VICI, Largest Las Vegas Strip Landlord, Not Sweating Recession
Posted on: July 29, 2022, 12:54h.
Last updated on: August 1, 2022, 01:45h.
VICI Properties, Inc. — which owns Caesars Palace, the MGM Grand, The Venetian and eight other Las Vegas Strip properties — said it does not fear the effects of a recession. During a conference call with analysts Thursday to discuss second-quarter earnings, company executives said the resiliency of gaming customers would see it through all short-term shortfalls.

VICI posted a net loss of $57.7 million, compared to $300.7 million in the second quarter of 2021. The New York-based real estate investment firm attributed part of the loss to its $17.2 billion buyout of MGM Growth Properties, MGM Resorts International’s real estate spinoff, in April 2002.
The gaming customer has proven to be more resilient through both garden-variety recessions and full-blown crises than just about any other discretionary consumer out there,” said VICI CEO Ed Pitoniak. “That was proven through both the great financial crisis and throughout the COVID-19 pandemic.”
Two months earlier, VICI purchased the real estate of The Venetian and Palazzo casino hotels and the Sands Expo Convention Center from Las Vegas Sands for $4 billion. Its Q2 revenue was $662.6 million, up 76% from $376.4 million in the same quarter last year.
Largest Strip Landowner
VICI’s 660 acres along Las Vegas Boulevard generates approximately 45% of its portfolio income, Pitoniak said on the call. VICI owns the MGM Grand, Mirage, Mandalay Bay, Excalibur, New York-New York, Park MGM and Luxor — which it leases to MGM Resorts International.
The Mirage, which is changing hands, will soon be leased to Hard Rock International for an annual base rent of $90 million. Vici also owns Caesars Palace and Harrah’s, which it leases to Caesars Entertainment, and the Venetian and Palazzo, which it leases to Apollo Global Management.
VICI was created in 2017 when Caesars Entertainment Corporation spun it off as part of its Chapter 11 bankruptcy reorganization.
Safety (Triple) Net
“While many of you enjoy asking questions about on the ground operating trends, I would like to remind you that we are a triple-net lease landlord,” VICI President and Chief Operating Officer John Payne told analysts on the call.
Triple-net leases require tenants to pay property taxes, utilities, insurance premiums and maintenance expenses in addition to rent. The main advantage of triple-net leases to tenants is lower rent.
We collect fixed rent streams with annual escalations over very long periods of time,” Payne said. “Those who have followed our story will recall that we continued to collect 100 percent of cash rent when every one of our properties was forced to close due to the government-mandated restrictions in response to COVID-19.”
Pitoniak said VICI’s future plans include continuing to densify its properties, identifying “either unoccupied acreage or acreage that is otherwise not being put to its highest and best use.” As an example, he cited the MSG Sphere at The Venetian, a 17,500-seat auditorium currently being built on 18 acres it owns behind the Sands Expo and Convention center. That formerly served as a parking lot.
VICI shares on the New York Stock Exchange closed Thursday at $33.80, up 0.9%.
Related News Articles
Related News Articles
Venetian to Debut U2 Museum Ahead of Band’s Las Vegas Residency
First MSG Sphere Show in Las Vegas Announced
Las Vegas Casino Stocks Can Rebound, Says Analyst
Most Popular
VEGAS MYTHS RE-BUSTED: The Restaurant Atop the Landmark Hotel Revolved
MGM Resorts Says IT Systems Restored But Operational Disruptions Remain
Las Vegas Grand Prix Faces Massive Cost Overruns
Connecticut Dog Trainer Accused of Animal Abuse Was ‘On Casino Bender’
MGM Has $200M Cyber Insurance Policy, Stock Can Recover, Says Analyst
Most Commented
-
VEGAS MYTHS RE-BUSTED: You Don’t Have to Pay Resort Fees
September 15, 2023 — 14 Comments— -
Bally’s Chicago ‘Mosque’ Casino Draws Mistaken Outrage
September 15, 2023 — 6 Comments— -
MGM vs. Caesars: Cybersecurity Expert Rates Hacking Responses
September 21, 2023 — 6 Comments— -
MGM Resorts Suffers Cybersecurity Attack, System Outage Reported
September 11, 2023 — 6 Comments— -
Pennsylvania Supreme Court to Hear Cordish Appeal of Bally’s State College Casino
September 8, 2023 — 4 Comments—
No comments yet