VICI Properties (VICI) Q2 FY26 earnings call: guidance and Q&A

What are VICI's expectations for regional M&A activity given Churchill Downs' potential sale of regional properties, and are regional valuations reasonable?

John Payne noted the resilience and rebound in regional gaming, driven by innovation in slot products. VICI will look at some of Churchill Downs' assets, and some tenants are interested. David Kieske added that build-to-suit deals like Club Med are common in net lease and attractive for growth-oriented partners.

“There are some assets in their portfolio that I'm sure we'll take a look at, that would be a nice addition to our portfolio. I know there are some of our tenants that are interested in those assets, and we'll continue to better understand the opportunities there.”

asked by Unknown Analyst · answered by John W. Payne

How do conversations with VICI's two largest tenants differ now, given their potential acquisition news, compared to a year or two ago?

Ed Pitoniak stated that conversations haven't fundamentally changed; VICI maintains constant contact with all partners. John Payne provided an example of working with Caesars on a potential NBA arena in Las Vegas, highlighting VICI's deeper relationships due to fewer tenants.

“I would say that our conversations actually haven't fundamentally changed with our partners. We are in constant contact with all of our partners, around various interactions involving our businesses.”

asked by Caitlin Burrows · answered by Edward Pitoniak

Is VICI considering share repurchases, or are accretive investments a higher priority for free cash flow?

David Kieske stated that investments yielding SOFR plus 825 (like the 1 Beverly Hills loan) or 9.5% (loan book) are much more attractive uses of capital than buybacks. He emphasized that for a growth-dependent net lease REIT, buybacks don't make sense given current investment prospects.

“I mean when we're putting money out at SOFR plus 825, that's a much more attractive use of our capital. And that's just for the 1 Beverly Hills loan, and our loan book is close to 9.5% yield. We can find much more attractive uses of that free cash flow.”

asked by Greg McGinniss · answered by David Kieske

Do private companies offer more flexibility for REIT financing compared to public companies, and how does the shift to private markets change the outlook for M&A and REIT financing in the casino space?

Ed Pitoniak suggested private operators are less focused on quarterly earnings and more on long-term IRR, making them more responsive to VICI's capital. John Payne added that private settings benefit capital-intensive businesses by allowing necessary long-term investments without short-term public market pressure.

“I appreciate the fact that in the private markets, they truly can do what they believe are the right things to grow their business over the longer term. And an example of that is that once they go private, they tend to be not focused on what's going to be the earnings in a given quarter.”

asked by John DeCree · answered by Edward Pitoniak

How does VICI monitor private operator tenant trends, given the impression that they might be 'black boxes' for property owners?

David Kieske explained that gaming operators have more transparency due to monthly state-level reporting and public debt reporting. Samantha Gallagher and an Unknown Executive added that VICI obtains property-level financials from all borrowers and tenants through lease agreements and conducts quarterly reviews, ensuring complete visibility.

“There's more transparency to the gaming operators than and they're across traditional net lease landscape because of the monthly reporting that goes on at the state level, sometimes it's by region, but oftentimes, it's by assets.”

asked by Daniel Guglielmo · answered by David Kieske

Does the improved gaming operations and upcoming rent escalator create more urgency for a broader portfolio solution with Caesars, and should resolution be expected in quarters rather than years?

Ed Pitoniak stated that VICI cannot provide a precise timetable, as Caesars is undergoing a significant M&A transaction with many moving pieces and regulatory considerations, which is expected to take about 12 months. He reiterated that VICI collects rent in the meantime and appreciates Caesars' performance.

“I wouldn't say that's necessarily a major factor. I think the thing to keep in mind is that in the case of Caesars, they're obviously undergoing a very significant M&A transaction with many, many moving pieces and many stakeholders, including regulatory.”

asked by Todd Thomas · answered by Edward Pitoniak