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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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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