01—Abstract
Summary
Summary of the 10-K filed February 23, 2022. Cited figures are marked; the original filing is the authoritative source.
VICI Properties Inc. (Maryland corporation, NYSE: VICI) owns and acquires gaming, hospitality and entertainment destinations under long-term triple-net leases.
As of December 31, 2021, its portfolio consisted of 28 properties, including Caesars Palace Las Vegas, Harrah's Las Vegas and the Venetian Resort (acquired February 23, 2022 for $4.0 billiona). Caesars was the largest tenant, generating 84% of total revenues for 2021. Total revenues rose to $1,509.6 million from $1,225.6 million, net income attributable to common stockholders was $1,013.9 million ($1.76 per diluted share), and AFFO increased 25.3% to $1,047.4 million.
Management reported that all tenants had fulfilled rent obligations through February 2022. The pending MGP Transactions, expected to close in the first half of 2022, would add MGP for total consideration of $17.2 billionb, including about $5.7 billion of assumed debt, and add $1,009.0 million of annualized rent from 15 properties. Post-closing, the company expects total pro forma consolidated indebtedness of approximately $15.5 billion, including about $4.4 billion of new debt to fund the cash redemption of MGM's units, and MGM and Caesars would be the largest tenants.
The filing states that closing is not conditioned on VICI obtaining financing, and it describes a $709.0 millionc termination fee payable to MGP in certain circumstances. At December 31, 2021, long-term debt was $4.75 billion in senior unsecured notes with no maturities until 2025, and cash was $739.6 million.
Following year-end, VICI entered into a $2.5 billiond revolving credit facility and a $1.0 billion delayed draw term loan, and it settled forward sale agreements for net proceeds of about $3.2 billion to help fund the Venetian acquisition. Investors should weigh the strong rent-based cash flow and the concentration in Caesars and the Las Vegas Strip against the substantial leverage and integration risk from the MGP transaction.
02—Key points
Key Highlights
- Total revenues increased 23.2% year-over-year to $1.5 billion in 2021, and AFFO increased 25.3% to $1,047.4 million, or $1.82 per diluted share.
- Caesars generated 84% of total revenues for 2021; following the Venetian Acquisition and MGP Transactions, Caesars and MGM are expected to represent approximately 42% and 36% of total estimated annualized cash rent, respectively.
- The pending MGP Transactions for approximately $17.2 billion would add $1,009.0 million of annualized rent from 15 properties and bring pro forma consolidated indebtedness to approximately $15.5 billion.
- The Venetian Acquisition closed February 23, 2022 for $4.0 billion, adding $250.0 million of initial annual rent under a 30-year lease, with LVS contingent lease payment support through 2023.
- All tenants had fulfilled their rent obligations through February 2022, and rent was collected 100% in cash during 2021.
- Quarterly dividend was increased to $0.36 per share ($1.44 annualized), a 9.1% increase over the prior quarterly dividend.
- Cash and cash equivalents were $739.6 million at year-end 2021, and the company had no debt maturities until 2025 at year-end.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 23, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $1.51B$1.23B | +23.2% |
| Cost of Revenue | $20.76M$17.63M | +17.8% |
| Gross Profit | $1.49B$1.21B | +23.3% |
| Interest Expense | $392.39M$308.61M | +27.1% |
| Net Income | $1.02B$896.21M | +14.2% |
| EPS (Basic) | $1.80$1.76 | +2.3% |
| EPS (Diluted) | $1.76$1.75 | +0.6% |
| Shares Outstanding (Basic) | 564.47M506.14M | +11.5% |
| Shares Outstanding (Diluted) | 577.07M510.91M | +12.9% |
05—Questions
Frequently Asked Questions
How concentrated is VICI's rental revenue?
Caesars accounted for 84% of total revenues in 2021. Properties on the Las Vegas Strip generated approximately 32% of total revenues in 2021, and after the Venetian Acquisition and MGP Transactions they are expected to generate about 45% of total estimated annualized cash rent.
What does the MGP acquisition add to VICI's portfolio?
The MGP Transactions would add 15 casino resort properties with $1,009.0 million of annualized rent, 33,000 hotel rooms, and 3.6 million square feet of meeting and convention space. Upon closing, VICI expects to have 43 properties, 10 of them on the Las Vegas Strip.
How will VICI finance the MGP transaction and what will leverage look like?
VICI expects to pay about $4.4 billion in cash to redeem a majority of MGM's operating partnership units, funded by long-term debt or a bridge facility, and to assume about $5.7 billion of MGP debt. Total pro forma consolidated indebtedness is expected to be approximately $15.5 billion, compared with $4.75 billion of long-term indebtedness at December 31, 2021.
Are VICI's dividends at risk following the MGP transaction?
The filing states that following the MGP Transactions, VICI may not continue to pay dividends at or above its current rate. Dividend decisions remain at the board's discretion, and the company may wish to retain cash to maintain its credit ratings.
What happens if the MGP transaction does not close?
The MGP Master Transaction Agreement may be terminated by either party if the Mergers have not closed by the Outside Date of November 4, 2022. VICI would also be required to pay MGP a termination fee of up to $709.0 million under certain circumstances, and it would have incurred significant transaction costs.
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