VICI Properties: Best Bet Among The Gaming REITs - An Interview With C-Suite Management

Summary

• All REITs operate within the exact legal/tax structure but VICI is undervalued compared with gaming peers.
• Management has built a portfolio that is both safe as well as balanced between Las Vegas and US regionals.
• Among gaming REITs, it could possibly benefit disproportionately as the Caesars/ERI merger is complete and potential properties go up for sale by the successor management.
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Special Note: In the past, our SA articles on gaming REITs have reflected some concerns about the structure as being ideal ways to best unlock shareholder value. We have since done a deep dive into the sub-sector focused on the three most widely held: Gaming & Leisure Properties Inc. (NASDAQ:GLPI), MGM Growth Properties LLC (NYSE: MGP) and VICI Properties, Inc. (NASDAQ:VICI). That research has resulted in our turning bullish from neutral as their results and swift growth have materialized. In looking at all three, we have come away with a recommendation on VICI Properties Inc. believing it is the most attractively priced of the three, relative to strategic prospects.

Our conclusion: VICI - A strong buy, overweight

Prices at writing: GLPI: $42.48; MGP: $32.11; VICI: $24.48

Theory of the investment: We begin with the premise that all REITs are essentially creatures of tax law going back to 1960s Public Law 86-770 and subsequent amendments, restrictions and expansions that produced the state of play today. Thus, we find that participants in the sector have remarkably similar profiles. As the old folk tale says, “everyone cooks with water”. So finding distinctive metrics among peers that make the case for one over another is possible but not as actionable in our view. The three gaming REITs we looked at all had similar characteristics, triple net lease revenue flows, property geography and effective yields. They all had similar portfolios divided between Las Vegas and US regionals. (Below: Caesars Palace one of the crown jewels in the VICI tiara).

So we confined our look at the sub-sector to the strategic runway we saw lying ahead for all three. Our conclusion was that VICI at its current price, and given what we believe to be its forward strategy, presented the best entry point for investors in the sector seeking

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.