VICI Properties, the largest owner of casino real estate, has raised its 2024 adjusted funds from operations (AFFO) guidance alongside the release of its second-quarter earnings. The company, which owns the Venetian on the Las Vegas Strip, now expects AFFO for this fiscal year to be between $2.35 billion and $2.37 billion, translating to $2.24 to $2.26 per share. For the June quarter, VICI reported an AFFO of $592.4 million, marking a 9.6% increase from the same period last year. On a per-share basis, this was 57 cents, up from 54 cents in the second quarter of 2023. The real estate investment trust (REIT) attributes the upgraded 2024 outlook to management’s optimistic views on “current and future market conditions.”
The boost in AFFO suggests that various investments by VICI, including some recent ventures and projects outside the gaming sector, are yielding positive returns. CEO Edward Pitoniak expressed confidence that these investments highlight VICI’s potential for sustained, sustainable growth through quality tenants in robust sectors across attractive geographic locations.
Following the earnings report, VICI’s shares saw a slight rise in after-hours trading. While the stock is down 1.94% year-to-date, it has surged 12% over the past month.
In March 2021, VICI acquired the real estate of the Venetian and the Sands Expo & Convention Center for $4 billion, forming a fruitful relationship with operator Apollo Global Management. On Venetian’s 25th anniversary in May, VICI announced a commitment to providing up to $700 million in financing to Apollo for enhancements at the integrated resort. Additionally, in the second quarter, VICI committed to $950 million in financing for the Venetian and non-gaming Great Wolf Resorts, with $650 million to be spent this year.
VICI and other REITs are increasingly willing to extend financing to tenants to improve gaming venues. These transactions not only diversify REITs’ revenue streams but also boost property values, benefiting landlords. Pitoniak noted that the Venetian Capital Investment exemplifies the company’s strategy to invest in existing assets at scale and that the Great Wolf transaction highlights VICI’s ability to recycle capital through its Experiential Credit Solutions strategy.
Some of VICI’s recent stock rally could be due to speculation about the Federal Reserve possibly lowering interest rates in September. This would be advantageous for VICI, as REITs typically perform better with lower borrowing costs. VICI had $17.1 billion in debt as of June 30, and companies with high debt levels often respond well to interest rate reductions.
At the end of the second quarter, VICI, the largest owner of Las Vegas gaming real estate, reported having $347.2 million in cash and cash equivalents.
