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DATE
Friday, Oct. 31, 2025 at 10:00 a.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Edward Baltazar Pitoniak
President and Chief Operating Officer — John Payne
Chief Financial Officer — David Andrew Kieske
Chief Accounting Officer — Dave Washerman
Senior Vice President of Capital Markets — Moyer McCluskey
Executive Vice President, General Counsel and Secretary — Samantha Sacks Gallagher
Chief Investment Officer — Gabriel F. Wasserman
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TAKEAWAYS
AFFO per share growth -- Increased 5.3% to $0.60, up from $0.57 for the quarter ended 09/30/2024, with management highlighting this demonstrates the earnings power of the model "even in periods of continuing uncertainty."
2025 AFFO guidance -- Raised to $2.36–$2.37 per diluted common share, up at the lower end by $0.01 over prior guidance, with total AFFO (non-GAAP) projected at $2.51–$2.52 billion.
Dividend increase -- Quarterly dividend declared at $0.45 per share, up 4% as declared on September 4, 2025 marking the eighth consecutive annual dividend increase since VICI's inception.
G&A efficiency -- General and administrative expense was $16.3 million, or 1.6% of total revenues, positioned by management as "one of the lowest ratios not only in the triple net sector but across all REITs."
Leverage metrics -- Net debt to annualized adjusted EBITDA was approximately five times, at the low end of the company’s 5–5.5 times target range.
Interest rate and debt maturity -- Weighted average interest rate is 4.47%. The weighted average debt maturity is 6.2 years, as adjusted for hedge activity.
Liquidity actions -- 12.1 million shares were settled under forward sale agreements, generating $376 million in net proceeds and used in part to repay $175 million on a credit facility.
Northfield Park transaction -- VICI to add Clairvest as fourteenth tenant via a new triple-net lease, with initial annual base rent of $53 million; a contractual amendment reduces MGM master lease rent by the same amount, keeping total collected rent unchanged.
Las Vegas convention segment -- Convention visitors in 2024 spent $1,681 per trip, 33% higher than average leisure visitors; VICI owns nearly 6 million square feet of convention and trade show space on the Strip.
Segmental and tenant diversification -- Addition of Clairvest marks further portfolio diversification, with the firm classified as a "top-performing private equity firm" according to John Payne with broad gaming sector exposure.
Loan portfolio status -- Management confirmed all borrowers are current on obligations, and there are no reported short-term payment issues.
Uncommitted guidance impacts -- Updated AFFO (non-GAAP) guidance excludes any contributions from yet-to-close transactions, undrawn loans, capital markets activity, or one-time items.
SUMMARY
VICI Properties (VICI +1.59%) delivered disciplined AFFO per share growth of 5.3% (non-GAAP), with management reaffirming the reliability of its triple-net REIT model and ability to produce earnings growth despite market volatility. Newly announced transactions include onboarding Clairvest as a fourteenth tenant in a way that maintains aggregate rent and leverages the company’s established structure for lease amendments without increasing total rental exposure. Updated 2025 AFFO guidance reflects a narrow upward adjustment. Explicit liquidity measures saw proceeds from forward equity settled in part to reduce credit facility borrowings, all within a leverage ratio maintained at targeted bounds.
John Payne emphasized disciplined capital allocation by stating, "We do not aim to grow for growth's sake. We do not seek to compromise creditworthiness to reach for return."
VICI management stated all loan counterparties remain current, reflecting no underlying deterioration in credit performance.
Management identified the Las Vegas convention segment as resilient, citing increased group demand and 2024 convention visitor spend 33% above leisure guests.
Addressing the MGM New York license withdrawal, Edward Baltazar Pitoniak said, "it didn't take us by surprise because we'd obviously been in conversation with them for a while," supporting deliberate communication and strategic alignment with major tenants.
Leadership clarified the company’s comfort with net leverage fluctuation around five times adjusted EBITDA, stressing its importance for operational flexibility and debt laddering.
VICI remains active in evaluating non-gaming experiential assets, including collegiate sports infrastructure, without reporting any closed investments in the segment to date.
INDUSTRY GLOSSARY
Triple net lease: A lease structure where the tenant is responsible for property taxes, insurance, and maintenance, minimizing landlord operating risk.
AFFO (Adjusted Funds From Operations): A cash flow metric used by REITs that adjusts FFO for capital expenditures and other non-cash items, intended to represent sustainable earnings.
Forward sale agreement: An equity financing arrangement allowing shares to be sold at a future date at specified terms, often used to raise capital efficiently.
Coverage ratio: In this context, the ratio of a tenant’s EBITDA to lease rent, indicating financial capacity and risk of default.
Full Conference Call Transcript
Samantha Sacks Gallagher: Thank you, operator, and good morning. Everyone should have access to the company's third quarter 2025 earnings release and supplemental information. The release and supplemental information can be found in the Investors 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, believe, expect, should, guidance, intends, outlook, 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.
We refer you to the company's SEC filings for a more detailed discussion of the risks that could impact future operating results and financial performance. During the call, we will discuss certain 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 website, our third quarter 2025 earnings release, our supplemental information, and our filings with the SEC.
For additional information with respect to non-GAAP measures, of certain tenants and/or counterparties discussed on this call, please refer to the respective company's public filings with the SEC. Hosting the call today, we have Ed Pitoniak, Chief Executive Officer; John Payne, President and Chief Operating Officer; David Kieske, Chief Financial Officer; Dave Washerman, Chief Accounting Officer; and Moyer McCluskey, Senior Vice President of Capital Markets. 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 Baltazar Pitoniak: Thank you, Samantha, and good morning, everyone. I want to start by talking about something we probably won't get asked about much during the upcoming Q&A, and that's our Q3 earnings growth. For Q3 2025, we grew our AFFO per share earnings by 5.3% versus Q3 2024. I want to emphasize our Q3 2025 earnings growth rate because I want to emphasize the earnings growth that our model is capable of producing even in periods of continuing uncertainty. With our Q3 2025 results, the VICI team continues to demonstrate its resourcefulness and resilience, growing relationships that grow our revenues and profits without, in the case of 2025, significantly growing our capital base.
You will hear more in a moment from John Payne about what the VICI team is doing to continue to grow our portfolio and our income, and you will hear from David on financial results, balance sheet, and updated 2025 earnings guidance. Before we turn to John and David, I want to talk about the wider strategic context in which we are producing our results. And by context, I do not mean the state of the market this week, which has obviously been a rough week for REITs and for gaming operators. If you wish, we can share our thoughts on this week's market reactions and ructions during the Q&A.
By strategic context, I mean the larger context of the world we are living and moreover we'll be investing in the years, not weeks, to come. As I've told you before, I do a lot of reading. Some days, I do wonder if I do too much reading. Two weeks ago, I read a guest post in one of my favorite daily newsletters, Odd Lot. That particular day, the Odd Lots pulpit was given over to Victor Schmitz, Head of Global Desk Strategy at Macquarie Capital.
Victor starts by quoting Nobel Prize winner Niels Bohr, who is often quoted as having said, "Prediction is very difficult, especially if it is about the future." Victor does acknowledge that Yogi Berra evidently said something similar. After summarizing the current weird state of our world, Victor states, "In line with many other prognosticators, I do believe that the next decade will be the most critical period in the transition from yesterday's capitalism toward a yet to be defined alternative system.
Everything is up for grabs in what is likely to be one of the most profound changes since the invention of agriculture, with far deeper consequences than even the industrial revolutions had." Victor goes on to ask, "Then what are rational investment strategies in response to an irrational world caught in a violent transition?" Victor's preferred answer is to have strong views rather than no views. This involves joining the revolution and backing instead of fighting secular themes. Basing investment strategy on a new world and avoiding the waging of old battles.
He states that for the last ten years, his firm has valued building portfolios around sectors and companies that are supported by long-term structural forces rather than investing based on a heavily degraded reading of economic and capital market cycles. With portfolio construction based in part on rising returns on digital capital, he then continues, "Included are several disruptive themes such as the replacement and augmentation of humans, the flow on impact to social, political, and geopolitical arenas, and the corresponding need for balm both metaphysical and real." Okay. Did you get all that? These days, it's hard, at least for me, to determine if Victor's view is on the outer or inner spectrum of potential outcomes.
But a lot of what he says rings true to me. And in any case, I believe that in this period, real estate investors should be developing and executing return and risk management strategies that account for the possibility that Victor will be proven right. That we are in a prolonged period of significant change and that those changes could impact people's desire and need for what Victor calls balm, both metaphysical and real. And just in case I'm not pronouncing it as clearly as I should, he is saying b-a-l-m, balm, and not bomb, b-o-m-b. And I take balm to mean what people do to seek connection, entertainment, play-based excitement, both psychological and physical, wellness, and healing.
These are the experiential dimensions, the various dimensions of balm we at VICI have been, are, and will continue to be examining, evaluating, and potentially investing in through our insight-driven approach. Depending, of course, on our determination that these experiences have the investment attributes we rely on. We are mindful, very mindful, that at a time like this, it's more important than ever to identify as best we can the risks of oversupply, obsolescence, and the other factors that can lead to real estate capital destruction. And through that identification process, determine what we will and will not invest in. It's an approach that has driven what we've done at VICI in the last few years.
An approach that has led to investments made and investments avoided. And as you can see from our Q3 2025 results, it's an approach that is delivering growth where it most counts: growth in AFFO per share. With that, I'll turn the call over to John.
John Payne: Thanks, Ed. Good morning to everyone who's on the call. As Ed laid out, we face a market environment that defies easy explanation. But at VICI, we have already faced multiple unprecedented events in our eight-year history, and through disciplined capital allocation, we have been able to strike the balance between investment quality and growth. Subsequent to quarter end, we announced that we'll be adding our fourteenth tenant, Clairvest, in connection with MGM Resorts' agreement to sell the operations of MGM Northfield Park. Upon closing of the transaction, VICI will enter into a new triple net lease with an affiliate of Clairvest as well as an amendment to the master lease between VICI and MGM Resorts.
The Northfield Park lease will have an initial annual base rent of $53 million or $4.054 billion if the transaction closes on or after 05/01/2026. And rent under the MGM master lease will decrease by the same amount. Simply put, this transaction will not change the total amount of rent collected by VICI. Clairvest is a top-performing private equity firm out of Toronto, and they are a recognized leader in the gaming sector. Clairvest is a sought-after partner with gaming experience across regional casinos, racetrack suppliers, technology providers, and online gaming globally.
Having made 17 investments in 37 gaming assets over the last two decades, VICI looks forward to further diversifying our tenant roster with a well-respected counterpart in the sector. Now, casino gaming remains a top focus for VICI. We continue to believe in the durability of the sector despite recent noise around Las Vegas. John DeCree at CBRE put it well in his research note earlier this week. Las Vegas has experienced a confluence of idiosyncratic headwinds. The slowdown in visitation this summer, influenced by decreased Canadian travel and reduced capacity from Spirit Airlines, is definitely something to monitor. But Las Vegas has endured cycles before, and operators are expecting trends to improve through quarter four and into 2026.
Headlines emphasize short-term trends, but at VICI, we take the long view. We are still big believers in Las Vegas as one of the world's best destinations with operators who are willing and able to adapt their business to meet consumer demand. With that said, some operators have experienced recent strength in Las Vegas. The Venetian, one of our tenants, for example, continues to perform remarkably well with record hotel revenues and gaming volumes this summer. Additionally, according to Venetian management, 2026 is on track to be a great year for The Venetian Group business.
Convention cycles in and out of cities each year, but Las Vegas continues to draw solid group demand that supports this segment as other conferences rotate locations. For example, CONEXPO-CON/AGG, America's largest construction tradeshow that draws nearly 140,000 attendees, takes place every three years and is set to happen in Las Vegas in March 2026. We believe the convention business in Las Vegas is an underappreciated mitigant to the cyclical nature of leisure-oriented business. In 2024, convention visitors spent $1,681 per trip. That is 33% higher than the average leisure visitor. And the strength of Las Vegas as a convention city has continued to gain momentum post-pandemic.
VICI owns nearly 6 million square feet of conference, convention, and trade show space on the Las Vegas Strip. Representatives from several blue-chip large-cap companies like Amazon, Google, and Microsoft attend conferences in Las Vegas every year. VICI continues to believe in the strength and resiliency of Las Vegas. Over the last eight years, VICI has been deliberate with its portfolio construction, and we believe we've made the company better each time we grew bigger. Our multidimensional investment evaluation bolsters the quality of our decisions as real estate owners, and we conduct rigorous analysis with each opportunity across our desk. At any given time, we consistently have multiple ongoing dialogues with gaming and other experiential operators.
And what we want to continue to do, which is what has earned us credibility thus far, is maintain a disciplined capital allocation strategy that facilitates quality growth. We do not aim to grow for growth's sake. We do not seek to compromise creditworthiness to reach for return. We instead engage in selective, sustainable capital allocation that can provide long-term growth and withstand potential near-term macro shocks. We are long-term stewards of capital, and VICI aims to make decisions that support sustained and sustainable growth that delivers value to our shareholders. Now I will turn the call over to David, who will discuss our financial results and guidance. David?
David Andrew Kieske: Touching on our financial results, AFFO per share was $0.60 for the quarter, an increase of 5.3% compared to $0.57 for the quarter ended 09/30/2024. These results once again highlight our highly efficient triple net model given the increase in adjusted EBITDA as a proportion of the corresponding increase in revenue. Our margins run in the high 90% range when eliminating non-cash items. Our G&A was $16.3 million for the quarter, and as a percentage of total revenues, was only 1.6%, which continues to be one of the lowest ratios in not only the triple net sector but across all REITs.
On September 4, we declared a dividend of $0.45 per share, representing a 4% increase from the prior dividend amount in our eighth consecutive annual dividend increase since VICI's inception. We are very proud to deliver this consistent increase to our owners. Touching on liquidity and the balance sheet, during the quarter, we settled a total of 12.1 million shares under our forward sale agreements, receiving approximately $376 million in net proceeds, with a portion of these proceeds being used to repay $175 million of the outstanding balance on our credit facility.
Our total debt is $17.1 billion, and our net debt to annualized third-quarter adjusted EBITDA is approximately five times, at the low end of our target leverage range of five to 5.5 times. We have a weighted average interest rate of 4.47% as adjusted to account for our hedge activity and a weighted average of 6.2 years to maturity. Turning to guidance, we are updating our AFFO guidance for 2025 on a per-share basis. AFFO for the year ending 12/31/2025 is now expected to be between $2.51 billion and $2.52 billion or between $2.36 and $2.37 per diluted common share.
Compared to our prior AFFO per share guidance of $2.35 to $2.37 per share, the raise represents an increase of the lower end by $0.01. Based on the midpoint of our updated 2025 guidance, VICI now expects to deliver year-over-year AFFO per share growth of 4.6%. As a reminder, our guidance does not include the impact on operating results from any transactions that have not closed, interest income from any loans that do not yet have final draw structures, possible future acquisitions or dispositions, capital markets activity, or other non-recurring transactions or items. With that, operator, please open the line for questions.
Operator: That's star followed by one to ask a question today. And our first question comes from Anthony Paolone from JPMorgan. Anthony, please go ahead. Your line is open.
Anthony Paolone: Great. Thanks. Good morning. John, I think you mentioned you're at 14 tenants now. And so VICI is kind of unique compared to net lease peers. Now you got a pretty narrow set. And you talk to them all the time. So can you talk about maybe like how often lease amendments come up? And if they do, how you approach those conversations?
Edward Baltazar Pitoniak: Yes. Hey, good morning, Tony. It's Ed. I'll start off and turn this over to John in just a moment. But where I want to start this morning is by reminding everyone of where we came from and how we started. At VICI, we were born with challenges. And what we proved right out of the gate, and I believe improved ever since, is that when we face challenges, we get after them. We focus on making sure we understand the full dimensions of the challenge, and then we work as productively and expeditiously as possible to find the right solutions that deliver the right outcomes for us and our partners.
And we've got obviously a track record of doing that. Through what we've done in selling assets that our partners wanted to get out of and we wanted to get out of as well. We have obviously helped tenants get out of assets that they, for strategic reasons, wanted to get out of. Northfield Park being the most recent example. But I'll turn it over to John because he can further elaborate on the approach we take with our partners and the degree to which we are always focused on making sure that any challenges that exist for them or for us get dealt with and we can all move on.
John Payne: Yes. Just a little bit to add to what Ed talked about. I mean, we are very fortunate or blessed to now have 14 tenants that allow us to get into greater detail of strategic growth or if there tends to be a problem in the business, we can discuss how we can be beneficial. That is very different than many other REITs that you know, Tony, that have 100 or 500 or 1,000 tenants. I'm not that smart to be able to help 1,000 different tenants to understand how we can be beneficial to them.
So we are very fortunate to have a few, and we can get into greater detailed discussion with them about how to grow again or how to handle a certain situation.
Anthony Paolone: Thanks. I mean, I could ask more directly like on Caesars, given the comments from them around the regional assets, like how might you approach a situation like that? Or would you use a similar framework to what you've used in the past? Or just any context there?
Edward Baltazar Pitoniak: Yes. I think the frameworks we've used in the past, Tony, would be the same frameworks we'd apply here. We would look across the portfolio on our own and with them determine where they want to be, where they want to continue to be, where do we want to continue to be, what are the various levers that we can work on our side, on their side, to make sure that we end up with an outcome that is a genuine win-win for both parties. We've obviously got time to deal with this, but we also don't want to let this continue to be a distraction. We've got a business to grow. They have a business to run.
And we will work in the way we have worked in the past from our very beginnings to make sure that we find the solutions that work for everybody as quickly as we can. And again, I just want to reiterate our experience in our eight years of getting after it when a situation needs to be dealt with.
Anthony Paolone: Great. Thank you.
Operator: The next question comes from Greg McGinnis from Scotiabank.
Greg Michael McGinniss: John, was hoping you could talk about some of the more non-gaming conversations you're having these days and your feelings on the potential likelihood of getting deals done. And I'm especially interested if you could touch on collegiate or university-level athletic facilities.
John Payne: Good morning. Everyone's smiling around the room because I spent quite a bit of time with experiential operators and been spending quite a bit of time, as you mentioned, in university sports. I'll touch on that one because it's very interesting. What I would describe university sports today is going through radical change. And I say that when we talk to athletic directors or CFOs or chancellors, they tend to nod their heads saying, yes, John, it's good to know that we are going through radical change. But we've been talking a lot with them about sports infrastructure. There's a lot of different investment companies getting involved in professional and youth collegiate sports.
But VICI is a little bit different in our pitch to them about how we can accelerate their growth in infrastructure and building, whether it's arenas, stadiums, practice facilities, ice rinks, all of those things. So it's been a really good educational process for the universities and for VICI as well about how our capital can work in that environment. On the other side, as I mentioned in my remarks, gaming is still top of the pyramid for us. We're spending a lot of time with our current tenants and new tenants. And then there's other experiential operators in mixed-use, in attractions, certain resort properties as well that our team has been out kicking the tires a little bit.
But University of Sports is definitely a big opportunity. There isn't a university that we've met with that doesn't have projects that they need to get done, and they are figuring out in this new environment how they're going to pay for it.
Greg Michael McGinniss: Great. Thanks. And I think maybe just touching on the gaming side a bit, is there any potential catalyst or some event that needs to occur to make some inroads into the downtown or local Vegas market?
John Payne: This is a market we would love to be in. As you're seeing the results come out every year, I think I saw a stat the other day that the Nevada locals market or the Las Vegas locals market is now the second biggest market in the United States. Which is a market that we sure would like to be in, and we love the regulations and the support from the State of Nevada in making investments in the bricks and mortars. So, this is an area that we continue to look at. There are obviously some great operators in that space. Red Rock Resorts, Golden.
There are some individual owners that own real estate there that we would love to be partners with over time.
Greg Michael McGinniss: Okay. Thank you.
Edward Baltazar Pitoniak: Thank you, Greg.
Operator: The next question comes from Barry Jonas from Truist Securities.
Barry Jonathan Jonas: Hey, guys. A competitor just noted their expectations for more broadly marketed competitive bidding type gaming M&A processes. Is that your expectation as well? And if yes, do you see VICI participating?
Edward Baltazar Pitoniak: Thanks.
John Payne: Hey, Barry. Good to talk to you. Well, we see a lot in gaming, and there's things out in the market, I think there's a good chance that we're also getting a look. And to answer your question, do we expect to participate? Depends on a lot of factors. Gaming M&A is complicated, and even if it's a single asset, it's kind of simply M&A given there's, you know, three parties. There's a seller, there's a propco and an opco buyer, and there are complex long-term leases that take a lot of diligence, a lot of work to get things done. So we would hope to continue to be active and continue to grow.
And John just talked about, there's always things we're looking at and pursuing.
Edward Baltazar Pitoniak: And Barry, it's Ed. I'll just add that in a week like this for gaming operators, there are the occasional public gaming operators who go, how much more of this do I want to put up with? And so I think there are a number of factors in play that could, I want to emphasize could, not necessarily, lead to heightened activity.
Barry Jonathan Jonas: Got it. Got it. And then just for a follow-up, coverage on Northfield Park in the Clairvest transaction looked pretty good. Can you talk maybe how that compared to what four-wall was in the MGM lease? I guess what I'm trying to get at is how do you think about the difference in value for a new lease with a smaller tenant versus the pre with a much larger lease and tenant? Thanks.
Edward Baltazar Pitoniak: Yes. It's a very good question, Barry. And I would generally say that for a single asset with a single tenant, yes, I think to your implicit point, you generally are going to look for higher coverage than you might have had within a master lease with a much bigger tenant. I think that's pretty much the simple logic of it.
Barry Jonathan Jonas: Makes sense. Thank you so much.
Edward Baltazar Pitoniak: Thank you, Barry.
Operator: The next question comes from Smedes Rose from Citi. Line is now open. Please go ahead.
Smedes Rose: Hi, thanks. I guess just on that with Clairvest, and as you mentioned, they have a history of some gaming assets in the U.S. and Canada. Do you expect to do more deals with them? Do you think that they're actively looking to expand their footprint in the U.S.? Or is this more of a one-off opportunity for them?
John Payne: Good morning, Smedes. I hope so. I mean, we've really enjoyed getting to know them in this process. They're very creative. They've hired a lot of very seasoned operators to work with them in the properties that they've owned not only now but in the past. So we're excited to have them as one of our tenants, and we hope to continue to grow that portfolio with them over the coming years for sure.
Smedes Rose: Okay. And then I wanted to ask you on the loan book. Are there any of the borrowers having any short-term issues that you can speak to? Or is everyone current on the payments just given some of the softness we're seeing in a broader economy, across certain kinds of venues?
Gabriel F. Wasserman: Yeah. Hey. It's Gabe here. I can answer that. Yeah. Everyone is current on all their obligations under their loans, and we continue to have active asset management and monitor all of our investments. And with our partners to understand that they're meeting their milestones and their business plans.
Smedes Rose: Thank you.
Edward Baltazar Pitoniak: Thanks, Smedes.
Operator: The next question comes from Haendel St. Juste from Mizuho. Haendel, your line is open. Please go ahead.
Haendel St. Juste: Thank you. Good morning. My question, I guess, is on the MGM decision to withdraw from the New York City license bidding process. It seemed to surprise a lot of people, including us. Was it a surprise to you? And what do you see as the implication for your Yonkers asset? And then I guess as part of that, given their decision to withdraw MGM, does that free you up to perhaps partner with some of the other bids? Thank you.
Edward Baltazar Pitoniak: Yeah. Haendel, good to talk to you. Well, certainly, it didn't take us by surprise because we'd obviously been in conversation with them for a while. And you know, what MGM did was look at the situation, the ever-evolving situation in the New York landscape, and make what we agree is a very sound capital allocation decision or capital non-allocation decision based on, again, the changing circumstances. I think one of the key factors, Haendel, really became clear in the last few months is that without a Manhattan-based casino, it was not clear that the remaining bidders would be able to create a casino experience. It would become a truly national and international destination.
And thus, if it was going to mainly be a competitive marketplace of three regional gaming assets competing geographically very close to each other for the same regional marketplace, it wasn't necessarily clear that the resulting economics of that very competitive marketplace would support the kind of capital required to enter the market with the tax regimes that are likely to be in place. And so again, I think MGM took care and took a lot of thought and obviously consulted very closely with us in making that decision.
In terms of the aftermath of the decision and what it means for us within this marketplace, yes, we have been in dialogue with various contestants in this process over the last couple of years. And certainly could be of service to them with capital if we believe that their opportunity was an opportunity that had very good capital fundamentals, that it had a legitimate shot to become what it would have to become, which is the most profitable regional casino in America. And I just want to emphasize that point, Haendel.
The way this is evolving, whatever does get built in New York is going to have to be meaningfully measurably more profitable than any other regional casino in America, and that includes the finest regional casinos in America, whether about MGM National Harbor, Encore Boston, MGM Detroit, or the others. Each of which I should emphasize tends to have market dominance and a lack of competitive supply that will not necessarily exist here in New York.
Haendel St. Juste: Appreciate that. Comments, Ed. If I could ask a follow-up or question on the I guess, there's announcement earlier this week, Cordish is developing a new project down at Virginia. And about an hour south of your DC National project. I guess I'm curious on the competitive dynamics there. Think Richmond's about an hour away with mild traffic. So curious if you think the location, maybe the demographics relative to what your asset offers, offer you some maybe some insulation. Thanks.
John Payne: Yes, it's a question. The distance may seem like an hour, but if you've been in DC, welcome to a little bit more traffic. Again, it's a pretty undersupplied market there. And they probably will target very different consumers. We'll have to see how the new asset that's built by Cordish. I'm sure it will be a wonderful asset as they do a good job in building their assets. But National Harbor is, as Ed just mentioned, if you're going to mention the best or one of the best regional casinos in the United States. MGM has done a fabulous job there, continues to do a fabulous job.
The numbers continue to be quite successful, and we think they're going to continue to grow there. So we'll have to watch how that happens. But I do think their customer base is going to be a little bit different.
Haendel St. Juste: Appreciate the color. Thank you.
Operator: The next question comes from David Katz of Jefferies. David, please go ahead. Your line is open.
David Brian Katz: Good morning, everybody. Thanks for taking my question. I appreciate all the candor as usual. I wanted to just go back on the sports facilities commentary, John. And not have you negotiate something in this kind of forum, but just out of curiosity, are there any historical cap rate, you know, or any kinds of, you know, comps or anything like that? Just out of curiosity, we would think about the opportunity if someone, you know, if people like us wanted to sit down and try and develop the TAM and think about, you know, what it all means for you.
Edward Baltazar Pitoniak: Yes. I'll start out, David. And I would say that if you're going to look for historical precedent for the possible infusion of private capital into real estate on university land, the corollary would be the development of on-campus student housing by private capital. Which has certainly taken place in the past, and the American Campus Communities is obviously an example of private capital, a REIT in fact at the time, that did exactly that. And obviously, you know, had to make sure they were creating a positive spread between their weighted average cost capital at the time and whatever cap rate they went on to campus with.
And so I do think that this landscape of sport infrastructure on college campuses is obviously rapidly evolving. In an overall marketplace that is wildly volatile. And everybody's trying to get smart as fast as they can. But I think what John and the team are finding, and John, you can elaborate on this, is that the idea of conventional private equity coming onto campus with a five to seven-year investment horizon just doesn't, I mean, it's just not that appealing.
John Payne: Yeah, David. Good to hear from you. I know you've asked about this sector before, and it is important to understand that this is what I think our company feels great about is finding a space that we think there's a lot of opportunity to deploy capital, and we've been spending time getting educated on the space, who the decision-makers are, what is the magnitude of opportunity, while at the same time hearing from the universities about how they could take our type of capital. And what we're talking about today is we're right in the middle of those processes. And obviously, state schools and private schools are different, right?
And so we are continuing to refine the way we think about the opportunity. We continue to talk about pricing. And as Ed said, there's other forms of outside capital that are also spending time with universities. And so it's like I opened up by saying, there's a lot of change going on in collegiate sports right now, and it's just an opportunity we are spending some time on because we think there is a magnitude of capital to be deployed.
David Brian Katz: Thanks, David.
Operator: The next question comes from Rich Hightower at Barclays. Rich, please go ahead. Your line is open.
Richard Hightower: Good morning, guys. Thanks for taking the question. And as always, appreciate the candor on various topics. But Ed, maybe just to ask you a metaphysical question, to use a word from earlier in the comments. Obviously, we don't want to focus on short-term movements in the stock price or cost of capital. But in your conversations with investors, what do you think are the major overhangs at this point? And does most of it revolve around some of the Caesars stuff you mentioned before? Is it other things?
Edward Baltazar Pitoniak: Yeah. I mean, I think it's a combination, Rich. I think there's the idiosyncratic factor of that noise, combined obviously with what's been a fairly tough period for the REIT market over the course of the year. And I think you put out a good note last night pointing out that, yes, in recent weeks, we have declined more than the REIT market. But Maura, don't know if you want to jump in here about the degree to which we may also somewhat idiosyncratically be seeing a dynamic of first-half winners. Well, you can explain better than I can.
Moyer McCluskey: No. Thanks, Rich. So as I was saying, we do think it's a confluence of factors between, yes, this Caesars focus, but also at the same time when there's been a positioning rotation out of some winners, of some long positions as the market has rotated into the end of the year. So the timing has been unfortunate, but we do think it's a combination of factors, not just the one particular overhang.
Richard Hightower: Alright. That's all for me. Thanks, guys.
Edward Baltazar Pitoniak: Thanks, Rich.
Operator: Next question comes from Chris Darling at Green Street. Chris, your line is open. Please go ahead.
Chris Darling: Thank you. Good morning. So with Six Flags in the news recently, I thought that presents a good opportunity to ask about your broad level of interest in theme park real estate ownership, the pros and cons that might come with those types of assets. And related to that, I'm curious if you've explored the theme park landscape internationally, as well as domestically in the U.S.?
John Payne: Yeah. Chris, good to hear from you. To be blunt, yes, it's an area of attractions in the United States that we have spent a lot of time with. We have not done a transaction, but we have spent quite a bit studying the landscape there, the opportunities there, the accounting treatment there, and obviously have followed what is going on in the news with Six Flags. And I think that's the way I can put it. Yes. And I'm going to ask Gabe to chime in here in a moment, Chris.
But one of the things we always do when we look at any particular experiential category is work to determine the degree to which there's a meaningful amount of real property within the business that is readable. And, Gabe, you can opine if you wish on theme parks and other categories that looked at ski resorts and other things.
Gabriel F. Wasserman: Yes. So in regards to that, Chris, obviously, there's a lot of real property at these theme parks and a lot of personal property, including the roller coasters and some of the attractions. And we would just make sure any potential investments that we're owning real property and put it in a REIT-friendly structure, but we're confident we could work with our partners to make it work.
Chris Darling: Okay. I appreciate those thoughts. And then just maybe a point of clarification on the Northfield piece with Clairvest and maybe a little nuanced here. But as it relates to allocating rents between the new standalone lease and then the remaining master lease with MGM, the resulting coverage ratios that you talked about, I guess I'm interested to understand what are your contractual rights in that regard versus this perhaps being more so just a good faith discussion between all the parties involved?
Edward Baltazar Pitoniak: Yeah. I don't know if, I mean, there are contractual considerations, and I'm looking at Samantha to bail me out in case we need to explain any of those. But I think the most fundamental starting point, Chris, is obviously the economic throwaway of the asset. What rent could it support at a coverage level we're all comfortable with? That's the starting point. What is the EBITDA before running the asset and what thus would be a level of rent coverage both we and they would be comfortable with.
Samantha Sacks Gallagher: Yeah. And just from a contractual perspective, in any event, how will we come to the determination of what rent might come out? We're always that we would never find ourselves in an economically disadvantaged position. So we're always going to have the same amount of rent, that transaction is completed between what we call a severance lease, the new lease with the standalone tenant, and then our MGM master lease. And that's contractually provided.
Chris Darling: Okay. Appreciate all the thoughts.
Operator: Next question comes from Chad Beynon from Macquarie. Chad, please go ahead. Your line is open.
Chad Beynon: Hi. Good morning. Thanks for taking my questions. Ed, thanks for the comment on Victor's pieces. Reports are absolutely a must-read, and he's another person that probably reads multiples of most of us on the call here. So, maybe just wanted to start with the call right on the Caesars Forum, convention center. We've kind of eclipsed that time period where that begins. It seems like all the commentary from Vegas operators is that conventions, the group pace, the outlook, you talked about some of the citywide is extremely positive. It's obviously some of the leisure concerns that have hurt some of the near-term results.
So with that opportunity, for that call right, how are you guys thinking about timing on that versus other deals? Thank you.
John Payne: It's a very good question, and I like your comments about Las Vegas because I think you said near-term concerns about leisure customers. And in my opening remarks, I do think we're the world is so short-term ADD focused that there's times that we don't think step back and think about what a great destination Las Vegas is and will continue to be. We obviously have a variety of things that we evaluate. You are correct that the opportunity to buy the Caesars Forum Convention Center is live right now. And we're fitting it into all the other things that we look at when is the right time. Is there the right time?
And Las Vegas, in my opening remarks, we are big believers in and we'll continue to make investments over time.
Edward Baltazar Pitoniak: Yes. Hey, I just want to jump in and emphasize, Chad, along the same line. The degree to which Vegas's competitive dominance across the American Convention, Trade Show, and Conference space has only increased in the last five to ten years. If you look across the competitive landscape of the big American convention centers in the gateway cities, it's actually kind of a sad story. First of all, most of the full-service urban hotel product has seen tremendous underinvestment. And a lot of the convention facilities themselves are in need of substantial capital and/or infrastructure. It would have been, for example, here in New York, would have been a very positive thing for the Javits Center if to Javits.
But as we all know, that project ain't happening. And as a result, Javits is still this conference center, the convention center near pretty much nothing in terms of hospitality infrastructure. And that's just one example among many across the US where Vegas, again, just shines because of the amount of capital put into both the conference convention and trade show facilities, 100 million into Mandalay Bay, I can't remember exactly how much Venetian's put in. To the expo center. But at any rate, this competitive dominance is only going to grow in the years ahead.
Chad Beynon: That's great.
Edward Baltazar Pitoniak: Thank you, Chad.
Chad Beynon: Thanks. And then moving over to the tribal lending landscape, I know we talked about before the North Fork loan is very different than a traditional loan to a tribe. But how has that evolved and how is your comfort level working with other tribes evolved here?
David Andrew Kieske: Yes, Chad, it's David. Good to hear from you. Just to clarify that, North Fork is a loan to a tribe. It's a typical lending structure into a tribe. Unique about it is there's no security in the real estate, and that goes with anything around tribal gaming. So, you know, we have a lot of relationships with tribes on commercial land. We have this great relationship with Red Rock. In the development of what will be a phenomenal asset at Madera, California, opening in Q3 2026. Do have dialogue with other tribes. I mean, anything we would do around tribal has to be with a great team, a great asset, but ultimately it'll be a credit investment. Right?
There's not a way to own gaming that sits on tribal lands and actually have security in that asset. And so we have a very active credit book led by Gabe, who you've heard from on this call, and we will continue to look for ways to deploy smart capital with good tribes in the future if the opportunities arise.
Operator: The next question comes from John DeCree at CBRE. John, please go ahead. Your line is open.
John G. DeCree: Hey, everybody. It's Colin on for John. Thanks for taking our questions. Maybe going back to the Northfield transaction, I think a lot of us have been relatively excited to see some recent pickup in M&A. So curious maybe how those negotiations went considering this, you know, became into a single lease. Did not go asset trading hands. You know, do you guys expect or think we could start seeing some more OpCo, you know, trade hands, you know, going forward?
John Payne: Well, your opening question was how did the negotiation go? And we're again, my opening remarks, we're excited to have Clairvest as one of our tenants, and we sure do hope that we continue to grow with them. They operate assets that we own. If you're asking, has there been a pickup in opportunities that we're seeing? For us, because we're looking at so many sectors across the gaming and experiential landscapes, there are a lot of different deals that we're looking at. Do I think there'll be more deals in gaming? I hope so. And I think we'll be there and talking to operators and talking to potential sellers. Colin, I am disappointed that John's not on.
I gave him some love with a quote with the opening. So it's disappointing to hear that love. So you'll have to pass that along.
John G. DeCree: Oh, he's going to be very disappointed to hear that, but I definitely appreciate this. I'm not going to get a repeat next quarter.
John Payne: Yes. It's going to be your turn next time, Phil.
John G. DeCree: And I guess, you know, maybe the other question I wanted to double-click on is, you know, how comfortable are you guys sort of letting leverage maybe creep below, you know, sort of the low end of the range that you guys have five to five and a half times. I think you have you guys about five right now, and obviously leverage you guys had taken a pretty low going into the MGP acquisition saving a lot of dry powder for what was quite a material transaction. So just kind of curious how you're seeing leverage trend from here. Obviously, have the escalators, but how are you thinking about it potentially creeping below your low end?
Edward Baltazar Pitoniak: I think the Spanish like to say with tranquility, if it goes lower, that is just fine. A little higher, it's just fine. But as you remember, Tom, from that dinner we had together in Boston, as important for us as leverage is laddering. And what we like about the five times debt to EBITDA benchmark is that it means by definition you have a dollar of debt for every 20¢ of EBITDA. And I'm not going to go through the whole English major math thing I did at that dinner.
But as you and your clients gathered, we like the way in which laddering in which roughly no more than 10% of debt comes due in any given year matches up with five times debt to EBITDA, such that the metrics are such that in the worst-case scenario where the credit market window is closed, you could, if necessary, pay off expiring debt with available cash flow after debt service. So in and around the five times plus or minus, you know, a tenth here, a tenth there, again, we don't tend to get highly precise about that.
It's more about building a ladder for the future, and with that, you know, making the best use of the amount of retained cash flow we generate, which as we've spoken about in the past, is now in the $600 million range and gives us firepower that enables the kind of year we're having this year. We're growing once again AFFO per share in this quarter by 5.3% while growing our share count by barely more than 1%.
John G. DeCree: Great. Thanks for that. And, yeah, Ed, I still think that was one of the best articulated explanations of formulation of a leverage target. That you gave when we had that dinner. Appreciate it. Thanks, guys.
Edward Baltazar Pitoniak: Thank you.
Operator: Next question comes from Daniel Guilherme from Capital One. Daniel, your line is open. Please go ahead.
Daniel Edward Guglielmo: Hi, everyone. Thank you for taking my questions. You all own a lot of the properties on the Las Vegas Strip, but not all of them. Based on your experience, what kind of macro or Las Vegas demand environment do properties typically come to market there? And if the opportunity arose, would you expand your ownership on the strip?
John Payne: I'll answer the last part of the question. I think for the right property and right operator, absolutely. We would continue to expand our presence not only on the Las Vegas Strip, and not only in the locals market that I talked about, but I think all over Nevada. We're big fans of that as well. But as it pertains to when do they come to market, that's very hard to predict. And it depends on the company and how they're thinking about the use of proceeds from the monetization of their real estate.
But what I would tell you to Ed's comments, we will be prepared should there be an opportunity of an asset in Las Vegas on the strip that comes to market, but I can't tell you when they're going to come.
Daniel Edward Guglielmo: Yeah. I appreciate that. And then as a just a follow-up. In the opening remarks, the 3Q earnings growth was mentioned. A big part of that is the competitive annual rent escalators that you all have. On the flip side, tenants do bear increased rent line. So can you just talk about some of the risks that you all think through on the tenant side of things with those kind of rent lines increased for them?
Edward Baltazar Pitoniak: Yeah. First of all, Daniel, Q3 2025 wouldn't within itself have had any rent escalations. Quarter over quarter sequentially. And when we think about escalation, what we think about is again the supportability of the rent. And so, yeah, we do not want rent escalation that goes beyond what the tenant can afford to pay over the long term. And, you know, and so again, I think we're in an environment right now where things have more or less reached equilibrium in terms of either the rates of inflation, rent escalation, and revenue and profit growth. Obviously, we monitor closely. And again, it doesn't benefit landlords when rent gets beyond what the tenant can pay.
Daniel Edward Guglielmo: Appreciate it. Thank you.
Operator: The next question comes from Jim Kammert from Evercore ISI. Jim, please go ahead. Your line is open.
Jim Kammert: Thank you. Good morning. Team, if I were thinking about your competitive advantages, let's say, as the example on the university sports, what elements really would differentiate VICI structuring-wise or other attributes? Because if I'm being snarky, I would say it's really just a cost of capital, right? I mean, the university is going to want to take the best deal for them. So how would VICI differentiate itself from other potential providers of the capital?
Gabriel F. Wasserman: Yes. Hey, Jim, it's Gabe Wasserman. I can take that one. So I don't think we're just competing along cost of capital. It's not the only dimension. It's also on structure. As a permanent capital vehicle that wants to own our real estate forever, I think our investment time horizon is very well aligned with our potential university and collegiate partners. And as we compare and contrast our capital and opportunity with private equity folks, we just think that our long-term permanent horizon is just a really good match for universities and colleges, and that's really resonated well in the conversations that we've been having.
Edward Baltazar Pitoniak: Yes. I would just add too, Jim, that while obviously, you know, universities, both public and private, can often tap, you know, the tax-free bond market. Most universities we're finding out run-in the way that Harvard famously speaks of, which is every tub on its own bottom. And athletic departments in particular, and John and Gabe, can elaborate on this. Athletic departments, especially at this point, are being told you need to be self-funding and self-sustaining. And, no, you're not necessarily going to get to use up, you know, whatever envelope we have in the tax-free bond market. You want to add to that, John?
John Payne: No. It's very clear. Good point.
Jim Kammert: Great. And just one quick related question. With most of those opportunities, I know it's very premature, but would they be leasehold interest because I presume the university continues to own the underlying land, or is that not necessarily?
Edward Baltazar Pitoniak: Yeah. I think it depends on the university. But we're open to both structurally and can make both of them work. Jim, it's a very good question. And you opened by saying, I know it's premature as we've talked about the university space, and I've been very open that when you're the first to kind of reach into this space, educating athletic directors and CFOs and chancellors and presidents on our type of capital. Structure then, as Gabe mentioned, is a big factor in the discussions. Can we own the real estate? Can't we own the real estate? What is the duration of the lease? How much capital of a project can you put in versus a donor?
Does your name go on it? Does it don't? I mean, there is a wide variety of things that we are feeling out. And as Sam mentioned, every university is different. And state universities are different than private, and that's why we're taking the time in meeting and really crafting how our capital can work. Obviously, we have not gotten over the finish line with the university sports deal yet. But you can hear that we've been spending some time because we think there is a big opportunity in sports infrastructure and the amount of capital that needs to be put to work.
Jim Kammert: Fair enough. Thank you for your time collectively.
Operator: Our final question today will come from Alex Bighin from Baird. Alec, please go ahead. Your line is open.
Alex Bighin: Hey, thank you for taking my question. Kind of wanting to synthesize what we've talked about all the call from, you know, the MGM capital allocation decision or the Caesar convention and also how you think about the balance sheet. With VICI taking the long view about capital deployment, kind of what's the philosophy about how VICI weighs deploying money in uncertain times for good opportunities, versus waiting and preserving the balance sheet for a potential great opportunity that may or may not come?
Edward Baltazar Pitoniak: Yeah. No. It is a wonderful question, and I wish we had more time to do it full justice. Because it is something that our investment committee is always, always deliberating. And I would tell you, Alec, there's no perfect answers. But I would say that because we invest what we believe to be perpetual capital, we really want to have confidence that ten, fifteen, and twenty years from now, we or our successors are going to be glad we made this investment, that we invested in the right geography, the right category, the right marketplace, and most importantly, the best operating partner we could find for that opportunity so that we can always be comfortable the credit is secure.
Alex Bighin: Yeah. Thank you for that.
Operator: Thank you. I will now hand the call back to Ed for any closing comments.
Edward Baltazar Pitoniak: Thank you, Adam. And I'll just thank everybody for their time today and look forward to continuing the conversation in the weeks and months to come. And see you again in February.
Operator: This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.