VICI Properties Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing, not a standalone fourth-quarter report. VICI is a REIT that owns gaming, hospitality, entertainment and leisure real estate, primarily leased to operators under long-term triple-net agreements.
Business and portfolio
- Owned 93 experiential assets—54 gaming properties and 39 other properties—in the United States and Canada. The portfolio was 100% leased, with a weighted average lease term of approximately 41.3 years, including extension options.
- Tenants generally pay property taxes, insurance, maintenance and other operating costs under triple-net leases. VICI reported 100% cash rent collection since its formation in 2017, including in 2023.
- Caesars and MGM accounted for approximately 76% of 2023 lease revenue combined. Las Vegas Strip properties generated approximately 49% of 2023 total revenue.
Financial performance and liquidity
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Total revenue | $3.612 billion | $2.601 billion | Up 38.9% |
| Net income attributable to common stockholders | $2.514 billion | $1.118 billion | Up 124.9% |
| Diluted GAAP earnings per share | $2.47 | $1.27 | Up 94.8% |
| AFFO attributable to common stockholders | $2.187 billion | $1.694 billion | Up 29.1% |
| Diluted AFFO per share | $2.15 | $1.93 | Up 11.8% |
| Cash provided by operating activities | $2.181 billion | $1.943 billion | Up $238 million |
- Leasing revenue rose to $3.421 billion from $2.461 billion, driven mainly by recent acquisitions and contractual rent escalators. Contractual leasing revenue was $2.905 billion; the difference reflects non-cash lease accounting adjustments.
- Net income growth was amplified by a much lower change in the allowance for credit losses: $103 million of expense in 2023 versus $834 million in 2022. Management attributes the prior-year charge largely to initial CECL allowances associated with much larger 2022 acquisition and loan-originations activity. The 2023 increase also includes non-cash initial allowances on new investments.
- Interest expense increased $278 million to $818 million, primarily reflecting additional debt and consolidation of the MGM Grand/Mandalay Bay property-level debt. The weighted average annualized debt interest rate, net of specified hedges, was 4.33% in 2023.
- Year-end cash and cash equivalents were $523 million. The company reported $2.326 billion of revolving-credit capacity and $382 million of potential proceeds from outstanding forward-sale agreements, for stated available liquidity of $3.231 billion. These forward-sale proceeds depend on settlement.
- Debt principal was $17.124 billion ($16.724 billion carrying value); 99% of principal had fixed rates. The company had $1.050 billion due in 2024, including notes maturing May 1, 2024. It reported covenant compliance at year-end.
- Operating cash flow was $2.181 billion; investing activities used $2.899 billion and financing activities provided $1.032 billion. The company paid $1.584 billion in dividends during the year.
Material changes and capital activity
- Invested approximately $4.1 billion in 2023 acquisitions, adding $291.5 million in annualized rent. Transactions included acquiring the remaining interest in the MGM Grand/Mandalay Bay joint venture, Canadian gaming properties, Rocky Gap Casino, 38 Bowlero centers and Chelsea Piers.
- Originated six debt investments with $698 million of commitments. At year-end, loan and securities principal was $1.176 billion, with $755 million of future funding commitments.
- Issued equity through forward-sale arrangements, settling shares for approximately $2.480 billion of net proceeds during 2023. The share count increased, and weighted-average shares outstanding rose to approximately 1.016 billion from 880 million.
- Raised the quarterly dividend to $0.415 per share in the third quarter, equivalent to an annualized rate of $1.66.
Outlook, risks and unusual items
- The filing provides no specific quantitative earnings or AFFO guidance. Management says it believes liquidity is sufficient for material cash requirements over the next 12 months, while noting that financing-market access and transaction economics remain uncertain.
- Management expects CPI-linked lease provisions to support rent growth over time, but caps and delayed start dates can limit increases relative to inflation. Higher interest rates may raise borrowing and refinancing costs and weigh on acquisition capacity and cash available for distribution.
- Key risks include dependence on tenant performance and gaming activity; concentration in Caesars, MGM and the Las Vegas Strip; tenant credit/default risk; regulatory approvals; substantial debt and refinancing needs; and the possibility that acquisitions, loans or purchase rights do not deliver expected returns.
- Climate-related exposures include water stress and heat in Nevada, as well as flooding and severe weather risks in other regions. VICI reported no environmental issues expected to have a material operational impact and no litigation believed likely to have a material adverse effect at year-end.
- Credit-loss allowances rely on modeled default and loss assumptions. A 10% increase in long-term default assumptions would increase the allowance by approximately $92 million; a 10% increase in loss-given-default assumptions would increase it by approximately $110 million, according to the filing’s sensitivity analysis.
- Deloitte issued unqualified opinions on the financial statements and internal controls. The auditor identified the allowance for credit losses as a critical audit matter because of the significant judgment involved in its assumptions and estimates.
Important facts for investors to verify
- Review Caesars’ and MGM’s financial condition and ability to meet lease obligations; together they represent roughly three-quarters of lease revenue.
- Assess the $1.050 billion 2024 debt maturity, subsequent refinancing or repayment, borrowing costs and remaining revolving-credit capacity.
- Separate recurring operating performance from non-cash lease accounting and CECL effects; compare AFFO and cash flows as well as GAAP net income.
- Check subsequent settlement of forward-sale shares, dilution and the resulting net proceeds; confirm whether the reported liquidity assumptions remain current.
- Track tenant rent coverage, lease escalators and CPI caps, portfolio concentration, and the performance and credit quality of newer acquisitions and borrowers.