VICI Properties Inc. (VICI) Q4 2018 Earnings Conference Call Transcript

VICI earnings call for the period ending December 31, 2018.

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VICI Properties Inc.  (NYSE:VICI)
Q4 2018 Earnings Conference Call
Feb. 15, 2019, 10:00 a.m. ET

Contents:

Prepared Remarks:

Operator

Good day, ladies and gentlemen, thank you for standing by. Welcome to the VICI Properties Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please note that this conference call is being recorded today, February 15, 2019. I will now turn the call over to Samantha Gallagher, General Counsel with VICI properties.

Samantha Gallagher -- Executive Vice President, General Counsel and Secretary

Thank you, operator and good morning. Everyone should have access to the Company's fourth quarter 2018 earnings release and the supplemental information. The release and supplemental information can be found in the Investor section of the VICI Properties website at www.viciproperties.com.

Some of our comments today will be forward-looking statements within the meaning of the Federal Securities Laws. Forward-looking statements, which are usually identified by the use of words such as will, expect, should, guidance, intent, projects or other similar phrases are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Therefore, you should exercise caution in interpreting and relying on them. I refer you to the Company's SEC filings for a more detailed discussion of the risks that could impact future operating results and financial condition.

During the call, we will discuss non-GAAP measures, which we believe can be useful in evaluating the Company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available on our fourth quarter 2018 earnings release and our supplemental information.

Hosting the call today, we have Ed Pitoniak, Chief Executive Officer; John Payne; President and Chief Operating Officer; David Kieske, Chief Financial Officer and Gab Wasserman, Chief Accounting Officer. Ed and team will provide some opening remarks and then we will open the call to questions. With that, I'll turn the call over to Ed.

Edward B. Pitoniak -- Chief Executive Officer

Thank you Samantha and good morning everyone. We're very excited to be here and appreciate you taking the time to join us for our fourth quarter and year-end 2018 earnings call. We released our fourth quarter results last evening, which caps off the end of our first full fiscal year. In a moment, John Payne and David Kieske will walk you through how active and productive the first 17 months for VICI has been. It's been a tremendously exciting 17 months for us as a team, and what most excites us every day we come to work, every time we meet a new potential shareholder or a new potential business partner is the opportunity we've been given to develop and share the next really great institutionalization story in American commercial real estate.

At the heart of every real estate institutionalization story, is institutional capital coming to understand the nature, quality, and durability of the cash flows in a real estate asset class, that has been previously seen broad and deep institutional investment. Every day, we are excited to tell the VICI story. A story based in three key drivers of value creation. One, our ability to deliver portfolio income of the highest character and quality; two a best-in-class and fully internalized governance and management structure; and three, one of the best internal and external growth profiles across the REIT sector.

Here's is a bit more on each one of these three value drivers. Portfolio income, character and quality, through our triple-net lease structure partnering with leading operators in Caesars and Penn, we deliver income durability throughout economic cycles at a value and magnitude we believe no other real estate sector is able to currently produce. And under our triple-net structure, where we have no property management, leasing or capital expenditure requirements, our reported AFFO is our true AFFO, giving our cash flows a degree of transparency and integrity hard to find in any other real estate sector.

Capability and governance, we have established a Board and a REIT management team with a deep bench of expertise in real estate, gaming and hospitality, bolstered by a governance framework explicitly designed to serve our one and only class of shareholder, the common equity shareholder. We are completely independent from our tenants with no overlapping directors or ownership in our Company.

Internal and external growth. Our results speak for themselves, we have executed over $8 billion worth of acquisitions and capital markets activity since our emergence on October 6, 2017. I'll let John tell you more about our growth track record and prospects in a moment. And even with all the three connectivity, our future growth pipeline remains robust as we of course still have three call option properties, which we can acquire at a 10% cap rate at any point prior to October 2022.

We will continue to evaluate those opportunities, but as John will now expand upon the appetite for gaming transactions has not diminished. With that, I'll now turn the call over to John to further discuss our recent transactions, and what we're seeing in the market going forward. John.

John Payne -- President and Chief Operations Officer

Thanks Ed and good morning everyone. Since our emergence, we've been extremely busy on the acquisition front. As we've announced five acquisitions which include four new properties and the consolidation of Caesars Palace, Las Vegas with the acquisition of the Octavius Tower. These acquisitions combined for transaction value of approximately $2.7 billion across four markets, two of which are new markets for VICI, as well as approximately 330,000 square feet of gaming space and almost 4,000 hotel rooms and suites. Every one of our acquisitions has been complementary to our strategic goals. When we wanted to increase our presence on the Las Vegas Strip, we acquired Harrah's Las Vegas and sold Caesar's 18 acres of our Las Vegas land holdings, in exchange for ROFR on a new world-class convention center, which is currently under development.

When we wanted to consolidate our ownership of Caesars Palace, and further extend our footprint on the Las Vegas Strip, we acquired the 668 room Octavius Tower adding $35 million of annual cash rent. When we wanted to expand into a top regional market, we acquired Harrah's Philadelphia and added $21 million in rent for a net purchase price of $82.5 million in connection with amending our foundational leases to align VICI and Caesars strategic interest to create more long-term income stability, initiate annual rent escalators in our non-CPLV and Joliet leases and incentivize Caesars to further invest in the assets in our portfolio.

When we wanted to increase our regional presence and diversify our tenant base in record time for a gaming REIT. We partnered with Penn National Gaming and acquired the Margaritaville Resort Casino in Bossier City, adding $23.2 million of rent to our portfolio and when we wanted a high-quality asset in one of the best regional gaming markets, we further expanded our partnership with Penn with the announced acquisition of the Greektown Casino Hotel located in downtown, Detroit's historical Central Business District adding $55 million in annual rent.

Through these accretive acquisitions, we have closed or announced the addition of over $220 million in annual cash rent, a 35% increase from our initial annual rent at emergence, which was only 17 months ago, as Ed mentioned. Each of these transactions accomplish the strategic goal we identified when we started VICI, what's more? All of the completed acquisitions were done accretively on a leverage-neutral basis for a very attractive cap rate.

2018 should give you a sense of what we hope to continue in 2019 and beyond. With a REIT team and deep hospitality industry connections, we will continue to put your capital to work, as we grow our portfolio and continue progressing toward our goal. Those goals have not changed. We intend to continue to work on diversifying our tenant base, expanding geographically in attractive urban and regional markets and growing our Las Vegas exposure, all while creating value for our shareholders.

The number of transactions announced by us and our peers over the past couple of years have bolstered the confidence in the gaming REIT model. REITs have become increasingly involved in gaming M&A conversations as operators look to capitalize on the underlying value of their real estate. The market environment for gaming transactions continues to be active and we look forward to the momentum we have headed into the rest of 2019.

With that, I'll turn the call over to David, who will discuss our balance sheet and financial results. David?

David Kieske -- Chief Financial Officer

Thanks, John. Starting with our balance sheet, since our emergence, we have been highly focused on disciplined capital allocations to progress our strategic goals. We have transformed our balance sheet since the emergence accessing the debt in equity markets to finance accretive acquisition, significantly reduce leverage and safeguard the Company's balance sheet against future uncertainty.

To summarize, we raised over $3.1 billion of equity through our $1 billion equity private placement in December 2017. A $1.4 billion IPO in February of 2018, which was 8 times oversubscribed and the upsized $725 million follow-on equity offering in November, which we are proud to say represented the largest primary first follow-on offering ever done by a REIT.

In 2018, VICI alone issued approximately 21% of our public REIT equity issued for the year. We entered into a $750 million equity distribution agreement or ATM Agreement in December, giving us an efficient tool to access equity if and when needed. We significantly strengthened our balance sheet, we reduced our leverage from 8.4 times debt to EBITDA at emergence to 4.2 times net debt to EBITDA at year-end, by refinancing nearly $2 billion of debt at lower interest rates and eliminating over $1.3 billion of debt.

Our outstanding debt at year-end was $4.1 billion with a weighted average interest rate of 4.97%. This includes the impact of the few interest rate swap transactions we entered into on January 3rd. These effectively fixed the LIBOR portion on $500 million under our term loan B facility at a weighted average interest rate of 2.38%.

Our debt is now approximately 98% fixed, providing certainty to our future interest expense. The weighted average maturity of our debt is approximately five years and we have no maturities until 2022. We increased our annualized dividend in June by 9.5% to $1.15 per share after only two quarters of being a dividend paying REIT. We ended the year with approximately $1.1 billion of cash in short-term investments and then unfunded $400 million revolver, providing us liquidity for future growth.

In terms of our financial results, yesterday we reported AFFO of $139.9 million or $0.36 per share for the fourth quarter, bringing the full year 2018 AFFO to $525.6 million or $1.43 per share, in line with our 2018 guidance. Our earnings for the quarter reflect revenue of $226 million which was comprised of $218.5 million from a real property business, and $7.5 million from a golf business. Real property business revenue was comprised of $187.3 million of income from direct financing leases, $11.3 million of income from operating leases and $19.9 million of property taxes paid by our tenants.

Our fourth quarter revenue includes $6.3 million of non-cash direct financing lease adjustments. As you may have noted, the $6.3 million adjustment is substantially lower from prior quarters as a result of the lease modifications which were effective as of November 1st, 2018. On the expense side, our general and administrative costs were $4.3 million for the quarter, this is lower than our previously stated run rate of approximately $6 million per quarter as a result of a one-time adjustment related to a true-up of certain gross receipt and franchise taxes incurred at the state and local level.

Going forward, we continue to expect our G&A to be between $6 million and $6.5 million per quarter with slight fluctuation possibly occurring quarter to quarter. We'd like to draw your attention to our financial supplement located on the Investors section of our website under the menu heading Financials. We've added additional quarterly disclosure and continue to value any feedback you may have on the information presented. To follow up on the acquisition front that John discussed, on November 14, we announced the $700 million acquisition of Greektown at Downtown, Detroit.

We will use a portion of the November equity offering proceeds to fund the Greektown transaction on a leverage neutral basis, which we continue to target closing during the second quarter of 2019. On December 26, we completed the acquisition of Harrah's Philadelphia for the net price of $82.5 million including the $159 million reduction to the gross price of $241.5 million to reflect the aggregate net present value of the lease modification. This transaction was completed using cash on our balance sheet. With the closing of this transaction, the lease modification took effect retroactive to November 1st, 2018. I'd like to briefly go over the impact of the annual escalators on 2018 results and with the annual cash rents been steady in the 2019.

The non-CPLV and Joliet base rent of $465 million was increased by 1.5% to an annual amount of $472 million on November 1st, providing us rent at the revised amounts for the final two months of 2018. On December 26, the non-CPLV and Joliet base rent was raised again by $21 million to $493 million to reflect the closing of Harrah's Philadelphia. We collected rent on the property for six days during 2018 and it will be subject to the annual escalator of 1.5% beginning on November 1st, 2019.

The CPLV base rent excluding Octavius Tower was increased by approximately 2.6% or $4.4 million to an annual amount of $169.4 million on November 1st, providing us with rents at the revised amount for the final two months in 2018. Inclusive of our Octavius Tower, which is not subject to an annual escalator, the annualized CPLV base rent is currently $204.4 million. The Harrah's Las Vegas escalator was effective as of January 1st 2019, so there is no impact on our 2018 results. Our cash rent for 2019 is projected to be approximately $88.3 million for HLV.

Subsequent to year-end, on January 2nd, the Company closed the acquisition of Margaritaville for $261.1 million, adding approximately $23.2 million in annual cash rent. The transaction was funded using cash on our balance sheet.

Turning to guidance, we expect 2019 AFFO per share to be between $1.47 and $1.50 per share. As a reminder, our guidance does not include pending acquisitions that have been announced and not yet closed. As a result of the follow-on offering, the outstanding share count -- share count at year-end is approximately 404.7 million shares and the the basis for our guidance.

Compared to our 2018 AFFO results, the approximate mid-point of our 2019 guidance assumes the following: a $0.03 per share increase due to the impact of annual escalators on the CPLV, non CPLV, the Joliet and HLV leases, a $0.05 per share increase due to the full year impact of rent added to the non-CPLV lease, then the acquisition of Harrah's Philadelphia, $0.05 per share increase due to the full year impact of rent added to the CPLV leave from the acquisition of Octavius Tower, which is not subject to the annual escalator. A $0.06 per share increase due to the acquisition of the Margaritaville Resort and Casino. This was partially offset by $0.14 per share decrease due to the addition of 34.5 million shares to the total share count as a result of the November 2018 equity offering.

Finally, the reduction in the DFL adjustment for 2019 as a result of our lease modification, is reflected in the $0.02 per share adjustment from FFO to AFFO in the table in our press release. As a reminder, this is a non-cash item, which increases topline revenue for 2019 and is deducted to calculate AFFO.

Just to reiterate, our guidance does not include the pending Greektown transaction, which we expect to close during Q2 of 2019. Greektown will add $55.6 million of annual rent to our portfolio once the transaction closes, and we expect to fund this on a leverage-neutral basis.

In closing, based on our 2018 performance, we continued to make tremendous progress as we execute on our strategy. Heading into 2019, we believe that we are well positioned with significant liquidity, the key growing our portfolio and delivering shareholder value. Operator, please open the line for questions.

Questions and Answers:

Operator

(Operator Instructions) Your first question comes from the line of Smedes Rose with Citi. Your line is open.

Edward B. Pitoniak -- Chief Executive Officer

Hi, Smedes.

Smedes Rose -- Citi -- Analyst

Hi. Thanks. I wanted to just understand your guidance a little better, I mean you kind of walk through it there, but are there any other kind of below the line items that maybe people are not factoring in or maybe we're not factoring in because you're coming in below consensus forecast. So maybe on the taxes side or some other item that maybe we're underestimating?

Edward B. Pitoniak -- Chief Executive Officer

Yes, Smedes, it's a good question. With the guidance -- consensus is to mixed bag of results that are out there, some analysts says that additional acquisitions that are outside of Greektown in our numbers, so I think when you factor in Greenktown and the additional AFFO, we will achieve by the annual rent of $55.6 million and then again we will fund that on a leverage-neutral basis from an assumption on $350 million of debt. I think the -- in an apples-to-apples comparison from our guidance of $1.47 to $1.50, adding in the Greektown transaction at some point in mid-year -- I think you get to that run rate, that we expect to achieve then, if you take out the noise to the other analysts, I think that's an apples-to-apples comparison.

Smedes Rose -- Citi -- Analyst

Okay, thanks. And we can follow up with you maybe offline on that. But the other thing I just wanted to ask you, Caesars remains very much in the press as potentially a sale candidate, and just wanted to ask you to kind of -- if you can kind of recap any implications for your leases with them, if Caesars is sold or if Caesars is to be -- if it's broken up potentially into different pieces?

David Kieske -- Chief Financial Officer

Yes, Smedes, I'll start and then John and Ed can chime in. Look, the leases in the call right that we have, the call properties, the three call properties that had alluded to our obligations of the entity and transfer with the entity, so obviously we only read within the press, but we're confident in Caesars and them as operators and the obligations of that we have with -- the right that we have with Caesars -- would continue in the event of any potential transaction.

Smedes Rose -- Citi -- Analyst

Okay, thank you.

Operator

Your next question comes from the line of Barry Jonas with SunTrust. Your line is open.

Barry Jonas -- SunTrust -- Analyst

Hey guys, good morning. Just a clarification on the Caesars question. Do you technically need to give consent to them in a change of control or sale of individual assets?

Edward B. Pitoniak -- Chief Executive Officer

No, we do not Barry. This is Ed. Good morning. No, we do not.

Barry Jonas -- SunTrust -- Analyst

Got it. Even the call option properties?

Edward B. Pitoniak -- Chief Executive Officer

Well, again, as David -- as David emphasized, in a change of control, our right to continue to call the call properties, continues.

Barry Jonas -- SunTrust -- Analyst

Great, and then just look (multiple speakers) -- sorry.

Edward B. Pitoniak -- Chief Executive Officer

And again, all the obligations of the leases would transfer as well.

Barry Jonas -- SunTrust -- Analyst

Got it. And then just look, high level, just curious if you can comment on the level activity in the M&A pipeline of things slowed at all? Or is the pace remain pretty brisk? Thanks.

Edward B. Pitoniak -- Chief Executive Officer

John.

John Payne -- President and Chief Operations Officer

I'll take that one, Barry. No, we continue to be quite busy I -- someone mentioned me another REIT mentioned that it slowed down a little bit, but we're feeling quite good, continue to be busy on the road, talking about potential deals as busy as we were in the latter part of 2018.

Barry Jonas -- SunTrust -- Analyst

All right, great to hear. Thanks so much guys.

David Kieske -- Chief Financial Officer

Thanks, Barry.

Operator

Your next question comes from the line of Mike Pace with JP Morgan. Your line is open.

Mike Pace -- JPMorgan -- Analyst

Hi, good morning. And David, thanks for the added disclosure on the DFL and since it's noncash, I won't belabor on that anymore. But maybe just some color on the capital structure, I guess you put in place some additional swaps, I think you have total swaps of $2 billion or so now. And I'm wondering what you think that implies or how we should read that in terms of you wanting or considering to chipping away $2 billion plus term loan maturity in the -- I think the 24 time-frame. Does that imply that you don't do that prior to the swaps running off and then how do you think about that large maturity out into the future as you sit here today and then I have a few follow ups?

David Kieske -- Chief Financial Officer

Sure. Thanks, Mike. Good to talk to you, looking forward to seeing you in a few weeks. Look, in terms of swap, it's a the two-year swap on $500 million of the term loan. We were opportunistic and took advantage of very low point in the market that fix a portion of our debt for the next two years. Obviously with the second liens and the term loan and then ultimately the CMBS, as we've discussed our strategy that ultimately migrate to an unsecured borrower and so there will be a sequencing of steps that will have to occur to put that in place over time, and I think the first will be the second lien potentially next year, and then with a two-year swap that would potentially give us a portion of the term loan that we could address in 2021.

So, just kind of working down the capital stack over time as the objective here obviously been very disciplined and how we access the markets and where we -- when we do that throughout the sequencing of our Company.

Mike Pace -- JPMorgan -- Analyst

And then, while I have you on the capital structure, you mentioned $350 million of debt for Greektown, that's incremental debt. So, we shouldn't assume that you're just going to use the cash that you raised from the equity offering, is that right?

David Kieske -- Chief Financial Officer

That's right. I mean we've modeled that and underwritten that internally at a leverage neutral basis, look we upsized the offering just given how strong the pipeline was where we were in the market and we feel really good about having the excess liquidity on balance sheet today.

Mike Pace -- JPMorgan -- Analyst

Okay. And then for any of you here. I guess, to get back to a prior question, maybe I'll just use the word activist rumbling across the marketplace, but do you guys ever think about the size of deals that you could do from a capacity or even your own appetite standpoint. And in that context, can you just remind us what your leverage target is and your willingness to go above that, if larger M&A opportunities do pop up?

Edward B. Pitoniak -- Chief Executive Officer

Mike, this is Ed. And again, good to talk to you. I think the fact that we were able to execute on a $1.1 billion transaction within really what amounted to six weeks or seven weeks after our emergence, speaks to the fact that when there are opportunities of magnitude, we will do all we can to see those opportunities in a way that delivers our owners, the kind of risk adjusted returns they deserve and I think we've proven our access to capital both on the equity side and the debt side.

So, again, we are willing to go after big opportunities, but we will always be highly disciplined in the way we do so, and if I can just go back for a moment to your question about Greektown and us funding it leverage neutral, that is very much our plan right now. But, if I could just take a moment to kind of talk about guiding principles in terms of how we approach risk management at VICI, when we raised the money that we did in November, we are obviously raising equity in excess of what we needed for Greektown.

But the feedback we got from our long-term shareholders in November, is that they believed in our guiding principle that we should always achieve funding certainty. If we can do so in a way that's accretive for the shareholder, and needless to say when December unfolded the way it did, we were very glad that we had the funding certainty for Greektown that we did, because we all painfully remember. December felt like a microcosm of the financial crisis, thank goodness, it was only a fire drill, not a fire that burned out of control for the months quarters and years at a time, but we went to bed every night knowing that we could fully paper Greektown, no matter what continue to unfold.

So, again, yes, we plan on Greektown being leveraged neutral, but the approach we will always take, is an approach where we are willing to sacrifice a certain amount of temporary, emphasis on temporary dilution in order to achieve long-term funding certainty, in order to generate long-term accretion for our owners.

Mike Pace -- JPMorgan -- Analyst

Great, thank you.

Operator

Your next question comes from the line of Carlo Santarelli with Deutsche Bank. Your line is open.

Carlo Santarelli -- Deutsche Bank -- Analyst

Thank you. Hi, good morning everybody. So Ed, I think you just answered the majority of my question, but as I think about the balance sheet today, and including some of the short-term investments you're obviously exiting the year pretty healthy from a cash perspective and clearly as you get into the first quarter here, we will see the the Margaritaville transaction, which is already closed. And then, obviously, we'll see Greektown when that happens. But as you think about kind of the cash balance that you guys are carrying through this year. In an ideal world, where do you-- what you kind of see as the cash need for the business? And I guess ask differently, does it kind of signal or could we read into kind of the elevated cash that you're keeping with the fact that you're going to kind of split that $700 million payment and maybe think that, that dry powder could be for some other things that you're contemplating at present?

Edward B. Pitoniak -- Chief Executive Officer

Very much so, Carlo and our Board, Chairman use the phrase in conversation a couple weeks ago, I never heard maybe all of you heard it before, but the phrase they use is that executions occur at the crossroads of strategy and opportunity. Our strategy is obviously continue to grow the portfolio accretively for our owners. Our strategy emphasizes continuing to build and diversify our portfolio and our tenant base, and we obviously love doing the kind of deals we've done in the last few months with Penn. So, we will have that money available to do deals that come at that crossroads of strategy and opportunity out in the open market. If they were not to materialize, and again, we have a -- we go into the year with a lot of confidence as John just said that we were going to be able to find deals out there that we can do accretively for our owners.

We always do have the backup of the call property. If we found ourselves in a situation where opportunities didn't materialize at the pace that one might wish, and thus, we are able to deploy the capital as you can well understand very accretively on a call property.

Carlo Santarelli -- Deutsche Bank -- Analyst

That's super helpful. Thank you, Ed.

Edward B. Pitoniak -- Chief Executive Officer

Thanks, Carl.

Operator

Your next question comes from the line of Daniel Adam with Nomura Instinet. Your line is open.

Daniel Adam -- Nomura l Instinet -- Analyst

Hi guys, good morning.

David Kieske -- Chief Financial Officer

Hey, Dan. Good morning.

Daniel Adam -- Nomura l Instinet -- Analyst

Most of my questions have been answered, but just one quick one -- quick follow-up on Caesars. To the extent that a strategic buyer held non-Clark County regional assets, would your ROFO with respect to the Caesars regional properties that they would potentially buy in the future, also hold on those assets in the event of a sale-leaseback?

David Kieske -- Chief Financial Officer

No, they never, not.

John Payne -- President and Chief Operations Officer

They would not. (multiple speakers).

Edward B. Pitoniak -- Chief Executive Officer

Yes, And I think I would just add Dan, as an element of color around that. You know, procedures Penn for anybody else, we're able to do business within the future. We always want to be the answer to the question. How do I fund my opportunities, right? We want VICI to be a great answer to that question of how do I fund platform growth? How do I fund development? How do I fund deleveraging? How do I fund the opportunities that are in front of me? And we want to be a permanent capital provider to great operators and we have great confidence in our relationship with Caesars that we can continue to be that solution provider as well as being a solution provider to other great operators out there.

Daniel Adam -- Nomura l Instinet -- Analyst

Got it.

Operator

Your next question comes from the line of John Massocca with Ladenburg Thalmann. Your line is open.

John Massocca -- Ladenburg Thalmann -- Analyst

Good morning.

David Kieske -- Chief Financial Officer

Good morning , John.

John Massocca -- Ladenburg Thalmann -- Analyst

So, kind of touching back on the acquisition environment again, can you maybe comment on the acquisition and transaction expenses you incurred in the quarter? Are those related deals that are kind of, let's say, completely dead or it could that be something where negotiations are ongoing, but maybe didn't close during the quarter? Just any color you could provide there would be helpful?

David Kieske -- Chief Financial Officer

Hi, John. It's Gab Wasserman here. Those are some instances post some deals we're looking at and we didn't feel that they were capitalizable under GAAP, but we're still looking at them, but felt it was the appropriate time to expense them during the fourth quarter.

John Massocca -- Ladenburg Thalmann -- Analyst

Very helpful, thank you. And then maybe kind of -- more on a strategic side of things, you continue to kind of grow the portfolio outside of the original Caesars properties. How do you think about corporate guarantees versus assets that a corporate guarantee. And then maybe what's kind of the appropriate in your mind property level coverages with both types of transactions?

Edward B. Pitoniak -- Chief Executive Officer

Yes , I'll start this out John and then turn it over to our John. Obviously when you have a corporate rent guarantee, you don't have to fixate to the same degree on asset level coverage. But when we're doing single asset deals, we obviously are very focused on that the coverage at debt level, and obviously it is a value even in those single asset deals to have corporate guarantees that go beyond the asset, but that's when we really drill in on what is the current cash flow of the asset? What is the coverage going in? What will the coverage be going forward, based upon the synergies, the operator is able to realize. So that we have confidence that the operator can be very successful and that, the rent can thus become as lower percentage as possible of the revenue and the cash flow of the asset. John, you want to jump in, you want to add to that?

John Payne -- President and Chief Operations Officer

Yes, John. I'd only add that it also depends on -- we've been clear on this. We talked to public companies and large public companies and small, but there is -- in this space, there's quite a bit of private companies that were out to. So, it really just depends, there isn't just a formula of how to do a deal, but we're out there talking to everyone. I think Ed described it incredibly well, but how we think about it.

John Massocca -- Ladenburg Thalmann -- Analyst

Make sense. And then kind of lastly, I know you talked about potential debt with regards to Greektown. Sorry if I miss this. Can you talk about what are the -- maybe pricing you think is in the market for that?

David Kieske -- Chief Financial Officer

Yes. Look, John, I think we point MGP at a very successful offer and recommend them on -- reopening the markets after the December malaise. There were five and three quarters, we've gotten indications in and around that area. So, we feel good about where the margins are, and they seem to be functioning after the shutdown essentially in December.

John Massocca -- Ladenburg Thalmann -- Analyst

That's it for me. Thank you very much.

Edward B. Pitoniak -- Chief Executive Officer

Thanks, John.

Operator

(Operator Instructions) Your next question comes from the line of Stephen Grambling with Goldman Sachs. Your line is open.

Stephen Grambling -- Goldman Sachs -- Analyst

Hi, thanks. I guess a quick follow-up to Carlos' question and to be clear, I guess would you contemplate a systematic exercising of the call option properties as we get close to expiration and how would a potential sale of Caesars if it were to go down that path, change your thought process on the options specifically call option properties specifically?

Edward B. Pitoniak -- Chief Executive Officer

John Payne, you want take that?

John Payne -- President and Chief Operations Officer

Well, to first one, I think your question is around would we take them down all at once, and we've been clear since we started that we don't see the path forward that there is an opportunity to acquire something externally that we have these options and we'd look at them at one at a time or across all three. I'm not sure, I think differently about if I think your question, Stephen was around if someone else was operating the call properties would we think that differently. Is that your question?

Stephen Grambling -- Goldman Sachs -- Analyst

So I guess on the first one was, not if you do them all at once, but would you come up with a systematic approach one a year, each year, so that there is not really surprises in the market.

John Payne -- President and Chief Operations Officer

Yes, I mean, I think that is our plan right now and that, again if we are forward-looking and we don't think our pipeline is as strong as we believe it is today, we will begin to turn to those option properties and we know how accretive they'll be if we execute them. Where we are today? I think you're hearing us say we feel good about the depth of our portfolio in front of us and we'll continue to evaluate when the right time is to execute those option properties. Ed, I don't know if you want to add to that?

Edward B. Pitoniak -- Chief Executive Officer

Yes, no, that -- you nailed it, John. I would just add, Stephen, I think in terms of how we think about our growth in a -- on a base case basis, it would be that kind of metronomic year-by-year take down, that would be our base case game plan. Just to go back to that execution being at the crossroads of strategy and opportunity, there could be situations that either could accelerate that or call -- upon attending call for taking down two at once, but we would we see those as a key means by which we delivered the kind of metronomic year-by-year growth in AFFO per share that certainly real estate investors, institutional investors expect and get delivered from the blue chip names in the triple net sector and elsewhere across our universe.

Stephen Grambling -- Goldman Sachs -- Analyst

Great, thanks. And then, what markets are you most interested in as you look about -- look for future opportunities for growth? And is there a mismatch between where you want to grow versus where assets are available for sale?

Edward B. Pitoniak -- Chief Executive Officer

John?

John Payne -- President and Chief Operations Officer

No, not at all. I think that we continue to like our diversification where we've got exposure on Las Vegas strip, we have exposure in regional markets, we have exposure in what we call urban regional markets. Clearly, there are some opportunities in markets that we'd like to have greater exposure in and there are some markets that we simply don't have real estate in, Las Vegas locals market being an example that we really like that market. So, there's not a mismatch between what is potentially for sale and where we'd like to expand. All I would say is, we will continue to remain diversified across our portfolio as we continue to grow it.

Stephen Grambling -- Goldman Sachs -- Analyst

Thanks. Maybe the last one is just, MGM is talking about shifting the ownership of MGP and potentially making a little bit more of an independent entity. Have you seen any change in the competitive landscape for potential deals?

Edward B. Pitoniak -- Chief Executive Officer

John?

John Payne -- President and Chief Operations Officer

No, I think we've come at this as a -- as you know, since we've been -- we were born a true independent REIT and we've come at any bid process that it's going to be a competitive process and we want to ensure that we get a fair deal for both the seller and for us, but we have not seen based on what you said, an increase in the amount of competition for assets that are potentially for sale because we've always come out at that there was -- there was competition.

Stephen Grambling -- Goldman Sachs -- Analyst

Have seller expectations changed, as the sector has started to do additional deals?

John Payne -- President and Chief Operations Officer

No, I think sellers are realistic about what they can get and you get into negotiations and talks with them, and ensure that you're going to get a fair deal both ways, that it works for our Company or for any REIT and it works for the seller and it works for the operator that you're partnering with. So, I've not seen unrealistic expectations a year ago, and I'm not seeing unrealistic expectations today.

Stephen Grambling -- Goldman Sachs -- Analyst

That's great. Good luck, this year, guys.

Edward B. Pitoniak -- Chief Executive Officer

Thanks, Stephen.

David Kieske -- Chief Financial Officer

Thank you.

John Payne -- President and Chief Operations Officer

Thank you.

Operator

Your next question comes from the line of John DeCree with Union Gaming. Your line is open.

John DeCree -- Union Gaming -- Analyst

Good morning everyone. Thanks for all the color so far, Ed or Kieske, maybe a question for you or anyone who wanted to chime in kind of higher level thinking. We talked a lot about casino real estate, how strong and durable that income stream is? But what are your thoughts on kind of non-gaming or resort other leisure type of acquisition activities and Caesars has been branding some resorts in select cities. Is it something that you look at today or is there just enough to do on Casino resort, M&A front that it's not really something you're branching out and how do you think about some of the other opportunities?

Edward B. Pitoniak -- Chief Executive Officer

Yes, John. Good to talk to you. We certainly are busy with gaming M&A right now and we obviously like the real estate investment economics of what we're looking at in gaming. But, from day one, we have positioned ourselves as an experiential REIT and we look ahead at the next 10-20 years with a high conviction that this should be a great 20-year period, the leisure, entertainment, recreation, hospitality and wellness. As you look at both the generational age-wise, the Baby Boomers and Millennials going into periods where there will be especially for Baby Boomers increased leisure time. And so, we have from day one, been determined to make sure we are learning at a pace that enables us to be in a position, whether it's many years from now or a few years from now, to be able to make compelling investments in non-gaming opportunities that meet our investment criteria. And frankly, our investment criteria will largely be framed by what we love about our investment in gaming real estate, which really starts with what we call experiential complexity.

The thing we love about so many of our gaming assets is the operator offers a rich experience, a rich multi-dimensional experience that greatly intensifies their relationship with the end user and thus protect them and us from disruption and obsolescence. So, we will look for that same experience of complexity. We'll look for operators who have that really strong enduring relationship with the end user. And we'll look for the kind of demographic, psychographic cultural and regional tailwinds, that ensures that asset. We'll have the kind of cash flows over a multi-decade period that our owners deserve.

But again, that is not imminent at this time. But the learning has to be taken place if we're going to make good decisions in the years to come.

John DeCree -- Union Gaming -- Analyst

Thanks, Ed. Thanks for the color and one follow-up on, I guess, a more specific question on types of M&A I think, slide I saw that you guys have put out maybe in January with your investor deck that kind of position kind of necessary return thresholds, relative to growth and I think somewhere in the middle with international gaming opportunities and we haven't had a chance to talk about that slide yet. So, I thought now would be a good time. Is there anything internationally that would make sense, is that just too challenging from how you positioned the business model or is that something that might perhaps come in somewhere between kind of North American gaming and some of those other kind of leisure and opportunities that you've just kind of spoke about?

Edward B. Pitoniak -- Chief Executive Officer

Yes, I'll turn it over to John in a moment. We certainly haven't prioritized international gaming as a REIT. Any REIT that goes outside the U.S. borders has to have an investment strategy that has a very strong risk management component to it. So that you're managing risk on tax, you're managing risk on currency, you're managing risk on rule of law or property ownership right. So we certainly haven't prioritized it at this time. But it's certainly in our learning file for going forward. John, if you want to add any color beyond that. John Payne?

John Payne -- President and Chief Operations Officer

No, I think you describe it well. I think if an opportunity came our way, we would continue to study is that the right place to be? Or are those the right assets and is that the right operator to be with us? We make a move to international, but I think Ed described it very well.

John DeCree -- Union Gaming -- Analyst

Thanks guys and congratulations on the first full year, last year.

Edward B. Pitoniak -- Chief Executive Officer

Thanks, John.

Operator

There are no further questions in queue at this time. I turn the conference back over to our presenters.

Edward B. Pitoniak -- Chief Executive Officer

Thank you, operator. Thanks again all of you for your time today. At VICI, we are privileged to be invested in experiential real estate, that is all about the shared experience. All about the desire of our guests to gather together in one place at one-time to share memorable and sometimes momentous experiences. And here's what's great about shared place based experiences, they're something that e-commerce has not figured out or to put in a box and ship your house. And real estate investors recognition of this dynamic is still in its very early stages. We look forward to providing an update on our continued progress in the spring, when we report our first quarter results. Thank you all.

Operator

This concludes today's conference call, you may now disconnect.

Duration: 45 minutes

Call participants:

Samantha Gallagher -- Executive Vice President, General Counsel and Secretary

Edward B. Pitoniak -- Chief Executive Officer

John Payne -- President and Chief Operations Officer

David Kieske -- Chief Financial Officer

Smedes Rose -- Citi -- Analyst

Barry Jonas -- SunTrust -- Analyst

Mike Pace -- JPMorgan -- Analyst

Carlo Santarelli -- Deutsche Bank -- Analyst

Daniel Adam -- Nomura l Instinet -- Analyst

John Massocca -- Ladenburg Thalmann -- Analyst

Stephen Grambling -- Goldman Sachs -- Analyst

John DeCree -- Union Gaming -- Analyst

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