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Vici Properties: The COVID-19 Wild Card And How To Play It

Jun. 03, 2020 7:00 AM ETVICI Properties Inc. (VICI)36 Comments


  • The coronavirus could serve as the first "stress test" for the relatively-new gaming REIT model.
  • This black swan “pandemic” has certainly added risk and complexity to the niche net lease REIT platform.
  • Yet the asset class also could prove-out the resiliency of the gaming rental streams that are likely to have a temporary impact over the long term.
  • Looking for a portfolio of ideas like this one? Members of iREIT on Alpha get exclusive access to our model portfolio. Get started today »

The gaming REIT sector is a fairly new category within the equity REIT universe and is actually a sub-sector of the broader Net Lease REIT sector. As illustrated below, gaming REITs represent around 25% of the Net Lease REIT sector (based on market capitalization):

Source: iREIT

As illustrated below, there are three Gaming REITs: VICI Gaming (NYSE:VICI), Gaming and Leisure Properties (GLPI), and MGM Growth (MGP):

Source: iREIT

Gaming and Leisure Properties was the first gaming-focused REIT that was formed from the 2013 tax-free spinoff of the real estate assets of Penn Gaming (PENN). As a result of the spinoff, GLPI owns substantially all of Penn's former real property assets and leases back these assets to Penn for use by its subsidiaries pursuant to a master lease.

In April 2016, MGM Resorts International (MGM) netted around $1 billion by creating a new REIT and spinning off 11 of its properties into the entity known as MGM Growth Properties.

Then in February, in an IPO, VICI raised about $1.4 billion, making it one of the largest IPOs in 2018 and one of the largest REIT IPOs ever, after its spin-off from Caesars Entertainment Operating Co., a subsidiary of gaming giant Caesars Entertainment Corp. (NASDAQ:CZR) (that emerged from Chapter 11 bankruptcy protection in October 2017).

The coronavirus could serve as the first "stress test" for the relatively new gaming REIT model. This black swan “pandemic” has certainly added risk and complexity to the niche net lease REIT platform, yet the asset class also could prove out the resiliency of the gaming rental streams that are likely to have a temporary impact over the long term

Source: Yahoo Finance

The COVID-19 Wild Card And How To Play It

We have been following VICI Gaming since the company listed shares back in 2018. At

Cash is King Portfolio +26.4% Since Mid March

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Disclosure: I am/we are long SPG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from See

This article was written by

Brad Thomas profile picture

Brad Thomas has over 30 years of real estate investing experience and has acquired, developed, or brokered over $1B in commercial real estate transactions. He has been featured in Barron's, Bloomberg, Fox Business, and many other media outlets. He's the author of four books, including the latest, REITs For Dummies.

Brad, with his team of 10 analysts, runs the investing group iREIT® on Alpha, which covers REITs, BDCs, MLPs, Preferreds, and other income-oriented alternatives. The team of analysts has a combined 100+ years of experience and includes a former hedge fund manager, due diligence officer, portfolio manager, PhD, military veteran, and advisor to a former U.S. President. Learn more

Analyst’s Disclosure: I am/we are long VICI. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (35)

Brad Thomas profile picture
VICI: "The Next Great Cap Rate Compression Story" (Podcast)

Brad Thomas profile picture
Boom! VICI Properties increases dividend by ~11% seekingalpha.com/...
gnewmie23 profile picture
yes sir!
Michael1944 profile picture
Congrats, a homer to make up for the walks.

Go Jays.

Favourite team, any one beating the Yankees.
gnewmie23 profile picture
Go Sox! That is Whitesox, not Red. :)
ChuckyCheese profile picture
Brad, this process of providing an initially free article then republishing behind a paywall will not serve you well.
Brad Thomas profile picture
@ChuckyCheese We publish most all deep dive articles now exclusively on the marketplace....pageviews have dropped substantially on the free site
ChuckyCheese profile picture
Brad, When and how does the entire REIT industry reconcile statements like "100% occupied" and "100% current month rents paid" with forbearance, deferrals or forgiveness of properties which have been impacted? Do we even have accepted accounting principals in place?

We did start a micro position in VICI last year after reading your first article and have recently added. Thanks for your fine research and analysis.
extra cash laying around, Brad strong buy, look into vici a little further, check charts, buy. well there you have it. long vici and thank you sir!
Michael1944 profile picture
So,BUY Long Term Calls if you are a believer,risk less to earn more?
Michael1944, I do utilize calls and leap calls but mostly on stocks stuck in a range. for example recently ups under $95. using leverage you want all the odds in your favor that you can. thanks
Michael1944 profile picture
This market is so spontaneously reactive,a stock could explode anytime,Markets could drop anytime??
I do Not Buy what I think I should Buy but Buy what I know I should Buy.
Brad Thomas profile picture
Stiffel (6-3-20): "VICI has five assets that are currently open (out of 28 total), and anticipates having 14 total assets open by the end of this week. Management believes the re-ramp of properties post virus will differ on location, primarily a result of where a properties customers come from. To this point, regional markets are likely to see quicker bounce-backs post crisis, while Vegas will take a little while longer to ramp, with the market being more heavily reliant on group and international tourism.

As previously disclosed by management, the company paid its 1Q dividend of $0.2975/share. The dividend equates to a 5.8% yield, and a 64.7% 2021E FAD payout ratio. Management believes they are well positioned to continue to pay it for the foreseeable future."
Been a strong proponent of VICI since day 1 and I doubled my position on the COVID drop. Casinos are one industry that will come back (I also bought a couple casino stocks as well as DraftKings which I really like). VICI is actually poised to benefit from any further temporary weakness in the actual casinos. 100% rent collection reaffirms my convictions and I think it is a great long-term holding.
Brad Thomas profile picture
@bason Glad we agree...thanks for reading & commenting - Brad
Michael1944 profile picture
Surgical and cotton masks are both ineffective when it comes to blocking droplets of the virus SARS–CoV-2 that may be generated when somebody coughs, according to investigators with the Ulsan College of Medicine, Seoul, South Korea. Their research letter, published yesterday in the Annals of Internal Medicine, compared the 2 types of masks. Four patients coughed 5 times each into a petri dish while wearing no mask. They then coughed 5 times wearing a surgical mask, a cotton mask, and then, again, wearing no mask. The study, conducted at 2 hospitals in Seoul, found that when patients coughed into either type of mask, droplets of SARS–CoV-2 were released into the environment.

“The median viral loads after coughs without a mask, with a surgical mask, and with a cotton mask were 2.56 log copies/mL, 2.42 log copies/mL, and 1.85 log copies/mL, respectively,” the research letter states. “All swabs from the outer mask surfaces of the masks were positive for SARS–CoV-2, whereas most swabs from the inner mask surfaces were negative.”
This study was retracted. “The authors have admitted that the data that they analyzed in their study were “unreliable,” making their findings “uninterpretable.“”

Michael1944 profile picture
site keeps spinning,but I introduced single use masks for the O.R. in the 60's.
Bacteria are 0.45 microns,and you could not breath in such a mask,,and when it gets moist,there is no barrier.
Check MMM site.
Brad. I would suggest you read the SA article by Juan de la Hoz , SRET: What went wrong. This author wrote a glowing article on this ETF, however the performance was horrible below VNQ. This guy APOLOGIZED for the article and his prediction. He went on to analyze his and ETF mistakes. You could learn a lot.
gnewmie23 profile picture
I’ve held VICI since early 2019; it’s been solid. Love the dividend and I think VICI is well managed and has a strong future. Long VICI and drip the divy; also add to my share count occasionally. Thanks Brad
Brad Thomas profile picture
@gnewmie23 Nice job and thank you for reading. All the best. Brad
I’ve been adding to VICI in small increments for about 5 weeks to take advantage of volatility bouts.
Brad Thomas profile picture
@Capt.TonyWild Thanks for reading and commenting - All the best. Brad
My girlfriend flew back from DC thru Atlanta back to Las Vegas last night.

75 people on a SWAir plane.... only ten got off the plane as the remaining scheduled took the plane to Reno and one more stop after that.....

McCarron airport at 6:30PM last night was still a ghost town.... four cars there to pickup passengers.

To the extent casinos are not 100% being reopened and the distinct likelihood they will not be reopened for quite sometime until occupancy at the open casinos shows a need for additional casino capacity and re openings means reits will struggle in terms of rents paid.

GOOD NEWS is the first casino to open tomorrow eliminating the hated resort fees until June of next year. Shortly all casinos will have to follow.

Las Vegas will have to change again back to an older model when they didn't nickel and dime for resort fees and parking fees.... and over time that will allow locals like myself and so many others to spend an occasional night at a strip casino and have a nice dinner... an expensive dinner less expensive because we do not have to pay the hated resort fee when over nighters rarely used any part of the resort side.
Brad Thomas profile picture
@Brucejfern my first question is why didn't she bring you? (kidding)

We interviewed VICI's CEO recently and he said that there is strong demand from residents in CA ready to drive over to LV. Similar to folks in my town who are driving to Charleston and Myrtle Beach...iREIT TV: Interview With CEO Of VICI Properties seekingalpha.com/...

Thanks for reading and all the best - Brad
Thanks for excellent analysis. In addition, recently read Soros hold a very large position. Not a fan of the man but a huge fan of VICI. Bought more yesterday after the press release of the 100% Tenents paid. Best growth REIT out there.
Soros may go down soon - my guess he is bankrolling the riots / mahem we have seen. His shares will be frozen with his other assets
swphill profile picture
You're entitled to your opinion... but, my opinion is that's silly talk
Incomeiam profile picture
Thanks for the analysis of a sector that I had no knowledge of.
Brad Thomas profile picture
@Bigsmitty You're welcome - Thanks for reading. Brad
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