01—Abstract
Summary
Summary of the 10-K filed February 22, 2024. Cited figures are marked; the original filing is the authoritative source.
VICI Properties Inc. (VICI) reported full-year 2023 results in this Form 10-K, filed February 22, 2024, as an owner and acquirer of gaming, hospitality and entertainment properties leased to operators under long-term triple-net leases.
At December 31, 2023 the company owned 93 experiential assets (54 gaming properties and 39 other experiential properties) across the United States and Canada, with its properties 100% leased and a weighted average lease term including extensions of approximately 41.3 years. Caesars and MGM, its two largest tenants, represented approximately 40% and 35% of annualized rent at year-end. Total revenues were $3.61 billiona in 2023, up 38.9% from 2022, and net income attributable to common stockholders was $2.51 billion, or $2.47 per diluted share.
AFFO rose 29.1% to $2.19 billionb, or $2.15 per diluted share. The year's growth was driven largely by acquisitions. VICI invested over $4.1 billion to acquire 51 properties, including the MGM Grand/Mandalay Bay JV interest, its first international gaming assets in Canada, and its first other-experiential properties in sports, family entertainment and Chelsea Piers.
It also originated six debt investments totaling $698.2 millionc of commitments. Net income was also affected by a change in allowance for credit losses of $102.8 million in 2023, compared with $834.5 million in 2022. At year-end the company had $17.1 billion of debt, $522.6 million of cash, and roughly $2.3 billion of undrawn revolving credit capacity, and it reported compliance with all debt covenants.
The filing highlights concentration risk: the Las Vegas Strip generated approximately 49% of total revenues, and the company is dependent on tenant performance and the gaming industry. Key forward-looking items include Caesars Indianapolis put-call rights exercisable through December 31, 2024, a $1.1 billiond debt maturity on May 1, 2024, and a regular quarterly dividend that was raised to $0.415 per share in the third quarter of 2023.
02—Key points
Key Highlights
- Total revenues of $3.61 billion for 2023, up 38.9% year-over-year from $2.60 billion.
- Net income attributable to common stockholders of $2.51 billion, or $2.47 per diluted share, versus $1.12 billion in 2022; the filing attributes the increase primarily to the prior-year CECL allowance and transaction timing.
- AFFO increased 29.1% to $2.19 billion, or $2.15 per diluted share, up 11.8% per share.
- Invested over $4.1 billion to acquire 51 properties, adding $291.5 million in annualized rent, including first international property investments in eight Canadian gaming assets.
- Portfolio of 93 experiential assets, 100% leased, with a weighted average lease term including extensions of approximately 41.3 years; Caesars and MGM represent approximately 40% and 35% of annualized rent.
- Las Vegas Strip properties generated approximately 49% of total revenues in 2023, a material geographic concentration.
- Total debt of $17.1 billion at year-end, with $2.3 billion of available Revolving Credit Facility capacity and a $1.1 billion debt maturity due May 1, 2024; the company reported compliance with all debt covenants.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 22, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $3.61B$2.60B | +38.9% |
| Cost of Revenue | $27.09M$22.60M | +19.9% |
| Gross Profit | $3.58B$2.58B | +39.1% |
| Interest Expense | $818.06M$539.95M | +51.5% |
| Net Income | $2.51B$1.12B | +124.9% |
| EPS (Basic) | $2.48$1.27 | +95.3% |
| EPS (Diluted) | $2.47$1.27 | +94.5% |
| Shares Outstanding (Basic) | 1.01B877.51M | +15.6% |
| Shares Outstanding (Diluted) | 1.02B879.68M | +15.5% |
05—Questions
Frequently Asked Questions
How much rent is VICI collecting from its tenants?
The filing states that VICI collected 100% of rent in cash in 2023, and that all of its properties were 100% leased as of December 31, 2023. Caesars and MGM are its two largest tenants, representing approximately 40% and 35%, respectively, of annualized rent at year-end. The filing also notes that Caesars and MGM are obligated to pay approximately $1.2 billion and $1.1 billion, respectively, in estimated annual payments for 2024.
How concentrated is VICI's exposure to Las Vegas and to its largest tenants?
Properties on the Las Vegas Strip generated approximately 49% of total revenues in 2023, and the company expects this concentration to continue. Caesars and MGM together accounted for approximately 76% of total leasing revenues for 2023. The filing identifies this dependence on significant tenants and on the gaming industry as a material risk.
How does VICI's rent escalate over time?
All lease agreements provide for annual base rent escalations that may be fixed or variable. Escalators range from a flat increase of 1% to 2% annually to an increase of 1% in earlier years and the greater of 2% or CPI in later years, often subject to a CPI cap. The filing states that 50% of rental revenue was subject to a CPI-linked escalation in 2023, and 95% is eventually subject to one over the life of the leases, subject to applicable caps.
What growth opportunities does VICI have in its pipeline?
The filing describes an embedded growth pipeline that includes put-call and call rights, rights of first refusal and rights of first offer. Notable items include the Caesars Indianapolis put-call (exercisable through December 31, 2024), the Caesars Forum Convention Center call and put rights, and a $120.0 million Cabot Citrus Farms delayed draw development loan convertible to real estate ownership. The filing notes these transactions remain subject to terms, due diligence, regulatory approvals and closing conditions, and that the company may not be able to finance them on attractive terms.
What are the main risks to the dividend and balance sheet?
The filing identifies several risks: tenant defaults or bankruptcy, rising interest rates (with 99.0% of debt at fixed rates and 1.0% variable), and reliance on capital markets for growth financing. VICI had $17.1 billion of debt at year-end, and the filing states that its REIT status requires distributing at least 90% of REIT taxable income. Quarterly dividends are at the discretion of the Board of Directors, and the dividend was raised to $0.415 per share in the third quarter of 2023.
06—Continue