Key Points
- EPS exceeded expectations, coming in at $0.71 versus the estimated $0.67.
- Total revenue of $957 million surpassed the forecast of $949.7 million.
- AFFO increased to $592.4 million, up 9.6% from the previous year.
VICI Properties (VICI 0.33%), a major player in the (REIT) sector specializing in experiential assets, reported second-quarter earnings on Wednesday that exceeded analyst consensus expectations. The , supported by strong operational execution and strategic investments.
| Metric | Q2 2024 | Analyst Estimate | Q2 2023 | Change (YOY) |
|---|---|---|---|---|
| Total revenue | $957 million | $949.7 million | $898.2 million | 6.6% |
| Net income* | $741.3 million | NA | $690.7 million | 7.3% |
| AFFO* | $592.4 million | N/A | $540.4 million | 9.6% |
| AFFO per share | $0.57 | N/A | $0.54 | 5.9% |
| EPS | $0.71 | $0.67 | $0.69 | 3.7% |
Source: VICI Properties. Note: Analyst estimate provided by FactSet. YOY = Year over year. AFFO = Adjusted funds from operations (a REIT's equivalent of net income). * Attributable to common shareholders.
An Overview of VICI Properties
VICI Properties specializes in experiential real estate assets primarily through long-term triple-net leases. This model transfers property-related costs such as taxes, insurance, and maintenance to tenants, ensuring stable cash flows. VICI owns 93 assets, including iconic gaming and entertainment properties like Caesars Palace Las Vegas and the MGM Grand.
Second-Quarter Highlights
In Q2 2024, demonstrated strong performance with net income attributable to common stockholders of $741.3 million, a 7.3% increase year over year. Additionally, Adjusted Funds From Operations (AFFO) grew 9.6% to $592.4 million, showcasing the company's efficiency and robust operational execution.
One of the notable investments was the allocation of up to $700 million for reinvestment projects at the Venetian Resort, with $400 million to be deployed in 2024. This move exemplifies VICI’s Partner Property Growth Fund strategy, offering capital deployment opportunities within existing VICI assets. Another strategic move was the origination of a $250 million mezzanine loan as part of a $1.55 billion financing for Great Wolf Resorts, demonstrating VICI's ability to recycle capital via its Experiential Credit Solutions strategy.
VICI ended the quarter with a strong liquidity position, holding $347.2 million in cash and equivalents. This, coupled with estimated forward sale equity proceeds of $681.0 million and revolving credit facility availability, brings the total liquidity close to $3.4 billion.
The REIT’s revenue streams are protected by CPI-linked escalations, where 50% of rental revenue was subject to a Consumer Price Index (CPI) linked escalation in 2023. Another key highlight was the company's completion of refinancing $1.5 billion of notes on favorable terms, illustrating its solid financing structure.
Looking Ahead
VICI Properties raised its full-year AFFO guidance to between $2.35 billion and $2.37 billion, or $2.24 to $2.26 per diluted share. This increased guidance reflects the company's confidence in continued growth and financial performance.
Investors should monitor ongoing investments, like those at the Venetian Resort, as these play a significant role in driving future growth. Additionally, keeping an eye on the company’s reliance on CPI-linked rent escalations will be crucial for understanding how inflation might impact revenue. Strategic agreements and heavy reliance on major tenants like Caesars and MGM remain critical factors to watch.
