growth of sports and entertainment were better understanding the economics of what.

John Payne: It is a sector that we have been spending some time and better understanding. We love what has happened in the city of Las Vegas with the growth of sports and entertainment. We're better understanding the economics of what happens inside those big buildings. They're absolutely beautiful, and the shows are great.

David: What happens inside those big buildings. They are absolutely beautiful in the shows are great, but can they support our model and we're continuing to study that and could there be an investment over time there could be.

John Payne: But can they support our model? And we're continuing to study that. And could there be an investment over time?

Chad Beynon: There could be. But we want to make sure that the cash flows are durable and that the operator, the tenant, that we want to be partners with for a long time. But it sure is exciting how Las Vegas has diversified its revenue stream and is attracting new consumers by adding sports and entertainment to Gambling and Food. Thank you very much. And this concludes today's question and answer session. I would now like to hand over to Edward Pitoniak for any final remarks.

David: But we want to make sure that.

David: The cash flows are durable and that the operator is a tenant that we want to be partner.

Speaker Change: With for a long time, but it sure is exciting how Las Vegas has diversified its revenue stream and attracting new consumers by adding sports and entertainment not just gambling and food and nightlife.

David: I appreciate it thank you very much.

Speaker Change: And this concludes today's question and answer session.

Chad Beynon: Thank you, Carla, and we'll just thank all of you for your time on today's call and wish you, once earnings season is over, an enjoyable rest of the summer. Bye for now. And this concludes today's conference call. Thank you for joining us. You may now disconnect your line.

Speaker Change: We will now like to hand over to Edward Cotoneaster for any final remarks.

Edward Cotoneaster: Hi, Thank you Carla and we'll just thank all of you for it.

Speaker Change: Your time on today's call and wish you once earnings seasons.

Speaker Change: We're an enjoyable rest of the summer bye for now.

Speaker Change: And this concludes today's conference call. Thank you for joining you may now disconnect your lines.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].