VICI Properties reported its first earnings since closing its $17.2 billion buyout of MGM Growth Properties. The real estate investment trust’s revenue rose, although its per-share funds from operation missed Wall Street forecasts.
Company officials discussed the MGM Growth deal and February’s deal for the Venetian during its conference call with analysts and journalists; CEO Edward Potoniak called the REIT’s portfolio “transformed.”
In a statement, VICI, which was spun off from Caesars in October 2017, said its funds from operation were $240.4 million, or 35 cents per share, for the three months ended March 31, down from $269.8 million, or 50 cents per share, a year earlier.
The latest result missed the 41-cents-per-share earnings forecast of analysts surveyed by Seeking Alpha. Funds from operation, a closely watched fiscal yardstick for real estate investment trusts, takes net income and adds back depreciation and amortization.
Revenue rose 11.3% to $416.6 million from $374.3 million. The total included $44 million of noncash items, composed of $35.6 million in noncash leasing and financing adjustments and $8.4 million of other income.
The latest revenue result topped the $410.9 million forecast of Seeking Alpha-polled analysts.
In the MGM Growth deal, which closed last Friday, VICI assumed about $5.7 billion in debt and acquired most MGM Resorts-operated Strip properties, including The Mirage, Park MGM, Mandalay Bay, New York-New York, Luxor, MGM Grand, and Excalibur.
In February, VICI completed its previously announced deal to acquire The Venetian’s land and real estate assets for $4 billion in cash, with Apollo Global Management acquiring The Venetian’s operating assets for $2.25 billion.
During Thursday’s conference call, Potoniak said the REIT had transformed its portfolio, tenant and geographic diversity, and balance sheet.
“We’ve also become the leading real estate owner on what we believe is the most economically productive street in the world, the Las Vegas Strip.”
Potoniak said the resiliency of VICI’s tenants’ business models showed during the coronavirus pandemic; the REIT collected all of its rent in cash and on time.
“Our operators have shown their ability to operate through thick and thin,” he said. “The economic outlook for the next year or two may be murky, but we firmly believe that our operators prepared their operating revenue and cost and liquidity models for whatever may be coming.”
Potoniak added that VICI believes its capital’s competitiveness and attractiveness could increase as experiential operators look to refinance businesses or fund growth.
“To sum up, VICI has gotten bigger and moreover stronger,” he said. “We believe advantages will accrue to those REITs that are bigger and stronger.”
VICI Properties shares fell 89 cents, or 2.9%, Thursday to close at $29.76 in regular trading on the New York Stock Exchange. The shares added back 4 cents, or 0.13%, after hours to settle at $29.80.
Follow Matthew Crowley on Twitter @copyjockey.
