VICI Properties Inc. (VICI) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the VICI Properties Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded today, July 30, 2026. I will now turn the call over to Samantha Gallagher, General Counsel with VICI Properties.

Thank you, operator, and good morning. Everyone should have access to the company's second quarter 2026 earnings release and supplemental information. The release and supplemental information can be found in the Investors section of the VICI Properties website at www.viciproperties.com. Some of our comments today will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements, which are usually identified by the use of words such as will, believe, expect, should, guidance, intend, outlook, projects or other similar phrases are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Therefore, you should exercise caution in interpreting and relying on them. I refer you to the company's SEC filings for a more detailed discussion of the risks that could impact future operating results and financial condition. During the call, we will discuss certain non-GAAP measures, which, we believe, can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available on our website and our second quarter 2026 earnings release and our supplemental information in our filings with the SEC. For additional information with respect to non-GAAP measures, certain tenants and/or counterparties discussed on this call, please refer to the respective company's public filings with the SEC. Hosting the call today, we have Ed Pitoniak, Chief Executive Officer; John Payne, President and Chief Operating Officer; David Kieske, Chief Financial Officer; [ Jeremy Wasman, ] Chief Accounting Officer; Gabe Wasserman, Managing Director of Business Development and VECS; and Moira McCloskey, Senior Vice President of Capital Markets. Ed and team will provide some opening remarks, and then we will open the call to questions. With that, I'll turn the call over to Ed.

Thank you, Samantha, and good morning, everyone. And for the analysts on the call, we are especially grateful for your presence today because we know that yesterday aftermarket, you dealt with an absolute flood of earnings releases in your coverage area. So again, thank you. In the next few minutes, you'll hear from John Payne on our growth outlook and activities and from David Kieske on our financial results, liquidity and updated 2026 earnings guidance. To start, I'd like to spend a moment or two talking about how we think about, talk about and manage the growth of our business. You've heard us say before, frequently, that we grow our business by growing our relationships by growing new relationships and growing the scale of existing relationships. Today, I'd like you to take you deeper inside our approach to relationship building and to do that, I'll tell you the story of our new relationship with Club Med, which we announced back in June with the news of our investment in St. Croix, where we've acquired a property initially developed as the Rock Resort Carambola. We first began getting to know Club Med in 2025, and it's important to understand how we came to be connected with Club Med. The connection was not direct. In this case, it wasn't about calling up their global headquarters in Paris. Northern North American Caribbean headquarters in Miami. So believe me, we do regularly make cold calls on experiential operators. We did not receive a flyer saying there was a Club Med property or a Club Med opportunity for sale. We did not get connected through bankers or brokers. We connected with Club Med through a company that will remain nameless. This is a leisure and hospitality company. We've been courting for partnerships since just about the birth of VICI. To date, we haven't been able to find the right opportunity with them. They will be sure we won't stop trying. We've always worked hard to make our conversations with this unnamed company meaningful and collegial and frequent. In 2025, Club Med asked this unnamed company, who they, Club Med, might partner with for financing of the St. Croix opportunity they were pursuing. The unnamed company said to Club Med, "We should connect you with our friends at VICI." And thus in 2025 Club Med connected with John Payne and [ Aaron Ferrari ] to get a conversation started. When we commence a conversation with a potential new partner, we are not in sales mode, we are in learning mode. With Club Med, John, Aaron and Matt Perkins and other members of the VICI team set about seeking to understand Club Med's needs, financial, strategic and cultural needs, not only in St. Croix, but into the future, that Club Med envisioned for itself. This is an approach that takes time. We believe in this approach that leads to the strongest foundations upon which to grow together. And in this case, St. Croix became the foundation upon which we are building a relationship. When we first announced our new partnership with Club Med and our acquisition of the St. Croix property, the reaction from some was sort of a small deal. I'll offer a couple of quick thoughts on that take. First of all, the total projected investment of $75 million into one property is pretty meaningful by net lease standards given the typical net lease property tends to cost low single-digit millions. Secondly, and to reemphasize the point, when we make a first investment with a new partner, we are highly focused on the foundation we are building for potential future investment. Two weeks ago, a number of us on the VICI team experienced a strong foundation when we joined our Club Med partners on the North Shore of St. Croix for what Club Med calls its first stone ceremony. This ceremony celebrated the ecosystem of relationships that Club Med builds before it creates and in order to create great experience resorts. The Club Med team of Global CEO, Stephen McClare, North American Caribbean CEO and President, Caroline Dean; and North American Caribbean Senior Vice President of Development, Eileen Kett, brought together the St. Croix governmental tourism and developmental officials who've been and will continue to be instrumental in supporting the resort redevelopment, both strategically and financially as well as the contractors who over the next 18 months-or-so will restore this resort to the glory originally envisioned by Lawrence Rockefeller while making it a distinctly Club Med experience. What I witnessed on St. Croix may be proud of the new partnership we've created with Club Med and excited for what together will contribute to St Croix's competitiveness as an experiential destination. But what was also clear to me that [indiscernible] in St. Croix is the energy, creativity and passion that Club Med brings to its growth activities. And with Club Med having a stated goal of growing its portfolio of destinations from 60 to 100 over the next few years, I'm hopeful and excited that VICI will find ways to be supportive of and participative in that growth. If we do, it's because we will continue to grow our relationship with Club Med with that growth relying on our working every day to understand and better serve their needs, which is what we strive to do with every one of our growth partners. And with that, I'll turn the call over to John.

Thanks, Ed. Good morning to everyone. You just heard Ed tell the story of how our Club Med relation came to be, and I'll simply add two things. First, for our business development team, a partnership like this one is the payoff of years of patient relationship building. It's the way we like to grow. Second, the transaction itself marks settle first for VICI. Our first build-to-suit investment and our first property acquisition in the Caribbean. At closing, we funded a $20 million acquisition of the Carambola Beach Resort, and we will fund club beds approximately $55 million redevelopment of the resort, which Club Med will operate under its premium exclusive collection brand following a targeted opening in the fourth quarter of 2027. As Ed said, we look forward to growing with Club Med for years to come. During the quarter, we also brought several previously announced transactions across the finish line, the closing of our $1.16 billion Golden Entertainment sale-leaseback, the commencement of our new lease with Clairvest at Northfield Park and the completion of the acquisition of the game host real estate in Alberta for approximately CAD 200 million alongside our existing partners at Sure. With the completion of these transactions, we've added Clairvest, Golden Entertainment and Club Med as our 14th and 15th and 16 tenants, respectively. This tenant growth was achieved by partnering with experienced and tenured operators from Clairvest's two decades of investing across 37 gaming assets to Blake Sartini's more than 30 years operating in the Nevada gaming landscape to Club Med's 75 years of all-inclusive operating experience and the closing of the game host transaction reflects the other side of that same discipline, our capital continuing to serve the growth of partners already on our roster. Turning to the trends across the portfolio, we already own, and there's no better place to start than Las Vegas. On a year-to-date basis, strip gaming revenue is running ahead of last year, with room rates continuing to demonstrate the pricing power of this market. The resilience of Las Vegas continues to be reinforced by the ongoing diversification of demand. We've noted many times how this city has transformed itself into an entertainment epicenter with experiences like sphere, and there's been the massive growth in professional sports with the addition of the Golden Nights, the Raiders F1, the [ ACES ] and the upcoming relocation of the OA and now the prospect of an NBA franchise stands to extend the trajectory further. Every new demand driver makes Las Vegas that much harder to bet again. Then there is the [ Convention ] segment, which we've long viewed as an underappreciated mitigate to the cyclicality of leisure demand, and it continues to strengthen. Last month, U.S. News & World Report named Las Vegas the #1 convention city in America with the Venetian ranked the top conference hotel on the entire list. This is a powerful validation of the convention infrastructure our operators continue to invest in and of the nearly 6 million square feet of conference convention and trade show space VICI owns on the scrip. We often say we aim to make VICI bigger only when it makes VICI better. This quarter, we got better. The tenured and experienced tenants added to our roster a new market in Las Vegas Locals, a new geography and partner in the Caribbean and continued growth with partners we know well. The roster building relationship-driven work is what will continue to find VICI in the quarter ahead. Now I'll turn the call over to David, who will discuss our financial results and guidance. David?

Thanks, John. Touched on the income statement. AFFO share was $0.62 for the quarter, an increase of 4.6% compared to $0.60 for the quarter ended June 30, 2025. In terms of the balance sheet, our total debt is $17.2 billion, and our net debt to annualized second quarter adjusted EBITDA is approximately 4.9x, below the low end of our target leverage range of 5 to 5.5x. We have a weighted average interest rate of 4.45% as adjusted for hedge activity and a weighted average of 5.5 years to maturity. As of June 30, 2026, we have approximately $2.5 billion in total liquidity, comprised of $288 million in cash and $2.2 billion of availability under our revolving credit facility. Turning to guidance. We are updating AFFO guidance for 2026 in absolute dollars as well as on a per share basis. AFFO for the year ending December 31, 2026, is expected to be between $2.675 billion and $2.695 billion or between $2.45 and $2.47 per diluted common share. Compared to our prior AFFO per share guidance, the updated guidance represents an increase at the low end of the range by $0.01. Based on the midpoint of our raised 2026 guidance, VICI expects to deliver year-over-year AFFO per share growth of 3.4%. As a reminder, our guidance does not include the impact on operating results from any pending any pending acquisitions without announced expected closing dates, possible future acquisitions or dispositions and related capital markets activity or other nonrecurring transactions or items. With that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Barry Jones from Truist.

This is Jeremy on for Barry. With Churchill [ Downs ] announcing last night that is looking to sell its regional properties, what's your high-level expectations for regional M&A activity throughout the remainder of the year? And do you see regional valuations market-wide as reasonable at this point?

This is John. It's good to talk to. I'll talk a little bit about regional gaming right now. I was adding up the years last night have been in or around the regional gaming space for 30 years. My colleagues are laughing at me right now. But the business is resilient. I mean there has been a really amazing rebound here over the past months or so in the regional markets. It's very exciting to see the innovation that's happening around slot product right now that's helping to drive growth in the regional markets. As it pertains to the -- I think you're referring to the Churchill announcement that they are going to be selling their regional gaming portfolio. There are some assets in their portfolio that I'm sure we'll take a look at, that would be a nice addition to our portfolio. I know there are some of our tenants that are interested in those assets, and we'll continue to better understand the opportunities there.

Got it. That's very helpful. And then should we expect to see more build-to-suit structure type deals similar to the Club Med?

Yes, Jeremy, it's very common across the net lease universe, and it's something that we're excited about, and I think we continue to offer solutions to our partners, and this is a very attractive solution for those that are in growth mode.

And our next question comes from the line of Caitlin Burrows from Goldman Sachs.

I guess just -- I don't figure out how to phrase it, but just considering that your two largest tenants are in the news to potentially be bought, we'll see what happens with them. But I guess just considering the time period that we're in right now, I was wondering if you could comment on how your conversations with those tenants today differ from a year or two ago and kind of what's normal course versus what's maybe on hold because their own structure is changing or potentially changing?

Yes. Caitlin, good to hear from you. I would say that our conversations actually haven't fundamentally changed with our partners. We are in constant contact with all of our partners, around various interactions involving our businesses. And they are obviously in very intense operational businesses day by day, hour by hour. And we're always very respectful of that and making sure we don't waste their time. But we continue to have very positive conversations around opportunities that we see together, whether with existing assets or incremental opportunities. I'll turn it over to John here because he can give you an example of an opportunity that we are discussing with a partner despite the fact that, that partner is also engaged in some very meaningful activities beyond us.

Yes. It's good to talk to you this morning. Ed is referring to the opportunity in Las Vegas with the NBA. I think everyone has seen in the news that the NBA is looking to put another team into Las Vegas. There are many people bidding on that team. We own in conjunction with our partner, Caesars, and we're working with them 50 acres of land behind Paris, Horseshoe, Planet Hollywood, and we are developing a plan with Caesars, Sean McBurney, in particular, who runs Las Vegas to house the arena that could be built for the new NBA team. So that's just an example of us working with one of our partners. The other thing I'll addresses in my opening remarks, I talked about having our 14th or 15th and our 16th tenant, we're very different than other triple nets that have hundreds of tenants we have, as you heard which then allows us to have deeper and more frequent conversations. So we're constantly talking to our partners about ways we can grow together, how our assets are performing, et cetera. So that's just another example of how we're a little bit different.

Got it. Okay. And then I think you've probably touched upon it briefly in the prepared remarks, but wondering if you could talk about some of the trends you're seeing more recently in Las Vegas and maybe how they differ vary between your specific assets and the market overall?

Well, we continue to be very excited about the market as I hinted, it's a place that constantly reinvents itself and not only has ways to make money in gaming, but you can hear it is becoming the #1 entertainment epicenter, and I'll describe in the world, someone can argue with me about that. But it is a place that continues to add different reasons to come and visit. We obviously are well invested there. We have numerous assets there. They all continue to have specific reasons why the consumer segment comes to their property. And we really like what the operators are doing, especially event-driven and creating these unique events that [indiscernible] can be done in Las Vegas. So we continue to be really excited, and we continue to like how our tenants are operating their businesses and being creative.

I'll just build on what John is saying, Caitlin, by pointing out what what MGM disclosed yesterday with this Q2 results, and that was 93% occupancy for their strip assets in the second quarter, which is truly an outstanding amount of occupancy given the amount of inventory that MGM has in the strip. And I think that the embedded within that was the very meaningful positive outcome they're getting on being promotional and offering all-inclusive packages it looks to our ex caliber. These are operators that respond to changing conditions, and they respond, I think, is energetically and creatively as any hospitality and leisure operators I've ever known.

And our next question comes from the line of Greg McGinniss from Scotiabank.

I believe most of the free cash flow is spoken for this year with investments to make. But as you look ahead, are you considering share repurchases? Or do you think you can find more accretive investments with this capital?

Yes, Greg, it's a question we get asked a lot you have basically answered the question. I mean when we're putting money out at SOFR plus 825, that's a much more attractive use of our capital. And that's just for the 1 Beverly Hills loan, and our loan book is close to 9.5% yield. We can find much more attractive uses of that free cash flow. And the Club Med is a very attractive return. Everything we've closed this quarter is a very attractive return. And just the buyback for a REIT, especially a net lease REIT that is -- growth is dependent on deploying capital just not something that makes a lot of sense, especially where we are now in the investment prospects that we have in front of us.

Okay. And then we've seen in the news that there's a lot of cities basically putting billions of dollars of capital into convention facilities. And I'm curious what impact you might think this may have on Las Vegas and also whether this represents an investment opportunity for you.

Yes. Greg, it's a good question. The -- I do think that the competitive superiority of Las Vegas as a convention, destination is so well established that I don't know that anybody is tremendously worried about new convention supply in other American cities. And part of that -- a large part of that has to do with the ecosystem that Las Vegas represents when it comes to appealing to and serving the need both convention needs and leisure and hospitality needs of convention goes, the entire ecosystem, including airlift, infrastructure lodging quality and abundance, entertainment, quality and abundance, F&B quality and abundance, there's really no city in America that can come close. And I think that's probably has also a lot to do with, unfortunately, the somewhat beat up condition of full-service lodging inventory across so many American city centers. So again, I really -- I have a very strong conviction around the competitive superiority of Las Vegas convention center destination. As to the introduction of new supply in other cities, it could be something we would get, but it would have to be a situation in which, obviously, we can invest in it accretively, and we would also have very high confidence that, that destination can be competitive in what is a very competitive marketplace.

And our next question comes from the line of John DeCree from CBRE.

Wanted to ask a little bit about kind of the shift to private markets for your tenants. I think VICI kind of had a unique exposure to public tenants relative to other REIT asset classes. But Ed, John or David, curious if you find private companies that you work with in an obese more willing or open, flexible to use refinancing relative to public companies. I think the last couple of years, we've just seen public markets kind of undervalue casino operators. And so curious that the shift we're seeing to private markets, if that's changing the outlook for M&A and REIT financing in the casino space.

Yes, I think it could. And I'll turn it over to John and David in just a moment, John, and good to talk to you. The -- it's somewhat understandable given what I think a lot of operators have felt has been a somewhat lack of love that they've gotten in the public markets over the last few years. And I think a number of them that we talk to, and John can give you more specifics here in a moment. I appreciate the fact that in the private markets, they truly can do what they believe are the right things to grow their business over the longer term. And an example of that is that once they go private, they tend to be not focused on what's going to be the earnings in a given quarter. And more focused on what -- if we make any incremental investments, what's going to be the IRR on those investments. And we have found, for example, that private operators are more responsive to the use of our capital through our property partner growth fund because from an IRR point of view, that capital is very, very attractive to them. And I'll turn it over to John now, but I think we can confidently say that the recent privatizations that [indiscernible] all private operator is feeling quite good about where they are.

Yes. I think from the operations side, you were talking about the financing side. But just from an operation side, being in a private setting, I think, is quite beneficial for this industry. These are very capital-intensive businesses. And there's times -- and John, I think you know I'm a former recovery operator or a former operator, that there were times where I knew something needed to be refurbed, but it was going to be detrimental to a quarter or two quarters. And that's really not the way to think about is to think about these businesses long term. And when capital needs to be invested and although it may disrupt the business for 60 days, 90 days, 120 days, you need to do it for the long term. IT is changing dramatically in this space and the implementation of new system the servers can be disruptive to an operation for 30, 60, 90 days, you need to do it. And in a private setting, you don't really worry about those 30, 60, 90 days. We're in all the setting, you might. So I think we're we're enthusiastic about what we're seeing. We'll see how this all plays out over the coming months or years, but that's my take on how it's affecting the operator's view of their business.

And our next question comes from the line of Chris Darling from Green Street.

Can you provide an update on the sports infrastructure opportunity? Any discussions you continue to have with universities. And then is there anything structural or maybe related to pressing that top of mind for these institutions? Just anything specific that may have possibly prevented deals from closing to date?