VICI Properties, the largest owner of casino real estate, has once again increased its 2024 adjusted funds from operations (AFFO) guidance. This marks at least the second time this year that the real estate investment trust (REIT) has revised its outlook upward. VICI Properties, the owner of Caesars Palace on the Las Vegas Strip, now expects 2024 AFFO to be between $2.36 billion and $2.37 billion, or $2.25 and $2.26 per diluted share. These figures are slightly above the previous forecast made in July, which estimated AFFO of $2.35 billion to $2.37 billion, translating to $2.24 to $2.26 per share.
In a statement, CEO Edward Pitoniak highlighted the company’s economic model, noting, “In the third quarter, we continued to demonstrate the flow-through efficiency of our economic model, increasing our quarterly revenue by approximately 7% year-over-year and our AFFO per share by approximately 5% year-over-year.” VICI’s revenue for the third quarter rose 6.7% to $964.7 million, while earnings per share increased to 70 cents from 55 cents a year earlier.
Continuing its tradition, VICI also increased its dividend during the third quarter. Last month, the REIT announced a 4.2% boost in its quarterly payout, marking the seventh consecutive year of increased distributions since it was spun off from the old version of Caesars Entertainment in 2017. Over this period, the dividend has grown at a compound annual growth rate (CAGR) of 7%. This commitment to dividend growth is significant for investors, as dividends are a primary attraction of REITs. As of Thursday’s market close, VICI stock yields 5.30%, presenting an appealing alternative to cash and short-term bonds.
The company is well-positioned to continue this dividend growth, having concluded the third quarter with $355.7 million in cash on hand and a 100% rent collection rate, indicating robust fiscal health among its tenants. This consistent rent inflow, coupled with inflation-linked increases, supports VICI’s dividend strategy. Pitoniak added, “Our methodical portfolio construction and consistent annual earnings growth from same-store rent escalations have funded our annual dividend increases, creating a compelling compounding opportunity.”
Commercial real estate is a capital-intensive industry, and VICI’s $17.1 billion debt burden at the end of the third quarter underscores its exposure to Federal Reserve monetary policy. However, the REIT’s $3.3 billion liquidity position and expectations of further interest rate cuts well into 2025 could reduce VICI’s financing costs.
Through strategic acquisitions, VICI has become the largest landlord on the Las Vegas Strip, owning the real estate of Caesars Palace, the Venetian, and almost all Strip venues operated by MGM Resorts International, except for Bellagio and Cosmopolitan.
