VICI Properties Q2 2024 Update

VICI Properties (VICI) had a solid second quarter.

As with most net lease REIT quarters, there wasn’t all that much going on.

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There was a slight increase in guidance though, which is clearly favorable.

Guidance

The following slide shows the change in guidance:

That’s up modestly. The new midpoint is $2.25 vs. $2.235. That’s an increase of 0.67%.

If we reduce the rounding impacts, it would be $2.2519 vs $2.2347. An increase of 0.77%.

The difference is favorable, but not remotely material.

Interest Rates

Relative to our prior update on VICI, interest rates dipped. That’s going to have a positive impact on targets also.

VICI also entered a small interest rate swap. That’s not material to our rating.

Issuing Shares

VICI is using forward sale agreements to lock in the pricing for shares.

During July, they settled another 4 million shares. The weighted average price was around $28.80, but that is rounded and the amount of rounding isn’t certain.

When I ran our NAV model on VICI, I determined that the NAV was probably around $27.86. That was lower than the consensus NAV of $30.78.

If Wall Street’s figure was more accurate, then the decision would be slightly dilutive. If my figure was more accurate, then the issuance is slightly accretive.

Keeping in mind, VICI already had a contract to sell the shares at this price. But their decision to enter into that contract makes more sense with my NAV figure.

Of course, REITs also gain some economies of scale from bigger size.

I see acquisitions as a useful tool for VICI to enhance shareholder value.

That will naturally require issuing shares.

The bigger the premium to NAV, the more powerful issuing equity becomes.

Conclusion

Good quarter. A modest bump to guidance combined with declining rates looks favorable for VICI.

VICI receives a slight boost to targets.

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