VICI Properties Raises 2023 FFO Projection
Vici Properties Inc., the biggest landlord for casinos in the United States, has updated its projected earnings for the year after revealing its performance in the third quarter. Vici, which operates Caesars Palace, announced that their FFO (Funds From Operations) for 2023 will be between $2.14 and $2.15 per share, higher than its previous expectation of $2.11 to $2.14. The company's FFO in the September quarter amounted to 54 cents per share, an increase from 49 cents the previous year, and above the reckoned average of 53 cents. Their sales increased from $751.5 million to $904.3 million, surpassing the expected revenue of $902 million.
The CEO, Edward Pitoniak, said in a statement, “Vici’s third-quarter financial performance reflects our continuous, continuous committal to growth and the deployment of capital through acquisitions and strategic financing activities, as denoted by around 20% revenue growth and close to 11% growth in AFFO (Adjusted Funds From Operations) per share year-over-year.”
This New York-based REIT (Real Estate Investment Trust), a member of the S&P 500, owns the real estate assets of 54 gaming properties across the United States and Canada. It's also the largest property owner on the Las Vegas Strip, where, apart from Caesars Palace, they own the Venetian and associated assets, and the property assets of most MGM-run casino hotels.
Why Vici’s FFO Optimism Is Important
REITs like Vici aren't structured like standard corporations. Unlike other companies, REITs' earnings aren’t taxed by the government. However, in exchange, the REITs must distribute at least 90% of their earnings as dividends. This pattern influences investors to scrutinize real estate companies based on the amount of cash generated, a metric VICI's FFO measures. FFO is calculated by adding net income, amortization, and depreciation as well as subtracting property sales.
Some of Vici's clients are Apollo Global Management, Century Casinos, and Hard Rock International. Their diverse client portfolio confirms that VICI's gaming REIT is successful across regions and casino sizes. MGM and Caesars, the two biggest operators on the Las Vegas Strip, comprise 76% of Vici's adjusted revenue.
“During the three months ending September 30th, the company agreed to forward-starting interest rate swap arrangements totaling $150.0 million. These agreements are intended to lessen the variability in future cash flows for a potentially strong issuance of long-term debt over a maximum timeframe ending in Dec 2024,” said the statement.
The New York REIT had a total debt of approximately $17.1 billion as of the third-quarter conclusion.
Deals Accelerating Vici's FFO
Vici, known for its acquisitive nature, has traded many properties and has earned a boost in their economic outlook due to these transactions.
Aside from their Q3 deals, Vici completed the purchase of the property assets for Rocky Gap Casino Resort in Flintstone, Maryland, and the real estate related to 4 casinos in Canada.
The company ended the quarter with $3.7 billion in liquidity, which included $510.9 million in cash and cash equivalents, $807.2 million of estimated net proceeds available upon settlement of outstanding forward agreement releases, and around $2.3 billion of availability under the revolving credit facility.
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Source: www.casino.org
