Research indicates that real estate equities with a net lease designation are most preferred .these real estate equities include gaming real estate investment trusts (REITs), MGM Growth Properties (NYSE: MGP), and VICI Properties (NYSE: VICI).
The term net lease refers to a contractual agreement whereby, lease pays part of taxes, insurance fees, and maintenance costs of a property. Net lease is common among real estate firms like MGM Resort International (NYSE: MGM).
There are three publicly-traded REITs in the US, they include Gaming and Leisure Properties Inc., MGM Growth, and VICI. At the height of the COVID-19 pandemic, there were fears that tenants would struggle to meet lease obligations.
The fears were inaccurate, and rent continued to be collected even in the darkest days. MGP and VICI are thriving today. Shares of the two REITs are up by 46 percent, above MSCI US Investable Market Real Estate, which is up by 34.76 percent.
MGP is expected to recover on the Las Vegas Strip, where they own bulk of properties. MGP virtually owns all properties that MGM domestic casinos operate. VICI rent escalators in its tenant contracts that are tied to Consumer Price Index (CPI).
That gauge has soared in April and May, indicating that VICI and REITs have the pricing power. VICI’S biggest client is Caesar Entertainment. Unlike MGP, it has other small tenants.
