Vici Properties (VICI 3.28%), a real estate investment trust specializing in gaming and experiential properties, released its earnings for the fourth quarter on Feb. 20. The report showcased a strong revenue performance, surpassing analyst expectations at $976.1 million compared to the analysts' consensus forecast of $970 million. However, adjusted earnings per share fell to $0.58, below the anticipated $0.68. Its adjusted fund from operations (AFFO) -- the preferred metric for gauging the profitability of a REIT -- came in at $0.57 per share, up by $0.02 per share. Overall, the quarter was mixed, marked by solid revenue growth but underwhelming earnings figures due to credit-related adjustments.
| Metric | Q4 2024 | Q4 2024 Analysts' Estimate | Q4 2023 | % Change |
|---|---|---|---|---|
| AFFO per share | $0.57 | N/A | $0.55 | 3.6% |
| Revenue | $976.1 million | $970 million | $931.9 million | 4.7% |
| Net income per share | $0.58 | $0.68 | $0.72 | (19.2%) |
| Net income | $614.6 million | N/A | $747.8 million | (17.8%) |
Source: Analysts' estimates for the quarter provided by FactSet.
Vici Properties Business Overview
Vici Properties operates as a real estate investment trust with a primary focus on gaming, hospitality, and entertainment properties. It relies heavily on long-term triple net leases, which transfer the responsibility for most property-related expenses to tenants, thereby providing the REIT with more predictable revenue streams. This approach allows Vici to maintain stable cash flows and engage in strategic financial partnerships that enhance its portfolio. Major tenants such as Caesars and MGM contribute significantly to its rental income.
Recently, it has focused on expanding through strategic partnerships and investments, working with firms like The Venetian Resort Las Vegas and Cain International.
NYSE: VICI
Key Data Points
Quarterly Highlights
During the fourth quarter, Vici Properties reported revenues of $976.1 million, a year-over-year increase of 4.7%. This growth was attributed to strong leasing activity and financing engagements across its portfolio. However, adjusted earnings per share declined to $0.58, missing the analysts' target by 16.2%. This was primarily due to a $157.7 million adjustment in the Current Expected Credit Loss (CECL) allowance, which impacted net income significantly. The adjustment was a reflection of the market volatility that the company is currently navigating.
Strategically, Vici reinforced its portfolio with new partnerships and investments, committing $1.1 billion to various ventures at a weighted yield of 8.1%. These activities aim to bolster the REIT's profitability through increased engagement in high-return projects. All properties remained fully leased as of the end of 2024, with a weighted average lease term of 40.7 years, providing a stable revenue floor.
The quarter did pose challenges, particularly on the earnings front. The adjustment in the CECL allowance highlights risk elements within the firm's leasing model that require vigilant management. Moreover, macroeconomic conditions, including interest rate fluctuations, could influence future revenue streams and require strategic adjustments in capital allocation.
Looking Ahead
Vici Properties has set an AFFO target for 2025 between $2.455 billion and $2.485 billion, translating to diluted EPS of $2.32 to $2.35. This projection indicates a stable outlook but does not account for potential extraordinary transactions.
Investors should monitor macroeconomic conditions such as interest rate changes and the economic performances of key partners such as Caesars and MGM.
