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Operator: Good day ladies and gentlemen, thank you for standing by. Welcome to the VICI Properties Third Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. Please note that this conference call is being recorded today, November 1, 2024. I will now turn the call over to Samantha Gallagher, General Counsel with VICI Properties.

Samantha Gallagher: Thank you, operator, and good morning. Everyone should have access to the company’s third quarter 2024 earnings release and supplemental information. The release and supplemental information can be found in the investor section of the VICI Properties website at www.viciproperties.com. Some of our comments today will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements which are usually identified by the use of words such as will, believe, expect, should, guidance, intend, outlook, project, or other similar phrases are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Therefore, you should exercise caution in interpreting and relying on them.

I refer you to the company’s SEC filings for more detailed discussion of the risks that could impact future operating results and financial conditions. During the call we will discuss certain non-GAAP measures which we believe can be useful in evaluating the company’s operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available on our website in our third quarter 2024 earnings release, our supplemental information, and our filings with the SEC. For additional information with respect to non-GAAP measures of certain tenants and/or counterparties discussed on this call, please refer to the respective company’s public filings with the SEC.

Hosting the call today, we have Ed Pitoniak, Chief Executive Officer, John Payne, President and Chief Operating Officer, David Kieske, Chief Financial Officer, Gabe Wasserman, Chief Accounting Officer, and Moira McCluskey, Senior Vice President of Capital Markets. Ed and team will provide some opening remarks and then we’ll open the call to questions. With that, I’ll turn the call over to Ed.

Ed Pitoniak: Thank you, Samantha, and good morning, everyone. It’s an interesting world we’re currently living in, isn’t it? I wish this was a video call so that I could ask for a show of hands on how many of you predicted that the Fed would lower the Fed funds rate 50 bps in mid-September and over the next six weeks, the U.S. 10-year yield would rise 70 bps. If you work at a hedge fund and bet that prediction, let me know if you need help spending all the money you just made. At VICI, we never tire of trying to make sense of the times we are living through so that we can be situationally ready for the future that may arise out of the present. To tell you about one of the means we use to make sense of the times we’re living through, I need you to please grab that old-fashioned thing called a pen or pencil and that old-fashioned thing called a piece of paper.

Draw a horizontal or latitude line on the paper. This axis will represent consumer economic conditions. At the left end of the latitude line, put lousy, and at the right end of the line, put great. Now, through the middle of the horizontal line, draw a vertical or longitude line. This axis will represent REIT capital market condition. At the top end of the latitude line, put great, and at the bottom end of the line, put lousy. You now have one of the key maps we use at VICI to determine at any given time where we are located latitudinally and longitudinally in relation to consumer economic conditions and REIT capital market conditions and where we might be headed. Over VICI’s seven years of existence, we have operated in every quadrant on this grid, and we have successfully generated earnings growth and dividend growth during our journey through all these quadrants.

Given 2024’s volatility, we have operated in or verged on almost all of these quadrants year-to-date. We like where we currently are, in a good position to fund the opportunities we are working on, but as always at VICI, we remain situationally ready for whatever lat-long position we may be in or headed toward. We’ve worked hard to develop a philosophy, strategy, and practice of capital allocation that enables VICI to allocate capital no matter which quadrant we find ourselves in at any given time. We achieve the sustained and sustainable capital allocation through two key means, internal funding capability through all cycles and investments that fund over time. When access to or cost of capital is in a negative quadrant, we want to be capable of what we’ve come to call capital markets independence, meaning that we have internal capital resources available to us that we can use to generate accretive external growth.

At VICI, capital markets independence is funded through both retained cash flow and what we call regained cash flow, meaning repayments of loans we’ve made through VICI experiential credit solutions. Depending on the loan repayments received in a given year, our annual internal cash resources available for allocation can be anywhere from $350 million to $500 million. When levered with debt, this can give us $500 million to nearly $1 billion of investing power, even when, again, overall capital market conditions are not positive. VICI’s ability to fund external growth no matter what quadrant we’re in builds off our foundation of same-store NOI growth that, thanks to our leases, rent escalation rates, and 100% occupancy is far superior to conventional net lease REITs as documented by Green Street.

We capitalize on this sustained funding capability by developing investment opportunities that enable us to put capital out the door in a regular sustained cadence, with Q3 2024 being an example of a quarter in which we announced no new transactions but nonetheless put nearly $250 million of incremental capital to work through our property partner growth fund and lending initiatives. Sustainable capital allocation is integral to a subject that we are religious about. At VICI, we are religious about the power of compounding, the compounding of earnings growth, the compounding of dividend growth, the compounding of total return. One of the keys of compounding is not go backwards, not in earnings, not in dividends, not in total return. A key to sustained forward momentum is the ability to generate earnings and value growth through all cycles in all quadrants of our BG conditions map.

We don’t know what the coming quarters will bring in REIT capital market conditions or consumer economic conditions, but we work every day to be ready for what may come. With that, I’ll now turn the call over to John and David, who will talk about our growth outlook and current performance. John?

John Payne: Thanks, Ed. Good morning to all of you on the call today. We’re often asked where we spend most of our time and energy, and while we’ve built a team that can assess the wide range of opportunities across experiential sectors and various geographies in tandem, I have said many times that casino gaming will continue to be a major driver of our growth. The size and scale of gaming assets is one element contributing to this focus, and we also like gaming because of how experiences at these assets continue to evolve, specifically in Las Vegas. We believe the tailwinds around gaming in Las Vegas will continue to create investment opportunities for VICI, similar to the Venetian Partner Property Growth Fund investment we announced during the second quarter.

A recent Financial Times article exemplifies our view of the future opportunities in Las Vegas. In the article, Barry Dillard, the Chairman of IAC, shared his thoughts on his company’s stake in MGM Resorts. He said, you can’t disintermediate a physical experience, which is why we are betting on Las Vegas. He then goes on to say, the amount of entertainment, sports, live performances, and every possible variety and combination in Las Vegas is unequaled anywhere in the world. This quote underlies the merits of VICI’s experiential real estate strategy, as well as our significant ownership of Las Vegas real estate. VICI is positioned to be a prime partner of our operators as they seek to invest further in this one-of-a-kind city. An example we have often cited is the opportunity presented by the Sports Triangle at the south end of the Las Vegas Strip, with our ownership of all six MGM assets contained within and alongside Allegiant Stadium, T-Mobile Arena, and the potential A’s Stadium on the former Tropicana site.

Given the increased densification and foot traffic in the area, our partners at MGM may seek to reinvest in those assets over the coming years. The scale of investment opportunity within assets VICI already owns provides us with a very unique advantage. We have also utilized our partner property growth fund with regional tenants, including Century, who this week is hosting the grand opening of their land-based casino in Caruthersville, Missouri. In 2022, VICI announced an investment of $52 million to fund development of this new casino resort at Century Caruthersville to replace the last remaining Riverboat casino on Open Water in Missouri. We have taken great care in the selection of our partners and investments to ensure not only a best-in-class portfolio with quality income, but a portfolio of investments and partners we can grow with.

This ethos is foundational to our capital allocation strategy and sets VICI up well for future pipeline opportunities and consistent capital deployment. In the third quarter, we deployed $230 million of capital through various loans and partner property growth fund agreements. This has been our 13th quarter of consecutive capital deployment. VICI has built a legacy of getting better as we grow bigger, and we believe our disciplined strategy will allow us to be situationally ready to continue to deliver consistent and sustainable growth. Now I’ll turn the call over to David, who will discuss our financial results and guidance. David?

David Kieske: Great. Thanks, John. Thanks, everybody, for joining us. I’ll touch on our balance sheet, liquidity, results, and our updated full-year guidance. Subsequent to quarter-end, we settled 7 million shares and received approximately $201 million under our forward sale agreements. These proceeds contributed to funding the Venetian Capital investment we announced in Q2. We currently have approximately $2.9 billion in total liquidity comprised of approximately $160 million in cash and cash equivalents, $430 million of estimated proceeds available under our outstanding forwards, and $2.3 billion of availability under our revolving credit facility. In addition, our revolving credit facility has an accordion option, allowing us to request additional lender commitments of up to $1 billion.

In terms of leverage, our total debt is currently $17.1 billion. Our net debt to annualized third quarter adjusted EBITDA, excluding the impact of unsettled forward equity, is approximately 5.4x, within our target leverage range of 5x to 5.5x. We have a weighted average interest rate of 4.36% taking into account our hedge portfolio and a weighted average 6.3 years to maturity. Touching on the income statement, AFFO per share was $0.57 for the quarter, an increase of 4.9% compared to $0.54 for the quarter ended September 30, 2023. Our results once again highlight our highly efficient triple net model, given the increase in adjusted EBITDA as a proportion of the corresponding increase in revenue. Our margins continue to run strong in the high 90% range when eliminating non-cash items.

Our G&A was $16.5 million for the quarter, and as a percentage of total revenues was only 1.7%, which continues to be one of the lowest ratios in not only the triple net sector, but across all REITs. Turning to guidance, we are updating our AFFO guidance for 2024 in both absolute dollars as well as on a per share basis. AFFO for the year ending December 31, 2024 is expected to now be between $2.36 billion and $2.37 billion, or between $2.25 and $2.26 per diluted common share. And just as a reminder, our guidance does not include the impact on operating results from any transactions that have not closed, interest income from any loans that do not yet have final draw structures, possible future acquisitions or dispositions, capital markets activity, or other non-recurring transactions or items.

With that, Adam, please open the line for questions.

Operator: [Operator Instructions] And our first question comes from Barry Jonas from Truist Securities. Barry, your line is open. Please go ahead.

Barry Jonas: Wanted to start with Tribal Gaming, see if you had any updated views there. Maybe you could spell out any parameters you would look for to execute any loans or sale leasebacks. Thank you.

Ed Pitoniak: Yes, good morning, Barry. I think the starting point for us, VICI, is that over our seven years, led by John and the team, we have developed very positive, powerful relationships with American tribal nations. We currently have four tribal relationships. As you know, Barry, they all obviously involve partnering with tribes in commercial gaming opportunities off of tribal land. And when it comes, again, to doing business with tribes, we love doing business with them. They’re commercial, they’re collaborative and great to do business with. When it comes to doing business on tribal land, it is, again, not about tribes being idiosyncratic. It’s about the structure that applies to tribal gaming on tribal land that is idiosyncratic.

And when you have an idiosyncratic situation, it’s sometimes useful to create a counterfactual that enables you to better understand the idiosyncrasy, the risks associated with the idiosyncrasy, and perhaps a better understanding of how to price the risk of that idiosyncrasy. So to create a counterfactual, I’m going to ask you, Barry, to imagine a scenario in which we announce that we’ve done a deal with a commercial gaming operator on freehold commercial land. But in that deal, we tell you that that commercial gaming operator is the only party in the world entitled to operate the gaming floor at the center of the asset and likely the economic engine of the asset. And moreover, that same operator owns the land underneath everything and thus would be the ground less sore to us as the ground less sea.

So that is by definition a sandwich lease. And from everything we’ve been able to learn, that is what applies to the transaction you’re implicitly referring to that got announced last week by our peers and colleagues at GLPI. We give full credit to GLPI for announcing this, for doing the work that went behind it. But I would say we are still coming up the learning curve when it comes to understanding the risks associated with that structure and how to best price the risk. At VICI, we spend a lot of time focusing on tail risk. And in fact, there may be moments when some people feel both externally and internally, maybe we spend a little too much time focused on tail risk. But in this particular case, the tail risk, again, is so idiosyncratic and so unique to this situation that we’re not at a point where we can say with any confidence, okay, the code has been cracked and the idiosyncratic risks that have always applied here have either been eliminated or have been minimized to a degree where we can confidently price the risk.

Barry Jonas: Great. I really appreciate that. Maybe just for a follow up, I wanted to touch on Vegas. I’m curious if you looked at Caesars sale of the LINQ, I believe, correct me if I’m wrong, you had a roofer there. And then with that sale, wondering if we could see anything happen with those 26 adjacent acres that VICI owns. Thank you.

Ed Pitoniak: Yes, just to be clear, Barry, we did not have a roofer on the LINQ promenade. The assets, we have a roofer on our casino assets and not the promenade, which is a distinct property unto itself. There is an idiosyncrasy. Well, I shouldn’t call it an idiosyncrasy. The LINQ promenade is not technically a net lease property. But we’re very glad to see TPG and especially [indiscernible] at Acadia led by Ken Bernstein go in there. I think there’s a lot of potential to continue to make that a corridor that exactly to your point can become a very powerful corridor to the land that we own in back of the promenade in the area in and around Ceasar’s Forum Convention Center.

Operator: The next question comes from Anthony Paolone from JPMorgan. Anthony, your line is open. Please go ahead.

Anthony Paolone: John, you mentioned in your comments, just a lot of opportunities for things like, you know, reinvestment into properties and such. So I mean, can you just talk about just as you look at the pipeline, how much of it is now, really focused on on those types of investments versus, new acquisitions and whether that’s changed much in the last quarter or two?

John Payne: Yes, Tony, good morning. Very good question. I don’t think it’s changed. What I like about what we’ve done is created these pillars of growth. We’ve got opportunities to continue to have real estate acquisitions, as you referred to in my comments, the ability to grow with our property partner growth funds with assets that we already own, particularly in Las Vegas. Although, as I mentioned in my opening remarks, we do have some opportunities in our regional assets because they’re large as well. And then we have this opportunity, as Ed mentioned, in his marks with VICI Experiential Credit Solutions, our credit book where it’s open doors for us to come in, provide a credit solution and then over time, hopefully flip it into real estate ownership.

So Tony, I wouldn’t say we’re focused more today on the property partner growth funds than the other two. I like the fact that we’re spending time and I’ve got a team now that are spending time on all three of these, which will provide growth for us for the long-term.

Anthony Paolone: Okay. Thanks. And then just the follow up there, maybe for you, John, and also, Ed, you commented about the 70 basis point move in the 10 year over a pretty short period of time. Do you think that’s had any effect on just the propensity of your counterparts to want to transact or on just where pricing might need to be?

Ed Pitoniak: Yes, Tony, I wouldn’t say that move over the last over the last month has necessarily by itself been highly impactful, but it’s all been part of a period of volatility that has just been frankly, it’s been kind of nauseating. And I do think it’s led to a level of indecision and inaction that is reflected certainly for us and what we’ve been able to come forward and tell you about. And needless to say, we very much hope that this period of volatility will soon start to pass, just to dramatize that volatility, Tony. Back in 2018, the number of days in the trading year when the U.S. 10 year moved 10 basis points or more was three. In 2019, it was seven. In 2020, it was 16. In 2021, it was eight. In 2022, it was 46 days.

It was 39 days last year. And given the volatility we’ve seen, crikey, even this week, I think we’re in the 20s now. And this is really just an example of how a lot of people have really, a lot of people on both sides of the transaction table have just been trying to figure out where am I today and where the hell am I going to be next week? And, needless to say, we are among those many in both America and globally who hope things really kind of calm down next week. And that the kind of volatility we’ve especially seen in the move index starts to quiet down because it has definitely led to all kinds of different behaviors by investors. And I saw where NFL ratings are down over the last month and that’s attributed to the election. It’s like, man, people are just so distracted and stressed out that they can’t even summon the time and focus to watch NFL games for crikey’s sake.

Operator: The next question comes from Chris Darling from Green Street. Chris, your line is open. Please go ahead.

Chris Darling: Maybe for Ed, can you talk about the potential opportunity to acquire gaming assets in off-strip Vegas locations? And to the extent there’s opportunity and interest on your part in pursuing that, it’d be helpful if you could elaborate maybe on what you look for in terms of yield coverage, but also how you think about partnering with the right operator in that sort of scenario.

Ed Pitoniak: And just to be clear, Chris, when you say off-strip, you’re referring to the locals and downtown markets in Las Vegas?

Chris Darling: Yes, exactly.

Ed Pitoniak: Or are you speaking about regional gaming?

Chris Darling: It could be either, honestly, but I’m more so referring to within the Vegas metro area itself, just off-strip.

Ed Pitoniak: I see. Yes, good. John, John and team are doing a lot of work in that area. John, over to you.

John Payne: Yes. Chris, nice to talk to you this morning. If you’ve been following us as you have for the past couple of years, you’ve heard us talk about our love of Las Vegas. And obviously, we’ve got great assets on the strip, but we’ve been spending years meeting with operators, not only in the local downtown market, but as you said, in the regional market, where they’re just some fabulous assets. And you ask what we do, we obviously spend time to understand the operator’s quality, the asset quality, the credit quality, what a structure of a lease could look like, how we could potentially help an operator who has assets in the local, downtown or regional market grow, not only in their current assets, but if they have a plan to grow the number of assets, how our capital could help them grow.

So it’s definitely been a focus of me and my team, not only recently, but also over the past couple of years. And there really are some neat places that we would love to be partners with great operators there.

Chris Darling: All right, helpful thoughts. And then maybe just one more, and this is more so focused on the regional side, outside of Vegas.

Ed Pitoniak: This was given to me by a guy, some of you know, named Mike Simanovsky, the Founder of Conversant. And it’s a book by Edward Chancellor, in which he collects the essays, sorry, not the essays, the investment memos of an asset management shop out of London called Marathon. And one of Marathon’s main investment theses is to identify categories that are at lower risk of excess capital being invested in the category and creating excess capacity. And I think one of the things we are mindful of right now in American regional gaming is making sure we understand market by market, the degree to which a given regulatory regime is at risk of authorizing the creation of more capacity than the market really should be able to sustain.

And I think there are areas, and I would say in particular, areas like Illinois and Indiana, where I think we all have to be mindful of, okay, when is enough, enough? But in terms of the current tone of the market, regional market, I’ll turn it over to John.

John Payne: Yes, Chris, and Ed hit on this very well, just about, as you underwrite regional gaming, you should understand some of the history of it, places like Pennsylvania that added new [licensers] [ph] or Illinois that added BLTs. You start to see new states add historical horse racing machines that now look very similar to slot machines. So to your point, as we look at regional assets, and in our lifetime, we will continue to buy real estate and buildings and regional assets, but we’re very thoughtful in understanding the best we can at the time, the competition that is in the market that could impact the asset that we’re buying, and then potential new markets that could open up. Because as someone who’s been in the business, I don’t like to date myself, but I’m almost going on 30 years, I don’t think there is belief that states like Nebraska or Virginia or Kentucky, which has HHR machines, would really have gaming at the moment that they do now, the magnitude that they do now.

So to answer your question, we are being thoughtful and disciplined in our underwriting as we look at regional assets.

Operator: The next question comes from Smedes Roans from Citi. Your line is now open. Please go ahead.

Smedes Rose: On your last call, you talked a little bit about some of your tenants were seeing weakness, especially on the lower end of the consumer spectrum. I’m wondering if you can [indiscernible] here that kind of feedback, and if you think that might impact their propensity to kind of reinvest or to participate in your funds that you’ve talked about previously.

Ed Pitoniak: John?

John Payne: Yes, Smedes, good to talk to you this morning. Probably the first part is a better question for our great operators that have extensive details on their databases and where they’re seeing positive growth and where they’re seeing some weakness. I think you’ve seen the earnings that have come out, and some have talked, particularly in the regional markets, that they are seeing a little bit of slowness in the lower segments of their business. But we continue to, this is the beauty of having great partners and having quite a few of them. We continue to meet with them, talk about how they’re thinking about growth, and is there a way that our different pillars of capital that I talked about earlier could help them grow, and whether that’s with a property partner growth fund, whether they have a credit opportunity, whether they’re building, would like to build a new hotel, whether they’d like to build a casino on land instead of on a boat.

Those are all type of conversations we’d like to have and are having with our partners, and we hope that leads to growth for us with all different types of our partners.

Smedes Rose: Thanks. And then maybe just kind of bigger picture, I need to think about coming into 2025, would you be giving a reasonable on the external growth side to think about maybe you do more frequent deals with smaller scope, or are you guys still maybe chasing the big deal, maybe in the non-gaming space that will more meaningfully drive their earnings growth next year? I guess I’m so touched about the opportunity set now that you’ve had more time, I guess, to think about kind of non-gaming and gaming investment opportunities and how it might play out here.

Ed Pitoniak: Yes, I mean, it’s something we think about every day. We have set forth goals and strategies at VICI that, like any goals and strategies, have trade-offs, and anyone who thinks their strategy doesn’t involve trade-offs either doesn’t have a strategy, doesn’t understand it, or it is not truly a differentiated strategy. And in our focus on experiential and our dedication to experiential, both gaming and non-gaming, we have to accept the trade-off that it is not a category of real estate transaction that has an endless stream of marketed processes. So we’ve got to do a lot of work every day, and John and the team and David and the team do work every single day, and Samantha and the team, to identify and chase down opportunities that usually are not marketed, or if they are marketed at all, it’s quite quietly.

As we look ahead to next year, John and David and Samantha and the teams are working on some very exciting stuff, including bigger assets in gaming, and only time is going to tell if we can bring these to full fruition. We wish, again, there are times when we wish, geez, it’d be nice to have one of these stamping machines where we just stamp out every week a few deals where maybe we bought car washes or dry cleaners or convenience stores or whatever, but that’s not what we focus on, that’s not what we invest in, and we have to accept the trade-off that our deal flow will be more sporadic. But as we look at 2025, and given what we’re working on, we remain confident that we are going to be bringing to the table both gaming and non-gaming deals, big and small.

It will continue the growth profile we’ve had over our seven years.

Operator: The next question comes from John Dave from CBRE. John, your line is open, please go ahead.

John Dave: Ed, John, I wanted to go back to your response to an earlier question because it’s something I’ve been thinking about a lot, and I apologize if your answer is going to be the same, but I wanted to talk about the regional gaming landscape and the trend where we’re seeing maybe some new openings and some areas where there’s been a lot more unit growth, some cannibalization or same-store sales declines. You mentioned you’re being very cognizant of that, but I was curious if you could go into a little bit more detail about investments and some of the things that you’d consider in underwriting. Is it higher rent coverage? Is it unique or certain operators that perhaps have a competitive scale advantage? Would you maybe only consider larger assets that have a couple larger barriers to entry?

I’m just curious how you think about deploying capital in regional gaming where maybe the markets, the regulatory environment, I think is a bit more predictable given history, but John, you pointed out some markets that have casinos today that we weren’t thinking about before. So I’m curious how you underwrite some of the criteria you might look at.

Ed Pitoniak: Yes, I’ll turn it over to John in just a moment, John, but I’d say as a starting point, you really have to look at every situation market-by-market to understand what the competitive marketplace is? And for a given asset and for a given operator, what is their opportunity to carve out a profitable position in that marketplace? It won’t necessarily always be the big assets. It could be small assets that in the hands of the right smaller asset operator who knows how to compete and make money with smaller assets in a given market. Those can still be very attractive to us. But it really comes down so much to the degree to which a given operator has a really, really healthy competitive response function. That’s something obviously we’ve always valued, but I think to your implicit point, John, at a time like this, you really want to understand a given operator’s ability to compete profitably for market share. John, do you want to add to that? John Payne?

John Payne: Yes, I will, John. When Ed and I started VICI back in 2017, one of the things I asked myself as I left my operating career was would the views from an operator make a difference inside a REIT in the way we underwrite our real estate? To your question, this is where my old job actually has some value in underwriting the business. We can dig into the business and the beauty of our operators is they have great detail on the consumer and where the consumer is coming. If we’re looking at an asset that potentially gets their guests from hundreds of miles away, the chance of impact from a new casino is probably greater than an asset that gets their consumers from 15 miles away. That’s just one example of how we are going to be disciplined as we go into regional markets.

Of course, we’ll weigh asset quality, operator quality, credit quality, structure of lease quality, those types of things, but we can also, with our operations background, go in and better understand could it get disrupted should the landscape change? Because remember, about being disciplined, we’re not investing just for the near term. I think anyone could invest for the near term and look good. Our mission is for the long term, and I think you need to be disciplined in the environment we’re in and understand what could ultimately impact the business, maybe it’s not this year or next year, but over the next decade.

John Dave: Thanks. I appreciate the incremental color there. That’s helpful. And maybe a quick one. We talked a little bit earlier also about maybe some gaming investments and opportunities in the Las Vegas locals market off the Strip, but the city is just kind of thriving in all ways. I’m curious if some non-gaming stuff outside of the Las Vegas Strip but in the Las Vegas metro area is something that’s on the radar and opportunities that are starting to maybe bubble up. I mean, it’s becoming a massive sports town, and so thinking about some of the other assets in your portfolio, youth sports, et cetera, is that an area of focus, non-gaming in Las Vegas off the Strip that you’re paying attention to or looking at in a meaningful way right now?

Ed Pitoniak: Yes, I’ll turn it over to John. Yes, I was just going to say it’s interesting you bring that up. We’ve gotten to know Jose Bautista, Joey Batts, as some of you may remember, who is now the owner of the Las Vegas Lights, the soccer team in the USL. As he looks at how he gives his team a really good home in the Las Vegas basin, one of the things we’ve talked about is the degree to which projects like the Homefield project we’ve invested in in Kansas City make so much sense in an environment like that in terms of the demand for those kind of youth sport facilities, John would agree. But, John Payne, go ahead, please.

John Payne: Yes, John, it’s an excellent question, and when you spend as much time as we have not only on the strip but in the locals market, downtown, and the regional market, many of the operators are entrepreneurs. They’re involved in things, not only casinos, which we love casinos, but other experiential assets, and so you’re right on point. Ed’s right on point. Not only are we studying the opportunity to own great real estate, casino real estate, in these locals regional market of Las Vegas, other opportunities have opened up, and we’ll study them and see if there’s something that we can get involved in in the near term or even in the long term. Great question.

Operator: The next question comes from Jim Kammert from Evercore. Jim, your line is open. Please go ahead.

Jim Kammert: Ed, reflecting on your earlier comments, the rates backing up and obviously a lot of volatility, I would have thought naively, does that not potentially help the Experiential Credit Solutions book, given your ability to close certainty and scale of available capital?

Ed Pitoniak: It does, Jim. It does, and I would say we’ve got a lot of lines in the water right now on the lending side, but the uncertainty on a week-by-week basis can cause us and any potential borrower to just wonder, well, what is market this week, right? What’s my spread this week? But if I commit to this spread, what’s that spread going to look like next week? So again, I think it’s all part and parcel of capital markets, consumer markets, and just about every other market having been here in a state of flux and volatility that has made decision making more challenging. Jim, I’ll just share with you that we began preparation of our annual long-term goals and strategic plan on July 1. We ended up presenting it to our Board at Canyon Ranch in Lenox in mid-September.

Over that 70-day period, our stock went from a point that was in two percentage points of our 52-week low and then went to a new 52-week high. And over that period, the U.S. 10-year went from 4.5 down to, I think, as low as 3.6. So again, now we’re talking about a period of four months, July, August, September, and October, that have just been really tumultuous. And I think it definitely has affected deal flow and it’s affected how we and everybody else underwrite. But I think we all have to hope and believe that things will calm down to a degree where everybody feels a bit more conviction in the visibility and certainty of what they can commit to.

Jim Kammert: That’s fair enough. Good comments. And then back to your opening comments regarding the quadrant analysis, I would imagine VICI presumes we’re in the top, above the horizontal line in terms of real estate and REIT capital markets. But where are you thinking in terms of the consumer sentiment, et cetera, and how is that potentially influencing how you’re thinking about investing going into 2025?

Ed Pitoniak: Yes. I was hoping somebody would ask that question, Jim. Where do we think we are right now? I would say, yes, we’re in the upper right quadrant. Obviously, the consumer generally looks good. But I think it was Smedes who asked a little bit earlier, what is going on across the entire consumer spectrum? And are we seeing signs of potential weakness, whether it be in credit card delinquency, car loan delinquency, footfalls into retail and other metrics? And it’s a bit of a mixed picture, but I think overall consumer economic conditions are quite good. And I would say REIT capital market conditions have been generally good since mid-July, but they’ve certainly been volatile in the last few weeks. So I would say upper right.

But what we always focus on, as I alluded to, Jim, is not only where we are, but what do we think the trajectory is in terms of where we might be going. Given the amount of time it takes us to pull a deal together, we need to know where we’re likely to be in a period in the future as much as we need to know where we are today.

Operator: The next question comes from John Kilichowski from Wells Fargo. John, your line is open. Please go ahead.

John Kilichowski: Last quarter, we spent a lot of time talking about the Harrah’s Hoosier Park call option. And remind me if we’ve spoken about this before, but when I think about that asset and the forum, there’s also put options attached to that that expire December of this year. How are you thinking about those put options? Is it likely or have you made any sort of commentary or have they made commentary to you about the likelihood of them exercising those put options? And does that keep capital sidelined as you wait to see what’s going to happen there?

Ed Pitoniak: Yes, actually, Caesars has stated very explicitly on a number of occasions they have no intention of putting the Indiana assets to us. So, no, that has not affected how we think about our capital and our funding capabilities.

John Kilichowski: Okay, understood. And then maybe on just on the election here, anything on the ballot as it pertains to regional gaming that we should be thinking about?

Ed Pitoniak: Not that I’m aware of. John Payne, are you?

John Payne: Yes, there’s a couple things. I mean, there’s Missouri, Arkansas and Virginia, New Casino, Virginia, Arkansas, Polk County. And then in Missouri, they are talking about online sports betting as well as in New Casino and Ozark. So, actually quite quiet for gaming, particularly when you compare it to other years.

John Kilichowski: Okay. And then maybe last one for me, the capital that you put to work in the quarter, there was 150 million that went to Venetian. But the other 80 you mentioned loan, and I don’t know if I caught the terms of that loan or what fund that was in. Could you give us a little more color on that capital?

Ed Pitoniak: David?

David Kieske: Yes, John, it’s David. Good to talk to you. Those are the incremental 80 odd million is incremental draws primarily under the Great Wolf loans up in Foxwoods and then the Homefield development as well as some smaller fundings for Cabot and Canyon Ranch. So, previously announced loans that have continued draw schedules.

Operator: The next question comes from Dan Guglielmo from Capital One. Dan, your line is open. Please go ahead.

Dan Guglielmo: It’s been a tough earnings for some operators and Vegas softness seems to be on investor minds. In your experience, do Vegas trends like this impact cap rates for the casino real estate there, or is it too short term and just kind of the nature of owning those assets?

Ed Pitoniak: Yes, Dan, good to talk to you. I’m going to have John Payne just remind everybody what MGM’s occupancy was on the strip in Q3. But when it comes to cap rates, I would say cap rates are probably much more dependent on real estate investment capital market conditions and general valuation trends than they are on operator performance quarter-to-quarter. John, you want to just talk a little bit about how to really understand what’s going on in the strip.

John Payne: Well, I am a recovering operator, Dan, as you know. So, I’ve seen the comments about the performance of our two largest tenants, MGM and Caesars. And you look at some of the numbers and they ran, as Ed was saying, MGM ran 94% occupancy in quarter three. ADR was up some single digits. So, I know as you dig in and as they talk about what’s coming up, you see some critical comments about F1, which again, long term F1 is great for the city and short term, it’s great for the city. It’s driving a weekend that was very slow. It’s down a tiny bit from last year. It looks like we’ll have to wait and see. But as Ed and I talk about, I’m not sure if a hotel company reported that they had 94% occupancy in quarter three, that there’d probably be a huge party thrown for them.

So, it’s interesting. It’s hard to measure these large assets on an every 90 day period. And these are the best operators in the world. Every time something is thrown at them, they figure out how to continue to grow the business. When every casino was shut down during COVID, they came back and ran them more profitably than they’ve ever run them before. So, again, if they have a tough 90 days, they’ll figure it out over the next 90, 180 next couple years. So, we feel really good about Las Vegas and the teams that are running their businesses there.

Dan Guglielmo: Thank you. Appreciate all that, color. And that makes sense. And just around the experiential partners, it’s tough from kind of RC to get a view of how the Great Wolfs, Cabot, and Canyon Ranches of the world are doing in kind of this complex time. So, high level, when you all talk with those partners, what are some of the tailwinds and headwinds that they’re thinking about?

Ed Pitoniak: David, you want to take that?

David Kieske: Yes, sure. Happy to. Dan, good to speak with you. Look, when you drill into each of the partners, they have an offering that’s very unique and part of the reason we partnered with them in the first place. And so, Great Wolfs is a casino without gaming. The performance continues to be solid, maybe a little bit of fall off in the weaker consumer, the lower end consumer, similar to gaming. But the drive to destination of that offering and the affordability of that offering, you can go for a day, you can go for five days, and you don’t take vacations away from your kids. And so, their business continues to be strong. They’ve opened four assets, three assets this year with another one opening early next year up in Foxwoods.

And so, the pipeline and the performance of those assets are great. And then we’ve talked about with Pilgrimage Golf and Cabot, the higher end consumer, the golfer is very, very avid of going out and trying new courses. Cabot does a phenomenal job of bringing in new guests and the marketing that they do for their assets and highlighting the quality of the golf experience that they’re providing. And then we’ve talked about with you in the past around wellness and mindfulness and people’s desire for longevity and better living. And so, the Canyon Ranches of the world are performing well and continue to attract customers and provide a level of service that is second to none.

Operator: The next question comes from Caitlin Burrows from Goldman Sachs. Caitlin, your line is open. Please go ahead.

Jeremy Cohen: Hi, this is Jeremy Cohen for Caitlin. I know you guys mentioned that this was the start of the property growth agreement with the Venetian. Are there any other specific partner property growth opportunities in the pipeline you’re considering or can approach by? Thanks.

Ed Pitoniak: John?

John Payne: We continuously look for opportunities to invest in our current assets, particularly the ones in Las Vegas. We don’t have anything to announce, but as I said in my opening remarks, the Sports Triangle where we own six assets around an area of the town that is growing and becoming more dense, we hope over the coming years there’ll be an opportunity for us to invest there, but nothing to announce at this time.

Ed Pitoniak: Yes, Jeremy, I was just going to add for those of you who don’t follow MGM, I’d encourage you to go look at their Q3 earnings deck, which does have a few pages talking about exactly what John Payne just talked about, which is the opportunity to intensify, densify the assets that MGM operates and that we own in the area defined by Allegiant, T-Mobile Arena, and the forthcoming A-Stadium. We stand to be, together with MGM, the biggest beneficiaries of the intensification of that area of Las Vegas. In fact, there’s a credit analyst out there who speculated that MGM will actually be the greatest beneficiary when the A-Stadium comes into operation.

Jeremy Cohen: Got it. That’s helpful. And then, I guess, one more question. As VICI continues to build relationships and explore opportunities to get recurring transactions and growth, would you say the majority of these new relationships are in the non-gaming space?

Ed Pitoniak: John or David, you want to take that?

John Payne: I’ll take that. I wouldn’t necessarily say it’s more non-gaming at all. There’s still opportunities on the gaming side. As we said before, the non-gaming and experiential transactions most likely will be of smaller scale than the gaming side. So, we may have more frequent smaller, and that may lead to more non-gaming partners. But there’s still many opportunities with new partners in the casino space, not only in the United States, but all over the world.

Ed Pitoniak: Yes. And let me just add that, and because nobody’s asked about it in a little while, and that, of course, has to do with the New York gaming license approval process. But when, well, I should say if the day comes, and when the day comes, we hope, that MGM is granted a full gaming license for the property that we own the real estate of in Yonkers, that will be a major property partner growth fund opportunity for VICI.

Operator: Next question comes on David Katz from Jefferies. David, your line is open. Please go ahead.

David Katz: I think you may have answered this in part, but I do want to just double back on the non-gaming opportunities, which today are small. And John, I think you touched on the fact that they perhaps remain small. If we look out a little longer term and start thinking three to five years, can they become something that is more or less than 10% or 15%, or I don’t expect you to necessarily put a number on it, but give us a vision for how those could become much larger and longer term, please.

Ed Pitoniak: Yes. I think, David, the way we think about it is really in the context of how do we build our rent base on a year-by-year basis with an ambition to grow the rent base at a base level about maybe three odd percent a year, right? And so that would represent on our current rent base a run rate of about 90 odd million bucks of new rent every year. And so we evaluate every opportunity, including non-gaming opportunities on the degree to which they can contribute to growing rent by a percentage point or two or three. And so when we speak about these smaller non-gaming deals, they are small by the standards of VICI deals. They are actually really large by the standards of conventional net lease deals, which tend to involve buying stores that might have between $200,000 and $400,000 of rent per box versus us doing deals that generally are going to have rents of many millions of dollars of rent per box.

Operator: Our final question today comes from Ronald Kamdem from Morgan Stanley. Ronald, your line is open. Please go ahead.

Unidentified Analyst: It’s Jenny on for Ron, and thank you for taking my question. I think the first is I want to dig a little deeper on youth sports or recreational sports sector. Can you talk a little bit more on the outlook of this sector? And not only in Vegas, but nationwide, do you see more opportunities for growth? And do you look to do more strategic investment in this area in the next three to five years? Thanks.

Ed Pitoniak: Yes, Jenny. Well, we definitely do. And I think you can see how this is manifesting itself in certain private equity firm investments in youth sport. Harris Blitzer is obviously a very good example, or I should say David Blitzer’s family office is a great example of a company that’s really focused on youth sport. And you see that in a number of shops. And they’re all capitalizing on the way in which youth sport has grown as a key, key component of youth and family culture. And it’s a little hard to tell exactly right now, given the data, what the youth population is going to look like over the coming years. But I can tell you anecdotally, there are a lot of little kids out there right now. Again, I’m not sure the data totally picks it up.

But we were comparing notes on Halloween trigger treating participation rates last night. And I know, and Samantha was just blown away by how many kids were roaming the streets of Westport, Connecticut. And there’s a lot of kids out there, and a lot of them are going to play sports at a high level. And we think that the need for facilities is only going to grow.

Unidentified Analyst: Yes, I agree. The data side is a little bit tricky to get for youth sports. I guess my second question is, I want to know if you want to discuss more on the talent diversification strategy, like acknowledging VICI already have a pretty diversified talent base. But is there any specific sector that you think you want to broaden the current talent base? Any specific sector that you prefer going forward? Do you have more exposure?

Ed Pitoniak: John or David?

John Payne: Well, I’ll talk. I think the question was about

David Kieske: Go ahead, John.

John Payne: Go ahead, David. No, go ahead. Go ahead.

David Kieske: Yes, I think the question, Jenny, just to make sure I heard you, is about Canada, right? And we look at Canada, we look at the globe internationally. And John touched on this comment about gaming operators earlier, that there’s both gaming and non-gaming opportunities across the globe. We’ve spoken with a lot of you about how our team has really mapped the globe and tried to focus on where we can buy real estate. And that’s a function of currency markets, rule of law, tax regime. Certain countries have very, very high foreign taxes on foreign real estate ownership, so that negates some of the competitive opportunity. But specifically in Canada, we’ve obviously made our first foreign investment into Canada since then.

We’ve gone into Scotland, into St. Lucia. We’d like to do both more gaming and non-gaming north of the border. And we think there’s great operators up there, great economies up there, great parts of the experiential spectrum that we’d like to go into. And so we don’t have anything immediate, as John would say, but hopefully there’s more to come up there.

Operator: I’ll now hand the call back to Edward for some closing remarks.

Ed Pitoniak: Yes. Thank you, Adam. Thanks to everybody for joining us today. And hey, guess what? Guess where NAREIT is, this November in, I guess it’s just a couple of weeks. It is in Las Vegas. We hope we see many of you there. We’ve got a lot of great events that are going to help showcase what’s going on in Las Vegas and reach out to some of our respective banking partners if you’re interested in those events because they’re going to be fun. With that, bye for now.

Operator: This concludes today’s call. Thank you very much for your attendance. You may now disconnect your lines.