Q4 2024 VICI Properties Inc Earnings Call
Good day ladies and gentlemen, thank you for standing by.
Conciliation of these measures the most directly comparable GAAP measure is available on our website and our fourth quarter and full year 2024 earnings release, our supplemental information and our other filings with the SEC for additional information with respect to non-GAAP measures of certain tenants and our Counterparties discussed on this call. Please refer to the respective companies public filings.
Sir.
Ed: Hosting the call today, we have <unk>, Chief Executive Officer, John Payne, President and Chief Operating Officer, David <unk>, Chief Financial Officer, Gabe Wasserman, Chief Accounting Officer, Marion Mccourt Senior Vice President of capital markets and team will provide some opening remarks, and then we will open the call to questions with that I will turn the call over to Ed.
Speaker Change: Thank you Samantha good morning, everyone. Thanks for joining us.
Speaker Change: Over the course of the next few minutes, leading into our Q&A session, you'll hear from John Payne on our growth activities and you'll hear from David key ski on our financial results financing activities and initial 2025 earnings guidance.
Speaker Change: I'll start the call with a few words about the announcement, we made Wednesday morning, initiating a new beachhead strategic and financial relationship with Kayne International and Eldridge industries. During the initial investment in the financing of the one Beverly Hills development.
Speaker Change: Like most of Bg's growth activities. This <unk> investment as a result of our growing a new relationship.
Speaker Change: This relationship began last may when on a trip to London and I spent time with Jonathan Goldstein, the founding CEO obtain international a diversified global real estate development and investment company.
Speaker Change: By the end of our hour, Jonathan and I agree that we should find ways to work together are urged to work together grew out of the recognition that we share convictions, we hear values, we share conviction in the secular strength for years to come of experiences with.
Speaker Change: We share cultural and ethical values around partnership.
Put another way the meeting of cane and Vg is a meeting of minds in a meeting of ambitions, particularly the shared ambition to invest in differentiated place based experiences whether those experiences are entertainment hospitality wellness or sport based.
Jonathan Goldstein: [laughter] excuse me for those of you not familiar with Kayne, which as of year end 2024 had nearly $18 billion in assets under management. It was founded in 2014 by Jonathan and his partner Todd Bully and is affiliated with Eldridge industries and investment company founded and led by Todd Bowling.
Speaker Change: <unk> came.
Speaker Change: Kane and Eldridge have made investments and iconic experiential brands that include Amman Delano St. James Sports clubs Circus away and Flexjet, Todd as an owner of the Los Angeles Dodgers in the Los Angeles Lakers and both Todd and Jonathan are owners of Chelsea FC and the English Premier League.
Jonathan Goldstein: 2024 went by Jonathan asked obtained development, one Beverly Hills might be our first opportunity to work together.
Jonathan Goldstein: These discussions enabled Kane elders and Vg do you get to know each other better and over the last few months. We all came to believe that our share conviction around place based experience as good yield as many compelling opportunities to work together in the years to come and that's why as well as announcing our one Beverly Hills investment on Wednesday came out.
Jonathan Goldstein: <unk> also announced our joint signing of a letter of intent expressing our intention to work collaboratively to identify and pursue experiential investment opportunities.
Jonathan Goldstein: Meet our respective investment objectives.
Jonathan Goldstein: You would've seen if you reviewed the investment deck, we posted to our website one Beverly hills stands to rank among the most compelling American luxury hospitality retail and residential developments in recent history.
Jonathan Goldstein: Development is currently rising out of over $17 five of the best located acres in Beverly Hills.
Jonathan Goldstein: Our angle bordered by Wilshire Boulevard, Santa Monica Boulevard, and La country Club.
Jonathan Goldstein: This development is centered on the Amman brand among the world's most venerated luxury hospitality brand.
Jonathan Goldstein: One Beverly Hills will be the largest realization of Oman branded hospitality wellness and living today with the gnomon hotel in Amman, wellness Spa, and Amman club and to Amman residential towers.
Jonathan Goldstein: We will also include a full renovation of the legendary Beverly Hilton longtime host site of the Golden Globes, and the Milken conference as well as 10 acres of botanical gardens, and open space with high end retail and dining offerings.
Jonathan Goldstein: Capital is a key fuel for ambitious place makers and experience creators.
Jonathan Goldstein: <unk> stands among the most ambitious place makers, we have come to know and yet Kane balances that ambition with what we've seen to be strong capability in development and risk management.
Jonathan Goldstein: We believe multi generational multinational demand for the differentiated experience within the differentiated place will create abundant opportunities for Cana elders in the coming decades, and we're excited about the prospect of becoming a long term partner in their growth.
Jonathan Goldstein: This announcement of our new partnership with Canon and Eldridge represents our first new venture.
Speaker Change: And what we hope will be here of new investment ventures in both gaming and non gaming for more on that I will now turn the call over to John Don Thanks, Matt and good morning to everyone I'll start by reiterating that we do have them around the new strategic relationships, we form with came in Eldridge as we've said time and time again.
Speaker Change: Deep relationships are at the core of <unk> investment strategy through the development of a new relationship with Homefield, Kansas City, and the strength of existing relationships with great Wolf and the team from Venetian we were able to commit approximately $1 $1 billion of capital in 2024 and initial.
Yield of eight 1%.
Speaker Change: The quality and scale of our existing portfolio also accrues to the value of our platform since our last earnings call in early November the <unk> team attended the NAREIT conference in Las Vegas, The conference provided a great opportunity to physically showcase our Las Vegas strip assets and convey the incredible.
Speaker Change: Scale of operation happening at these properties every single day for example, the Venetian to which we committed up to $700 million in 2024 through our partner property growth Fund strategy Sprawls over 17 million square feet. It has been proactively.
Speaker Change: We imagined across several business verticals, including convention food and beverage hotel rooms gaming floor optimization entertainment and more to drive the continued growth of the operating business as well as capitalize on the sphere, which sits behind the Venetian.
Speaker Change: And RJ Milligan NAREIT recap note he observed that I quote with all of the events in and around Las Vegas. It was hard to ignore the quality of <unk> real estate, which we don't think the market is giving them enough credit for its just so hard to comprehend that <unk>.
Speaker Change: <unk> was able to purchase the Venetian at the same cap rate as a well located dollar general.
Speaker Change: Stated our Jade.
Speaker Change: Las Vegas Tourism also continues to hit record. According to the LDC VA 2024 saw record airline passengers through Harry Reid Airport at $58 million for the year and visitation to the city increased 2% year over year to approximately 42 million.
Speaker Change: Our operating partners recognize the value and proactively investing in and reinventing experiences at our assets to capitalize on demand for example, MGM Grand recently announced a $300 million remodel all of their 4200 hotel rooms to be completed in December.
Speaker Change: <unk> 2025, and launched their Palm Tree Beach club outdoor music and entertainment venue, which will open in May of 2025, Caesars New Orleans, just opened following a comprehensive $435 million renovation and the property hosted many Super Bowl goers, a couple of weeks ago and in note.
Speaker Change: Member of last year, Harveys Lake Tahoe also announced a $100 million owing competency transformational project just since the fourth quarter, our operators have announced nearly $1 billion of investments in our real estate that is reflective of our shared conviction around the value of.
Speaker Change: High quality experiences at high quality properties, <unk> believes that the quality and scale of investment opportunity in our existing properties as well as our ability to cultivate and maintain deep relationships with our partners will provide springboard for future growth now I will turn the call.
Speaker Change: Over to David who will discuss our financial results and guidance.
David: John I'm going to start with our balance sheet as we begin 2025 seven years after our IPO in 2018.
David: I want to highlight 2024 and reflect on how far our balance sheet has come since well going way back to our pre emergence in the summer of 2017.
<unk> had total leverage of roughly 10 five times debt to EBITDA.
David: We were born with a very unnatural balance sheet very short tenor secured debt second lien debt of $1 6 billion <unk> loan that matured in 2022 all of instruments that we knew were not consistent with becoming a blue chip, we do we should and could become.
David: After we emerge in October 2017, we got to work on fixing our balance sheet, we started to chip away at the second lien notes with our IPO and retired the remaining $498 million in February 2020 in connection with the Eldorado Caesars merger, we retired the CMS debt.
David: And with our acquisition of MVP, we were able to retire all of our remaining secured debt. We received an investment grade credit ratings from S&P and Fitch in April 2022.
David: There was one straggler at that time, Moody's through the leadership of <unk>, and we put our heads down and work with Moody's over the next two years to educate them on the merits of gaming the resiliency of our tenants business and the quality of our balance sheet.
David: That werent paid off with the Moody's upgrade we received on November 18 to 2020 for giving US an investment grade credit rating across all three agencies.
David: Ratings upgrade should accrue to our benefit with an improved access to and cost of capital over time, we believe our balance sheet and unsecured debt complex is one of the more liquid debt conferences across the REIT landscape with total debt of $17 1 billion, which we have unsecured debt of $14 1 billion.
David: This creates liquidity in our unsecured notes and we saw this in December refinancing, where we had several new institutional credit investors come into our offering.
David: The quality of our balance sheet was also highlighted during our recent recast of our unsecured revolving credit facility, which we closed subsequent to quarter end with a new $2 5 billion facility.
David: We had strong sponsorship from our bank group and want to thank each and every institution committed to that facility and then the conviction. They all have in our balance sheet and business.
David: We have approximately $3 3 billion in total liquidity comprised of approximately 525 million in cash $376 million of estimated proceeds available under our outstanding forwards and $2 4 billion of availability under our revolving credit facilities.
Our net debt to annualized fourth quarter adjusted EBITDA, excluding the impact of unsettled forward equity was approximately five three times within our target leverage range of five to five five times, we have a weighted average interest rate of $4 four 1% taking into account our hedge portfolio and a weighted average six four years to maturity.
David: Again, thank you to earn and the entire team for the work that has been completed but know that we are not done with the continual focus on improving our balance sheet.
Touching on the income statement.
David: <unk> per share was <unk> 57 for the quarter, an increase of three 6% compared to 55 for the quarter ended December 31, 2023 for the full year 2024, <unk> per share was $2 26, an increase of five 1% compared to $2 15 for the full year 2023.
David: Our results highlight our highly efficient triple net model given the increase in adjusted EBITDA as a proportion of the corresponding increase in revenue and margins continue to run strong in the high 90% range when eliminating noncash items, our G&A was $20 7 million for the quarter.
David: As a percentage of total revenues was only two 1% which continues to be one of the lowest ratios in not only the triple net sector, but across all rights.
David: Turning to guidance, we are initiating <unk> guidance for 2025 in both absolute dollars as well as on a per share basis.
David: <unk> <unk> for the year ending December 31, 2025 is expected to be between two for $5 5 billion and $2 $4 85 billion.
David: Or between $2 32, and $2 35 per diluted common share based on the midpoint of our 2025 guidance <unk> expects to deliver year over year <unk> per share growth of three 3%.
David: <unk> solid starting point as we begin 2025.
David: As a reminder, our guidance does not include the impact of operating results from any transactions that have not closed interest income from any loans that do not yet have final draw structure as possible future acquisitions or dispositions capital markets activity or other nonrecurring transaction or items.
Speaker Change: With that operator, please open the line for questions.
David: Thank you.
David: Wonder if you would like to ask.
David: Your question. Please press star followed by one on the telephone keypad, if you like to remove your question that staff by two.
Speaker Change: Our first question, let's say comes from Anthony Powell lineup from J P. Morgan. Your line is now open. Please go ahead.
David: Yes, thanks, and good morning.
I guess my first question is from our side, we obviously just see the things that you're close but I was wondering if you could talk about kind of what deal flow look like in 'twenty, four and what it looks like currently in.
David: Contrast, maybe in prior years.
David: Whether you're whether you're seeing a lot of stuff and it's just not making it past the finish line or youre not seeing as much as you'd like in terms of the outright proper.
David: Property purchases and so any color there would be great.
Speaker Change: Yeah, I'll start Tony and then I'll turn it over to John.
Speaker Change: The 2024 for US was a year in which we did not see.
Speaker Change: Anything resembling a plentiful slow.
Speaker Change: Selling high quality real estate acquisition opportunities, we did see a very compelling opportunity to further invest in and one of our marquee properties. The Venetian and what we also saw is that while high quality.
Speaker Change: Existing assets don't appear to be widely for sale or at least didn't in 2024 highly compelling high quality developments were there and a lot of the work we've done.
Speaker Change: Whether whether with home field at the very beginning of the year, whether our ongoing work with great wall.
Speaker Change: Ongoing work with Canyon Ranch in Cabot and now our new work, we came in Algeria is about identifying and and providing capital to great experiential place makers and getting very very good yields on it, especially when comparing those yields to the incredibly high quality.
Speaker Change: All of the developments, we are helping to fund.
Speaker Change: Beyond that I will turn it over to John who can give you further color on what we saw in 2024, maybe more importantly, what we believe we will see in 2025, John Yes.
Speaker Change: Little bit then Tony good to talk to you. This morning, one of the parts of your question was how does that compare to years before remember when we started the company as David walked through some of that history in his opening remarks, we really were born.
Simply a casino triple net lease REIT.
Speaker Change: Today with the announcement in our announcement the other day you can see we continue to diversify our portfolio. So the funnel continues to get wider of things that we look at and.
Speaker Change: I would say at the beginning of 2025 on me as busy or busier than I've been in a very long time.
Speaker Change: And we continue to be very thoughtful in where we put.
Speaker Change: Our capital to work the type of partners that we want to do business with the type of growth potential. So that's a long way of saying we're quite busy the funnel as wide. We're looking at a variety of things in the experiential and the casino gaming space.
Speaker Change: Okay. Thanks, and then just a follow up any comments on where you think cash yields would be right now for some of the various buckets that youre looking at whether it would be.
Speaker Change: We're a high quality asset on the strip might be versus regional versus some of the other categories.
Speaker Change: Yeah, not a lot of visibility into that Tony on the strip, obviously, we haven't seen any meaningful trades recently.
Speaker Change: On the strip and I think with the volatility that we've seen.
Speaker Change: In the 10 year over.
Speaker Change: Well, what do we know the last three years.
Speaker Change: And this year has not really represented a meaningful change from that volatility I think it's really it's a little bit hard to get pricing certainty on permitted assets.
Speaker Change: Whether on the strip regional I think theres been more trading activity, John So theres, probably somewhat more clarity there. So again quality for us is a key consideration and remember on the strip Tony.
Speaker Change: The world is pretty good out there I'm not sure it is.
Speaker Change: Market that had subsequent success again in 2024 after following a record 2023 so.
Speaker Change: Operators looking to sell those assets on the strip.
Speaker Change: It is not likely at this time, because the business continues to be strong.
Speaker Change: Across many of the different segments in Las Vegas.
Speaker Change: Okay. Thank you.
Thank you. Our next question comes from Caitlin Burrows of Goldman Sachs. Your line is now open. Please go ahead.
Caitlin Burrows: Hi, Good morning, everyone. Maybe just following up on the development funding talk Ed I know you mentioned that when you look through the opportunities of 24. It seems like Thats what made sense at the time. So I guess, how do you think of that development funding.
Caitlin Burrows: He gets paid back versus acquisitions, and what that means for the future of the portfolio and like recurring nature of income.
Caitlin Burrows: Yes.
Jonathan Goldstein: Yeah, no. It's a very good question Caitlin and it's one we think and talk about a lot at the management table at Vg.
Caitlin Burrows: <unk>.
Caitlin Burrows: As a starting point in this particular case with Kayne and Eldridge much has been the case with great Wolf.
Caitlin Burrows: We we are not.
Caitlin Burrows: Overly concerned about the money coming back because of the depth and and time extend of the pipeline. We believe we could have with kayne.
Caitlin Burrows: And in this particular case.
Obviously, you need to be careful here, but I do want to say that in the particular case of one Beverly Hills.
Caitlin Burrows: We are working we continue to work with Kane and I should note the money for one Beverly Hills that 300 million is already gone out the door, but we continue to work with gain at.
Caitlin Burrows: And potentially participating in a larger and longer way with one Beverly hills, but beyond that to really get to the heart of your question, we see a pipeline of opportunities with kayne across their various verticals that could enable us to continue to roll our capital into new cane.
Caitlin Burrows: <unk> when they talked for example, about the growth opportunity for Amman globally.
Caitlin Burrows: Especially across Europe in the coming decade, we see an opportunity to continue to be a funding partner in that particular example, much in the way David and the team have been now a steady partner to grateful for how long dated five years five years right.
So we we.
Caitlin Burrows: We obviously are mindful of the fact that this money will come back to us at some point or could come back to us at some point kaitlin.
Caitlin Burrows: But we really do focus on relationships that we think could enable us to continue to basically roll that capital into new manifestations have be given partnership.
Caitlin Burrows: Got it okay, yes that makes sense and then maybe.
Speaker Change: More like nerdy question, but on the share count you guys have a lot of forward equity. So can you go through over what time period, you're required to settle those shares under what conditions, you would choose to settle them and what assumptions for your own share price are assumed in guidance.
Caitlin Burrows: Yeah.
Kevin: Yes, Kevin.
Caitlin Burrows: As we've done for many years now.
Caitlin Burrows: Outstanding forward equity quarter over quarter on an annual basis and those contracts are.
Caitlin Burrows: Quickly one year contracts, but they are extended and amended too.
Caitlin Burrows: To go beyond the initial period of time and that is very commonplace with banks and with Counterparties.
Caitlin Burrows: And then in our guidance or in our share count we use the treasury stock dilution method.
Caitlin Burrows: Some estimates around reasonable projections around future stock prices.
Caitlin Burrows: Incorporating a level of dilution into our guidance range, but do not obviously take into consideration the inherited those outstanding forwards because we use those to match fund potential acquisitions, which are not in our guidance. So.
Caitlin Burrows: This is very common across the <unk> and what we've been doing it I know a lot of other triple nets, we've done it for three years maybe.
Caitlin Burrows: Maybe I'll just add to what David said, Caitlin by emphasizing that the way we did it for 2025 guidance is the way we have always thought that theres been no change in the methodology.
Caitlin Burrows: Got it okay. Thanks.
Caitlin Burrows: Thanks Caitlin.
Caitlin Burrows: Thank you our.
Speaker Change: The next question comes from Barry Jonas of Trust Securities.
Speaker Change: And it's now open. Please go ahead.
Barry Jonas: Hey, guys good morning.
Speaker Change: In September you'll have the right to call. The Caesars Forum Convention center at the same cap rate you had on the Indiana properties any thoughts you can offer on the puts and takes to exercising that option.
Barry Jonas: Barry John Payne can talk to you.
Barry Jonas: It's definitely an asset that youre well aware of.
Speaker Change: Built a great facility, there and anchors.
Speaker Change: The empty acreage that we have in Las Vegas. So we will continue to see how it's performing when that time comes up and obviously also connects.
Two one of our assets in Harris facility that we own the real estate in the building and lease it back the Caesars. So it's definitely on our radar, it's definitely something that we've been lucky.
Speaker Change: Looking at over the years and well aware of this.
Speaker Change: Opportunity that we could have and will continue to study it in the commentary.
Speaker Change: As it approaches.
Speaker Change: Understood understood and then just as a follow up I'm not sure you've talked about this before but.
Speaker Change: You've obviously operated golf courses, but is there a scenario, where you would consider operating casinos or other assets in the Trs.
Speaker Change: Well as a starting point.
Speaker Change: Any casino and Samantha and David help me out here any casino that went into a trs would have to be a casino with zero.
Zero Hotel rooms, there is an integral senior nuance of REIT legislation that would forbid the inclusion of a casino with hotel rooms in a trs.
Speaker Change: Beyond that I would say, we don't see that happening we would not seek to have that happen.
I guess, it's always a possibility that we would be silly to rule out a priori.
Speaker Change: The 100% certainty, but not in our plans.
Speaker Change: Understood Alright, thanks, guys.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from Greg Mcginniss of Scotiabank.
Speaker Change: It's now open. Please go ahead.
Speaker Change: Yes.
Speaker Change: Hey, good morning.
Speaker Change: Given the non.
Speaker Change: Non binding.
Speaker Change: Can you hear me.
Speaker Change: Yes Hello.
Speaker Change: Sorry.
Speaker Change: Can you give us a non binding letter of intent on the new partnership with gain and Eldridge, how would you describe your competitive positioning relative to other capital providers.
Speaker Change: Especially as they consider more permanent financing options on completion of that development.
Greg: Yeah, Yeah, it's a very good question to ask Greg.
Greg: I would I would say that in the case of one Beverly Hills. So again, we shouldnt rule out anything ever a priori, we do not expect to become a permanent real estate owner of the assets at one Beverly Hills.
Greg: But having said that based on the discussions we've already been in with Jonathan <unk> seen with Todd Bully.
Greg: We see we see opportunities to work across the portfolio for example in the <unk> portfolio.
Greg: You will see that one of the investments they have and St. James clubs and again I really emphasize looking at that slide in that wonderful deck that he has put together.
Greg: And St. James Club can represent an example of us to further capitalize on the knowledge, we gained through our investment in Chelsea piers into these kind of sports and recreation complexes.
Greg: And absolutely they will always have the ability to seek other forms other sources of capital.
Greg: But I will emphasize that there is a a cultural union between or among Kane Eldridge and Vg that gives us a lot of confidence that we will we will always have a chance to be a partner of choice to them.
Greg: As they seek to capitalize really compelling experiential investments they are making.
Greg: And I will and I would say.
Greg: Hey.
Greg: That regard Greg So Greg I'll, just say to that regard it was not bully, who proposed hey, let's let's do an LOI.
Speaker Change: And explain why in a case like that you kind of have to make it non binding but it was it was a sign of todd's commitment to the partnership.
Speaker Change: Okay good to hear.
Speaker Change: I guess thinking about investing in the assets that you.
Speaker Change: Already have one curious.
Speaker Change: The niche and kind of looking for more of the capital potentially committed and then.
Speaker Change: <unk> guidance slightly lower growth Capex funding for this year. So it does appear they're allocating some funding to Tim GM Grand Whats your kind of general sense for how capex budgets are trending for casino as compared to the last few years, what might that mean for your investment opportunities with them in Las Vegas in May.
<unk> and.
Then also how does that compare to the contractually obligated capex.
Speaker Change: Yeah very good question.
Speaker Change: I'll start in Las Vegas, one of the advantages of our portfolio and having such a big presence in that market as the assets are.
Speaker Change: Absolutely incredible in my opening remarks, I talked about the mission and I said that then over 17 million square feet.
Speaker Change: That's bigger than some companies whole portfolio and it's one of our one of our NSS in one market.
Speaker Change: Why I bring that up is that it provides opportunity for us to brainstorm with the operator about how to use our capital to continue to have them grow and obviously, we over the past year.
Speaker Change: The amount of money up to $700 million, we've been putting in with the Apollo team into the evolution. We have those same conversations with our other partners and operators, obviously, Las Vegas has bigger boxes than the regionals, but we do have conversations with our regional partners about other opportunities to build hotels.
Speaker Change: So are there opportunities to to bring casinos that happened to be on river boats on the land. So we continue to have those discussions I think there continues to be an excitement about putting new capital into Las Vegas.
Speaker Change: There was an article I saw this morning.
Speaker Change: The CEO of organization, putting over $1 billion in the Las Vegas over the past couple of years, so that should get you and our investors excited about the opportunities that could be presented in that market, but I think 25 very similar to that we saw in 'twenty four and even in 'twenty three.
Speaker Change: Operators continue to reinvent themselves and they need capital to create new experiences.
Speaker Change: Great. Thank you.
Speaker Change: Our next question comes from Rich Hightower of Barclays. Your line is now open. Please go ahead.
Rich Hightower: Hey, good morning, everybody.
Speaker Change: And congrats again on the new partnership with <unk> good morning.
Speaker Change: Let me let me go back to the guidance really quickly if you don't mind, David I think you mentioned in the prepared comments.
Speaker Change: Certain.
Speaker Change: Loan fundings.
Speaker Change: Not included in the <unk> number.
Speaker Change: As presented last night can you can you walk us through what precisely is included dollars cadence.
Speaker Change: <unk> et cetera, just so we have a kind of a clear understanding of.
Speaker Change: Of funding throughout the year.
Speaker Change: Currently contemplated.
Speaker Change: Yes, and Greg comments or.
Speaker Change: We do not include in guidance any funding for development funding that does not have a identify draw schedule.
Speaker Change: As we sit here today.
Speaker Change: Continuing the foggy gray oak northeast or funding.
Speaker Change: Canyon Ranch Austin.
Speaker Change: Cabot citrus farms and it's.
Speaker Change: $15 million to $20 million a month or so.
Speaker Change: Great wealth northeast complete familiar 25 kv oriented sometime in 'twenty six citrus farms is working through later this year early next year. So it's theirs.
Speaker Change: There is not a specific number per month, because it's all based on the timing of the draws and the amount of draws and obviously with governments are completed.
Speaker Change: We have a construction loan fully funding construction loans outstanding.
Speaker Change: Okay. That's actually helpful and just just to be clear Venetian PPG funding is kind of separate from that is that.
Speaker Change: Whats the timing on that one as well.
Speaker Change: If I have that correct yes.
We announced we.
We announced a total commitment of $700 million. They drew 400 million in 2024 and that is all.
Speaker Change: Converted to rent and embedded and beliefs that they have the option, but not the obligation to draw an incremental $300 million.
Speaker Change: <unk>.
Speaker Change: That commitment over time.
Speaker Change: They're holding their budgets right now on their plans and as Jeremy talked about putting a lot of new inquiries you may have seen a lot of new restaurants in revenue.
Speaker Change: <unk> as a nation and so they're working through if and when they withdraw that incremental 300.
Speaker Change: And needless to say rates given that they have not.
Speaker Change: We remain committed to using any of that none of that is in guidance.
Speaker Change: Okay. That's very helpful. And then one last kind of small and I think you guys have addressed this on prior calls, but just so we all have a clear you do see some pretty swing pretty big swings in.
Speaker Change: I guess the change in allowance for credit losses in the income statement, obviously, a noncash number.
Speaker Change: Most of the time.
Speaker Change: Hope there arent any actual credit losses, but just David help us understand the drivers.
The quarter swing.
David: Yeah, Hey escape velocity here I can take that so in the fourth quarter. Most negative allowance has really driven that.
David: So it was really driven by by Moody's, which is the service provider that we use to help us model out and project future losses in the fourth quarter their economic scenario, which is.
David: Scenario condition and a requirement of the model and the banks are using similar forward projections they were kind of forecasting.
David: Higher for longer interest rate potential tariffs in some headwinds economically and that was going to.
David: There are projections, so that was really the driver of the increase in the allowance in the fourth quarter, which gave wood.
David: Another way of saying it is it was more general than specific write anything on credit more macro as opposed to my growth to any of those specific tenants.
Speaker Change: Perfect very helpful. Thank you guys and rich you again, you get in you get an award rich for asking about seasonal.
David: Yes.
David: I knew we had address seasonal on prior calls, but I just I think it's been a little while so again I appreciate it. Thanks.
David: Yes, there you go.
David: No.
David: Okay.
David: Thank you next.
David: Next question comes from Jim comment of Evercore.
Speaker Change: Please go ahead.
Speaker Change: Thank you good morning, I know, David obviously guidance excludes capital markets activities, but given the $1. Three that's rolling are maturing I should say of Q2.
Speaker Change: How's the Vg leaning right now repot repay part of that or.
Speaker Change: What would the Cosby.
Speaker Change: I think Eric just to your question, we Didnt break it up a little bit yeah, we've got.
Speaker Change: Majority of June maturity, and we don't make any assumptions in guidance on those refis, but we're seeing on a 10 year kind of 128 125 spread over the 10 year, which.
Speaker Change: As a portfolio.
Speaker Change: Earlier this morning, but obviously bounces around so we can move.
Speaker Change: <unk>.
Speaker Change: By far the advertiser and by area.
Speaker Change: 10 year refinancing.
Speaker Change: Great. Thank you and then obviously early innings with the new relationship with <unk> and otherwise, but has his relationship or ownership of Chelsea.
Speaker Change: It helps give you a little inside the tent.
Speaker Change: Can view as to how those owners in consortium to think about.
Speaker Change: Tracking additional capital and opportunity for <unk>.
Speaker Change: Well.
Speaker Change: Certainly.
Speaker Change: In this specific case of Chelsea one as is true of so many of the Premier League teams, they're very focused on making sure that they are doing everything they can to maximize gateway revenue and obviously maximizing game day revenue.
Speaker Change: Involves making sure you have the optimal stadium.
Speaker Change: And to a great degree now increasingly the rights surroundings around the stadium.
Speaker Change: We've had we've had I would say Samantha very preliminary chats with Todd around their vision for what Chelsea FC can become in terms of its place.
Speaker Change: Placement of London, but not much more than that.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: Next question comes from Smedes Rose of Citi. Your line is now open. Please go ahead.
Smedes Rose: Hi, Thank you.
Smedes Rose: I just want I wanted to ask if maybe you could provide any sort of update on the licensing process. It seems to be kind of marching forward in New York for.
Smedes Rose: Forlorn casinos, and just kind of as part of that.
Smedes Rose: Sure.
Smedes Rose: MGM property were not selected for licenses or just remain as a essentially a slots only facility or is there. Some other change that will take place.
Smedes Rose: Okay.
Jon: Made it's Jon I, probably should be asking you what you think about the New York process.
Smedes Rose: Look I.
Speaker Change: I think there is news almost every day, we are sitting here in New York altogether I read an article yesterday about one of them the group's debt potentially bidding on the license. It does seem like there is progress being made on all of the different steps. It takes to win one of the three.
Smedes Rose: <unk>.
Smedes Rose: It does still seem like they're shooting for decision at the end of this year, but your guess is as good as mine.
Smedes Rose: Same with the last part of your question you ask about the MGM property at Empire City.
Smedes Rose: We're excited about that that group has put together.
Smedes Rose: Ari.
Smedes Rose: And very healthy bid for the full license don't know the exact answer to your question should they not received one of the three licenses how that ultimately plays out with the slot facility, but I think in this whole process plays out with the gaming Commission how they make.
Smedes Rose: Decisions will continue to learn more but it does seem like there is more progress in quarter. One 'twenty five than there has been in a while but it's hard to determine ultimately when the final stages.
Smedes Rose: Okay and then.
Smedes Rose: In terms of the one Beverly Hills, and maybe this doesn't make any difference in terms of your loan to them.
Smedes Rose: Wanted to ask you I mean, Los Angeles has a lot of luxury retail readily available. It has a lot of luxury housing and it has a lot of luxury hotels and I guess.
Smedes Rose: From their perspective, what I guess, what's giving them confidence that there is incremental demand for more.
Smedes Rose: Multimillion dollar condominiums, and more schmelz and whatnot and just.
Smedes Rose: Yeah.
Speaker Change: Maybe that's sort of a dumb question, but I just kind of wondering how they are thinking about the demand factor there.
Smedes Rose: Yes, I think.
Speaker Change: And I am priming, Samantha she's going to need to speak here in a moment because she actually has experienced in Vermont.
Speaker Change: I think.
Smedes Rose: Smedes to answer your question, we really have to do all we can to help everyone understand.
Barry Jonas: The brand power of Oman, Amman, obviously is not a public company there are no other mines within.
Smedes Rose: Hotel REIT portfolios, but.
Smedes Rose: If I were you I would just I would just do a price check on the rates that demand gets location by location around the world because.
Speaker Change: <unk> is in a league of its own direct Samantha Yes, I think just to add point Youre talking ultra high end luxury it truly is above and beyond really what you see almost anywhere else in the world and they've been able to do it in cities throughout the world and I think that's what they'll bring to Beverly Hills, which I don't think they have a peer yeah and.
Speaker Change: It's so much to the credit of the cane team they were able to get entitlements and permitting for that $17 five and comparable acres for incremental hotel supply in Beverly Hills, and some of you may have seen over the course of 2024 <unk> was unable.
Speaker Change: To get entitlements and permitting for each of our block <unk>.
Smedes Rose: Rodeo drive there is there is supply there to your point Smedes, but again I would we will do all we can to help everyone understand the very very differentiated position of Oman in every market in the world.
Smedes Rose: That it operates in which it operates.
Smedes Rose: Thank you.
Smedes Rose: Thank you.
Smedes Rose: Question comes from David Katz of Jefferies. Your line is now open. Please go ahead.
Speaker Change: Thank you and good morning, everybody.
Speaker Change: I wanted to ask a little bigger picture question first congratulations on your announcement of the new partnership, but and that kind of putting it all in context of the discussion we have with investors frequently is around thinking about underwriting the various aspects of your Tam and obviously a deal.
Speaker Change: This adds to your Tam in some ways right, but to an earlier question about the duration of the capital you have out now and how we sort of think about that strategically.
Speaker Change: Potential expansions embedded in your current portfolio and how we think about underwriting those versus a new casino partner to.
Speaker Change: To be named later, so to speak right across the spectrum and I, Bob Edgar just your thoughts and comments around how we.
Speaker Change: Underwrite those.
Speaker Change: Or whether it's straight math.
Speaker Change: Yeah. It is.
Speaker Change: It's a great question David.
Speaker Change: And.
Speaker Change: One of the ways in which I'll answer it is that when we when we think about <unk>.
Tam we really also think about that.
Speaker Change: <unk>.
Speaker Change: I'm trying to come up with an acronym on the spot and I'm not going to do it David.
Speaker Change: I was going to say like the car the total the total amount of the relationship.
Speaker Change: That's not very good at it.
Speaker Change: And what I'm getting at is.
Speaker Change: Yeah. There you go thank you David Yes on the slide Yeah, I'll do better next time I promise.
When we as we began to get to know Kayne and Eldridge we.
Speaker Change: Very quickly developed very high conviction that this has the potential to be a multibillion dollar relationship over time we.
Speaker Change: We do believe there can be opportunities within that relationship for us to ultimately own permanent real estate, but also the opportunity to continue.
Caitlin Burrows: And my answer to Caitlin.
Speaker Change: Indicated the opportunity.
Speaker Change: Have numerous funding opportunities and thus opportunities to continue to roll our capital behind their initiatives.
Speaker Change: And so we are very very focused on on widening our tam without diluting our quality, our quality of relationship and our quality of investment.
Speaker Change: And again.
Speaker Change: At a time like this when the gaming deal flow is what it is we believe we serve our stockholders very well by developing these kinds of relationship. They gave our stockholders' participation in what we think is some of that can most compelling place, making taking place right now.
Speaker Change: Okay. Thank you appreciate it.
Speaker Change: Thank you David.
Speaker Change: Thank you. Our next question comes from John <unk> of Wells Fargo Your line.
Speaker Change: Please go ahead.
Speaker Change: Thank you good morning, maybe if I could just.
Speaker Change: Circle back on that last comment.
Speaker Change: You said that eventually owning some of the real estate and these deals with Cana. The Eldridge could you specify specifically, maybe what types of real estate you'd be looking at out here. Obviously in this project. It's multiyear so we have the hotel the residence is the retail the food and beverage just curious what you would be considering owning versus not earnings.
Speaker Change: Yeah, and just to be clear and as I indicated earlier.
Speaker Change: In my remarks, we are not optimistic that we would eventually own any real estate within one Beverly Hills.
Speaker Change: This is real estate that if it if and when it trades it will trade at stratospheric values.
Speaker Change: And also as real estate of a nature that doesn't exactly fit our investment criteria, which obviously mainly in bottle does involve net lease but beyond that as you look across the elders Kayne portfolio I think you will see.
Speaker Change: Again, citing that really good slide in the transaction deck.
Speaker Change: Business is current businesses within Kane and Eldridge that involve real estate. It very very much resembles real estate that we already own and I would cite the example of Chelsea piers.
Speaker Change: As as the type of real estate, we already own and are very excited to continue to invest in.
Speaker Change: Can I add one thing to that as well.
Speaker Change: Creating partnerships like we have with keen in Eldridge also open other potential partners that are around the world better seen what we're doing with our capital to help other experiential companies grow I mean, we just made this announcement and there are folks that are reached.
Speaker Change: Now it's a in a very interesting way that you are getting involved with that project, we'd like to talk to you about X Y and Z. So don't underestimate that as we continue to build these world class.
Speaker Change: Developers and partners that it also opened new ones for us and doesn't keep us as a year that.
Speaker Change: You are just that gaming, which we love casino gaming, but it really is opening the funnel for conversations about other opportunities for us around the world.
Speaker Change: Just wanted to build on what John is saying too that there's actually another dimension of partnership in what we just announced and though it may not have been visible in our releases. This marks the fourth time in which we will partner with J P. Morgan.
In participating working together on a capital structure for a very compelling development and.
Speaker Change: <unk>.
Speaker Change: As you all know we are a very small team we have over 25% of the company is sitting at this table and that seven people.
Speaker Change: So we are always very focused on opportunities to force multiply.
Speaker Change: What we are able to achieve with BG and we're really really appreciated partnership that David and his team at forum with Brian Baker and his team at Jpmorgan when it comes to identifying opportunities to work together and put our capital to work in opportunities that might not have otherwise been available to us.
Speaker Change: Got it I appreciate that and then.
Speaker Change: Maybe jumping back to one of the first comments you made today was just on the pipeline really picking up and I am curious on the other side of that equation. How is the competitive landscape change I feel like across most of our our earnings discussion. This quarter, we've heard competitions certainly spiked from the private side I'm curious if you're seeing the same.
Speaker Change: It's been the same since we started the company.
Speaker Change: This is a space, particularly the casino space, where there is a lot of interest there is great operators theres, great real estate buildings perform like no other in the experiential sectors. So as we look at any opportunity we.
Speaker Change: Go in with our eyes open if there's others that are looking at this and that's why we.
Speaker Change: We pride ourselves on building deep relationships when the ties.
Speaker Change: Grow the company in that fashion, So I wouldn't say, we see an increase in competition I would say, it's always been there.
Speaker Change: We want to continue to be out there as well.
Speaker Change: Got it thank you.
Speaker Change: Thank you our.
Speaker Change: Our next question comes from John decree of CBRE.
Speaker Change: It's now open. Please go ahead.
John Decree: Hey, everyone.
Speaker Change: You talked a lot of ground, but maybe.
Speaker Change: Two more.
Speaker Change: One on the casino M&A environment I think.
Speaker Change: Discuss it a little bit earlier.
Speaker Change: Pointing to the volatility in the 10 year, but add or John or David curious, if you have any thoughts as to.
Speaker Change: What else is kind of influencing.
Speaker Change: You're seeing a lack of M&A in the space, whether it involves real estate or not it seems like it's still kind of quiet. So curious if you kind of see any other factors in there that are.
Speaker Change: Maybe maybe causing that.
Speaker Change: Yeah.
Speaker Change: I don't think John it's nice to talk to him.
Speaker Change: You hit on you hit on a few again in my remarks earlier, while I was answering one question I just talked about Las Vegas, and if you're an operator in Las Vegas, and Youre performing the way you are performing you have to say well where else would I like to operate and you land on another one this asset can continue to invest in it there are.
Speaker Change: New customers coming through my door every day and I'm going to just make this a better place I mean, the results that you saw out of Las Vegas, I mean wins results were absolutely incredible resolve.
Speaker Change: Incredible results coming out of the buildings that we own so John I don't see a lot of trading in Las Vegas at a time when it comes to the regionals I think it's just a matter of.
Speaker Change: They like operating those businesses right now there could be some trades over time and if there are removed.
Speaker Change: See if there is an opportunity for us and John I'll, just add to that that I think when it comes to regional gaming.
Speaker Change: We're in a period where.
Speaker Change: Investing in regional gaming has to be done with precision.
Speaker Change: Market by market asset by asset, we're obviously seeing supply growth across much of the U S regional landscape and I think if youre going to invest incremental capital in regional gaming do you want to be highly conscious of new.
Speaker Change: <unk>, new supply and what that would mean for same store sales at existing assets. So again, its not solely a case of where what's available. It's also a case of where what are you really want to own again, we are very much in this for the long term and thus we are going to be by nature selected.
John: Thanks, John that's helpful.
Speaker Change: One more on the discussion of <unk>.
John: Kind of a man hotels is a good example.
John: There are a lot of those ultra high end international hotels I'm curious your thoughts on how you think about.
John: Expanding a bit more internationally, obviously theres some in Canada, but would you go overseas.
John: And in investment or lending capacity like you've done in California, recently, so opportunities, where maybe not real estate ownership, but.
John: Or however else you structure it in some international markets or something like that on the table have kind of far have you explored those kind of lending and international market opportunities.
John: Yes, I have to say at that so we definitely what are we actually do have some lending activity in the UK in Scotland, right now with Cabot and we've done our internal team has done a lot of work around really Matt <unk>.
John: Mapping of World and where we can invest both from a 90 perspective as well as an acquisition perspective understanding any tax leakage and really looking at what jurisdictions would be most compelling for us so that when we look at our camera really knowledgeable about that so the answer that question is yes, we absolutely can and wood.
John: Yeah.
John: Thank you very much.
John: Thanks, John.
Speaker Change: Thank you. Our next question comes from Chris Darling of Green Street.
Speaker Change: It's now open. Please go ahead.
Yeah.
Speaker Change: Thanks, Good morning.
Speaker Change: Question on the gaming side, it seems like Theres been a lot more capital flowing into the historic horse racing segment of the market. A couple of projects I think have been announced in new Hampshire.
Speaker Change: This segment of the market that's interesting to you and how would you think about sort of the opportunities and risks involved.
Speaker Change: So that's nice to nice to speak to you yes.
Speaker Change: If you're asking would we make an investment into a race track, particularly most of these investments are adding some form of gambling to that investment so whether its historical racing machines that are being added in certain markets other markets are adding.
Speaker Change: Just simple class III slot machines in some as we heard earlier today talking about Empire city their ability to turn <unk> into a full fledged casino.
Speaker Change: So to answer your question. They are all areas that we would have interest in place and the investments that we have the right partners have globalized structure along the way. So we continue to study the markets that you mentioned and other markets that could as Ed mentioned, there could be some some new markets that open up over time and we'd be interested in those as well.
Speaker Change: Alright fair enough.
Speaker Change: Then just one more quickly for me.
Curious if you could walk through the rationale from pure gaming standpoint to sell the Canadian operations to IGT.
Speaker Change: Then I think it would be helpful as well to understand a little bit more about who IGT is kind of their scale, where they own fee transitions. Many anything that you could add.
Speaker Change: Yes, we were very excited.
Speaker Change: We had a great relationship with the management team and the owners of pure.
Speaker Change: But we are excited to form our new relationship.
Yes.
Speaker Change: Few tribes that of combinations that have come together to form this group, we're learning more about their interest their capacity.
Speaker Change: To grow their business that was one of the things that we're excited about not only them acquiring.
Speaker Change: The operations of the assets, we own in Canada, but also our ability to continue to partner not only in Canada, but there could be opportunities all over the world. So.
Speaker Change: The more we learn about each other this was our first opportunity to work together.
Speaker Change: The more I think youll see us.
Speaker Change: Grow with them over time should the right opportunities come about and Chris.
Speaker Change: Just to make sure I understood your question.
Speaker Change: Clearly I want to clarify we didn't sell anything.
Speaker Change: The prior owner of pure Onyx.
Speaker Change: Toronto based firm sold the Opco to GP and not only are we excited about AGP being our new partner on the Alberta assets.
Speaker Change: It also signifies that op goes our marketable debt there are buyers who are <unk>, which I think there has been some questioning around but this is a clear example of gaming op codes and opco as having value.
Speaker Change: Got it and yes that point was understood Ed, but I appreciate the clarification. That's all for me. So thanks for the time.
Speaker Change: Thank you Chris.
Speaker Change: Thank you at this time I'll turn the call back to Ed <unk> for any further remarks.
Speaker Change: Thanks, Alex and thanks, all of you we know you've got many of you have another call coming up here just momentarily. So wish you the best and thanks again for attending this morning Bye for now.
Speaker Change: Thank you all for joining you may now disconnect your lines.
Speaker Change: [music].