Real Estate Investment Trusts (REITs) are the most straightforward and proven way to get access to quality properties of just about any type. They invest in different kinds of real estate or real estate-related assets — including shopping centers, office buildings, hotels, self-storage facilities, and long-term care communities. Right now, I like the specialty property REIT VICI Properties (VICI), writes Nilus Mattive, editor of Safe Money Report.
REITs get special treatment from the IRS. They don’t pay corporate income tax as long as they distribute at least 90% of their taxable income to shareholders every year. They also have to invest at least 75% of their total assets in real estate and generate at least 75% of annual gross income from real estate-related income such as rents from real property or interest on obligations secured by mortgages on real property.
The big dividends alone make many REITs great investments. But they also give you liquidity, account flexibility, ease of ownership, and other benefits.
As for VICI, it primarily owns casino properties in the United States and Canada, with 60% of the company’s revenue coming from two operators — Caesars and MGM.
That has a few important implications. Obviously, the downside is that it puts a lot of VICI’s eggs in one basket…particularly if the economy weakens substantially and less people feel inclined to gamble. I would say that’s the biggest risk to this investment overall. However, that would prove to be a relatively short-term issue even if it materialized.
Meanwhile, VICI has more than $500 million in cash on its balance sheet, and it has already begun making big moves to start diversifying its portfolio through a recent deal with bowling lane operator, Bowlero. VICI acquired 38 properties from the company through a sale-leaseback transaction.
VICI Properties (VICI)
The company’s recent results have been strong, as well. On Oct. 25, VICI said third-quarter revenue hit $904.3 million, a 20.3% jump from the same period a year earlier. Net income rose to $556.3 million from $330.9 million a year earlier. On a per-share basis, adjusted funds from operations (AFFO) were $0.54, up more than 10% year over year.
During the same earnings report, VICI increased its guidance for the rest of the year. It also recently announced its next quarterly dividend of $0.415 a share, which represents a 6.4% increase from the payment made in Q3 of 2022.
Recommended Action: Buy VICI.