VICI Properties’ 2023 results combat ‘volatile’ real estate markets

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VICI Properties has counteracted the “volatility across real estate and capital markets” to publish strong financial results for Q4 and full year 2023. 

Edward Pitoniak, VICI CEO, highlighted that the casino real estate investment firm “successfully deployed capital every single month of the year”, stressing that the company’s 2023 investments will deliver shareholder value across 2024. 

Fourth quarter results

Amidst several investment activities in the final three months of 2023, VICI Properties produced total revenues of $931.9m, an increase of 21 per cent year-over-year (Q42022: $769.9m). 

Net income attributable to common stockholders increased 23.8 per cent year-over-year to $747.8m (Q42022: $604m), with net income on a per share basis increasing 15.1 per cent from last year’s Q4 figures of $0.63 to $0.72. 

Adjusted EBITDA for the quarter stood at $7.5m (Q42022: $6.54m), with adjusted funds from operations increasing by 17 per cent YoY to $570.4m (Q42022: $4.88m) and by 8.8 per cent on a per diluted share basis to $0.55 (Q42022: $0.51). 

VICI’s strategic investments across the period saw the company acquire 38 bowling venues in a $432.9m sale leaseback transaction with Bowlero, while providing an up to $212.2m mezzanine loan to Kalahari for a waterpark development project in Thornburg, Virginia 

The real estate firm also announced its purchase of the leasehold interest of Chelsea Piers in New York City for a total purchase price of $342.9m, raising $390.2m of gross proceeds in forward equity under the ATM program. 

In addition, Q4 saw VICI announce an agreement to provide an up to $100m delayed draw loan facility for the development of Cabot Saint Lucia alongside a £9m loan for the redevelopment of Cabot Highlands, with an agreement in principle to provide additional development financing. 

Full year 2023

For the full year, VICI produced revenues of $3.6bn, an uptick of 38.9 per cent compared to the year prior’s $2.6bn. 

Net income attributable to common stockholders rose by 124.9 per cent YoY to $2.5bn (2022: $1.1bn) and, on a per share basis, increased 94.8 per cent YoY to $2.47 (2022: $1.27).

AFFO increased 29.1 per cent YoY to $2.2bn (2022: $1.7bn) with AFFO on a per diluted share basis rising by 11.8 per cent YoY to $2.15 (2022: $1.93). 

Meanwhile, the company increased annualised cash dividend by 6.4 per cent in the third quarter, representing the company’s sixth consecutive annual dividend increase. VICI’s equity stands at $1.6bn with $200m of debt, achieving the firm’s long-term net leverage ratio of x5 to x5.5 net debt to adjusted EBITDA. 

Across the year, VICI Properties contributed $1.8bn in acquisitions and investments, with a weighted average initial yield of 7.7 per cent.

Within these activities, VICI ventured into its first international investments after acquiring eight gaming assets in Canada with Century Casinos and PURE Canadian Gaming Corp for a total aggregate consideration of $363.3m. 

VICI also initiated $698.2m of strategic financing partnerships, including the purchase of $85m of senior secured notes of Hard Rock Ottawa and an up to $100m delayed draw development loan to Cabot Saint Lucia for the development of a luxury golf resort. 

Pitoniak commented: “In 2023, VICI successfully deployed capital every single month of the year despite volatility across commercial real estate and in the capital markets. 

“Our team continued to exercise patience and diligence in underwriting while navigating this backdrop, and we are proud to have committed $1.8bn of capital at a blended yield of 7.7 per cent, and to have done so with approximately $1.6bn of equity and $0.2 billion of debt, demonstrating our adherence to achieving our targeted long-term net leverage ratio of x5 to x5.5 net debt to Adjusted EBITDA. 

“This year, our $1.8bn of capital commitments with best-in-class operators across gaming and other experiential sectors came with several VICI milestones. 

“We consummated our first international real estate acquisitions of gaming properties in Canada and grew financing partnerships in Saint Lucia and the UK, made our first real estate acquisition in the family entertainment sector, significantly expanded our partnerships with Canyon Ranch and Cabot, and converted our first loan to real estate ownership. 

“We believe our 2023 growth in AFFO per share of 11.8 per cent will be among the higher growth rates of S&P 500 REITs, while our 2023 investments put us in a position to deliver a 2024 AFFO per share growth on the high end of consensus average growth rates for S&P 500 REITs.”

Looking at the year ahead, VICI’s full year 2024 guidance saw the firm predict AFFO to be between $2.32 and $2.35m, or between $2.22 and $2.25 on a per diluted share basis.