VICI Properties Spotlighted with Bullish Rally and Grand Acquisitions Ahead


In the world of real estate investment trusts (REITs), VICI Properties (NYSE: VICI) seized the center stage on Monday, reveling in a bullish rally fueled by positive predictions from astute Jefferies analyst, David Katz. The firm’s assertion arrived in the wake of its refreshed perspective on VICI ahead of the imminent unveiling of the trust’s second-quarter earnings report.

In a calculated move, Katz and his proficient team fine-tuned their VICI models to echo two critical developments. First, the rent escalations at the venerable Caesars Palace on the vibrant Las Vegas Strip, and second, the rental income generated by the famed Venetian that has recently rooted itself in a colossal $700 million financing deal with Apollo Global Management (NYSE: APO). This immense infusion of capital is designed to augment the revered venue, resulting Jefferies now projecting VICI’s 2025 revenue as an impressive $3.98 billion.

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“We are valuing the company on the same blended multiples as in 2024/2025, of 18x enterprise value/earnings before interest, taxes, depreciation, and amortization (EBITDA), 19x price/acquired funds from operations (AFFO), and 16x price/free cash flow,” Katz explained. He noted that these multiples are on par with those of triple net REITs with longer track records, sans the growth and future outlook of VICI. With VICI expanding its tenant base and pursuing value-boosting deals, Katz envisions the gap to continue narrowing over time.

The $43 price target extended to the REIT by Katz signals a 53% upside from the June 21 close. The hotly-anticipated release date for VICI’s estimated second-quarter earnings is set for July 24.

Furthermore, Katz hints that VICI’s second-quarter earnings report would be an opportune platform to brief investors about the feasibility of acquiring Caesars Entertainment’s (NASDAQ: CZR) Centaur Holdings. This company houses Harrah’s Hoosier Park and Horseshoe Indianapolis’ lucrative assets.

VICI’s opportunity came in 2019 when Eldorado Resorts touted its whopping $17.3 billion takeover bid for Caesars. Eldorado rendered an agreement with VICI that opened the door for either the sale or acquisition of assets between 2022 and 2024. As Caesars wages a battle to decrease its palpable debt and its management is alluding to shedding noncore assets, speculation is rife that 2021 could see VICI emerging as the real estate owner of landmark venues.

Aside from acquiring Centaur Holding, Katz implies that VICI’s second-quarter earnings report could detail other non-gaming pursuits. Prominently, its connection with Bowlero, a leading bowling alley operator, and the Kansas City sports center. He also suggests that VICI might clarify its acquisition plans within the gaming and experiential spaces, hinting at additional financial ventures akin to the Venetian arrangement on the horizon.

Being inherently prone to interest rate fluctuations, VICI’s management may articulate their rate outlook during the earnings call, adding another layer to this intricate narrative. In the end, exactly how these projections pan out in reality will only become apparent in the course of time. But one this is clear, the unfolding landscape of VICI promises a series of exciting developments in the future.