01—Abstract
Summary
Summary of the 10-K filed February 23, 2023. Cited figures are marked; the original filing is the authoritative source.
VICI Properties Inc. (NYSE: VICI) reported in its 2022 Form 10-K that it owns 49 gaming facilities in the United States and Canada, leased on long-term triple-net terms to tenants including Caesars and MGM, which together represented 43%a and 36%, respectively, of annualized rent as of December 31, 2022.
Total revenues rose to $2,600.7 millionb in 2022 from $1,509.6 million in 2021, and net income attributable to common stockholders was $1,117.6 million, or $1.27 per diluted share. The company stated that AFFO increased 61.7% to $1,693.8 million, or $1.93 per diluted share, and that it collected 100% of rent in cash. Net income per diluted share declined 27.7%, primarily due to an $834.5 million increase in the allowance for credit losses, mostly driven by initial CECL allowances on 2022 acquisitions and originations.
The year was dominated by the April 2022 MGP Transactions, in which VICI acquired MGM Growth Properties for total consideration of $11.6 billionc plus the assumption of approximately $5.7 billion of debt, adding $1,012.2 million of annualized rent. Other major activity included the Venetian Acquisition for $4.0 billion in cash, the Foundation Gaming and PURE Canadian Gaming transactions, and more than $1.2 billion of loan commitments. Subsequent to year-end, VICI closed the acquisition of the remaining 49.9% interest in the MGM Grand/Mandalay Bay JV from BREIT for $1,261.9 million in cash, assumed $1,497.0 million of the property-level debt, and raised equity through forward sale settlements and a January 2023 offering.
At December 31, 2022, long-term indebtedness totaled approximately $15.45 billiond, consisting of $13.95 billion of senior unsecured debt and a $1.5 billion pro-rata share of secured property-level debt. Cash and cash equivalents were $208.9 million, and the company reported $2.5 billion of revolver capacity, with no debt maturities until May 2024. Key risks highlighted include dependence on Caesars and MGM, concentration in the Las Vegas Strip (about 45% of 2022 revenues), REIT distribution requirements, and rising interest rates.
02—Key points
Key Highlights
- Total revenues increased 72.3% year-over-year to $2,600.7 million, driven by the MGP Transactions, the Venetian Acquisition and the Foundation Gaming Transaction.
- Net income attributable to common stockholders rose 10.2% to $1,117.6 million, but diluted EPS declined 27.7% to $1.27 due to the CECL allowance and a higher weighted average share count.
- AFFO increased 61.7% to $1,693.8 million, or $1.93 per diluted share, up 6.1% on a per-share basis, and the company collected 100% of rent in cash.
- The MGP Transactions, closed April 29, 2022, added $1,012.2 million of annualized rent; the Venetian Acquisition added $250.0 million.
- Caesars and MGM are the largest tenants at 43% and 36% of annualized rent, respectively, as of December 31, 2022; the Las Vegas Strip generated about 45% of 2022 total revenues.
- Post year-end, VICI acquired BREIT's 49.9% interest in the MGM Grand/Mandalay Bay JV for $1,261.9 million cash and assumed $1,497.0 million of pro rata debt.
- Total debt was approximately $15.45 billion at year-end 2022, with a weighted average interest rate of 4.39% for the year, and no debt maturities until May 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 23, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $2.60B$1.51B | +72.3% |
| Cost of Revenue | $22.60M$20.76M | +8.9% |
| Gross Profit | $2.58B$1.49B | +73.2% |
| Interest Expense | $539.95M$392.39M | +37.6% |
| Net Income | $1.12B$1.02B | +9.2% |
| EPS (Basic) | $1.27$1.80 | −29.4% |
| EPS (Diluted) | $1.27$1.76 | −27.8% |
| Shares Outstanding (Basic) | 877.51M564.47M | +55.5% |
| Shares Outstanding (Diluted) | 879.68M577.07M | +52.4% |
05—Questions
Frequently Asked Questions
Why did diluted EPS decline even though net income increased?
The filing states that net income attributable to common stockholders increased 10.2% to $1,117.6 million, but diluted EPS fell 27.7% to $1.27, primarily due to the impact of the CECL allowance and an increased weighted average share count. The change in allowance for credit losses was an $834.5 million expense in 2022, compared with a $19.6 million benefit in 2021.
How concentrated is VICI's rent base?
Caesars and MGM are the two largest tenants, representing 43% and 36%, respectively, of annualized rent as of December 31, 2022. The filing states that these two tenants comprise approximately 79% of total estimated annualized cash rent. Properties on the Las Vegas Strip generated approximately 45% of total 2022 revenues.
What did VICI acquire in 2022 and what is pending after year-end?
In 2022, VICI closed the MGP Transactions for total consideration of $11.6 billion plus approximately $5.7 billion of assumed debt, the Venetian Acquisition for $4.0 billion in cash, and the Foundation Gaming Transaction for $293.4 million. Subsequent to year-end, it closed the MGM Grand/Mandalay Bay JV interest acquisition on January 9, 2023 and the PURE Canadian Gaming Transaction on January 6, 2023. The Rocky Gap Casino acquisition for $203.9 million remained pending and was expected to close in mid-2023.
How is VICI funding its growth and what is its liquidity position?
As of December 31, 2022, the company had $208.9 million of cash and cash equivalents, $217.3 million of short-term investments, $2.5 billion of Revolving Credit Facility capacity, and $1,272.2 million of proceeds available from forward sale settlements, totaling $4,198.5 million. The company completed a $5.0 billion inaugural senior unsecured notes offering in April 2022 and a $1.0 billion equity offering in January 2023. The filing states it has sufficient liquidity for the next 12 months.
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