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

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the VICI Properties Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, October 29, 2026. I will now turn the call over to Samantha Gallagher, General Counsel with PiciProperties.

Thank you, operator, and good morning. Everyone should have access to the company's third 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, intends, 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 conditions. 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 in our third quarter 2026 earnings release, our supplemental information and our filings with the SEC. For additional information with respect to non-GAAP measures of certain tenants and 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 Waxman, Chief Accounting Officer; Gabe Wasserman, Managing Director of Business Development and VCS; and Lori 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.

Thanks, Sam. This is John Payne. Ed dropped from the call. So I'm going to start with...

John, sorry, I got back in and thank you for that, John, and thank you, Samantha, and good morning, everyone. In a moment, you hear from John Payne on our investment outlook and activities and for David Kieske on our financial results and updated guidance. To start, I want to thank the VICI team for the work they did in Q3 to continue to grow VICI's investment portfolio and investment earnings. As David will discuss further, we grew our revenues 5.8% in Q3 and our AFFO per share by 4.3%. In addition, within Q3, we deployed $221 million of capital into previously announced investing activities, capital intended to produce income growth in future quarters. . While I'm very proud of the work the VICI team did during Q3 2026 to grow the quality and earnings reduction of our portfolio, as a fellow VICI stockholder, I'm disappointed with VICI's share price performance during the quarter and year-to-date. I know many of you share that disappointment because I've heard of that disappointment firsthand from you. In our continuous dialogues with VICI stockholders, we generally hear them sight what they justifiably believe are 3 key factors impacting our equity performance. I will order these 3 factors from general factors impacting all net lease REITs to factors specific to VICI. Factor one, general recent negativity around net lease REIT stocks given the current interest rate environment and a version to duration, especially those net lease REIT stocks that have consumer exposure given the current general negativity around consumer discretionary spending. Factor two, VICI's ability to generate accretive growth in the future given our current capital market conditions and cost of capital. Factor three, uncertainties around our Caesars regional lease. For factor one, general negativity around net lease REITs, we can't do anything to change general credit market conditions and general views around how those conditions impact net lease REITs. What we have done since our beginning and will continue to do is manage our business to protect VICI's stakeholders from general market conditions as best we can. And those management actions center on maintaining our target leverage of approximately 5 to 5.5x adjusted EBITDA, a payout ratio of approximately 75% and which allows for significant retained free cash flow and a conservative approach to G&A with VICI achieving 1 of the lowest ratios of G&A spending among net lease rates specifically in all REITs generally whether measured as a percentage of revenue or percentage of assets under management. For Factor two, VICI's ability to generate accretive growth given current capital market conditions and VICI's specific cost of capital. We do not believe that we have lost access to capital that can grow shareholder value. We have 3 key capital sources that do not rely on access to public market equity. Capital source on our retained cash flow after all obligations, G&A, interest expense and dividend distributions, which averages approximately $720 million on a trailing 12-month basis. Capital source two, proceeds from future repayment of our outstanding loans as they are repaid over the coming years. Capital Source three, as with any REIT practicing proper portfolio management there is the potential to recover and redeploy capital through asset sales. Beyond these 3 sources, we are always exploring and evaluating alternative forms of capital including the range of structures, other REITs across the sector have recently developed. Whatever capital source we rely on at a given time, VICI's management team and VICI's Board of Directors will always take great care in making sure that, that capital is used for what we believe are the best economic and strategic purposes given the circumstances in consideration at a given time. Among those purposes could be potential BG share repurchasing. Accordingly, we have announced the establishment of VICI's first stock buyback authorization if and let me emphasize that if at a given time in the future, we have uncommitted investable capital whether because of uncommitted retained cash flow, repaid loans or asset sales, we will rigorously examine the potential uses of that capital. And if the best use of that capital is the repurchase of stock we may potentially do so. Finally, let me conclude with a few words about what I cited as Factor two, impacting our stock price performance, our Caesars regional lease. First of all, amidst all the market chatter, we believe it's critically important to understand in relation to our Caesars regional lease, what we own and two, the essential ways of understanding and managing the value of what we own. When it comes to the Caesars regional lease in the simplest terms, what we own are real assets within which significant economic activity in output are produced. And from those assets, we own an income stream in the form of rent. The VICI team is analyzing every dollar of our BT income stream within our Caesars Regional lease properties through various valuation prisms. In essence, we are asking in relation to this asset-based income stream, what income structuring model and potential related actions produce the greatest aggregate value for our stockholders. At this time, I cannot tell you what actions are analytical work on our Caesars regional lease will lead to. But I can tell you that the work that VICI team is doing to value what we own is the means by which we will eventually make the decisions and take the actions we believe best serve the long-term strategic and economic interest of our stakeholders. Again, be assured that the VICI team and VICI Board are focused every day on determining and executing the strategies that will produce the best achievable long-term value creation for our stockholders. With that, I will turn the call over to John. John?

Thanks, Ed, and good morning to everyone. Ed just spoke about our cost of capital and the care we take in deciding how and when to deploy it. I want to pick up there because that discipline is not an abstraction for our business development team. It shapes every conversation we have and every opportunity we underwrite. We have said for years that we aim to make VICI bigger when it makes VICI better. In an environment like this one, that principal matters more, not less. During the third quarter, VICI continued to further diversify our tenant roster making VICI better. In September in connection with Century Casino's agreement to sell the operations of Century Mile and Century Downs in Alberta to high-field Investment Group, we agreed to enter a new triple net lease master lease with Highfield, which will add our 17th tenant upon closing. . The high field lease carries initial annual base rent of CAD 10.7 million with a corresponding reduction under our -- under our Century master lease. So there is no change to the aggregate rent collected by VICI. The assets remain in steady hands in a Canadian market we know very well and our rent stream gains are another -- our rent stream gained another distinct experienced local operator behind it. That transaction continues what we delivered over the course of 2026, the diversification of our tenant roster. Upon the closing of the high field transaction, we will have added 4 new tenants this year, Clairvest, Golden Entertainment, Club Med and High Field spanning regional gaming, the Las Vegas locals market, non-gaming hospitality in the Caribbean and Canadian gaming. Every one of those tenants is led by a tenured experienced operating team and every one of them makes the income stream of our stockholders, own more diverse and, therefore, more durable. On the investment outlook, we never go pencils down at VICI and our relationship development across our pipeline continues to be active. We are in continuous dialogue with operators across gaming, hospitality and really the broader experiential landscape. And those conversations do not stop when the capital markets become volatile. What changes is the bar. Our underwriting moves with our cost of capital, and we will be patient, selective and disciplined, only pursuing those opportunities that are portfolio enhancing and strategically additive on terms that reflect today's environment. Finally, let me turn to what we are seeing inside the portfolio because while sentiment toward customer-facing net lease REITs has been negative, the consumer inside our buildings keep showing up. In Las Vegas, the Nevada Gaming Control Board reported strip gaming revenue of more than $776 million in July, up 3.6% year-over-year, the Strip's fifth monthly gain in 6 months over the trailing 12-month strip gaming revenue now totals nearly $9 billion. August brought more modest growth with Nevada, statewide gaming went up 3% and the third quarter ended with strip revenue up 1.8% and the Las Vegas Locals business increased 2.1% . The picture is similar nationwide. Accordingly, to the American Gaming Association through July overall commercial casino revenue increased 6% year-over-year with brick-and-mortar, sports betting and iGaming revenue all up year-over-year. Consumers keep choosing these experiences. Most importantly, our operators keep investing in them and that demand is the engine underneath the long duration escalating leases that define our portfolio. So while we share the frustration Ed described with where our stock has traded, the work of this company has not slowed exemplified by tenant roster that is deeper and more diverse than it was a year ago, a pipeline of relationships that continues to grow, and our portfolio's underlying demand continues to prove itself. That is the work we control, and we will keep doing it with discipline. Now I will turn the call over to David, who will discuss our financial results and guidance. David?

Thanks, John. Touching on the income statement, AFFO per share was $0.62 for the quarter, an increase of 4.3% compared to $0.60 for the quarter ended September 30, 2025. Just looking at the balance sheet, we had a very active quarter. In August, we fully refinanced our 2026 maturities by executing a $1.75 billion public bond offering comprised of $900 million, 5.4% senior unsecured notes due in 2031 and $850 million 5.75% senior unsecured notes due in 2036. In connection with the offering, we settled $1.1 billion of forward starting interest rate swaps and treasury locks and received $20 million of proceeds which reduced the all-in interest rate on the notes from approximately 5.57% to 5.42% the savings of nearly 15 basis points. Our total debt is $17.2 billion and our net debt to annualized third quarter adjusted EBITDA is approximately 4.8x, below the low end of our target leverage range of 5 to 5.5x. We have a weighted average interest rate of 4.57% as adjusted to account for our hedge activity and a weighted average of 6.0 years to maturity. As of September 30, we have approximately $2.5 billion in total liquidity comprised of $270 million in cash and $2.2 billion of availability under our revolver. As Ed mentioned, we've implemented a share repurchase program for up to $2 billion. This authorization gives us flexibility. It is not a commitment to repurchase any specific amount or on any specific time line. We view it as one of the many capital allocation tools we have, and we expect to expect to use it opportunistically and to cite our friend Mitch Germain, only when it is the most vigilant approach in allocating capital. During the third quarter, we declared a dividend of $0.46 per share. The quarterly dividend equates to an annualized dividend of $1.84 per share and represents a 2.2% year-over-year increase, representing our ninth consecutive year of dividend growth. Our dividend is very well covered with an AFFO payout ratio of approximately 75% per share based on the midpoint of our 2026 AFFO guidance. And turning to guidance. We are raising AFFO guidance for 2026 in both absolute dollars as well as on a per share basis. AFFO for the year ending December 31, 2026, is expected to be between $2.695 billion and $2.705 billion or between $2.47 and $2.48 per diluted common share. Compared to our prior AFFO per share guidance, the update represents an increase at the low end of the range by $0.02 and an increase at the high end by $0.01 and -- based on the midpoint of our raised 2026 guidance, VICI expects to deliver year-over-year AFFO per share growth of 4%. And just as a reminder, our guidance does not include the impact on operating results from 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 Anthony Paolone of JPMorgan.

My first question is related to the buyback. And you talked about comparing other options for the capital before using it. You have some existing commitments already. But can you talk about just maybe more specifically, if you've got capacity beyond the existing commitments where the buyback is going to compete with, say, your deal pipeline? Or do you think the existing capital commitments we'll probably use up like your free cash flow and capacity for now?

Yes. Tony, I'll start and then I'm going to hand it over to David. And I actually -- and David will talk you through the capital sources that could again potentially be a source of share buyback funding. But I actually want to address what came out in a couple of notes last night, which is that somehow if it'd been construed VICI and said, "Oh, we will never do share buybacks. And I can tell you, I don't think I ever used the word never. I moved to New York in 1979 when a lot of people said New York would never come back, and it came back and it's come back repeatedly over those 40-plus years. In the same way, anybody who says VICI can never come back from this is also making the wrong bet. And accordingly, we have never ever ruled out share buybacks. We have never said we would never do it. We will do it if it is the best choice among all the choices we have in front of us in terms of allocating capital. But with that, I'll turn it over to David, and David can talk about possible sources a potential share buyback funding given our current circumstances.

Yes, thanks, Ed. Tony, good to talk to you. Thanks for joining us this morning. I mean, look, at the end of the day, we view it as good corporate hygiene. Ed went through some of the potential sources and we get a lot of questions on what do you do with the loan proceeds when those get repaid, that's 1 potential source. Obviously, free cash flow is a potential source. To answer your question directly, Tony, most of the free cash flow is allocated to loan commitments right now. And -- at the end of the day, our job is to grow the left side of the balance sheet with long-term durable real estate. And so we put the tool in place as simply that, a tool to potentially utilize excess cash flow when the opportunity may arise at a point in time, sometime in the future.

Got it. On the loan book, I mean, I think in prior periods, the question was always around reinvestment risk, but I guess maybe does that flip now at all? And do you have opportunity to sell loans any parts of the book liquid where you can actually monetize and repurchase shares?

David?

Yes, Tony, it's a great question. I mean this past quarter, the Hard Rock Ottawa notes, we sold those back to Hard Rock at par. So yes, everything is liquid in there. For the most part, sometimes it comes at a price. It is not our first choice. Obviously, the yield on that loan book is very attractive, but it is an option that we have and a tool that we have in our toolkit.

And Tony, I will just add -- I'm glad you asked that question, Tony, because I will just add in that we've often had the question over the last few years. What if that money comes back to you and the redeployment of it is not as high yielding as the loan might have been given both the state of the credit markets, I think that risk is lower. But again, at our current stock price and current AFFO yield, share buybacks would potentially be just as productive as the outstanding loan might have been depending on its interest rate. .

Our next question comes from the line of Barry Jonas of Truist.

Churchill Downs just said on its call right before this, that their gaming M&A process is going well. I don't know if you want to talk specific processes, but at a broader level, maybe talk about the pipeline and if you think that bid-ask spreads are in a reasonable place today.

It's John. Nice to hear from you. Again, I'll go back to my opening remarks in the environment that we're in today. We continue to have a robust pipeline, a variety of -- you're talking about gaming, leisure, hospitality, entertainment, sports, health and wellness. But what's key at this time is really being patient, selective and disciplined with our capital. And as we look at these opportunities, how they fit strategically with our portfolio. And as you mentioned, there is a process with the Churchill assets. There's other gaming assets in the market, but we take that same approach across not only gaming but the other categories that I walked you through. .

Great. Just as a follow-up, I appreciate the comments on the Caesars regional lease, but what's the level of urgency from Caesars and their pending acquirer to resolve this to negotiate around the regional lease. They obviously have a lot going on now, but we do get the question around potential time lines where we could see some potential resolution?

Yes, I'll start, and then I'll turn it over to John, Barry. But we obviously can't speak for what Caesars sees as time lines and critical paths to all of the issues, obviously, that they're dealing with right now in terms of M&A. I will tell you that we're using the time very productively to make sure that we understand that we catalog and understand all of the potential choices available to us when it comes to the decisions and actions we might ever take with the Caesars regional lease. And along that line, whenever you're going to make good decisions, you have to understand the choices in front of you. And we see our choices as arrayed along 2 fundamental axes, one of which would be lease management, and that is what do we do with the leases? Do we fix them? Do we potentially not fix them? And then the other axis of choice and decision-making is portfolio management. And that is do we keep the lease in its entirety and the properties that go with it. Do we sell the lease in the properties to go with it? Or is there some gradation along that access of choice and decision-making in the same way that there are gradations of choice and decision making along the access of lease management. John, did you want to add anything?

No. I think you described it very well. I don't think we've historically talked enough about on these calls that we're always evaluating our portfolio. We're always talking -- you mentioned Caesars, Barry, but we're always talking to our tenants about opportunities. So Ed described it very well. .

Our next question comes from the line of Jim Kammert of Evercore.

I fully appreciate that the whole CECL allowance is convoluted, very subjective mathematics. But is there any information value that your consultant may have shared with you regarding the pro forma anticipated sort of cash flows and cap stack of Caesars on a private entity.

David and team.

Yes. Jim, good to hear from you. Now the CECL, you're right. The CECL allowance is a very convoluted esoteric GAAP provision, and I encourage everybody to go read [indiscernible] and talk about it, your upcoming Halloween parties because you'll really be the hit of those parties. I mean it's an internal accounting treatment that we go through Jim and based on credit ratings and inputs to the Moody's model that we use. And it is a noncash charge. I think everybody knows that. It is a GAAP accounting provision and shouldn't let accounting provisions distort economic reality of what is actually going on in the business. I think the One of the reasons for the change this quarter as we laid out in our disclosure is that the merger closed and that Moody's did downgrade Caesars downgraded their credit rating. So there was some -- again, some GAAP accounting that had to take place this quarter given some of the events at our tenant.

That's fair. So you don't really have any -- there's no incremental insight as to future taste, et cetera. So that's fine. .

No, there's not, Jim. It just what gets put out some credit pieces or whatnot, but we don't have great insight to that. .

That's helpful. And then if I could, I certainly appreciate Ed's comments regarding just very -- a moment ago regarding portfolio management, I mean would you be even open to if the valuation made sense to take an MGM lease here, a Caesars lease there essentially create sort of a joint venture or a package deal as a way to identify sources of capital?

It's a very fair question, Jim. And related to that question, Jim, and I think you see this in the work you do as well, we're in a rather strange time right now where the public market generally does not put a lot of value on distributed income and duration. On the other hand, there is in the private capital markets, a big focus and the insurance capital pools are obviously an example of this, a big focus on distributed income and duration. So as we array all of -- sorry, as we assess all the choices in front of us and the opportunity to make the best decisions possible for our stakeholders, we're certainly mindful of the fact that the income produced by our assets is very appealing in terms of being very good quality distributed income of duration in a world where there are certain capital pools and still very much value that. .

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

Maybe just considering where VC's dividend yield is today and internal rent bumps, seems like VG can attain the 10% total return without external growth. So given that, I guess, could you go through Vic's priorities today? And does the urgency of external growth seem less than it's been in the past?

That is a very good question, Caitlin. And thank you for citing that total return math. We always appreciate that. As you know, we're very focused on the building blocks of total return. Your math is not incorrect. I would say though that, that dividend yield plus the sort of same-store growth that we do enjoy as a net lease REIT, does get the get us there in your math, but we would build on John's point of a moment ago around our business development activities. We would not, in this situation, choose to stop investigating the opportunities to acquire very good real estate that we believe will have very strong and growing long-term value.

Okay, got it. And so I guess on that, and you guys mentioned earlier how you've added a number of new tenants, Clairvest, Club Med, pure high field as examples. I guess where do you see the greatest growth from these or these kind of partners between those new tenants?

John?

Yes. Very good question as well. Part of why we did these initial deals with these groups is our ability to continue to grow with them. We like these deals individually, but we also like that they continue to look at new opportunities. I'll just take 1 of them. Club Med is one that we announced a deal this year, as we mentioned, and they continue to be a company that are looking for opportunities all over the world. And I think they have found us to be a good partner to continue to have those discussions. Now again, whether we announce another deal, do another deal, it's all going to depend on how selective and disciplined where our cost of capital is. But Catlin, you've nailed it, we found some new partners that are looking to continue to grow their business, and we hope they grow it with our model. .

Our next question comes from the line of John DeCree of CBRE.

Maybe just speak about a sector that we've talked about in the past, and that's kind of sports stadiums or kind of sports anchored mixed-use districts. We're paying attention to a lot of the institutional capital and private equity, finding its way to professional sports teams. And so Ed or John, David, how are you thinking about those potential opportunities for real estate as kind of the professional sports ecosystem evolves with institutional investors? Is it becoming more attractive? Or are you seeing more opportunities? And is it still an area of interest for you? .

John?

It's nice to hear from you. It's a very exciting area. It seems to be in the news almost every day. So this sector is definitely worthy the investment of time that we have been spending, learning the ecosystem, meeting the players, understanding the developers. We're also watching how this sector is beginning to overlap even more and more with live entertainment with multipurpose entertainment centers with the professional or collegiate sports team, arena and stadium becoming the anchor for that development. So that's a long way of saying we continue to be excited about the opportunity here. We've not made an investment as we continue to be selective and disciplined, but we do think over the coming years, there is opportunity. The only other opportunity I'll mention, John, while I have the mic is a little bit about Las Vegas and the excitement going on in that town. Obviously, the success of the raters, the Golden Knights soon to be the -- as has the NBA talking about bringing an expansion team that would be just for us, super exciting that an expansion team ended up in Las Vegas to continue to drive customers there another reason to visit Las Vegas. At the same time, with our partners at Caesars we are actively involved in the process of talking about arena on the land that we own. We think I'm obviously a little bit biased here, but we think we have the best site for a new arena should the NBA decide to have a team there, and it's been a pleasure coming up with plans with our partners of Caesars.

Thanks, John. That's helpful. Those comments. Yes, every day we're reading about more and more capital going towards the sports ecosystem. So very interesting. Maybe a housekeeping item as a follow-up. Ed, you've kind of mentioned the payout ratio around 75%, which leaves retained free cash flow, which has been a core strategy for VICI and very effective. What are some circumstances or how do you think about maybe altering that payout ratio in the care environment going forward? What would caused you to go up or down other than kind of normal steps and flows and just timing?

Well, I'll start, John, and then I'll turn it over to David. But I would say that benchmark of in and around the 75% range is a benchmark that we believed in from day 1. And I don't think our belief in it has altered. We do believe that there's great value in having that amount of free cash flow in and around the 75% level. So the idea of taking it down further isn't necessarily that appealing and yet taking it up for the same reason is not that appealing. David, I don't know if you want to add to that?

John, good to hear for me. And I think Ed covered it well. I mean, as Ed alluded to, this was kind of a day 1 decision to, one, generate free cash flow; two, to make sure we're well distributed in terms of our REIT taxable income distribution requirements. And then they have flexibility in the event that back when we set the payout ratio, we had no idea what the future would hold. We have no idea what the future obviously hold today. But it gives us flexibility to go up in the event that needed for whether it be distribution requirements, payout requirements, but we like the free cash flow it generates, and we are continuing to watch it and maintain it.

And John, I will just add that sooner or later, I do believe we're going to be right in what we said on our Q2 2025 earnings call when we cited Siviourmanian from BofA and proclaiming that the total return area has returned -- we do believe -- we generally believe it will. And with that, there will be greater value placed on dividends than might be the case today. .

Our next question comes from the line of Greg McGinniss of Scotiabank.

I just want to return to buybacks. We appreciate the clarity you provided on your thinking they're going to be evaluated in the future versus other potential commitments, but this does seem like a near-term concern given current commitments in place implies excess free cash flow in 2027. So are you seeing opportunities today on the debt side that are as attractive as a 10%-plus AFO AFFO yield, excuse me, or maybe deals that improve the longer-term acquisition pipeline. So even if the debt investment return doesn't really match the potential accretion from a buyback, it still makes sense as a more viable option.

Yes. I actually really like the way you framed that, Greg, in terms of the range of choices available. So David, do you want to take that? .

Yes, Greg, good question. We appreciate it. Just in terms of debt investments, we talked a lot about the size of our loan book, and we feel good about the current size of our loan book. I think -- we do see debt investments that are north of our AFFO yield, and it becomes a strategic decision whether or not to grow the loan book, who is the partner kind of the future opportunities, and then you're rightly so, there may be a lower yield for assets to go on the left side of the balance sheet, but produce durable income, improve the quality, diversification of our income stream and our tenant base, and those are all things that we take into consideration. As I mentioned in my remarks, a share buyback is simply a tool program is a tool and having as many tools in our toolbox is just good, again, good corporate hygiene.

Great. then just kind of looking at some of the operator earnings that came out the last couple of days, you had Caesars with the decline in Vegas, but some improvement in the regional side, MGM with some improvement on Vegas, but a major decline on the regional. Is there anything specific asset wise that's within your portfolio where you're seeing kind of changes from a customer perspective or anything where you expect near-term growth from investments that are being made? .

John?