VICI Properties Inc. — 2021 Form 10-K
Business context and reporting period. This annual report covers the fiscal year ended December 31, 2021; the filing does not provide a separate fourth-quarter financial results breakdown. VICI is a gaming, hospitality and entertainment real estate owner, with most properties leased on a long-term triple-net basis. At year-end, its portfolio included 27 casino properties, four golf courses and real estate loans. The Venetian Resort acquisition closed on February 23, 2022, after year-end.
Financial performance and position
| Metric | 2021 | 2020 | Change / detail |
|---|---|---|---|
| Total revenue | $1.510 billion | $1.226 billion | Up 23.2% |
| Net income attributable to common stockholders | $1.014 billion | $891.7 million | Up $122.2 million; diluted EPS was $1.76 versus $1.75 |
| AFFO (non-GAAP) | $1.047 billion | $835.8 million | Up 25.3%; diluted AFFO per share was $1.82, up 11.0% |
| Cash from operating activities | $896.4 million | $883.6 million | Up $12.7 million |
| Cash and cash equivalents | $739.6 million | $316.0 million | At December 31 |
| Debt | $4.75 billion principal; $4.695 billion carrying value | $6.85 billion principal | Term Loan B repaid in September; outstanding notes are fixed-rate |
| Dividends | $1.38 per share declared | $1.255 per share declared | Quarterly rate increased to $0.36, or $1.44 annualized |
Cash flows from investing activities were positive $41.4 million and financing activities used $514.2 million; cash, cash equivalents and restricted cash increased $423.6 million. The weighted-average annualized interest rate on debt was 4.04%, down from 4.47%. No debt maturities were scheduled before 2025. At year-end, the company reported $1.0 billion of capacity under its then-existing secured revolver; that facility was replaced in February 2022 by a $2.5 billion unsecured revolver and $1.0 billion delayed-draw term loan.
Management reported collecting 100% of rent in cash in 2021. Revenue is highly concentrated: Caesars represented 84% of total revenue, while Las Vegas Strip properties generated approximately 32% of total revenue. Triple-net leases generally require tenants to pay property taxes, insurance, utilities, maintenance and repair costs.
Material changes and unusual items
- Revenue growth primarily reflected the 2020 Eldorado transaction and related lease changes, additional loan investments, and improved golf activity compared with pandemic-related 2020 closures.
- Operating expenses fell to $75.6 million from $321.0 million, principally because the 2020 period included a $244.5 million increase in the credit-loss allowance. In 2021, the allowance change was a $19.6 million reduction, reflecting improved tenant outlook assumptions and other model updates.
- Interest expense rose $83.8 million to $392.4 million, including $64.2 million of interest-rate swap settlement costs and bridge-facility commitment-fee amortization. The company repaid its $2.1 billion Term Loan B using equity proceeds.
- The 2020 comparison included a one-time $333.4 million gain from lease modifications related to the Eldorado transaction; no comparable gain occurred in 2021. These items affect year-over-year comparisons.
- VICI issued common stock and settled forward sales during 2021, increasing shares outstanding. The remaining March and September 2021 forward sales were physically settled in February 2022 for approximately $3.2 billion, used toward the Venetian acquisition.
Outlook, transactions and risks
- MGP transaction: At the filing date, the approximately $17.2 billion acquisition remained pending, subject to approvals and closing conditions, and was expected to close in the first half of 2022. It was expected to add 15 properties and about $1.009 billion of annualized rent before the planned Mirage separation. VICI anticipated assuming approximately $5.7 billion of MGP debt and incurring approximately $4.4 billion of additional debt for the cash redemption; estimated pro forma consolidated debt was approximately $15.5 billion. These were forward-looking estimates, not year-end balances.
- Venetian: The February 23, 2022 acquisition added a 30-year triple-net lease with initial annual rent of $250 million. LVS lease-payment support was limited, generally through 2023, and could end early if specified operating or ownership conditions occurred; the tenant’s obligations are not guaranteed by Apollo or its affiliates.
- All leased properties and golf courses were open at the time of the report, and tenants had paid rent through February 2022. Management said performance at many properties had reached or exceeded pre-pandemic levels, while warning of continuing risks from COVID-19 variants, restrictions, staffing, service levels and the durability of improved operating performance.
- Key exposures include dependence on tenants—especially Caesars—gaming-industry and Las Vegas concentration, tenant credit and debt-service capacity, regulatory approvals, interest rates and financing access, and execution and integration risks for major acquisitions. Management also cited REIT qualification and distribution requirements, tax-protection obligations related to MGP, climate and natural-disaster exposure, and possible lease renewals or tenant defaults.
- The board controls whether and how much to distribute. The filing does not give financial guidance for future revenue, earnings or AFFO, and states that future distributions and transaction benefits are not assured. At December 31, 2021, the company reported compliance with its debt covenants.
Most important facts for investors to verify
- Actual completion economics, financing costs, debt and rent contribution from the MGP transaction, including the effect of the Mirage sale and related lease.
- Post-acquisition leverage, interest expense, covenant headroom and liquidity after the Venetian purchase and settlement of forward sales.
- Caesars’ and other tenants’ capacity to meet rent, debt-service and capital-expenditure obligations; Caesars accounted for 84% of 2021 total revenue.
- The durability of rent collection and operating recovery amid pandemic, labor, inflation and travel risks, and the precise conditions and duration of Venetian lease support.
- Reconciliation of AFFO to GAAP earnings and cash flow, including non-cash lease accounting and credit-loss assumptions. The company reported a 3.12% allowance against the amortized cost of specified lease, loan and related exposures, and identified credit-loss estimation as a critical audit matter.
- Dividend coverage and sustainability: 2021 dividends declared were $1.38 per share, while future distributions remain discretionary and subject to cash flow, debt limits and REIT requirements.