– Announces Record Financial Results Driven By 72% Full-Year Revenue Growth –
– Closed on $22.8 Billion of Transactions in 2022 –
– Establishes Guidance for Full Year 2023 –
NEW YORK–(BUSINESS WIRE)–VICI Properties Inc. (NYSE: VICI) (“VICI Properties” or the “Company”), an experiential real estate investment trust, today reported results for the quarter and year ended December 31, 2022. All per share amounts included herein are on a per diluted share basis unless otherwise stated.
Fourth Quarter 2022 Financial and Operating Highlights
- Total revenues increased 100.9% year-over-year to $769.9 million
- Net income attributable to common stockholders increased 114.6% year-over-year to $604.1 million and, on a per share basis, increased 41.7% year-over-year to $0.63
- AFFO increased 74.8% year-over-year to $487.6 million and, on a per share basis, increased 15.5% year-over-year to $0.51
- Weighted average shares outstanding increased 51.4% year-over-year
- Announced the acquisition of the remaining 49.9% interest in the MGM Grand/Mandalay Bay joint venture and completed the acquisition subsequent to quarter-end
- Acquired two regional gaming assets through a sale-leaseback transaction with Foundation Gaming for $293.4 million
- Announced partnership with Canyon Ranch, providing up to $200.0 million in financing related to a development in Austin, Texas and purchase options for additional Canyon Ranch properties
- Announced $51.9 million Partner Property Growth Fund investment with Century Casinos Inc.
- Announced an agreement to provide up to $350.0 million in mezzanine loan financing for the construction of the Fontainebleau Las Vegas
- Entered into a lease agreement with Hard Rock related to the Mirage Hotel & Casino in Las Vegas
- Expanded existing partnership with Great Wolf Resorts through the origination of a construction loan of up to $287.9 million
- Completed an equity offering with aggregate value of $580.0 million in November 2022 and raised $212.4 million of gross proceeds under the ATM program
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Subsequent to quarter-end:
- Acquired four gaming properties in Alberta, Canada for C$271.9 million, representing the Company’s first international investment
- Completed a forward equity offering with an aggregate gross offering value of approximately $1.0 billion
Full Year 2022 Financial and Operating Highlights
- Total revenues increased 72.3% year-over-year to $2.6 billion
- Net income attributable to common stockholders increased 10.2% year-over-year to $1.1 billion and, on a per share basis, decreased 27.7% year-over-year to $1.27, primarily due to the impact of CECL and increased weighted average share count
- AFFO increased 61.7% year-over-year to $1.7 billion and, on a per share basis, increased 6.1% year-over-year to $1.93
- Announced and originated total investment volume of approximately $4.5 billion and completed $22.8 billion of acquisitions and investments, including the $4.0 billion strategic acquisition of the Venetian Resort Las Vegas and the $17.2 billion transformative acquisition of MGM Growth Properties LLC
- Increased annualized cash dividend by 8.3% in the third quarter
- Entered into a new $2.5 billion unsecured revolving credit facility
- Issued $5.0 billion inaugural investment grade senior notes
- Raised total equity proceeds of $1.3 billion through the Company’s ATM program and November equity offering
CEO Comments
Edward Pitoniak, Chief Executive Officer of VICI Properties, said, “In 2022, less than 5 years from our IPO, VICI became a Top 10 REIT in the RMZ REIT Index, a member of the S&P 500 and an investment grade issuer of credit. In the first half of the year, we completed our transformational acquisitions of MGM Growth Properties and the Venetian Resort Las Vegas, thereby becoming the leading real estate owner on America’s most dynamic commercial street, The Las Vegas Strip. In the second half of the year and into 2023, we demonstrated the advantage and flexibility provided by VICI’s scale and liquidity as we announced and originated approximately $4.5 billion of investments across a variety of gaming and non-gaming opportunities, diversifying our relationships and expanding internationally into Canada with our PURE Canadian Gaming announcement in January 2023. Finally, we are proud that VICI generated the highest—and only positive—total shareholder return of all S&P 500 REITs in 2022. We are confident that our 2022 activities and achievements will continue to put VICI in position for sustainable accretive growth and value creation for our shareholders into 2023 and beyond.”
Fourth Quarter 2022 Financial Results
Total Revenues
Total revenues were $769.9 million for the quarter, an increase of 100.9% compared to $383.2 million for the quarter ended December 31, 2021. The year-over-year increase in total revenues was primarily related to incremental revenue from the MGP Transactions (as defined below), which closed on April 29, 2022, and the Venetian Las Vegas Acquisition (as defined below), which closed on February 23, 2022. Total revenues for the quarter included $107.1 million of non-cash leasing and financing adjustments and $17.8 million of other income.
Net Income Attributable to Common Stockholders
Net income attributable to common stockholders was $604.1 million for the quarter, or $0.63 per share, compared to $281.5 million, or $0.44 per share, for the quarter ended December 31, 2021.
Funds from Operations (“FFO”)
FFO attributable to common stockholders was $614.1 million for the quarter, or $0.64 per share, compared to $281.5 million, or $0.44 per share, for the quarter ended December 31, 2021.
Adjusted Funds from Operations (“AFFO”)
AFFO attributable to common stockholders was $487.6 million for the quarter, an increase of 74.8% compared to $278.9 million for the quarter ended December 31, 2021. AFFO per share was $0.51 for the quarter compared to $0.44 per share for the quarter ended December 31, 2021.
Full Year 2022 Financial Results
Total Revenues
Total revenues were $2,600.7 million for the year, an increase of 72.3% compared to $1,509.6 million for the year ended December 31, 2021. The year-over-year increase in total revenues was primarily related to incremental revenue from the MGP Transactions, which closed on April 29, 2022, and the Venetian Las Vegas Acquisition, which closed on February 23, 2022. Total revenues for the year included $337.6 million of non-cash leasing and financing adjustments and $59.6 million of other income.
Net Income Attributable to Common Stockholders
Net income attributable to common stockholders was $1,117.6 million for the year, or $1.27 per share, compared to $1,013.9 million, or $1.76 per share, for the year ended December 31, 2021. The year-over-year increase in aggregate net income was primarily related to revenue from the MGP Transactions and the Venetian Las Vegas Acquisition, offset by the $834.5 million increase in the CECL allowance for the year ended December 31, 2022, which was primarily driven by the initial CECL allowances in relation to the MGP Transactions and the Venetian Las Vegas Acquisition. The year-over-year decline in net income attributable to common stockholders per share was driven by the increase in the CECL allowance for the year ended December 31, 2022 and the increased weighted average share count compared to the year ended December 31, 2021.
Funds from Operations (“FFO”)
FFO attributable to common stockholders was $1,144.8 million for the year, or $1.30 per share, compared to $1,013.9 million, or $1.76 per share, for the year ended December 31, 2021. The year-over-year decline in FFO per share was primarily related to the increase in the CECL allowance for the year ended December 31, 2022 and the increased weighted average share count compared to the year ended December 31, 2021.
Adjusted Funds from Operations (“AFFO”)
AFFO attributable to common stockholders was $1,693.8 million for the year, an increase of 61.7% compared to $1,047.4 million for the year ended December 31, 2021. AFFO per share was $1.93 for the year compared to $1.82 per share for the year ended December 31, 2021.
Fourth Quarter 2022 Acquisitions and Portfolio Activity
Acquisitions Activity
On December 1, 2022, the Company announced a definitive agreement pursuant to which it would acquire the remaining 49.9% interest in the joint venture that owns the MGM Grand Las Vegas and Mandalay Bay (the “MGM Grand/Mandalay Bay JV”) from Blackstone Real Estate Income Trust, Inc. (“BREIT”) for cash consideration of approximately $1.3 billion and the assumption of BREIT’s pro rata share of the existing $3.0 billion property-level debt. The MGM Grand/Mandalay Bay JV triple-net lease currently generates total annual rent of approximately $303.8 million and will generate total annual rent of approximately $310.0 million upon the commencement of the next rental escalation on March 1, 2023. Subsequent to quarter-end, on January 9, 2023, the Company closed on the acquisition. The cash consideration was funded through a combination of cash on hand and proceeds from the settlement of outstanding forward sale agreements from the November 2022 equity offering and sales under the ATM program.
On December 22, 2022, the Company acquired the real estate assets of the Fitz Casino & Hotel, located in Tunica, Mississippi, and the WaterView Casino & Hotel, located in Vicksburg, Mississippi, from Foundation Gaming & Entertainment, LLC (“Foundation Gaming”) for an aggregate purchase price of $293.4 million. The Company financed the acquisition with cash on hand. Simultaneous with the acquisition, the Company entered into a triple-net master lease agreement with subsidiaries of Foundation Gaming related to the real estate assets, which has an initial total annual rent of $24.25 million, representing an implied acquisition cap rate of 8.3%.
Subsequent to quarter-end, on January 6, 2023, the Company acquired four real estate assets from PURE Canadian Gaming Corp. (“PURE”) in Alberta, Canada: PURE Casino Edmonton, PURE Casino Yellowhead, PURE Casino Calgary, and PURE Casino Lethbridge (collectively the “PURE Portfolio”) for an aggregate purchase price of approximately C$271.9 million (approximately US$200.8 million). The Company financed the acquisition with a combination of cash on hand and a C$140.0 million (approximately US$103.4 million) draw under its revolving credit facility. Simultaneous with the acquisition, the Company entered into a triple-net master lease agreement with PURE covering the PURE Portfolio, which has an initial total annual rent of approximately C$21.8 million (approximately US$16.1 million), representing an implied acquisition cap rate of 8.0%.
Loan Originations
On October 18, 2022, the Company announced a partnership with Canyon Ranch, a pioneer in the integrative wellness space, whereby it has agreed to provide a delayed draw term loan facility for up to $200.0 million to fund the development of Canyon Ranch’s newest wellness resort offering, Canyon Ranch Austin, in Austin, Texas. The Company also received a call right to acquire the real estate of Canyon Ranch Austin upon stabilization and a purchase option for the real estate of Canyon Ranch Tucson in Tucson, Arizona and Canyon Ranch Lenox in Lenox, Massachusetts, should Canyon Ranch elect to sell the real estate of either property. If the call right and/or purchase options are exercised, Canyon Ranch would continue to operate the applicable wellness resorts subject to a long-term triple net lease with VICI. Canyon Ranch Austin is expected to open in 2025.
On December 27, 2022, the Company announced definitive agreements pursuant to which the Company has agreed to provide up to $350.0 million in mezzanine loan financing to a partnership between Fontainebleau Development, LLC, a builder, owner, and operator of luxury hospitality, commercial and retail properties, and Koch Real Estate Investments, the real estate investment arm of Koch Industries, to complete the construction of Fontainebleau Las Vegas, a 67-story hotel, gaming, meeting, and entertainment destination coming to the north end of the Las Vegas Strip. The investment was, and will continue to be, funded by the Company in accordance with a construction draw schedule. Fontainebleau Las Vegas is expected to open in the fourth quarter of 2023.
On December 30, 2022, the Company originated a construction loan for up to $287.9 million to Great Wolf Resorts, Inc. (“Great Wolf”) related to the development of a Great Wolf Northeast Lodge in Mashantucket, Connecticut, a family resort project adjacent to the Foxwoods Resort Casino. The investment is expected to be funded in accordance with a construction draw schedule.
Other Portfolio Activity
On October 3, 2022, the Company announced a management agreement with CDN Golf Management Inc. (“CDN”), an affiliate of Cabot, a developer, owner and operator of world-class destination golf resorts and communities, pursuant to which CDN manages VICI’s four golf courses: Cascata, Rio Secco, Grand Bear and Chariot Run (collectively, the “Golf Courses”). As of October 1, 2022, CDN assumed all day-to-day operations of the Golf Courses and all of the Company’s former employees at the Golf Courses are employees of CDN. The Company continues to own the Golf Courses within its taxable REIT subsidiary, VICI Golf LLC. The management agreement has a term of 20 years with two five-year renewal options upon mutual agreement, subject to certain early termination rights.
On December 5, 2022, the Company announced that it will provide approximately $51.9 million of capital through its Partner Property Growth Fund to its existing tenant, Century Casinos, Inc. (NASDAQ: CNTY) (“Century”), for the construction of a land-based casino with an adjacent 38-room hotel tower at Century Casino Caruthersville. The Company will own the real estate improvements associated with these projects and annual rent under the existing Century master lease will increase by approximately $4.2 million upon completion of such projects.
On December 19, 2022, the Company entered into a triple-net lease agreement with Hard Rock International (“Hard Rock”) with respect to the real property associated with the Mirage Hotel & Casino (the “Mirage”) in Las Vegas, Nevada in connection with Hard Rock’s previously announced acquisition of the operations of the Mirage from MGM Resorts International (NYSE: MGM) (“MGM”). The Mirage lease has an initial annual base rent of $90.0 million with other economic terms substantially similar to the MGM master lease. Additionally, the Company may fund Hard Rock’s planned redevelopment of the Mirage through VICI’s Partner Property Growth Fund, although specific terms of the potential funding remains subject to ongoing discussions in connection with Hard Rock’s broader planning of the potential redevelopment, as well as the negotiation of definitive documentation between VICI and Hard Rock.
Subsequent to quarter end, on February 15, 2023, the Company entered into a triple-net lease agreement with Cherokee Nation Businesses (“CNB”) with respect to the real property associated with the Gold Strike Casino Resort (“Gold Strike”) in Tunica, Mississippi in connection with CNB’s previously announced acquisition of the operations of Gold Strike from MGM. The Gold Strike lease has an initial annual base rent of $40.0 million with other economic terms substantially similar to the MGM master lease.
Annual base rent payments under the Company’s master lease with MGM were reduced by $90.0 million, to a total of $770.0 million, upon the close of MGM’s divestiture of operations of the Mirage and then further reduced by $40.0 million, to a total of $730.0 million, upon the close of MGM’s divestiture of the operations of Gold Strike.
Full Year 2022 Acquisitions and Portfolio Activity
Acquisitions and Investment Activity
Over the course of 2022, the Company announced and originated approximately $4.5 billion of acquisitions and investments at a weighted average initial yield of 6.6%.
Real estate acquisition volume totaled $3.3 billion, including: (i) the pending $203.9 million acquisition of the leasehold interest in the land and buildings associated with Rocky Gap Casino Resort, (ii) the $2.8 billion acquisition of the remaining 49.9% interest in the MGM Grand/Mandalay Bay JV (including the assumption of BREIT’s pro rata share of the existing $3.0 billion property-level debt), and (iii) the $293.4 million acquisition of the real estate assets of the Fitz Casino & Hotel and WaterView Casino & Hotel from Foundation Gaming.
Additionally, the Company entered into $1.2 billion of strategic financing partnerships, including: (i) mortgage financing for up to $80.0 million to fund the construction of new BigShots Golf facilities, (ii) the delayed draw term loan with Cabot for up to $120.0 million to fund the development of Cabot Citrus Farms and a purchase and sale agreement to convert a portion of the loan into real estate ownership, (iii) a mezzanine loan with Great Wolf for up to $59.0 million to fund the development of Great Wolf Lodge South Florida, (iv) a mezzanine loan with Great Wolf for up to $127.0 million to fund the development of Great Wolf Lodge Gulf Coast Texas, (v) a delayed draw term loan facility with Canyon Ranch for up to $200.0 million to fund the development of Canyon Ranch Austin, a call option for the real estate of Canyon Ranch Austin upon stabilization and a purchase option for the real estate of Canyon Ranch Tucson and Canyon Ranch Lenox, (vi) a mezzanine loan for up to $350.0 million to a partnership between Fontainebleau Development, LLC and Koch Real Estate Investments to complete the construction of Fontainebleau Las Vegas and (vii) a construction loan with Great Wolf for up to $287.9 million to fund development of a Great Wolf Lodge Northeast.
On February 23, 2022, the Company completed the previously announced transaction to acquire the land and real estate assets of the Venetian Resort Las Vegas for $4.0 billion in cash (the “Venetian Las Vegas Acquisition”), with an affiliate of certain funds managed by Apollo acquiring the operating assets of the Venetian Resort Las Vegas for $2.25 billion. The Company financed its portion of the Venetian Las Vegas Acquisition with proceeds from the settlement of an aggregate 119,000,000 forward equity shares, $600.0 million of borrowings under the Company’s unsecured revolving credit facility (which was subsequently repaid) and cash on hand.
On April 29, 2022, the Company closed on the previously announced acquisition of MGM Growth Properties LLC (“MGP”) and related transactions (the “MGP Transactions”). Under the terms of the MGP master transaction agreement, MGP stockholders received 1.366 shares of the Company’s newly issued common stock in exchange for each Class A common share of MGP, resulting in the Company issuing 214.6 million shares of common stock. The fixed exchange ratio represented an agreed upon price of $43.00 per share of MGP Class A common shares based on our trailing 5-day volume weighted average price per share of $31.47 as of July 30, 2021. MGM received $43.00 per unit in cash for the redemption of the majority of its units of MGP’s former operating partnership (“MGP OP”), which were converted into units of VICI Properties OP LLC, the Company’s operating partnership (“VICI OP”), in connection with the closing of the MGP Transactions, for total cash consideration of $4.4 billion financed with proceeds from the offering of the April 2022 Notes (as defined below). MGM retained approximately 12.2 million VICI OP units following the closing of the MGP Transactions. The MGP Class B share that was held by MGM was cancelled and ceased to exist.
Fourth Quarter 2022 and Full Year 2022 Capital Markets and Subsequent Activity
On February 8, 2022, the Company entered into a $2.5 billion unsecured revolving credit facility, scheduled to mature on March 31, 2026 and $1.0 billion delayed draw term loan facility. Concurrently, the Company terminated its existing secured revolving credit facility. The delayed draw term loan was available to be drawn up to 12 months following the effective date and subsequent to year end, on February 8, 2023, it expired undrawn in accordance with its terms.
On February 18, 2022, the Company settled 119,000,000 shares under the September 2021 and March 2021 forward sale agreements in exchange for approximately $3.2 billion of total cash proceeds to fund a portion of the Venetian Las Vegas Acquisition.
On April 29, 2022, in connection with the closing of the MGP Transactions, the Company issued $5.0 billion of inaugural investment grade senior notes, comprised of (i) $500.0 million of 4.375% Senior Notes due 2025, (ii) $1.25 billion of 4.750% Senior Notes due 2028, (iii) $1.0 billion of 4.950% Senior Notes due 2030, (iv) $1.5 billion of 5.125% Senior Notes due 2032, and (v) $750.0 million of 5.625% Senior Notes due 2052 (collectively, the “April 2022 Notes”). The adjusted weighted average interest rate for the April 2022 Notes was 4.51% after taking into account the impact of prior forward starting interest rate swaps and treasury locks. The Company used the net proceeds from the April 2022 Notes offering (i) to fund the consideration for the redemption of a majority of MGM’s outstanding MGP OP units, which were converted into VICI OP units received by MGM in connection with the closing of the MGP Transactions, for $4.4 billion in cash on April 29, 2022, and (ii) to pay down the outstanding balance on the revolving credit facility drawn in connection with the closing of the Venetian Las Vegas Acquisition.
On November 3, 2022, the Company completed an offering of 18,975,000 shares of common stock (inclusive of 2,475,000 shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional common stock) for an aggregate offering value of $580.0 million, all of which were sold subject to forward sale agreements (the “November 2022 Forward Sale Agreements”).
During the twelve months ended December 31, 2022, the Company sold a total of 21,617,592 shares under its ATM program at a weighted average price per share of $33.12 for an aggregate value of $715.9 million, all of which were sold subject to forward sale agreements (the “ATM Forward Sale Agreements”). After fees and other adjustments calculated in accordance with the ATM Forward Sale Agreements, the aggregate net value of $696.6 million yielded a net initial forward sale price per share of $32.22 as of December 31, 2022.
As of December 31, 2022, the Company had a total of 40,592,592 shares remaining to be settled under existing forward sale agreements for an aggregate value of approximately $1.3 billion. Subsequent to year-end in January 2023, the Company settled all 40,592,592 shares under existing forward sale agreements in exchange for approximately $1.3 billion of total cash proceeds used to fund VICI’s acquisition and investment activity.
Subsequent to year-end, on January 3, 2023, the Company drew down C$140.0 million (approximately US$103.4 million) under its revolving credit facility to fund a portion of the purchase price of the PURE Portfolio acquisition. On January 18, 2023, the Company completed a primary offering of 30,302,500 shares of common stock (inclusive of 3,952,500 shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional common stock solely to cover over-allotments, if any) at a public offering price of $33.00 per share for an aggregate offering value of approximately $1.
Contacts
Investor Contacts:
[email protected]
(646) 949-4631
Or
David Kieske
EVP, Chief Financial Officer
[email protected]
Moira McCloskey
SVP, Capital Markets
[email protected]