VICI PROPERTIES INC. VICI

VICI Properties announced a new strategic and financial relationship with Cain International and Eldridge Industries, initiated by an investment in the One Beverly Hills development. This partnership is rooted in shared convictions about the secular strength of experiential assets (entertainment, hospitality, wellness, sport) and cultural values around partnership. The collaboration aims to identify and pursue future experiential investment opportunities, leveraging Cain's nearly $18 billion in assets under management and its affiliation with Eldridge Industries, which has investments in iconic brands like Aman, Delano, and Cirque du Soleil.

The initial investment in the One Beverly Hills development, totaling $300 million, is centered on the Aman brand, which is among the world's most venerated luxury hospitality brands. The development, located on 17.5 acres in Beverly Hills, will feature an Aman Hotel, wellness spa, club, and two residential towers, alongside a full renovation of the Beverly Hilton and 10 acres of botanical gardens. VICI views this as a high-quality development opportunity, with the capital already disbursed, and sees potential for further participation in this project or other Cain ventures.

VICI highlighted the significant transformation of its balance sheet since its pre-emergence in 2017, when it had 10.5x debt-to-EBITDA and an 'unnatural' REIT balance sheet. Through strategic actions like retiring second lien notes and CMBS debt, and the acquisition of MGP, VICI achieved investment-grade credit ratings from S&P and Fitch by April 2022. The final step was the Moody's upgrade on November 18, 2024, granting VICI investment-grade status across all three agencies, which is expected to improve access to and cost of capital.

VICI's investment strategy in 2024 focused on relationships and high-quality developments, committing approximately $1.1 billion of capital at an 8.1% initial yield. This included further investment in the Venetian ($700 million commitment, $400 million drawn) and new relationships with Homefield, Great Wolf, and Canyon Ranch. Management emphasized widening its total addressable market (TAM) without diluting quality, focusing on experiential place-making and leveraging partnerships to generate multi-billion dollar opportunities over time^⏳, including potential for permanent real estate ownership in some future ventures.

Operating partners are proactively investing in VICI's assets, reflecting a shared conviction in high-quality experiences. Since Q4, operators have announced nearly $1 billion in investments, including MGM Grand's $300 million remodel of 4,200 hotel rooms (to be completed by Dec 2025), Caesars New Orleans' $435 million renovation, and Harvey's Lake Tahoe's $100 million transformational project. These investments aim to capitalize on strong market demand, particularly in Las Vegas, which saw record airline passengers (58 million) and increased visitation (42 million) in 2024.

The New York casino licensing process is showing more progress in Q1 2025, with news almost daily. VICI's partner, MGM, has put together a 'very healthy bid' for a full license for its Empire City property. While the ultimate outcome and impact on the property if a full license is not secured remain uncertain, management is closely monitoring developments, with a decision potentially targeted for the end of 2025.