VICI Properties Inc. — Q1 2024 Form 10-Q
Business context and reporting period
For the three months ended March 31, 2024. VICI owns gaming, hospitality and other experiential real estate, primarily leased under long-term triple-net agreements; it also owns four golf courses and makes real estate debt investments. At quarter-end, its portfolio comprised 93 assets, was 100% leased and had a weighted-average lease term of approximately 42.5 years, including renewal options.
Key financial metrics
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Total revenue | $951.5 million | $877.6 million; up 8.4% |
| Net income attributable to common stockholders | $590.0 million; $0.57 per diluted share | $518.7 million; $0.52 per diluted share |
| Adjusted funds from operations (AFFO), non-GAAP | $583.2 million; $0.56 per diluted share | $528.6 million; $0.53 per diluted share |
| Cash provided by operating activities | $543.7 million | $522.0 million |
| Total assets | $44.2 billion | $44.1 billion at December 31, 2023 |
| Debt | $17.1 billion principal; $16.7 billion carrying value, net | $17.1 billion principal at December 31, 2023 |
| Cash and short-term investments | $514.9 million | $522.6 million cash at December 31, 2023 |
| Quarterly dividend declared | $0.415 per share | $0.390 per share |
Net income attributable to common stockholders as a share of revenue was approximately 62.0%, versus 59.1% a year earlier. VICI reported $765.3 million of Adjusted EBITDA, a non-GAAP measure, up from $710.3 million. The company cautions that non-GAAP measures are not substitutes for GAAP results or liquidity measures.
Material changes versus the prior period
- Revenue growth primarily reflected rent from properties added in 2023—including the remaining interest in the MGM Grand/Mandalay Bay joint venture, Century properties, Bowlero and Chelsea Piers—and contractual rent escalators.
- Income from loans and securities rose $12.1 million, reflecting increased funded loan balances, partly offset by repayments.
- Operating cash flow increased $21.7 million. Investing cash outflow was much lower than in Q1 2023, which included the $1.27 billion MGM Grand/Mandalay Bay joint venture interest acquisition.
- The credit-loss provision was $106.9 million, down $4.6 million year over year. The total allowance for credit losses was approximately $1.56 billion at quarter-end, versus $1.45 billion at year-end. Management cited increased reasonable-and-supportable-period default probabilities for several tenants and guarantors, partly offset by model updates. Management reported that all leases and loan investments were current and none were on non-accrual status.
- In March, VICI LP issued $1.05 billion of notes due 2034 and 2054 and used the proceeds to redeem approximately $1.05 billion of notes due in 2024. The new notes carry coupons of 5.750% and 6.125%. Total debt principal was broadly unchanged.
Outlook, risks and notable items
- The filing provides no specific full-year 2024 earnings or AFFO guidance. Management stated it believes available resources and expected funding sources are sufficient for material cash needs over the next 12 months and future periods, while noting capital-market access is not assured.
- Available liquidity was reported as approximately $3.53 billion, including cash, short-term investments, undrawn revolving-credit capacity and proceeds assumed from physical settlement of outstanding forward-sale shares. The latter two components are not cash already on hand.
- After quarter-end, on May 1, VICI agreed to provide up to $700 million for Venetian Resort improvements: $400 million scheduled to be funded in 2024 and an additional $300 million the tenant may draw through November 2026. Incremental rent is set at a 7.25% yield on funded capital, subject to the disclosed escalation terms. The prior $1.0 billion Venetian growth-fund agreement was terminated.
- At March 31, future funding commitments for loan investments and the Partner Property Growth Fund totaled approximately $1.20 billion in the contractual-obligations table; this included the $400 million initial Venetian commitment, not the optional additional $300 million.
- Credit and concentration risks include dependence on Caesars and MGM, which represented 36% and 38% of lease revenue, respectively; Las Vegas Strip properties generated approximately 48% of lease revenue. Management also cited interest rates, inflation, consumer spending and tenant financial performance as uncertainties.
- Approximately 99% of debt principal carried fixed interest rates; a one-percentage-point change in rates on variable-rate borrowings would change annual cash interest expense by an estimated $1.7 million. VICI reported compliance with debt covenants and no litigation expected to have a material adverse effect.
Important facts for investors to verify
- Tenant credit quality and rent coverage, particularly for Caesars and MGM, and developments in Las Vegas operations.
- The assumptions behind the $106.9 million quarterly credit-loss provision and the $1.56 billion total allowance.
- Funding, project execution and rent increases under the Venetian investment, plus other committed and optional funding obligations.
- 2025 debt maturities totaling $2.05 billion, refinancing terms and future borrowing costs.
- How AFFO and cash generation compare with dividends and investment commitments; AFFO per share was $0.56 versus $0.53 a year earlier despite higher total AFFO.