VICI Properties Lifts 2024 AFFO Guidance
VICI Properties (NYSE: VICI), the top holder of casino real estate, increased its 2024 adjusted funds from operations (AFFO) forecast alongside the announcement of its second-quarter earnings.
The proprietor of the Venetian on the Las Vegas Strip stated it now anticipates AFFO for this year to reach between $2.35 billion and $2.37 billion, or approximately $2.24 to $2.26 per share. For the June quarter, VICI reported an AFFO of $592.4 million, marking a 9.6% rise compared to the same period last year. On a per-share basis, it amounted to 57 cents, an increase from 54 cents in the second quarter of 2023.
The real estate investment trust (REIT) stated that the increased 2024 forecast reflects management's perspectives on "present and forthcoming market conditions."
The rise in AFFO may indicate that the different investments made by VICI — both recent and those not in gaming properties — are yielding positive results.
"We believe these investments demonstrate that VICI has advantageous levers for sustained, sustainable growth with quality tenants in durable sectors across attractive geographies,” said CEO Edward Pitoniak in a statement.
VICI shares increased modestly in after-hours trading after the report was released. The stock has decreased by 1.94% year to date, but it has recently been on a rapid rise, climbing 12% in the last month.
Venetian Yielding Profits for VICI
In March 2021, VICI purchased the real estate of the Venetian and the then Sands Expo & Convention Center for $4 billion. The partnership with operator Apollo Global Management has grown and is yielding benefits for both sides.
On Venetian’s 25th birthday in May, VICI revealed it would offer up to $700 million in funding to Apollo for improvements at the integrated resort. Pitoniak stated that in the second quarter, VICI allocated $950 million for financing the Venetian and the non-gaming Great Wolf Resorts, with $650 million designated for expenditure this year.
Lately, VICI and other REITs have demonstrated a readiness to provide financing to tenants for enhancing gaming facilities. This not only diversifies the revenue sources for REITs, but these transactions also aim to enhance property values, benefiting landlords.
“The Venetian Capital Investment exemplifies the value of our Partner Property Growth Fund strategy, which provides attractive capital deployment opportunities to invest into existing VICI assets at scale, and the Great Wolf transaction demonstrates VICI’s ability to recycle capital via our VICI Experiential Credit Solutions strategy,” added Pitoniak in the press release.
Additional Assistance for VICI Might Be Coming Soon
It can be argued that part of the recent surge in VICI's stock is due to growing speculation that the Federal Reserve will cut interest rates in September. That would be advantageous for VICI in at least two ways.
To begin with, REITs rank among the asset classes that are most negatively correlated with elevated borrowing expenses. Secondly, as of June 30, VICI held $17.1 billion in debt, and companies with substantial debt frequently benefit from reductions in interest rates.
VICI, the largest proprietor of gaming properties in Las Vegas, held $347.2 million in cash and cash equivalents at the close of the second quarter.
