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DATE
Thursday, April 30, 2026 at 10 a.m. ET
CALL PARTICIPANTS
- Chief Executive Officer — Edward Baltazar Pitoniak
- President and Chief Operating Officer — John W. Payne
- Chief Financial Officer — David Andrew Kieske
- Managing Director of Business Development — Gabriel F. Wasserman
- General Counsel and Secretary — Samantha Sacks Gallagher
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TAKEAWAYS
- New capital commitments -- $1.2 billion in new capital commitments announced, marking the first time with more than $1 billion in back-to-back quarters.
- Cain and Eldridge mezzanine loan -- $1.5 billion provided as construction mezzanine financing for One Beverly Hills, representing a $1.05 billion incremental commitment over the prior $450 million.
- International transactions -- $144 million pending acquisition of four Alberta, Canada real estate assets at an 8% cap rate tied to Pure Casino Entertainment’s take-private acquisition of Game Host.
- Golden transaction -- $1.16 billion Golden acquisition closing announced, providing first exposure to Las Vegas locals market and further tenant diversification.
- New tenant additions -- Addition of fourteenth tenant via new Clairvest lease with Northfield Park, increasing portfolio tenant diversity.
- AFFO growth -- Adjusted Funds From Operations per share grew 4.5% year over year while share count increased approximately 1%.
- Free cash flow -- Business generates approximately $650 million in free cash flow annually, enabling incremental investment without shareholder dilution.
- AFFO payout ratio -- Approximately 75%, supporting a consistent dividend growth trajectory.
- Total debt and leverage -- $17.1 billion in total debt and net debt to annualized calendar first-quarter 2026 adjusted EBITDA at roughly 5x, the low end of the 5x-5.5x leverage target range. (Calendar quarter ended March 31, 2026.)
- Interest and liquidity position -- Weighted average interest rate is 4.46% as adjusted for hedge activity; $3.1 billion total liquidity at quarter end, including $480 million in cash and $2.4 billion in revolver availability.
- AFFO guidance raise -- AFFO for 2026 now expected at $2.665 billion-$2.695 billion, or $2.44-$2.47 per diluted share; guidance excludes impact of transactions pending without scheduled closing dates.
- Dividend track record -- Dividend increased every year since 2018 IPO, reflecting an eight-year compound annual growth rate of 7%.
- Forward interest rate swaps -- Initiated as a hedge for upcoming 2026 and early 2027 debt maturities, despite minimal floating rate debt outside the revolver.
- Portfolio investment focus -- High single-digit percentage of total assets allocated to loans, with management emphasizing measured exposure and strong sponsor relationships.
- Las Vegas trends -- Noted recovery in Las Vegas visitor demand, major operator room and amenity investments, ongoing professional sports developments, and significant convention activity cited as sector drivers.
SUMMARY
VICI Properties (VICI +2.10%) signaled a period of sustained external growth by finalizing its largest volume of consecutive quarterly capital deployments, surpassing $1 billion in new commitments for both calendar fourth quarter 2025 and calendar first quarter 2026 (periods ended December 31, 2025, and March 31, 2026, respectively). The company’s balance sheet strategy was further clarified through explicit commentary on leverage management, hedging actions initiated ahead of sizable refinancing needs, and a detailed liquidity profile supporting ongoing and future acquisitions. Fiscal discipline was emphasized by management’s commitment to maintain incremental investments without increasing shareholder dilution, primarily enabled by substantial internally generated free cash flow. VICI Properties articulated a deliberate long-term focus on tenant and asset diversification—evidenced by new tenant additions and expanding exposure to both domestic and international experiential sectors. Strategic updates to 2026 guidance further underscore visible confidence in earnings durability while acknowledging the exclusion of uncommitted pipeline transactions from forecasted results.
- The executive team described a “secular focus” on experiential real estate as foundational to VICI Properties’ investment outlook, referencing external data that experience-related services outpaced aggregate personal consumption growth between 2023 and 2025.
- VICI Properties highlighted its capacity to deploy capital amid current market conditions, with management noting all three investment “pillars” (gaming, non-gaming, and amenity expansions with existing tenants) remain active engagement areas.
- Management confirmed readiness to employ alternative and international capital sources, including foreign currency debt, to optimize cost of capital for upcoming deals, citing flexibility as a core financial principle.
- Liquidity was further enhanced post quarter-end by settlement of all outstanding forward equity, partially funding the Golden acquisition.
- Management stressed ongoing dialogue with tenants for property-level amenity upgrades and emphasized an “active” pipeline for both gaming and non-gaming asset investments.
INDUSTRY GLOSSARY
- AFFO (Adjusted Funds From Operations): A REIT-specific cash flow metric adjusting FFO by removing non-cash items and adding back recurring capital expenditures to better reflect free cash.
- Cap rate: The rate of return on a real estate investment based on the income the property is expected to generate, calculated as net operating income divided by acquisition cost.
- Mezzanine loan: A hybrid debt arrangement commonly subordinate to senior debt, offering higher yield in exchange for increased risk; often used as part of construction project financing.
- Forward equity: An equity capital raising strategy where shares are issued at a later date pursuant to prior agreements, commonly used to match capital inflows with investment outflows in REITs.
Full Conference Call Transcript
Samantha Sacks Gallagher: Thank you, operator, and good morning. Everyone should have access to the company's first quarter 2026 earnings release and supplemental information. The release and supplemental information can be found in the Investors section of the VICI Properties Inc. website at 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.
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 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 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 and our first quarter 2026 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 Edward Baltazar Pitoniak, chief executive officer; John W. Payne, president and chief operating officer; David Andrew Kieske, chief financial officer; Gabriel F. Wasserman, managing director of business development; and others on the team. Edward and team will provide some opening remarks, then we will open the call to questions. With that, I will turn the call over to Edward.
Edward Baltazar Pitoniak: Thanks, Samantha, and good morning, everyone. This morning, you will hear from John W. Payne on our recent investment and growth activities, and you will hear from David Andrew Kieske on our financial results and updated 2026 earnings guidance. To start, I would like to thank the members of the VICI Properties Inc. team for their continued hard work. Contributions to the business, including their efforts around the deal activity we announced this quarter, are essential to our success and ability to deliver value to our owners. Today, I would like to share with you, in abbreviated form, the thoughts I shared in my recent annual report letter.
I will begin with this: The leaders of any business should always have a clear and cogent answer to the question, what business are you in? At VICI Properties Inc., the high-level answer to that question is, we are in the business of sourcing, allocating, and stewarding capital invested accretively in experiential real estate of enduring value. That could be the answer offered by any REIT or real estate investment management firm in America, save for one word: experiential. The 28 other REITs currently in the S&P 500 all have their own distinct adjectives in front of real estate, whether those modifiers be logistics, data center, office, residential, lodging, retail, self storage, etcetera.
Property types may differ, but we all wrestle with the key real estate investment attribute of relevance—and on the opposite end of the investment spectrum, obsolescence. The more relevant the real estate is to its intended end users, the greater the likelihood that the income and value of that real estate will be sustained and potentially grow. The relevance of a property is ultimately determined by the people who use the real estate for its intended purpose. And for that reason, I believe that real estate investment insights are ultimately cultural insights.
To evaluate the current—and moreover future—relevance and value of real estate requires the development of insights and forecasts into how people will live, work, play, heal, gather, create, and otherwise manifest the experience of living their lives now and over the lifespan of the investment. As I noted a moment ago, at VICI Properties Inc., we are strategically and organizationally committed to investing in experiential real estate, and that commitment is anchored in the insights and forecasts we have developed around the experience economy during our first eight years as a company. Spending trends support our thesis.
According to Mastercard, during the period of 2019 to 2023, when the COVID pandemic led to a spike in goods purchases, global spending on experiences nonetheless rose 65%, while spending on things only increased 12% over the same period—a more than five-to-one growth ratio favoring experiences. This momentum has persisted after the post-COVID boom. TD Cowen’s January 2026 report on the experience economy showed that experience-related services, like gaming, accommodations, sports, air travel, and other leisure-related spend, have seen an average annual growth rate of 5.2% from 2023 to 2025 compared to average annual total personal consumption expenditure, or PCE, growth of 2.9% during the same period.
The durability and persistence of this trend across multiple economic cycles, demographic shifts, and technological innovations supports the thesis that preference for experiences is not transient and instead signifies a deeper and enduring secular change. At VICI Properties Inc., we balance our secular focus with sharp attention to what is going on in the here and now. At any given time, we at VICI Properties Inc. believe we are responsible for managing our relationship and exposure to three key dimensions of impact: secular trend impact, cyclical trend impact, and idiosyncratic impact unique to VICI Properties Inc. Let me take each one of these dimensions of impact in reverse order.
By idiosyncratic impact, I mean developments unique to VICI Properties Inc. arising out of our specific business conditions. These can be issues or situations that generally do not have secular or cyclical causes, beyond our management control. These are issues that we can and must address through our own management actions. By cyclical trend impact, I mean cyclical developments and trends in our economy and our society. These are fluctuations that are likely beyond our—or any management team’s—control, but VICI Properties Inc.’s business model and our revenue income streams as a net lease REIT are generally not highly subject to material cyclical fluctuation. We also strive to invest in businesses and sectors that have lower-than-average cyclicality to mitigate cyclical risk.
By secular trend impact, as I noted above, I mean material and impactful changes in the ways in which people are living, working, playing, healing, gathering, creating, and otherwise manifesting the experience of living their lives. As with cyclical trends, secular change is beyond our management control. But what is within our control is identifying, understanding, and preparing for those changes, and consequently developing and executing responses that enable us to capitalize on positive developments and manage our risk exposure to potential negative developments in and around the experiential economy. As investors in large-scale, long-duration real estate, we work hard to be right about the secular.
If you get secular trends wrong, as a real estate investor, it is hard to overcome the value-eroding impact of negative secular impact. If you get secular trends right, you have more management capacity to seize opportunity and manage cyclical and idiosyncratic developments. The VICI Properties Inc. executive team was in Las Vegas two weeks ago, and around every corner, we witnessed the secular power of experiences. Secular is long term. Getting secular right represents long-term competitive advantage. And with that, I will turn it over.
John W. Payne: Thanks, Edward, and good morning to everyone. VICI Properties Inc. had an active first quarter with approximately $1.2 billion in new capital commitments. The last two quarters—Q4 2025 and Q1 2026—represent the first consecutive quarters during which VICI Properties Inc. has announced more than $1 billion in new capital commitments sequentially in the company’s history. This quarter, we announced an expansion of our long-term strategic relationship with Cain and Eldridge Industries by providing a $1.5 billion mezzanine loan as part of the construction financing for the One Beverly Hills development project. The mezzanine loan represents a $1.05 billion incremental commitment beyond our previously announced $450 million investment.
Construction on the development commenced in 2024, with vertical works beginning in fall 2025, and phased delivery is scheduled to commence in 2028. VICI Properties Inc. also had international gaming real estate activity during the quarter. We announced the pending $144 million acquisition of four real estate assets located in Alberta, Canada, at an 8% cap rate in connection with Pure Casino Entertainment’s pending take-private acquisition of Game Host. This transaction is emblematic of VICI Properties Inc.’s ability to help our existing tenants execute on their growth strategies through the monetization of their real estate. Having worked alongside IGP and Pure for the last few years, we have appreciated their ability to operate and grow a very effective gaming platform.
Subsequent to quarter end, we entered into a new lease agreement with Clairvest in connection with the closing of Clairvest’s acquisition of Northfield Park in Ohio from MGM. This transaction added VICI Properties Inc.’s fourteenth tenant, further diversifying our tenant roster, which has always been a core portfolio management objective since VICI Properties Inc.’s inception, and there was no change to total rent collected by VICI Properties Inc. Last week, we also announced that all gaming regulatory and shareholder approvals have been met for the previously announced $1.16 billion Golden transaction; we expect this acquisition to close today.
This transaction reflects VICI Properties Inc.’s strategic entry into real estate ownership in the Las Vegas locals market, which has deeply rooted, loyal customer bases and attractive demographic tailwinds, and it highlights our ability to transform relationship-building efforts into constructive growth for our shareholders. To continue on the thread of Las Vegas, operator reports this week have demonstrated improvements in Q1. There was strong convention-related activity during the quarter with about 140 thousand ConExpo/Con-AGG attendees in March, and operators are continuing to address the value issue with MGM and Caesars offering promotional deals catering to value-oriented consumers.
There are plenty of demand drivers, particularly around professional sports and entertainment, that continue to make Las Vegas a draw for a wide range of consumers for the foreseeable future. Construction on the A’s stadium has started. The NBA has voted to pursue a Las Vegas franchise. And the annual spring WWE event brought over 100 thousand attendees to the city a few weeks ago. Furthermore, our tenants continue to invest heavily in the assets we own on the Strip—from MGM Grand’s $300 million room remodel to the Omnia Day Club development out front of Caesars Palace, to the renovation of the Mirage and the building of the absolutely incredible Hard Rock guitar tower.
We acknowledge the emerging changes that exist in the gaming space, from iGaming’s expanding presence to the growing, though largely unregulated, prediction markets, to the stabilization of online sports betting. But we do believe that brick-and-mortar gaming assets in the right markets, operated by the right operators, will retain sticky consumer bases and continue to perform well. At the same time, we will continue our broader long-term strategy that includes diversifying our tenant base, continuing to invest in other experiential real estate, and managing a portfolio set to benefit from the secular trends Edward mentioned in his opening remarks. Now I will turn the call over to David, who will discuss our financial results and guidance.
David Andrew Kieske: Thanks, John. I want to start with a few numbers that I believe best capture what VICI Properties Inc.’s business has been designed to do. In the first quarter, on a year-over-year basis, we grew AFFO per share by 4.5% while only increasing our share count by roughly 1%. This sustainable, efficient growth is made possible by the fact that our business generates about $650 million of free cash flow annually, and we have been able to deploy that free cash flow into incremental investments without having to dilute our shareholders. Furthermore, VICI Properties Inc. has an AFFO payout ratio of approximately 75%.
We are focused on maintaining our ability to continue to grow our dividend, which we have done every single year since we have been public in 2018, posting a peer-leading eight-year dividend growth CAGR of 7%, and intend to continue to protect the sanctity of the dividend as we strive to continue to grow the business both organically and externally. Each year’s growth is supported by a strong balance sheet. Our total debt is $17.1 billion, and our net debt to annualized first-quarter adjusted EBITDA is approximately 5x, at the low end of our target leverage range of 5x to 5.5x.
We have a weighted average interest rate of 4.46% as adjusted to account for our hedge activity, and a weighted average 5.7 years to maturity. As of 03/31/2026, we have approximately $3.1 billion in total liquidity comprised of approximately $480 million in cash and cash equivalents, $142 million in estimated proceeds available under our outstanding forwards, and $2.4 billion of availability under our revolving credit facility. I would note that subsequent to quarter end, we settled all remaining outstanding forward equity to partially fund the Golden transaction, which, again, as John mentioned, is closing today. Turning to guidance, we are raising AFFO guidance for 2026 in both absolute dollars as well as on a per-share basis.
AFFO for the year ending 12/31/2026 is expected to be between $2.665 billion and $2.695 billion, or between $2.44 and $2.47 per diluted common share. As a reminder, our guidance does not include the impact on operating results from any pending acquisitions without announced expected closing dates, possible future acquisitions or dispositions and related capital markets activity, or other nonrecurring transactions or items. With that, operator, please open the line for questions.
Operator: Thank you. As a reminder, to ask a question, please press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. Please limit yourself to one question and one follow-up. One moment for questions. Our first question comes from Barry Jonathan Jonas with Truist. You may proceed.
Barry Jonathan Jonas: Hey, guys. Good morning. Thank you for taking my questions. Your loan book is expanding again. Curious how you think about the right mix there versus traditional sale-leaseback.
David Andrew Kieske: Yeah, Barry. It is a strategic tool that we have in our toolkit to develop long-term relationships. And, as you know, some of the loans have direct pathways to real estate ownership, and others have the ability to learn about sectors that we would like to own the real estate in over time. We feel pretty good about where the size is right now. We are at high single digits in terms of percent of total assets, and we are very mindful of the fact that these loans will get repaid over time.
But we have developed very good relationships with the sponsors and the operators and the owners of these businesses such that there may be future opportunities to deploy these proceeds either into real estate or incremental credit opportunities going forward.
Barry Jonathan Jonas: Thanks, David. That is really helpful. Then just for a follow-up, I would just broadly ask what the pipeline is looking like right now. If you could maybe talk about how the mix between gaming and non-gaming is looking, that would be helpful.
John W. Payne: Hey, Barry. Good morning. Not much different than the past couple of quarters. We continue to spend quite a bit of time on the casino side. We obviously have announced over the past couple of quarters some deals with some new tenants that we are very excited about—not only the deals we have with them, but where we could potentially grow in the future. So we continue to look at opportunities in the casino space. We also are spending time in the same categories that we have talked to you about, whether that is unique attractions, university and professional sports or surrounding development, golf, and pilgrimage resorts, and unique opportunities.
The other thing, we are spending some time with our current tenants—are there new amenities at their existing properties that we can continue to build out with them on a larger scale? So I guess all three pillars are active at this time. I could not give you a pie of where I am spending my time, but I would say all three we are spending time on.
Operator: Thank you. Our next question comes from Caitlin Burrows with Goldman Sachs. You may proceed.
Caitlin Burrows: Maybe just a follow-up on that last point. You mentioned that new amenities at existing properties is one of your opportunities. I know when you guys initially announced the partner property growth fund opportunity with the Venetian, like, two years ago now, there was a potential incremental $300 million of funding, which I feel like you have not talked about in a while. So is that not potentially happening, or what can we expect there?
David Andrew Kieske: Hey, Caitlin. Good to hear from you today. It is still potentially happening. If anybody has walked the Venetian over the last couple of years, you can see the transformations that the team has done, led by, you know, Patrick Nichols and Rob Brimmer and all the folks that go to work very hard every day within the proverbial four walls of that asset. They have put in new assets, room remodels, updated the convention space, and it initially used $400 million of our capital, and we are in constant dialogue about their future capital plans and what they might continue to add to that asset to continue to grow the revenue base there.
John W. Payne: There are probably some other opportunities with tenants as well we continue to speak about. We are just not prepared to talk about that today.
Caitlin Burrows: Okay. So as it relates to the Venetian one, sounds like just wait and see over the next six months or so to see if that materializes or not.
David Andrew Kieske: Yeah. I think that is right, Caitlin. And, look, our capital is flexible, and there is an outside date on it, but if they wanted to go longer, we would be willing to go longer with that.
Caitlin Burrows: Yeah. Makes sense. Okay. And then in the earnings release, you mentioned that you guys entered into forward interest rate swaps, which I guess I was a little surprised by since you do not have that much floating rate debt. I was wondering if you could just go through the thinking there and under what circumstance you expect to use that?
David Andrew Kieske: Yeah. No, you are right, Caitlin. We do not have any floating rate debt other than our revolver, but these are forward-starting interest rate swaps to start to leg our way into an interest rate hedge portfolio ahead of our upcoming refis, which we have maturities in September and December this year, and then turning the corner into February 2027. In the interest rate market, you can either do forward-starting swaps or treasury locks, and we have started to build up a portfolio of forward-starting swaps to lock in the base rate.
Caitlin Burrows: Got it. Thanks.
David Andrew Kieske: Thank you.
Operator: Our next question comes from Smedes Rose with Citi. You may proceed.
Analyst: It is Nick Joseph here with Smedes. Curious what feedback you are getting from tenants just on underlying demand trends, given the relatively fluid macro outlook?
John W. Payne: Yes. We have watched, as you have, many of our tenants who are in the public markets announcing about the consumer and their results. And you can see that in their results. Obviously, the regional markets have performed steady is the best way I would describe it. Las Vegas is going through a transition. You can see that it turned the corner from some of the slowness that they had. They are making adjustments to their business models, which you have heard from us for over eight years. These are the best operators in the world. They know how to adjust their businesses accordingly, and they are doing it right now.
They will also get the bumps over the coming years of new attractions coming to Las Vegas, which always has benefited that market. So as new assets open up, as new product opens up, trial will open up. They can price their business accordingly a little bit faster in the regional markets than they can in the Las Vegas markets, but you can see from the results that they are quite good.
Analyst: Thanks. And then just hoping you could give an update on the Caesars regional leases—how those assets are performing right now. And then, obviously, there have been some press reports about Caesars—any potential impact if there is a privatization there?
Edward Baltazar Pitoniak: Yeah. Maybe to take those questions in reverse order, Caesars has not confirmed anything, and thus everything that is being talked about is rumors. And, as a fundamental practice, we do not comment on rumors. As concerns Caesars’ regional trends, you obviously saw their results, which they released on Tuesday. What we are certainly seeing is the benefits of the CapEx that Caesars has very smartly invested in a number of regional assets over the last couple of years—notably places like New Orleans and now Lake Tahoe. And I think what we are clearly seeing—and I believe the market is seeing as well—are the benefits of that CapEx.
And I think it is also notable to see the narrative reemphasis Caesars is putting on its database. They spoke about the importance of its database in relation to its digital strategy during their earnings call on Tuesday. And I think it is key to remember that so much of the database—and John knows way better than I do—so much of that database is generated by the regional spokes in the Caesars hub-and-spoke system.
Operator: Thank you. Our next question comes from Chris Darling with Green Street. You may proceed.
Chris Darling: Regarding the Cain Eldridge relationship, can you speak to your vision for that partnership over time? I find the notion of partnering with a private capital source interesting in terms of furthering your own growth plans, particularly if you may not feel comfortable issuing equity capital at various points in time.
Edward Baltazar Pitoniak: Yeah. Good to talk to you, Chris. What we have learned about Cain and Eldridge over now, I guess, almost two years that we have been partnering with them is that they have a vision of the world and the experiential economy that is very, very synchronous and aligned with ours. And what we really value in Cain and Eldridge is, frankly, the energy of their animal spirits in terms of identifying and seizing opportunities globally. And they are obviously an example, Chris, of the power of insurance capital pools at this particular moment in time and at this particular phase of global capital formation.
And so, very much to your point, we believe that as responsible stewards of VICI Properties Inc.’s capital, we need to constantly be monitoring the landscape of global capital formation and identifying pools of capital that may be very valuable to our business—the growth of our business, the durability of our business—wherever that capital may come from. And we are certainly not the first to do that. You have certainly seen over the decades very great REITs like Prologis pursue such a strategy. I would not say that we are necessarily going to mirror that strategy, but we are certainly going to look to grow with great partners. And Cain and Eldridge are certainly an example of that.
Chris Darling: That is helpful. And then maybe just switching gears for a follow-up. With the Golden deal closing today, can you speak to how that team is thinking about growing their business? And specifically, I wonder if there is anything related to new acquisitions, reinvestment into the existing portfolio—anything like that where you can play a role in the near term.
John W. Payne: Yeah. It is a great question. One of the things that we are excited about and have been excited about since we started meeting with the Golden team—and, obviously, as we announced, that transaction will close today—is we will begin that work. This transaction closes today; we will begin that work on areas where we can grow together. I do know the team there is anxious to continue to look at unique opportunities to see their portfolio be diversified.
And our capital can help them in many ways—to your point—not only as we look together at acquiring new assets, but how can our capital help them at their existing assets, adding amenities that can attract new consumers and grow their EBITDA. We had initial talks on those, and we will continue, now that the deal is closed, to really refine those over the coming months and years.
Operator: Our next question comes from John G. DeCree with CBRE Capital Advisors. You may proceed.
John G. DeCree: Hi, guys. Thank you for taking my questions. Edward, you just kind of talked about attractive pools of capital, I guess kind of in the equity sense. Maybe Edward or David, curious if you thought about other pools of capital or sourcing debt capital—international financing sources. I noticed the financing in Canada for the Pure Gaming deal. I would say base rates are a bit lower there. One of your tenants went for the yen carry trade—they obviously have a project, MGM in Japan. But curious if there are opportunities for more creative debt capital uses to kind of tick down your overall cost of capital.
David Andrew Kieske: Yeah, John. Always good to hear from you. It is a great question and one that we have talked about since our inception. You go back to the beginning of VICI Properties Inc., and we kind of had a very unnatural balance sheet for a REIT, and we worked hard to transition that balance sheet into a more standard—and obviously investment-grade—balance sheet. And we have always been trying to be forward-looking around where we can source alternative forms of both debt capital as well as potentially equity capital at some point in the future, and you are spot on with our recent acquisitions in Canada—there could be an opportunity to issue debt up there.
We have, on and off, looked at things overseas and looked at the various financing markets that other triple-net lease REITs and even other REITs take advantage of, whether it be euro- or sterling-denominated. And then we watch what other net lease REITs have recently done—some of the larger REITs—in terms of accessing private capital. And so, as Edward said, being a good steward of capital and finding the most attractive pools, partners, and opportunities for us is something we work hard at every day.
John G. DeCree: Thanks, David. John, in your prepared remarks, you highlighted the increase in investment activity the last couple of quarters. Is there anything you attribute that kind of success and increased activity to? Is it just the kind of stars aligned? I know these transactions and investments take quite a while to bake, but is there anything changed? Or what would you attribute the ability to get some capital to work the last couple of quarters?
John W. Payne: Hey, John, good to hear from you. I do not think anything has changed. I think you described it very well at the beginning of the question, which was some of these larger deals take time. When we are doing billion-dollar acquisitions or credit deals, they take time. I am not saying that a $50 million deal does not take time, but we need to be diligent about our evaluation of the deal, and it simply works out—the timing just works out when we are ready to execute.
Edward Baltazar Pitoniak: And, John, I just want to add that I had a little bit of a bet with my colleagues that despite all the activity in Q1—and thank you for recognizing all that activity—that somebody would use the term “quiet” to describe the quarter. And indeed, a couple did. But I have been very proud of myself for not blowing a gasket.
John G. DeCree: Great. I appreciate it. It is always good to talk to you.
David Andrew Kieske: Thanks, John.
Operator: Thank you. Our next question comes from Ravi Vijay Vaidya with Mizuho. You may proceed.
Ravi Vijay Vaidya: Hi there. Good morning. Hope you guys are doing well. I wanted to ask a little bit more about the Caesars regional lease here. Are there active negotiations or discussions regarding a lease? Or are we seeing if the recent CapEx improvements at a number of these assets—it seems like they are off to a good start in producing improvements in property-level NOI—are we kind of in more of a wait-and-see mode regarding how those initiatives kind of flow through and subsequently improve the coverage there?
Edward Baltazar Pitoniak: Yeah. So, to the first part of your question, Ravi, we are not going to—and never will—comment on those kinds of discussions with any tenant. And then I will just reiterate what I said earlier about, yes, the positive evidence in terms of the CapEx paying off and the renewed focus on the part of Caesars to the power of the hub-and-spoke system as powered by the database, so much of which is developed at the regional level—brick-and-mortar location by brick-and-mortar location.
John W. Payne: Can I add one thing to that? Because I do think at times people judge where you put in capital—that is how you, that is the only way you grow the business. This is a business that ebbs and flows. It is controlled at times by the databases Edward described and the way the business can be—the incentives can be done—and understanding the consumer segments and targeting them in different ways often can move the business up and down. So capital is absolutely an important part of the business, but it is not everything about what drives revenues. There is loyalty. There is service. There is execution. There are offers.
And that is important to understand when you look at a complex business like the casino business.
Ravi Vijay Vaidya: Got it. That is really helpful color. Just one more here. Can you offer any comments on what is going on with Century Casinos? It seems that they have been under a strategic review for a little while, but I think the coverage is pretty healthy on those assets. Maybe discuss the disconnect between corporate credit and strong four-wall credit on that lease? Thank you.
David Andrew Kieske: Yeah, Ravi, you summed it up well. They have hired a bank and announced a strategic review. The asset-level coverage is very strong. They have very good execution at the asset level. And we do not have any inside baseball or anything that we could share about what is going on with the process. I think if you look at their leverage, it may be a little bit higher than some of the others, but they have a couple years to deal with that term loan that sits on their balance sheet.
You would have to ask that question directly to them for an update on what is happening there, but we feel good about the operations and the folks on the ground that go to work every day in our assets.
John W. Payne: And we like the results of the incremental capital in our property growth fund that we put in with them a few years ago at the Missouri asset. So we spend a lot of time there understanding that capital and what it has led to at this business.
David Andrew Kieske: Thank you.
John W. Payne: Thank you.
Operator: Thank you. Our next question comes from Daniel with Capital One Securities. You may proceed.
Analyst: Hello, everyone. Thank you for taking my questions. You all have a lot of leases linked to U.S. CPI in one way or another. Are there any particular months where you are really looking at the 8 a.m. report because it will have an outsized impact the following year?
Edward Baltazar Pitoniak: Yeah. Hi, Dan. The Caesars lease, the measurement period is July, August, September for a lease that resets every year on November 1. Beyond that, I believe Venetian resets in March, so the measurement period would be January. So, yeah, we follow it, obviously, but it is nothing we have any control over. We just wait until the score gets posted, and then we know what is going to happen from there.
David Andrew Kieske: Okay, Dan, the only thing I would add—and saw that in your note this morning—there is nothing assumed in guidance other than the base rates in our escalators.
Analyst: Okay. Great. Thank you. And then, you all own a few properties in New York and Atlantic City. One of the full commercial casinos opened in New York City recently. Are there any competitive pressures that you all or your gaming operator partners are thinking through there? Any color would be helpful.
John W. Payne: Well, it is a great question. Most likely, it should go to our tenants right now. Obviously, the Resorts World that opened in New York with table games happened two days ago, but I am sure the secret shoppers have started from our tenants. It is something we will continue to monitor. And our tenants will continue to monitor, and we will have conversations about that—where those customers are coming from. Is it a radius of 20 miles, 15 miles, 50 miles? They will learn over time.
But, clearly, if any new market opens up—whether that has been New York starting to open up, Virginia opening up in the past, Nebraska opening up over previous years—it is something that our tenants are aware of, and they continue to track and adjust their plans accordingly in their offices.
Analyst: Great. Thank you.
John W. Payne: You are welcome.
David Andrew Kieske: Thank you.
Operator: Our next question comes from an analyst with Morgan Stanley. You may proceed.
Analyst: Hey, great. Just my first one on the commentary of experiential real estate in the opening comments. Just thinking about the supplement and some of the sectors that you have not quite made it in yet, whether it is professional sports or theme parks or anything like that. Any updated commentary on how you are thinking about that opportunity and if we are getting closer? Is it sort of still wait and see?
John W. Payne: Well, it is hard to tell you exactly the timing of when a deal can be announced. What I would tell you is if you asked me that question a year ago compared to what I know today, it is very different. Our knowledge base of the players in whether it is university and professional sports infrastructure, whether it is the understanding of how surrounding developments around these arenas and new stadiums or universities—how they get done, how they take place, where our capital can be effective—we sure do know a lot more today than we did a year ago.
When I can tell you we can put our capital to work, or if we put our capital to work, I cannot answer that. But what I can tell you is we continue to see a large opportunity in professional and collegiate athletics, particularly in sports infrastructure.
Analyst: Great. That is really helpful. And then if I could just go back to the Cain and Eldridge—just a nonbinding sort of agreement. You do not often see these nonbinding agreements and so forth. Just a little bit more color around there. Is it sort of just the messaging that there is a partnership happening? Why not do something a little bit more binding?
Edward Baltazar Pitoniak: Well, it would be hard to do anything binding without a very clear sense of what the future will bring. To bind each other to what we might do together three or four years from now would seem very unnecessary and very unwise. And I think rather than focusing on whether an agreement is binding or nonbinding, for us the most important thing is alignment of views, alignment of values—probably most importantly—and establishing a relationship, as we have done through One Beverly Hills, that is founded on trust and a real desire to understand each other’s needs and how we can best serve each other’s needs.
David Andrew Kieske: Great.
Analyst: That is it for me.
John W. Payne: Thank you.
Operator: Thank you. Our next question comes from Richard Hightower with Barclays. You may proceed.
Richard Hightower: Hi. Good morning, guys. Thanks for squeezing me in here. David, since you brought it up in one of your earlier answers, I will assume it is fair game. But just to go back on the idea of VICI Properties Inc. sourcing private capital in some form going forward. I am assuming that you might have been referring to the Realty Income multiple announcements recently.
And so if I think about those particular announcements, in each case it sort of solves a very unique problem for both counterparties—whether it is in terms of, obviously, cost of capital to the REIT but also a particular group of assets, the cadence of deal flow, a particular risk profile that is sort of well suited for the other counterparty. And so, if I think of that as a template, what does that look like with VICI Properties Inc.? What form does that take, and how does that compare to just an institutional partner coming in and buying the stock at what is obviously a very attractive level here?
David Andrew Kieske: Yeah, look, Rich, I think your intro to the question hit on a lot of the things that we think about. But taking a half step back, the biggest thing we think about is where are alternative pockets of capital. And, obviously, Prologis started it many, many years ago with their fund business. Others have emulated that. I am not saying we are going into the fund business, but we watch and learn what others do.
There is a whole lot of focus on these high-grade capital solutions or these insurance pockets of capital, and it is something we are studying and learning and seeing if there might be a use for it—whether it be with existing assets or potentially future acquisitions. And it is a way to just continue to diversify. We want to diversify the portfolio of real estate, and it is important to have a diversified pool of capital sources to continue to execute on our growth ambitions over time.
Richard Hightower: Okay. That does make sense. And I guess maybe to follow up, if I think about your regular-way deal flow capacity—given that we have sort of exhausted the forwards, obviously got liquidity in other forms—but just help us put pencil to paper on what maybe your current total acquisition capacity is as the balance sheet stands today. Thanks.
David Andrew Kieske: Yeah. We sit at the low end of our leverage range, so we have got incremental debt capacity. As I mentioned in my comments, we have $650 million of true free cash flow—it is after dividends—on an annual basis. And, look, the stock is at a level that is not all that attractive to us right now, but we are not sitting on our hands. John and the business development team are hard at work every day sourcing opportunities.
The uniqueness about our business is that things take time, and as you have seen, they are lumpy and chunky, but we are confident that we can continue to execute our external growth plans with the sources of capital that we have available today.
Richard Hightower: Got it. Thank you.
David Andrew Kieske: Thanks, Rich.
Operator: I would now like to turn the call back over to Edward Baltazar Pitoniak for any closing remarks.
Edward Baltazar Pitoniak: I will just close out by thanking everybody who is on the call today. I recognize it is a very busy day in a very busy earnings season. We appreciate your time and support, and we will look forward to talking to you again in late July.
Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
