VICI - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the VICI Properties’ Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please note that this conference call is being recorded today, August 1, 2019.

the Properties. to turn Counsel Gallagher, now VICI with will call Samantha over General I

Samantha Gallagher

operator, good release you, be VICI Company’s The Thank Properties and and found second to have release www.viciproperties.com. section quarter the in access website the XXXX of information at earnings supplemental and Investors information. morning. supplemental can Everyone the should

Some federal securities the the meaning of our of comments today will be forward-looking statements within laws.

intend, what will, projects identified refer detailed the risks by we interpreting I other you the of expect, in to operating Forward-looking should, subject which caution as guidance, cause that actual are could and the are usually discussion of phrases impact filings materially should results statements, and expect. more Therefore, risks to future uncertainties financial Company’s condition. exercise or a could words similar them. use numerous and relying differ results on SEC such to from you for that

comparable our we non-GAAP our or as measure These financial During measures in GAAP. directly isolation with be reconciliation is in these the for performance. call, considered useful which should operating discuss we not measures, a evaluating believe Company’s be will our the results measures in substitute earnings most the available accordance of in release XXXX second to information. quarter A and prepared GAAP supplemental can

call Officer; Kieske, and Financial Chief will some Pitoniak, Ed the to Payne, Hosting provide remarks Chief Chief Gabe Accounting Ed Officer; today Executive then Officer; opening John the David have questions. we will we call President and Wasserman, open team Operating and Officer. and Chief

over to the turn Ed. I’ll call that, With

Ed Pitoniak

on thanks XXXX and our QX call. you, Thank earnings Good Samantha. everyone, for joining morning, us

context growth extremely of in we the our proven a QX achieve to activities And In and of activities. what and financing to spend the over before moment that, short The QX we’re David I’d will long-term John results. activities be has financial results history. get our second recap recap will putting into QX busy striving But our XXXX our quarter another a moment, to VICI for quarter like to shareholders.

we times times nutshell, over billion almost at VICI leverage EBITDA debt net X.X to at nearly from a a $X.X announced years at end refinancing to is X.X accomplished of and approximately we In rates by short net old EBITDA $X.X We a debt acquisitions interest in have of billion amount emergence have to and debt billion raised time. quarter eliminating reduced $X.X now $X debt. lot equity. of of our approximately billion two adjusted of and lower

We also increased rent the base annual XXX%. by Company’s

include rent pending you the incremental not is transactions yet lot of announced, closed. the activity of over If That short-term. the annual but a

institutional to an REIT of our All the in of pursuit has goal build been for long-term. which

achieved investment the spectrum with for Building well-covered VICI the upheld and by dividend end, any dividend strength long-term, secure the we delivers the Building tenants and growth relationships to we endure. cycle a focus a enhancing the relentless sheet sustainable income of that sheet acquisitions across for the run, recreate anticipated growth, tenant growth. our terms long-term. Towards our have landscape. broadest following. long-term funded strategy Having income gaming or and investments, executing the estate structures that economic balance can credit and successfully on not dividend Improving weather lead our may for for enhancing a with that portfolio A growth balance at growing real long the strategy long-term. for and

of predictable quality, pipeline our recognizes unrivaled And that our of that the can durability, irreplaceability ownership an purposes community Building long-term, prospects trust capturing the and growth for shareholders and gives investment means the the building for on into creating value a value see that for an not the relentless base that our estate. shareholder base long-term real ownership The focus values long-term of we an lasting this years value short-term will creating future. growth gain.

the able outlook to we’re duration of longest an accordingly. in leases the act some and So industry, expansive take

had Take disciplined for acquisitions, I generated more however, announced accretion immediate in relied example short-term approximately acquisition approach, announced REIT of earlier, we advance not stat acquisitions funding of that we as the value not accretion, especially the creation have we the while for equity. for $X.X immediate equity we focused of and may billion closings. have not kind on on have $X.X that raised approximately heavily mentioned short-term billion sacrificed gain. of long-term far If taken would’ve would

closing, would would on building measure funding until we to not risk. significant short-term be we In doing can as case, upon interest true have but that trust REIT our we their focus market decisions. able a to The our we have been and rely thrive would believe so, cycles. act capital delayed for either and through in relentless investors stayed focus pricing taken is in best our to essential Another allocation all in

this security a and on those VICI consistency provide of dividend. back sustainability long-term our flow we transactions our of see have quarter accretion, designed growth in will Looking long-term cash fund certainty, the history, short the you manner and who completed long-term a funding and in long-term transactions and of you we announced to

We and creation acquisition shareholders deliver. and support raise calculate We greatly launched The our collectively from our with transaction up value for activities. the capital equity valued the and realized when immediate nature with allocation of funding with a makes transformative of that we the the that cultivating stepped backing impact long-term strategies analysts announcement with and it such Eldorado. will investors base precision, benefit this who related our understanding strong long-term to strategies currently our understand especially we challenging support the of of believe and covering our

the creation. believe long-term; long-term transaction of this stress I’d our And degree our us enable to long-term AFFO extend to the a one, our will leases John things and over number number significantly improve contribute to our was success to for restock about Eldorado turn to like with significant which the before significantly two, QX four, We value I long-term number our transaction and John, all has competitiveness great Caesars That’s say to long-term. XXXX growth add number about introduction tenant; and accretion; finally, what three, pipelines growth largest activity. to

With over to you, that, John.

John Payne

everyone. good and Ed, to Thanks, morning

while one we As pipeline. seven upon refreshed established acquisition new we We busy the time, same had three closing, closed billion announced new while Ed markets, mentioned, our across six new and acquisition. adding on a a properties $X over growth tenant relationships quite quarter. We at regional

like their a for of VICI, strategic I’d JACK these minute to each spend on transactions Cincinnati. and benefit

Cincinnati rate. with off another And world $XX.XX proven With gaming roster. we we tenant rent will X, Cincinnati $XXX As we quarter’s million last of a to track million the this X.X% in transaction class operator market enter on for success representing the with record Hard partnership transaction, agreed cap JACK the on with announcing our to by the add call we an a operator gaming in market. We’ve quarter attractive discussed acquire urban first Rock class of in strong Ohio April kicked International.

to on urban for on of Casino X addition asset Greektown, VICI the $XX.X Greektown Penn X.X% we is This rate. the rent in cap closed officially the the Detroit core an next, located portfolio. million quality at a Hotel $XXX to And in on National. XX, acres approximately the simultaneously acquisition of May high asset great add attractive leasing million

transaction entering National Casinos, with and partnership are regional Penn to to closing, strong adding transaction million $XXX a income will in announced master Century add while Century benefits. of three Casinos. partnership further very under a acquisition strategic diversification provides attractive several expand June Upon lease the X% for pleased by at properties our this rent geographic $XX an gaming on in We stable rate. regional cap our a a tenant with XX, market. million we additional and diversify our The

Casinos, tenant gaming. to creating small mid-size U.S. are we expert further operator plans into regional partnership a with of Century to expand assets an with First, new

State deal proposed in Caesars company Entertainment. the The domestic largest benefiting be market the transaction, conjunction thereby combination one from transformative and the create database will combination while Rewards. $X.X AFFO Caesars announced week entering Virginia Eldorado’s transaction, with to assets Century of with announced Pittsburgh Caesars gaming we and billion West after in the we’ll the robust value adding and The sophisticated leading regional Eldorado of loyalty with that market Eldorado customer the accretive we lastly, most every nearly on basis. Second, long-term for shareholders –diversification MSA, a

properties in of rent, the attractive $XXX.X We rent capital we for including blended $XXX gaming execute they rent This are our partner $XX.X million largest is Vegas a and transaction on master company dynamic the with incremental provide X.X%. portion VICI, thrilled need, add in to of as regional order to most of Strip million goal cap across from Eldorado creating in the four lease. our All to will rate their of of especially million Las country. of

go an urban have upon, refresh growth quality assets, includes What’s company put-call opportunities. on in on maintains Casino for long-term and pipeline high more, diverse assets Vegas core we gaming also This visible growing refilled two as Strip an roofer the on Baltimore. a in Ed strong growth that market pipeline Indianapolis option touched the a opportunities Las two ensures additional

team Eldorado the look to the partnership future and strategic both our with in goals. execute work forward to excited our as on We’re continued we

shareholders. transactions over accomplished with for VICI an announced in alone, equivalent billion quarter second of amount conclusion, we’ve In $X the

further AFFO. a very of our it distribution, growth all to refreshing We’re doing made that long-term is manner to adding tenant diversifying the roster pipeline we’ve in proud of accretive course our progress and in our geographic

indicates, to finance of we’ve in our our and all execute ability As and shapes acquisitions sizes. quarter activity the proven source,

be the presents. to on believe great we capitalize determined opportunities to remains a that continue will position We in VICI and market

discuss balance With to results. over David, financial sheet the call that, and I’ll David? who will our turn

David Kieske

cover sheet first quarterly a John. results transaction highlights financial and balance the our surrounding to our few recent turning I’ll specifics Thanks, the from before activity. of our

XXX, a on the are tenant to lease to XXXX, real tenants basis directly present longer accounting by estate paid As relevant reminder, no since required they we under the standard, taxing on X, reimbursements starting gross related ASC taxes our new authority. January are and the a

period, related therefore gross will operations. prior adjusted of continues be taxes XX, Therefore, and up neither our to real historical not and retrospectively the statement these remains presentation estate and unchanged of appear the reimbursements. financial include of the items tenant statement June on The XXXX

XXXX revenues total XXXX reimbursement property $XXX.X QX million. in Our excluding QX over taxes, to of increased X.X% tenant the

transaction incur was for full-year our with lowest the projection the Our G&A We ratios revenues was the quarter the to the required only related of $X.X percentage represents the in accounting expensed guidance. million costs leases, costs and and documenting associated under quarter, in a and of million line of quarter, JACK expenses is legal $X.X as with transaction. triple-net for be X% Portfolio the new the total primarily Eldorado the in which are and Cincinnati, leasing sector. the Century to one These

increased for AFFO the equity most the quarter the per issuances over was share, last increased second share offering recent year, X% prior or $X.XX million at $XXX.X approximately Our quarter and given year-over-year, per XX% AFFO while AFFO the end. almost November

Our highlight cash revenue and as EBITDA our AFFO of XXX% XX%. approximately of through adjusted net revenue flow highly efficient once results cash model while was again, flow was through to approximately triple to

under Investor transparency, believe quarterly section and the As any in you find to helpful detailed menu always, we heading materials. the financial point for financials. website, We this you’ll located information welcome the on which feedback supplement, of our additional is

we comprehensive positioning and continued growth. company Moving In we onto balance further other markets the an strengthen capital strategy. auto quarter, funding active our combined transactions had capital balance activities, a our been yet with but closed, not connection other the for the that with and announced sheet had sheet transaction pursued

and was objective shares activity billion. believe week near of capital last we the we sheet by million this the flexibility maintain an provide share completed transformative of our approximately to led a upside proceeds of effort derisk for shareholders will Our some On but quarter. sold sheet for This that per funding with we balance term to locking deals. growth. we ensure XXX balance during price will immediately the $X.X to the at on dilutions, an sequence have in long-term With fall certainty effectively net thinking offering June $XX.XX of XX, of approach, this

June offering offering billion million regular The XX. a in share stock on of was comprised XX our to total approximately resulting immediate and common shares of net account being proceeds the added share $X way

XX $X.X additional million agreements also We up forward for is shares, anticipated approximately into raise on the proceeds forward to of billion. sale the of net entered component the settlement, offering

We in do the not view any expression transaction of from and in the lightly. in support, offering trust whole now time forward or retain success ability a We between significant XX, settle confidence we upside take the and as to and commitment our that XXXX. of September tranches shareholders this

will deploy capital our We we your to continue goals. work on long-term strategic as accretively to execute

of the total we existing capacity increased loan a leverage $X and well in transaction act the unsecured secured term of credit as through intend million funding the capacity combination the to a $XXX markets Las debt our neutral on Related of Caesars borrowing Palace, by our Eldorado billion. as May, of For the we bonds We remainder facility, currently the a basis. amended to needed a CMBS debt to revolving to refinancing loan on Vegas. with the close

years maturity with two and moved to interest also of the to a basis range grid We to XXX over we rate May, LIBOR, leverage XXXX based XXX extended a by our points

total revolver. billion to with X.XX%, the rate to our debt terms remaining maturity is billion we $X revolver our future in have cash We the approximately fixed quarter X.X of our weighted Our is was X% and of debt the of maturing XXXX. providing of debt under ended investments availability $X.X short The at $X.X average no interest term over floating, a billion billion XX% and with average $X years and expense. liquidity, outstanding subject our clarity until our of end compliance weighted quarter with debt approximately interest with including

our X.X of XX, EBITDA to June end of was times, LTM our target of As net times. to low debt approximately X below well long-term X.X the

adding X.X% increasing We cap transactions, transaction of Portfolio between XX% Regarding quarter. specifics, all. Then just Greektown our on $XX.X announced add in Century so cash rent, we on will rent JACK it the the annualized annual income pending acquisition touched rental XX, our and rate. million I on $XXX approximately in activity, over three the million Eldorado, won’t by cash a approximately in John Cincinnati, repeat one the most closed May just annual at

expect JACK by end In terms of we Cincinnati XXXX. close to timing, of the

the targeted first continue target Portfolio, XXXX. Eldorado to close of in XXXX. in the Transaction For is closing Century early we to half And the

guidance a quarter, respect per will to Now with we this dollars provide additional absolute guidance. as Beginning to share on well our be basis as presenting in transparency.

closing our updating second completed are as Greektown well XX, XXXX markets year activities the capital We full guidance to on in all the of reflect as May quarter.

We AFFO or million $X.XX million million versus per or $XXX share guidance $X.XX $XXX be expect of between million per prior our $X.XX to share. and $XXX to $XXX now to $X.XX and

adjusted assumptions are Greektown. AFFO with for prior underlying of the guidance Our consistent closing

to potential record we we in stock as required for trades June, deal will extent, the and dilution While under Sale above treasury issued into from the XX the QX impact our range the per be share Agreements price, accounts resulting Forward to a stock now GAAP. million entered in dilutive shares that

guidance any of does our acquisitions. pending always, not As the reflect

based paid per Turning business XX the of dividend to stockholders of our dividend we to of on the share XX. on $X.XXX dividends, of a July record annualized June on as close of $X.XXXX

line for that, With the open questions. please operator,

Operator

from [Operator Bank. Carlo Deutsche comes with Instructions] question Our Santarelli first

open. Your is line

open. is line Your

Carlo Santarelli

you in mind. were you talk good really in is another I did morning. have directly in don’t and you proceeded But blow of you maybe later in helpful. – specific comment potentially know probably Thank perspectives pipeline, guys. going that terms the if bit be you’re If about on a would that things about deal Hey, This to able talk could stages back how little guys your of reference. question that I if for. the can June, negotiations to

Ed Pitoniak

John, you want ahead. go to

John Payne

all and specifically can’t think, I hope indicated, I remain you, past months that, we Carlo, Well, active Sure. as I’ve busy XX that at but about I talk to times. the

And to as we quite others and other the that we continue at comparison so, deal to be work well. road on a we in look opportunities and out bit that called continue to

right during even busy a summer these it’s So months now.

Carlo Santarelli

of but transaction? best Great. you’re the this good you, you for targeting. you’re Are then to the to that the loan proceeds of year you date, cash and regardless guys the could, pretty if specific in John. this you’ve your in kind not the shape on cash transaction I to but opinion as Thank done maybe position hand be of hand, unsecured later raise do in one, of term the with financing equity maybe going and necessarily with well what deal including on in would David terms that And that as

David Kieske

Carlo. need what Yes. to of, just the we’ll raise not terms right, debt we react of equity. markets, And year do terms clarify, more to in any in That’s in as later

We equity have The offering go or part announced fund. to the account. potential take that’s upsize that the of the referred acquisitions to will was S-X, we acquisition the not an back reason to into markets to that we

pipeline do equity Our pipeline, about term. in we feel and foresee any near confident our more the not

Carlo Santarelli

you, guys. Thank Great.

Operator

Our from DeCree Union John next comes with question Gaming.

line Your is open.

John DeCree

everyone. be congratulations a XQ, morning, might think an Good but Congratulations busy on nonetheless. I busy understatement,

Ed Pitoniak

Thank you, John.

John DeCree

we of your in company. Ed, transactions wondering kind so as more, long-term high But in these could of short accretion VICI talk creation importance about was close some of it see a and value strategies to get the year term and out discussed the kind really so the the of quite forth. kind of where remarks, I if to talk transactions obvious pipeline, might for little goal you’ve some of of with ultimate Wanted and long-term value growth the are bit your with balancing the talk And you’ve creation. the you going, done merits prepared think, for you for a some replenishing a of I level second. helpful on be

Ed Pitoniak

be in fundamental And so at Yes, what to do believe, able we’re we what well, real real believe is estate yet, high time, of prices. great John, to our this still, estate, continues quality. invest I institutional at to think, opportunity we bargain fundamentally are

we’re it plus plus to to real and you what estate you opportunistic a private If about value-add. love equity yields, framework, core in something buying for core wanted talk real private We estate. opportunistic is or we opportunity. core put this and believe typically right value-add equity real at now, into core yields fundamentally real opportunistic yields either And estate

emphasizes And for this see take it, everybody collaborative portfolio haven’t integrity effort great is what is we business real cash message, further estate fundamentally opportunity is flows. the build at estate of what believe the yet – able to estate. highly those out great this of a it earlier And who the VICI, week. a the It’s GLPI. that is the been operating MGP we fundamentally think ensures real on and our great sector whose our and that of tenants, core on look Green durability Street recommend with we have real put to we a which And report part long-term

So, to to want just again the noise the want continue the to We tell to in market. ignore we story. continue

so in runaway on hope continue I are that that’s a to a there seen, night like go whether much to of last We’re And country, put on be experience politics of of trends very as point also as reports cultural look other we policy you XX,XXX-foot sectors in it some data, the and with we and frankly, it’s service underneath think answer, June a strong. at now for we trends value that, is Boyd going it. And at saw Strip John, obviously economy markets. all from and right real continues we everybody the gaming of believe demographic prospects Penn realize and if think to you got great And yet really estate. I noise have continues you. And is the to and capital to around but nervousness the a or as well. long where experience out ahead

John DeCree

That’s all helpful. was I looking That’s for.

I follow-up. And think you if think I good can answer comments. my

switch gears to slightly. maybe So

guys You very types financing provided very smaller companies. large for two unique one One, much scale. sources different scale some of and

last the some or seen with over gaming years change the couple I a of of be months. think seen REITs resistant partners XX we’ve historically partnering certainly so over little XX last to we’ve the the

the for to As all acceptance you short of have an opportunities these are is, forward and receptivity the different seeing increase in and from unique partners. refinancing on you financing potential companies or seen other guess inbounds sizes positionings, increased provide you receptivity transactions? question I

Ed Pitoniak

growth I turn to is what John over what in to going – in for it to over granularity on more to continue ambitions, look we’re another John John, affordable capital, say, help I markets. their it here, just represent want I’m John I’ll VICI than to a gaming-oriented Yes. companies permanent turn to give Payne, that DeCree. gaming frankly growth before they rise just believe in seeing second capital might But that or want increased grow companies achieving public over permanent finance growth. It’s to their rise that, grow. the a is realizing gaming and turn might that greatly gaming to to way they receptivity from as And who to John. REITs help that color that. is equity more simple companies continue other it but growth of source Gaming you We will we are great want that permanent are to capital

John Payne

lot story that a to how our Ed, in my in hadn’t explanation credit of question Gabe the and potential space, my I the before company of on been on helping whole a REIT the based really done me space. that can it’s colleagues REIT that think help Sam, from John, sellers background. to a grow gaming a tell the Yes, come colleagues and And I phone give team great David, was

opportunities our And in really it see, a that folks outside time of the with first of experiential a so wide and we space. spent doing year variety space to the in can has led, and lot you as

I’ve calls we’re your a of as over understand a continue lot it. lot seeing in calls, also be specifically, than better just our it’s the who be spend calls and inbound quarters can they model we say few partner, more answer partner, years to grow, did outbound time with previous but question to a inbound folks we’re obviously with and seeing the said So more a company. wasn’t on how It’s the lease our explanation ago, and a space an table it good of for a been can REIT where can a help companies so take start long-term

John DeCree

Thanks, everyone. Appreciate the comments.

Operator

question Goldman comes Grambling from next Our Stephen with Sachs.

Your line is now open.

Stephen Grambling

thanks. Good morning,

First on a the you intermediate the have outlined rent term, announced lot of from details incremental around the the transactions.

You a degree already the to front-loaded for these. financing

is really maybe or frame John’s what I if per the AFFO all of a you. years investors is at to longer that the still of kind out. you power then as couple when these that a gaming And follow-up maybe mean as look we of is transactions share Thank look start maybe So mind? the help business not question, look term, top together of you to what guardrails think about outside of are something to could

Ed Pitoniak

that it on count mean we good Obviously second lever need adds leverage and announced and in billion that to rent of about basis. I million a of announced part on share $XXX question. our Yes, neutral the the share acquisition, Stephen, quarter our $X.XX based the that put a in $X that’s we is just we that need obviously to rent.

of the to that way of this XX% growth face on the the year-out growth, and sector part is right. that XX% total we issue the year-in, up front-loading the So is REIT that this we return in set

you Eldorado will We Century we in so as and next now close AFFO rent of three year, have and well announced this closed November, in quarters Greektown get as year. XXXX,

So for AFFO continue in to years growth to build come.

We just a will of and Eldorado half immediate close in of XXXX transactions full get then in assuming rent about – XXXX. year half the of

time. of So sequenced the company by growth the the we out to day and continue FFO it into and growth the over acquisitions to working in day ladder add

Ed Pitoniak

real is believe end part your terms has great we second of for to the today and And valued user end an question, durability that gaming, experience fundamentally, be from Stephen, now. Most outside guard that greatly user estate to we what in the an be of see to experience it. valued is greatly of XX, that experience is home will has it the rails. XX an as by years by That would the

within experience love replace that refine at the we of and new in opportunity business about call operator new an we experience to will the complexity. probably what to add It day has And the what has have gaming. complexity which – complex same experience, it, It’s we what is we that durability fresh. every become elements is we with has what look look obsolete for same to look of fundamental will And that experience. when gaming, of and do outside experience experientially

Stephen Grambling

or look like compelled outside gaming. doesn’t But sound currently you’re need of the to feel so it

Ed Pitoniak

certainly excited continuing compelling of And doing have of about includes lend that obviously needless a and to we grow. quarter, outside like outside to identify with very, very growth the Century, companies characteristics companies $X we’re smaller that investment sectors gaming we like But about big companies help of which to the billion gaming. themselves Eldorado great gaming acquisitions in themselves Caesars as are one well. sectors gaming, opportunities would and learn for all that And can thesis. say, to would They

Stephen Grambling

enough. Greg, the thanks. queue. I’ll Fair jump in back

Operator

from next question Rose of Smedes media Citi. comes Our

now Your line is open.

Cameron Hughes

smaller deal you might complex deal. your this on going the be is Hughes Century I at transaction that of get or sizes the Smedes. take like look range whether of forward, on more to behalf Cameron larger wanted just would Hi, like Eldorado

Ed Pitoniak

John?

John Payne

I for described think Well, you the us. range

what non-gaming operators we company, allow not would as at the started we’re all going thought would operators look gaming – to that at not meet restrict brackets we even and we at. think time. I didn’t us. It put around this We and look us to

so we really it obviously. take deal, doesn’t do we do any And meeting, any mean we’ll

the a a that But like deal, million small would parameters an but describe growing seems and around it’s But it’s in this if $XXX creative called that with not example, was if as the space. size, an us, partner Century do deal that U.S. small, many they strategic put platform are for we believe deals a only many we – don’t with not be to would is as that are but others. operator

answer at quarters just all simple magnitude because lead a we’ll lot ended. continue the it like we of that, is of looking will to the different think and we’re do we So things

Ed Pitoniak

of that, and that distribute able like for cycles. what to REIT of said through REIT some proposition being strategy. a inherently be necessarily I’d portfolio its all anyone And cash to segment. geography, customer is be Cameron, not should John the overexposed reason to fundamental A value just add element have a to REIT hedging anyone should to given

that can all is distribute ensure to through again cash that there one cycles. So the

of a tenant could of again REIT aspect lead business we doing like the do distributions. having biggest in REIT we’re did place higher we of the gaming that’s not overexposing deal the kind sorry, in space. to diversity put spectrum risk having diversity with by in that kind to where And the geography, investment to of we with sustainment, also the again terms Eldorado, deal Because particular the of we anyone us that of Century. the That while enables did of that

Cameron Hughes

guys. Thanks, Great.

Operator

Our next from question comes from Ladenburg Massocca John Thalmann.

Your open. now line is

John Massocca

morning. Good

Ed Pitoniak

John. morning, Good

John Massocca

do there think enough your kind is going plate offering. needs acquisitions given, today just more you mentioned pause equity closed the you of So transactions larger to do the Essentially forward your the on be continue think in of you some deals is today to do in the you maybe that at time kind what assuming you to roughly the tangible larger can pipeline or of maybe a that near-term. in capacity there speaking,

David Kieske

right add and John, announced it’s David. Payne I’ll lot now, and can mean that. John I to we’ve onto and a we start have a to obviously lot digest close.

path some to right capital and we’re lot debt look probably John a lot we on in of out towards meet plan table acquisitions, So that discipline their us. transactions the now things investment path But people long-term pursuing the grade. of as got we terms larger continue to, lowering are the capacity for now like with and cost ultimately financing our and we we’ve lay off of a said, probably right focused at a towards ensuring a on of

broader they As to year. the we seamless and Century working of then the Eldorado of the closing ensuring closing early about transaction a Cincinnati, ensure think next with closing ultimately

John Massocca

timing Okay. plan of Caesars unsecured mentioned, think that to to yourself the or rating agencies CMBS for And you more with debt getting the term kind potentially grade, debt hand? all – in the the going order there of CMBS taking investment then of be that markets issue. about you in debt and of the cadence of by the if thought position is type the about of the the cash to security any dictated market out you kind Is on

David Kieske

transaction. part stat the the out of take will We as broader CMBS Eldorado

you, high where take the As costs on to is we as cost or just yield announced we back in breakage overall of the little bit us. the agreed those they loan that with markets give Eldorado to are the cost, And will out of the split with either a of June, in – capital. depending term transaction transaction, and part the

that And cap structure have has that big which capital now feedback our the is we up then in agencies. hang the just structure. in remove of to agencies debt that cleans amount And positive rating secured a rating too, the up for the very right our begins been

is high And the the course markets unsecured over an several through so yield to grade of through our to more months. next then start the borrower, long-term and markets towards ultimately plan the investment

John Massocca

the you Do guess of your that’s some to hands. out of in be of ERI able a think before, of closing it’s I markets and raise of investment the grade kind bit you’d

David Kieske

say we And that’s We’ll to the will probably months, that’s liens the today months, grade months I be, XX secured would is XX secured we loans debt maybe in they remove off. our are, both cap months call in the with XX fall XX the agencies here. of have second of it meet October But year a lot CMBS, are in Investment the term debt. XXXX stack. again, can that the and next

So big and we to excited taking that bit we’re was do, about but got a first a CMBS that. little work of step out

John Massocca

color you taking on then maybe timing can out for potential any And CMBS? Okay. the of provide

David Kieske

first the it. first That’s sometime Its XXXX. November then can repay early call is And when XX quarter fourth we quarter, window. late

John Massocca

very for Thank you much. it me. Okay. That’s

Ed Pitoniak

John. Thanks,

Operator

Nomura from Our next with question comes Daniel Adam Instinet.

is line Your now open.

Daniel Adam

good morning. guys, Hey

guys And Boyd than estate think M&A why the real M&A the in market. about Obviously, right an earlier company, week, are? do So that comments current some you but quote landscape they’re was had quiet operator a is little made their Boyd exact are I current the seeing and think you feels it differently you a now.

Ed Pitoniak

by by think market by I size. geography, segment, Yes, varies it operator

seen weeks, announcement Century. You’ve you recent our with in saw obviously Dan, obviously

there You saw going the segments going did of River and at at level. on is activity maybe – on Twin the it’s asset There are or announcement with transactions again, Eldorado.

Asset operate that a is size at does Boyd good not again company. Boyd and levels really

smaller it’s realizing these we initially this of of David and gaming than – because it asset, and that larger a universe as while think of the part that I recreation, asset the diversity to other context terms those hotels relatively gaming money. things of assets And we moved in of assets to again, may fact or per in be hospitality EBITDA understood. versus small a smaller is like recreational are us it be And make sector or understood entertainment assets need these more within to myself lot they the has

deal that Century. kind can an with did we’ve do the Eldorado. strip the on. time enables And got The deal to fact us the do same with did So that we like there that we of is again, spectrum going we at assets investment the activity we

John Payne

little years mean Daniel, add bit quarter three I ago… billion I worth perspective, think just let that, acquisitions, this finished sometimes we And just to just because of of me at announcing a a $X I

Ed Pitoniak

$X billion.

John Payne

In this $X billion sorry.

Just space months anything would perspective, in last before XX this three years that someone in just would do else. this ago

a in one that of space. company so in this billion lot we’re sitting And $X not just change of think here there’s say, well, And to last I little a activity bit it’s quarter just announced perspective August that acquisition. and we’re

active. say not – depends So at I’m just my all Again, it’s perspective I’d friends I is. contradicting it your Boyd on where think at – very perspective it’s

Daniel Adam

follow-up helpful. on closing Strip Vegas nuance, more bit a with they but to those transacted the assets is the if rifer apply And my respect Las the then your That’s to of rifer, deal. still prior Okay. would Eldorado, Caesars

Ed Pitoniak

that I’m in sorry, who be they that case? would

Daniel Adam

So and would the be between in closing. Caesars now inter-sell

Ed Pitoniak

do Caesars really approval. precluded to deal be agreement likely Eldorado’s without merger their Eldorado would with essentially having a under

of than be that. complicated would a it giving more size that, So

Daniel Adam

Thanks Okay, it. guys. Appreciate Awesome. great. that’s

Ed Pitoniak

Dan. Thanks,

Operator

Our next with from Jefferies. David question comes Katz

Your line is now open.

David Katz

Hi, morning, everyone. good

Ed Pitoniak

David. Hey,

David Katz

been that the covered walked I You’ve of deal wanted on from but some beginning, tether maybe or I And And Caesars. of has concentration commentary to of flown earlier recognize fair that a does lot overall sort ground, Ed, you say some independence in tenant. around independence. a the this think to establishing your it’s discourse the from to or the follow-up of driven. you’ve the lot as But talk not way a Eldorado – is same single I from

criteria? and evaluative much may and accretion forward going how does of about relative into that be you decisions to think that other concentration deals we the considering, notion or as independence But the factor

Ed Pitoniak

Yes.

to think John. and I’ll start over it turn David, I I’ll

testimony, able it’s were right. relationship in existing it involve creatively very Eldorado, In development with say, John’s independent operators. transaction didn’t Eldorado, initiate is not with it that I David, think other to our our a elegantly, and the with to words, ability leadership tenant. activities And happen I does transformative to to I’m I’m length transaction that we with to to what independent saying larger that we did is most a great represents this trying relationships arm’s an that our transact do Caesars, what a led that especially transaction think we business

transaction to Caesars, and this I day issue to greatest tenant deal diversity particular out And that we to with scare that ability deal deal of think it is does or yield take great we but add concentration and not Penn Century flow. the John, concentration tenant does single our that ultimately of it will in we concentration, work create case, though itself of some development an not not lessening will to I hard because of every generate relationships, degree the to intensify our built that? that to confidence generate a you us. Rock this is to relationships the relationships if lead which and independent Hard So message those think in that on take continue relentlessly we is want from In this are relationships flow. the of

John Payne

No.

our competitive We us independence hands mean, don’t think us. us company a – described I it you deals parent a well. huge for I I was or have gives advantage is that deals.

to more there get and, it to is makes the be me continue hard continue going deals it. to will deals every do going work a of and to of it A wide we’re others way to get variety independence can there me, to day be, every mentioned day prove to you doing out have relationships makes that to We out as with a to to that. build work operators continue close we get with and simple factor big

David Katz

you very it. Thank much. Appreciate

Ed Pitoniak

David. Thanks

Operator

Barry with comes question from Jonas SunTrust. next Our

open. Your line now is

Barry Jonas

to out on Thanks. angle versus they’ve guys. XX:XX Caesars further coverage Good now? morning of How mix the that penetrate a ratio weigh around of said at Maybe you they’re just to ratio lease the Thanks. Eldorado, do wholly owned. come have kind versus strong of another the deal going you opportunity rent

Ed Pitoniak

was, it element guiding is is see it the key them great the a in of it ended great it’s Yes, with balance. merit they’re up we question. was key We Bret Eldorado your and capital constructing the deal a principle how obviously and Reeg a of substance cost is rent it the and that point, and our To in obviously It their substance, having valued. coverage to Tom team.

maintain think would it that approaching we companies, this The ratio. again kind So, philosophy we is strong be and sale both leasebacks, happy necessarily a New Tom that that VICI to positions. puts in don’t very if continued the they Caesars and of ROFRs very with mean

Barry Jonas

REITs class. exploring just then asset talked And, a about potentially Great. the we other last gaming follow up, quarter

of nature we the out seeing gaming what’s entrant? unique another anything and every, Thanks. the you given are see curious, there likelihood Just

Ed Pitoniak

then and start over to it I’ll I’ll John. turn

prices. again think perhaps really of And, there I I real regional would mean, Las available There’s thing that that this good bidders show speaking go could are attractive at is up fundamentally assets. Vegas it up back for certain set I to another very this high, is show bidders who estate very, of for assets.

into very think for the mind require I licensed, comfortable which to real keep real Vegas in could estate seeing should Vegas to institutional which Strip, applies real capital, Vegas institutional move make real Las certain ownership the degree estate. Las not real estate estate, we investors And the it real estate value Strip high the very to very we’re the Las Strip estate. owner does again, all to gaming of be kinds of quickly

of print you notice the on it for Shaft valued the to loan Right. was the Grand rate refinancing latest an If the recognition, think X.X. got on of implied made of cap of, the which happen I purposes those Canal assets

challenges of baked this otherwise terms are fully they how real in that or lot estate you’re are fundamentally today. again, at So will good it how I given real looking a undergoing either there valued really in think of sectors where be for commercial estate environment a is hunger secular

John Payne

at and our X%, they ability consumers. add mean onto the that. X%, just of and quality and the I’ll as stability when tenants we’ve of number the done and I to of company rates think tenants see in those X% that other consumers and I are new that buying attract then a industries they’re people And their cap as our keep transactions

at X%, there’s then are that that in REITs other things X%. buying And spaces X%, are

that space do plans board. growth they doubt no the built at gaming understands that worked space. there’s on our I and and look on beginning why try the firm to things. are think winning understand, a at, are And talking EPR to out if put they space. about as question this that I REITs looking sellers, their I’ve we’ve best the has think those that being model the don’t and other this there’s weren’t with taking potential I’m executives ties to one that there’s And, and that’s no of partnerships Obviously people this

others I this. agree entering So, there’s with to going anyway over that be that, time

Barry Jonas

so you Thank Fantastic. much.

Operator

Baird. comes question with RJ next from Our Milligan

Your line is open. now

RJ Milligan

morning. good Hey,

the Just in with guys you captive give when based a timing Eldorado. you you have and assets some to but of option looks have question curious the maybe did pipeline. if what you the color that optionality on, would terms like think you on on properties, the like timing call with don’t do those control could you your Obviously reloaded bring like if assets those on conversations with

Ed Pitoniak

Yes, close. Century, which growth add will again, XXXX, of the in and of timing a tremendous of obviously the I’ll eventually on the John based probably rent generate start by to and We of closing are going closing will XXXX closing virtue Cincinnati, RJ. of Eldorado growth also transaction, the mid-year the AFFO generate

of pipeline, terms starts XXXX, Eldorado And, proceed growth to pipeline of XXXX, if these an yet wishes the in perfect we cadence. to any on earlier responsive that’s at date. opportunities in be very honest if So, with you, be will the

opportunities. add? We John, to great ready. great a be to want ready, fundamentally They’re partner. want they’re If we’re

John Payne

the and one. just No, I as how future thought in opportunities not described That’s multiple well. think about negotiating you we it having

are when have “embedded” want again, or So, or out two it’s REIT other I execute just pipeline and multiple space. or to the seen been our in on in continuing for years not you’re it that will knock think can to But our opportunities whether and metronomic they growth, Indianapolis that to has growth Strip acquisitions, historically the opportunities, of you in shareholders. seeing see gaming us in that Baltimore allow

Ed Pitoniak

previously pipeline we incorporate XXXX to Center, growth call growth our by we that the then Las the around original effectively on a NFL opens the hosting properties Draft. spring XXXX agreements. you already what Convention put-call used believe which those extend And especially next to pipeline until the we lasted given Vegas, had if RJ, probably is we possessed Forum call the

think REITs with and hundreds that visibly dollars millions includes we’ve kind there pipeline And I of now many there’s incremental a again, of out So of goes don’t about of that XXXX pipeline. rent. to got other American

RJ Milligan

is question dividend, you expectations issues maybe to move with of board might That’s maybe My we helpful. the terms terms growth the actually Can going or is any in growth? on it second comment some free AFFO in forward. just cash in it of expect strategy more taxable for you Thanks. where line growth, lower flow earnings as look slightly increase there to than retain could

David Kieske

Yes RJ it’s question. David, good

year QX. increase As in announced last dividend you saw we the

to that things dividend one think, we up aristocrat. wanted to I be this of company ultimately a set be the

we in and timing of quarterly a with on dividend in discussed announcement basis. board terms So, consistent year dividend dividend growth, and the year the ultimate out

subject is approval. increase So board any future to to bound

in with targeted to always area. an AFFO we’ve we you But XX% an talked That’s as like about internal us funding. payout mid-XX%, self ratio the give

dividend keep line again start the a in dividend, the ratio. increase. annual around this out an And to see that implement acquisitions, on you’ll in think sequencing just that our timing year of payout year I and consistent and increasing with annual not basis in consistent So, and announcement for of but to

RJ Milligan

year? And or of helpful. a quantify just you the about the that’s forward AFFO the last half or sort of back can then forward dilution from Okay, of at you’re the modeling question, in impact, the assuming question, the talk David,

David Kieske

XXX weighted if about million that and about release, days is million, layer starting our you million million. about you the gives and in XX Yes see to that take XX RJ, in out can XXX, share shares, whatever of January that XXX XXX average you we’re XXX

from a is the million it forward. impact X So, share

RJ Milligan

to And through the that you end year? of expect the continue

David Kieske

right, yes. That’s

RJ Milligan

guys. Great. Thanks

Ed Pitoniak

Thank you RJ.

Operator

comes Our from ISI. question with Evercore [indiscernible] next

now line open. Your is

Unidentified Analyst

Do the to or it to on actually do we’re this out? closer any think and education play you you how morning. net downturn comment a you guys take between gap think Good that REITs gaming initiatives investor for Can lease may are the progressing? closing

Ed Pitoniak

three Dahlia. basis, and MGP, the showing rents crisis. a even question financial great ourselves back-testing job done a think GLPI during all which would We, of on good been the a companies, the well to have REIT degree have that’s that Yes, very great covered gaming

flows should of faith GLPI. So, our MGP colleagues our impacts no to harmful variety have at and we will, cash or those garden recession, absolutely have a a to if in lot of you

new It We time. that’s estate. itself time. that don’t cash And should of be in is flow And necessity. our and a that we element in of fundamental out. is that in could be most the is, the takes re-rating. cycle its ever the at is of our a think validating takes have of and out that’s story for rate we step that compression But a end awareness played the growing key investors real valuation sustained sector. is bidders in entrance our what of ability faith cap free to the the Every produce again there real of day, quality what So cycle ultimate a think of quality the frankly, intrinsic estate

case beyond That’s there should everyone have. the for estate base that, and accordingly. ultimate above to this is comfort real But our revalued that opportunity be

Unidentified Analyst

are quality, tenant is think on factors helpful. any note, any can about And flags, consideration? Thank you. you what important, you provide are guess on That’s similar detail when I a a most tenant under red new how there

Ed Pitoniak

property? to with there’s Yes, operating do enable them that’s the and strengths, a well, relationship of do have good every operate a weather strong ultimate, sheet credit do are end users then have determinant do the who enduring the two their they they I think value economic. are their they to customers, cycle, a strong going balance of know the they And

and to say, continue use will those evaluate we do we’ll with. we’re business needless we criteria, far, operating very so and to have tenant two tenant with the balance roster other to sheet key And strength happy any

Unidentified Analyst

you. Thank Great.

Operator

Our Morgan next question Stanley. from comes from Bradford Dalinka

open. now is line Your

Bradford Dalinka

for Hey, on good morning Brad Allen. Thomas

help about but wanted a Thank call I bump you’ve keep maybe in the call? vis-à-vis rather us long-term to if could leverage sheet could is to in the Just some a options throughout talked in see there. speed capacity a know you. and be the put there you think, past targets, extra economy do the balance about you put there than plan

David Kieske

de-levering it’s been and Eldorado strategy the a that could question, vocal Tom potential balance good for because put Brad the pretty be have part sheets. de-lever a and is I obviously mechanism think their Eldorado to overall Yes. of Bradford,

and it we we of company. of think part once way billion look, we’ll settle $XX So somewhere in have the $XX of is enterprise total billion be cap are, equity billion about market we’ve the $XX forward sort value

to year our a line-of-credit increased billion. this We

over You’ll time well. that increase as probably see

could us, period. and in we’ll be So time as execute access to we XXXX to on that when XXXX liquidity sufficient balance to between approach, be the put Eldorado our potentially asset do during that fact doesn’t that our period have through feel if put liquidity able we sheet, that

Ed Pitoniak

I to day or that when that, Yes, capacity have I say all have will to the principle, that management a general just the comes been would that opportunity. still would calls as to want take add of Brad, puts advantage exercised, we

Warren everybody to greedy is else is and everybody Buffet fearful else you As says want greedy when when fearful.

to opportunistic. the want REIT the capacity opportunistic we be when may be be position to in others not So, have always a to

Bradford Dalinka

you. was Thank extremely That helpful.

Operator

There for Pitoniak are to the Ed call remarks. time. I’ll over closing at in turn no further this questions queue back

Ed Pitoniak

sum We help great largest Caesars. We Rock transaction an been our history. our primary who’s new fortified tenants, everybody To VICI announced our the you Century. XXXX facilitate follow-on and operator. balance a with brief you has short history. call. Thank largest REIT partnerships, new Thank point Hard QX as with inflection in on transformation the to up been history in of We to sheet in entered further a into tenant

have whom honored We restocked of could we whom five our relentlessly are our stay and would hundreds we’ll seven focused new embedded roll rent this pipeline growth without of we such for potentially through long-term value to happened for of over work, add years. our of dollars None millions rent to the to on creation. next shareholders growth, that

for again today. Thanks you of to joining us all

Operator

call. This concludes conference today’s

disconnect. now may You

VICI Properties (VICI) 1 Aug 192019 Q2 Earnings call transcript