Investors who are content to collect income and ignore interim hiccups can remain confident in the U.S. economy’s fundamental soundness for at least the next several years. This REIT is an attractive pick as a result, notes analyst Martin Fridson, editor of Forbes/Fridson Income Securities Investor.
VICI Properties (VICI) is a Real Estate Investment Trust that owns one of the largest portfolios of market-leading gaming, hospitality, and entertainment properties in the nation. The portfolio includes the likes of Caesars Palace, MGM Grand, and the Venetian Resort. The company’s operators are in geographic areas such as Las Vegas, Lake Tahoe, Atlantic City, Louisiana, Mississippi, Missouri, and New York.
VICI was created in late 2017 as a spin-off from Caesars Entertainment Operating Company. Today the portfolio comprises 43 gaming facilities, with more than 122 million square feet and approximately 58,700 hotel rooms. VICI’s hospitality operators include the likes of Caesars Entertainment, Century Casinos, Hard Rock International, JACK Entertainment, MGM Resorts International, and The Venetian Las Vegas.
The REIT also owns four championship golf courses and has a broad array of partnerships with leading non-gaming operators, including Canyon Ranch, Chelsea Piers, and Great Wolf Resorts. Despite relatively high debt leverage, VICI benefits from predictable cash flows, reflecting its long-term leases and high occupancy.
Fixed rent payments with annual contractual rent escalators, including CPI escalators, have further aided cash flow predictability. VICI reported 3Q 2022 adjusted funds from operations (AFFO) of $470.7 million, an 82.8% year-over-year increase attributable to acquisitions and the economy’s rebound.
AFFO of $0.49 per share matched analysts’ estimates. Dividend growth has averaged roughly 10% annually over the last two years. This common stock REIT investment is suitable for medium-risk tax-deferred portfolios. Dividends are taxed as ordinary income.
Recommended Action: Buy at $43 or lower.
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