Posted on: February 27, 2023, 03:44h.
Final up to date on: February 27, 2023, 04:31h.
VICI Properties (NYSE: VICI) is the most important landlord on the Las Vegas Strip and owns the property belongings of a slew of regional casinos, making it a compelling actual property development story, in line with at the least one analyst.
In a observe to shoppers on Monday, Macquarie analyst Chad Beynon reiterated an “outperform” score and $40 worth goal on the Caesars Palace proprietor. That means upside of 18.7% from at the moment’s closing worth of $33.68. Shares of the true property funding belief (REIT) are up 4% year-to-date.
In comparison with different corners of the publicly traded actual property universe, on line casino REITs are younger, and the group encountered some doubts from traders through the early days of the coronavirus pandemic. That state of affairs is altering for the higher.
We imagine it continues to realize acceptance as US Gaming post-pandemic outcomes have highlighted sturdy top-line demand and improved revenue margins and money movement, an important objects for VICI. Whereas dynamic, we anticipate peak to trough revenues to fare higher vs. what the road is anticipating for each the US regional market and Las Vegas,” wrote Beynon.
Following VICI’s 2022 acquisition of MGM Progress Properties (MGP), there are simply two listed on line casino REITs — VICI and Gaming and Leisure Properties (NASDAQ: GLPI).
VICI Has Established Progress Monitor File
By way of a sequence of prescient acquisitions over its life as a standalone public firm, VICI developed a status for speedy development.
These strikes had been on full show final 12 months because the REIT notched its first 12 months as the owner of the Venetian and the associated conference middle, closed the aforementioned buy of MGP, and purchased the 49.9% of the Mandalay Bay and MGM Grand it didn’t beforehand personal, amongst different transactions.
“Since its IPO, VICI has grown income ~300% and the corporate is nicely positioned for development within the subsequent few years, given a number of acquisitions, which embrace its conventional public/non-public alternatives in gaming, plus the extra experiential alternatives like golf/resorts, each domestically and overseas,” added Beynon.
VICI was spun out of Caesars Leisure (NASDAQ: CZR) in 2018 when the on line casino large wanted to lift money. At present, the gaming operator is without doubt one of the REIT’s largest tenants.
Talking of VICI and Caesars…
VICI owns the property belongings of 18 gaming venues operated by Caesars, together with Caesars Palace and Harrah’s on the Strip and Caesars Palace on the Atlantic Metropolis Boardwalk. It’s doable that relationship will broaden over time.
“VICI is certainly one of our prime gaming picks given its Vegas publicity, the place we’re bullish on the restoration, and development alternatives given the ROFRs and put/name agreements with Caesars Leisure,” in line with Beynon.
“ROFR” refers to rights of first refusal, which VICI gained in 2019 when Eldorado Resorts unveiled its takeover bid for “previous Caesars.” As a part of that settlement, the REIT has ROFR on Horseshoe On line casino Baltimore and rights to amass the true property of Harrah’s Hoosier Park and Indiana Grand earlier than the tip of 2024.
VICI additionally possesses ROFR on the Flamingo Las Vegas, Horseshoe Las Vegas, Paris Las Vegas, and Planet Hollywood Resort & On line casino. A second deal would come with the remainders from that group and the LINQ Lodge & On line casino. It might be some time earlier than one other large-scale deal between the REIT and Caesars materializes as a result of the gaming firm stated it’s unlikely to promote belongings this 12 months.