VICI Properties Inc., a prominent real estate investment trust (REIT), has unveiled plans to inject up to $700 million into The Venetian Resort Las Vegas for extensive refurbishment projects, marking a significant step in enhancing the renowned integrated resort’s offerings and guest experience.

VICI Properties Teams Up with The Venetian for Major Upgrades

This capital infusion, part of VICI’s Partner Property Growth Fund strategy, aims to fund various initiatives such as renovations to hotel rooms, optimization of the gaming floor, and enhancements to entertainment and convention facilities. The endeavor seeks not only to elevate the property’s overall appeal but also to augment its intrinsic value in the market.

According to John Payne, president and chief operating officer of VICI Properties, the collaboration with The Venetian Resort underscores a commitment to innovation and progress within the hospitality sector. He expressed enthusiasm about supporting impactful expansion endeavors at the Las Vegas landmark, citing the impressive performance achieved since VICI’s acquisition alongside funds managed by Apollo Global Management, Inc. in 2022.

David Kieske, chief financial officer of VICI Properties, emphasized the strategic alignment of the Partner Property Growth Fund strategy with the company’s overarching objectives. He highlighted the dynamic nature of VICI’s real estate assets and the potential for creative capital deployment to optimize operational efficiency and profitability.

VICI Properties’ $700M Capital Injection and Poker Room Expansion

The funding agreement entails an initial investment of $400 million to be disbursed in 2024, with an additional $300 million available for drawdown until November 1, 2026. Rent payments under the existing lease agreement will be subject to incremental increases, beginning on the first day of the quarter following each capital infusion, reflecting a 7.25% yield.

Furthermore, the agreement stipulates that incremental rent hikes will commence annually at a rate of 2.0% from March 1, 2029, with subsequent escalations tied to either a fixed percentage or the Consumer Price Index (CPI), capped at 3.0%.

The Venetian Capital Investment is expected to be financed through a combination of cash reserves and the partial settlement of forward equity sale agreements, underscoring VICI’s prudent approach to capital allocation and investment management.

Additionally, the Venetian Resort Las Vegas is relocating and expanding its poker room to a larger space on Level 2 of the Grand Canal Shoppes, set to open in the summer of 2024. 

In a broader context, this initiative exemplifies a growing trend among REITs, including VICI, to provide financing for tenant-driven enhancement projects in the gaming and hospitality sectors. Such arrangements not only diversify revenue streams for landlords but also contribute to the overall enhancement of property values, thereby benefiting all stakeholders involved.

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The recent surge in baccarat volume has economists and industry experts buzzing with optimism about the future of high-end properties along the famed Las Vegas Strip. 

High-Stakes Baccarat Fuels Record Revenue for Las Vegas Strip

According to insights provided by Wall Street analyst John DeCree, the Las Vegas Strip witnessed an unprecedented $905 million in gaming revenue in December alone, marking an 11.2% increase from the same period last year. 

Baccarat, renowned for its popularity among high rollers and international visitors, played a significant role in achieving this milestone. The baccarat win soared to $218.7 million, representing a staggering 50.1% increase compared to previous figures. 

Additionally, baccarat volume reached $839.5 million, the highest post-pandemic level, indicating a robust resurgence in high-stakes gaming.

DeCree emphasized that the notable performance of baccarat in November, coinciding with the inaugural Formula One race in Las Vegas, further solidifies the positive trend for upscale properties. 

DeCree stated that the table win had been buoyed by a strong baccarat win and emphasized that the positive trends in baccarat for both months served as indicators of optimism for higher-end properties on the Las Vegas Strip.

Record Slot Wins and Local Market Surge Propel Las Vegas to Success

The momentum extended beyond baccarat, with slot win on the Las Vegas Strip hitting an all-time high of $446 million, marking a 10.1% year-over-year increase. Notably, despite a slight decrease in hold, the handle reached a remarkable $6.2 billion, setting a new precedent for the region. 

Table win also experienced significant growth, increasing by 12.3% year over year, supported by a 5.5% rise in table drop.

In addition to the Strip’s success, the local market saw a boost in gaming revenue, largely attributed to the recent opening of the Durango Casino & Resort in southwest Las Vegas. 

DeCree noted a 6.5% year-over-year increase in December gaming revenue for local casinos, with the Durango property playing a pivotal role in driving these figures.

The positive performance was not confined to gaming revenue alone. Visitation to Las Vegas saw a 2.7% increase year over year in December, culminating in an annual total of 40.8 million visitors, surpassing the previous year’s figures. Furthermore, average daily room rates on the Las Vegas Strip experienced a notable uptick, rising by 5.8% year over year in December and 12.3% for the entire year.

While the data signals a promising trajectory for the region, DeCree urged caution against drawing definitive conclusions from a single month’s figures. Nevertheless, the overarching sentiment remains optimistic, with analysts eagerly anticipating continued growth and prosperity for Las Vegas’s renowned hospitality and gaming industry.

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Divestment of assets isn’t uncommon for gambling operators across the globe. If a certain digital asset is a burden or a specific property is underperforming, operators often explore a wide range of options, including potential sales or mergers.

Currently, the leading gaming and entertainment company, Caesars Entertainment, has four casinos across Indiana. The list of properties includes Caesars Southern Indiana Hotel and Casino, Horseshoe Hammond, Harrah’s Hoosier Park Racing and Casino and Horseshoe Indianapolis.

An ongoing focus for Caesars is to reduce its financial liabilities. The potential sale of two of its Indiana properties is one way this can be achieved, an analyst suggests. Shaun Kelley, a senior research analyst for Bank of America, recently revealed that Caesars may consider divesting two of its casinos.

The venues that may be sold are Horseshoe Indianapolis and Harrah’s Hoosier Park. The divestment of the two properties is expected to raise close to $2 billion in net proceeds for Caesars, Kelley estimates. Additionally, the analyst explained that the finalization of the company’s projects in Danville and New Orleans may further boost its growth.

“We expect this sale to raise nearly $2 billion in net proceeds that should reduce traditional and lease-adjusted leverage below five times and close to their targeted range.“

Shaun Kelley, senior research analyst for Bank of America

Possible Buyer Is VICI Properties

The sale of two of Caesars’ casinos in Indiana may be completed by divestment of Centaur Holdings, the holding company of the two properties. The potential buyer, according to the analyst, could be VICI Properties, the owner and acquirer of real estate assets within the hospitality, gaming, leisure and entertainment sectors.

Despite Kelley’s prediction, Caesars is yet to confirm or reject the possible divestment of assets in Indiana. With the start of the year, the leading gaming and entertainment company confirmed the date when it will be releasing its financial results for the fourth quarter and full year 2023. At the time, Caesars said that its results would be released upon market close on Tuesday, February 20, 2023.

On the same day, the company will also host a conference, discussing its latest results as well as other important matters. If Caesars considers the aforementioned divestment, it may be one of the topics up for discussion on that day.

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Golden Entertainment Inc was cleared to sell its slots business to Oak Tree last week with the Nevada Gaming Commission giving its approval and go-ahead for the deal to proceed. Officially, the acquisition is carried out by J&J Ventures and backed by Oak Tree.

Ploughing the Proceeds Back into Improving Existing Business

The proceeds from the deal will go into overhauling various operations, after the company announced changes to Gold Town’s dining options earlier this year, including a Farmhouse Kitchen, which is locally sourced and highly cherished dining expeirence.

Golden Entertainment is on a good business footing, as it will continue to support the gaming operations of Golden’s branded tavern locations in Nevada for J&J Ventures, indicative of the high level of trust voted to the company by the acquiring entity.

Meanwhile, other proceeds from the deal will be ploughed into improving some of the company’s casinos and operations, including Arizona Charlie’s, Strat, and gaming properties near Laughlin.

This will begin with the improvement of gaming operations in Pahrump, apart from the introduction of additional dining options. Many excellent venues could use the funding to become more competitive and continue driving more traffic towards themselves.

For example, Pahrump is located only 58 miles from the Las Vegas Strip and is enjoying a good amount of footfall, especially by travelers who baulk at the idea of plunging into the heart of the rowdy gaming heartland of Nevada.

Rather, Pahrump offers a little more relaxed but equally entertaining expeirence that Golden Entertainment is hoping to capitalize on. This sentiment is reflected in the company’s ownership of several prominent properties in which it operates, among which are Lakeside Hotel & Casino, Pahrump Nugget Hotel & Casino, and not least Gold Town Casino.

Sustained Interest in Pahrump Gaming and Resort Experiences

Pahrump may have a small population of only 40,000 people. Still, it’s right next to Death Valley National Park and Spring Mountains, which means that tourists are not really a rare sight. The area’s gaming reputation has been solidly edging upward, not least owing to Golden Entertainment’s sustained and long-term efforts to differentiate it.

Golden Entertainment has confirmed that it will seek to improve its Arizona Charlie’s casinos as well as the Laughlin properties and look to further boost shareholder value by driving solid returns.

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Rocky Mountain Gaming has signed definitive deals with Minter Holdings and G Investments, allowing it to acquire the operating assets of two major casino properties. The agreement, if approved by Colorado’s gambling regulator, would add Johnny Nolon’s Casino and Colorado Grande Casino to Rocky Mountain Gaming’s portfolio.

Johnny Nolon’s Casino is one of the original casinos in Cripple Creek. Acquiring it and the Colorado Grande Casino will allow Rocky Mountain Gaming to dominate the town’s legendary gaming district. The two properties the latter company set out to acquire have a total of 400 gaming devices and 7 hotel rooms. In addition, Colorado Grande Casino operates Maggie’s Restaurant on its premises.

For reference, both properties are managed by David Minter through Minter Holdings. Minter is the sole owner of Johnny Nolon and the majority owner of Colorado Grande’s operating assets.

Rocky Mountain Gaming is the brainchild of David D. Ross, Michael J. Gaughan III and Joseph J. Canfora and is a venture that allows them to explore gaming opportunities in the United States. The first two men have worked together for over three decades in senior management for a number of influential casino companies. Canfora, on the other hand, is a casino veteran with over four decades of experience in the gaming and hospitality industry.

Minter Is Optimistic about the Properties’ Future

Canfora commented on the new venture with Ross and Gaughan, saying that he was surprised when they first invited him to return to the Cripple Creek market. After he thought about it for a while, Canfora realized that Johnny Nolon’s and Colorado Grande present a unique opportunity to conserve the old Cripple Creek atmosphere local players love.

Ross also commented on the matter, saying that the local market has been growing fast thanks to companies like Golden Nugget. This has attracted new players to Cripple Creek, revitalizing the local industry. Ross concluded that his team hopes to capitalize on the influx of people and cater to the needs of players seeking loose slots and personal service.

David Minter also commented on the matter, saying that he is proud of Johnny Nolon’s Casino and Colorado Grande Casino’s progress over the past few years.

While other casinos were coming and going and changing owners, we were a constant in this town. I look forward to seeing what Rocky Mountain Gaming CC brings to these casinos I love so much.
David J. Minter

Speaking of Colorado, the state just published information about the performance of its sports betting industry.

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DSD Renewables (DSD) has successfully completed a cutting-edge solar portfolio spanning 6.5 MW for Caesars Entertainment, enriching the skyline of Atlantic City with sustainable power solutions. The project, consisting of four canopies strategically placed across two prominent Caesars Atlantic City properties, is poised to generate approximately 8.29 MWh of clean energy annually, contributing to Caesars Entertainment’s green initiatives and promoting a sustainable future.

Caesars Entertainment’s Solar Canopies Transform Atlantic City

The solar canopies, a blend of innovation and environmental consciousness, are not just a testament to Caesars Entertainment‘s commitment to reducing its carbon footprint but also a symbol of its pledge to the communities it serves. 

Eric Dominguez, senior vice president of engineering & asset management at Caesars Entertainment, expressed his enthusiasm for the milestone, stating:

Our partnership with DSD plays a pivotal role in helping us adopt measures to minimize our carbon footprint. These projects in Atlantic City exemplify our pursuit to integrate more clean energy resources into our business while delivering real value locally to the communities in which we operate.

Eric Dominguez, senior vice president of engineering & asset management, Caesars Entertainment

The completed installations include a 1.7 MW and an 886 kW solar garage canopy at Caesars Atlantic City, coupled with two installations at Harrah’s Resort Atlantic City – a 1.9 MW solar canopy at Harrah’s self-park garage and a 1.9 MW canopy at Harrah’s valet garage. Additionally, a 913 kW solar rooftop system at Harrah’s Waterfront Conference Center, set to be installed in early 2024, will further bolster this green initiative.

These installations serve a dual purpose – providing shaded parking for staff and customers while significantly reducing snow removal costs. Moreover, the rooftop system extends the roof’s lifespan and reduces cooling needs by limiting UV exposure, thereby bolstering the environmental and economic sustainability of the properties.

DSD Overcomes Coastal Hurdles for Sustainable Solar Success

The journey toward achieving these feats was not without its challenges. DSD’s in-house canopy team had to overcome unique obstacles posed by the proximity to the coast, adapting engineering designs to accommodate increased wind load and other risk factors. 

Dan O’Brien, vice president of commercial origination at DSD, expressed his pride in the team’s efforts, stating:

We were faced with some pretty unique development obstacles, but our team was up to the challenge, working closely with Caesars and the Casino Redevelopment Authority to bring these projects to fruition. The outcome couldn’t be more rewarding.

Dan O’Brien, VP of commercial origination, DSD

DSD financed and developed these installations and will serve as their long-term owner and operator. Looking toward the future, DSD is actively exploring additional projects with Caesars Entertainment at various destinations across the United States, reinforcing their shared commitment to a sustainable, clean energy future.

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Melco Resorts has expanded its Macau properties with three new gaming areas for foreign players. The news comes amid the strong recovery of the gambling industry in the special administrative region.

The company chairman and chief executive officer, Lawrence Ho, spoke about the new areas during the recent opening of an indoor water park at Studio City. In an interview with Inside Asian Gaming, Ho addressed the new areas, saying that they are Melco’s way to keep up with the increasing number of foreign tourists.

The CEO said that now both City of Dreams and Studio City have gaming areas for foreigners. He noted that two of them are in the former property, and another one in the latter, providing extra gaming tables for visitors.

Ho noted that the crowds coming to Macau have been increasing following the lifting of the visitation restrictions. He believes that the region will attract even more visitors in May.

The COVID Woes Affected Melco’s Business

The COVID-19 pandemic and China’s zero-COVID policy devastated Macau for a time. The local gaming and entertainment industry was struggling to cope with the travel restrictions and the sudden lack of visitors.

Amid all this trouble, many of the local operators reported subpar results. Melco, for example, announce a net loss of a whopping $931 million USD in 2022. This was the second devastating year in a row for the company, which lost another $810 million in 2021.

Luckily, Ho believes that Melco’s results will be better this year. While he lamented losing so much money in the past three years, he said that Melco is not expected to lose money in 2023. However, its bank debt has increased substantially, meaning that the company will have to work extra hard to pay its debts.

Ho counts on Melco’s signature facilities and entertainment offering to attract more visitors to Macau. Now that border tourism has been restored, his team hopes that many foreign tourists will come to the special administrative region.

A week ago, Macau reported that its gambling industry continued to rebound in March. The total gross gaming revenue recorded in the region sat at $1.58 billion, representing a substantial year-on-year increase.

Credit Suisse ex attributed the favorable results to the resumed package tours, which continue to bring more and more people to Macau. This extra visitation translated into a daily GGR boost of around $41-46 million in mid-March and $59-62 million in late March.

However, more needs to be done if Macau is to return to its pre-pandemic results.

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VICI’s savvy choice of investments continues to pay off as its shares keep rising and net income soars. The REIT maintained its momentum during the last quarter, demonstrating substantial boosts across the most relevant metrics. Such impressive financial results provide a stable foundation for the investment trust to provide its shareholders with sustainable growth and rising value.

Financials Exceeded Expectations

Q4 revenues rose an impressive 100.9% year-over-year, reaching $769.9 million. Profits for the fiscal year 2022 also grew significantly. VICI made a total of $2.6 billion, an increase of 72.3% compared to 2021. Such a substantial revenue bump coincided with a sharp increase in adjusted funds from operations (AFFO), which increased 61.7% from last year to $1.7 billion.

These metrics are generally positive for VICI’s shareholders. Net income attributable to common stockholders rose to $1,117.6 million compared to $1,013.9 million for 2021. However, per-share prices dropped to $1.27 from $1.76. VICI attributed the decline to increased CECL allowance and the higher weighted average share count, which rose 51.4% year-over-year in Q4.

High-Profile Investments in 2022 Bolstered VICI’s Momentum

Such a meteoric rise in revenue is the direct result of VICI’s many successful partnerships throughout the year. In the fourth quarter alone, the REIT invested $51.9 million in Century Casinos in Missouri, acquired assets, completed the acquisition of the remaining 49.9% interest in MGM Grand/Mandalay Bay, and made a new lease agreement with Hard Rock related to Vegas’ Mirage Hotel & Casino, among others.

We… announced and originated approximately $4.5 billion of investments…, diversifying our relationships and expanding internationally.

Edward Pitoniak, CEO of VICI Properties

CEO Pitoniak was very pleased with 2022’s results. He shared that VICI was the only S&P 500 REIT to report a positive shareholder return and was now among the top 10 REITs in the RMZ REIT Index. Pitoniak was proud of the transformational acquisitions across Las Vegas, which made VICI the leading real estate owner in the Strip, laying a solid foundation for the coming year.

We are confident that our 2022… achievements will continue to put VICI in position for sustainable accretive growth and value creation for our shareholders into 2023 and beyond.

Edward Pitoniak, CEO of VICI Properties

VICI has successfully utilized its scale and liquidity, allowing for a flexible investment approach and a carefully curated portfolio of gaming and non-gaming assets. The recent acquisitions of four PURE casinos marked the REIT’s first foray into Canada, increasing the number of its gaming properties to eleven. With more expansions planned for 2023, VICI is well underway to maintain its upward trajectory.

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