Caesars Real Estate Trust VICI Raises $1.21 Billion in NYSE IPO, Performs Better Than Expected

Posted on: February 2, 2018, 05:00h. 

Last updated on: February 2, 2018, 02:40h.

VICI, the real-estate investment trust (REIT) created as part of Caesars’ recent bankruptcy reorganization, raised $1.21 billion at an IPO on the New York Stock Exchange (NYSE) on Thursday, exceeding expectations. The flotation generated sales of 60.5 million shares at $20 each, higher than the 50 million shares it had hoped to offload.

ICI raises $1.21 billion in IPO
CEO of VICI Ed Pitoniak believes that Caesars’ lack of involvement in the new REIT will make it easier to acquire new properties because other operators need not be concerned about selling to a competitor. (Image:

The name VICI, which means “I conquered” in Latin, is taken from Julius Caesars’ famous comma splice Veni, vidi, vici (“I came, I saw, I conquered), and the new REIT hopes to gobble up the casino real estate market with equal efficiency.

The company is a spin-off from Caesars’ stricken main operating unit, Caesars Entertainment Operating Co. (CEOC), which entered Chapter 11 bankruptcy in 2015, owing an industry all-time-high debt of around $18 billion.

VICI was created as a way to eliminate a large portion of that debt by delivering it in the form of equity to CEOC’s creditors, who had squabbled with Caesars Entertainment in the bankruptcy courts over what they saw as inequitable restructure plans.

The REIT Stuff

REITs are investment companies that own and purchase income-producing property through combined investments. They are structured much like a mutual fund, allowing both large and small investors to own shares of real estate. But because they receive special tax considerations and must pay out at least 90 percent of taxable profits to shareholders, they typical offer investors a higher ROI.

VICI owns 20 Caesars casinos outright, including flagship Strip properties Caesars Palace and Harrahs, and leases them to the newly reorganized Caesars Entertainment to operate. Caesars has no equity in the company and no influence over the board or management.

It’s the third casino industry REIT since Penn National started the trend in 2013, with Gaming and Leisure Properties Inc. MGM Resorts followed suit in 2015, with its own MGM Growth Properties.

Competitive Edge

Both Penn National and MGM own part of their REITs, however, which may give VICI an advantage when it comes to acquisitions of new casinos, because operators will not need to be concerned about selling to a competitor.

“Once that is clearly understood to anyone we are talking to, they can be confident that we are not and will not be a direct operating competitor of theirs,” VICI CEO Ed Pitoniak told the Las Vegas Review-Journal on Thursday.

“There is growing interest in gaming real estate as an … asset class worthy of institutional investment,” he added. “It is still a relatively new sector versus so many other well-established REIT sectors. We are fortunate to be at a point where that interest is growing strongly.”

According to the Review-Journal story, MGM made an unsolicited offer to acquire VICI in the days leading up to its IPO, but was rebuffed.