VICI(VICI) - 2024 Q3 - Quarterly Report

Explanatory Note This report consolidates quarterly filings for VICI Properties Inc. and VICI Properties L.P. to offer a unified business view, highlighting key financial and structural differences - The report combines quarterly filings for VICI Properties Inc. and VICI Properties L.P. to offer a holistic view of the business, operating as a single enterprise[4][5][7] - VICI, a REIT, is the sole general partner of VICI LP, conducting most operations and owning assets indirectly; key financial statement differences relate to cash, equity/capital, non-controlling interests, and golf operations[6][9][11] PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents unaudited consolidated financial statements for VICI Properties Inc. and VICI Properties L.P., including balance sheets, income statements, equity/capital statements, and cash flows, with detailed notes on operations and policies Financial Statements of VICI Properties Inc. (Unaudited) Consolidated Balance Sheets (VICI Properties Inc.) VICI Inc.'s total assets increased from $44.06 billion to $44.92 billion, driven by lease and loan investments, while cash decreased and equity rose Consolidated Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Change (in thousands) | | :------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Total Assets | $44,918,106 | $44,059,841 | $858,265 | | Investments in leases - sales-type, net | $23,429,732 | $23,015,931 | $413,801 | | Investments in leases - financing receivables, net | $18,410,105 | $18,211,102 | $199,003 | | Investments in loans and securities, net | $1,550,680 | $1,144,177 | $406,503 | | Cash and cash equivalents | $355,667 | $522,574 | $(166,907) | | Total Liabilities | $18,395,034 | $18,402,067 | $(7,033) | | Total Stockholders' Equity | $26,523,072 | $25,657,774 | $865,298 | Consolidated Statements of Operations and Comprehensive Income (VICI Properties Inc.) VICI Inc. reported total revenue growth of $60.4 million (6.7%) for the quarter and $193.0 million (7.2%) for nine months, with net income attributable to common stockholders increasing by $176.6 million (31.7%) and $298.4 million (16.9%), respectively Consolidated Statements of Operations and Comprehensive Income (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change (3 Months) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change (9 Months) | | :------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Total Revenues | $964,669 | $904,318 | $60,351 | $2,873,153 | $2,680,123 | $193,030 | | Income from sales-type leases | $518,691 | $500,212 | $18,479 | $1,543,752 | $1,473,961 | $69,791 | | Income from lease financing receivables, loans and securities | $419,115 | $378,502 | $40,613 | $1,242,151 | $1,122,703 | $119,448 | | Total Operating Expenses | $13,143 | $139,507 | $(126,364) | $163,669 | $290,480 | $(126,811) | | Change in allowance for credit losses | $(31,626) | $95,997 | $(127,623) | $32,292 | $166,119 | $(133,827) | | Net Income attributable to common stockholders | $732,898 | $556,329 | $176,569 | $2,064,216 | $1,765,771 | $298,445 | | Basic EPS | $0.70 | $0.55 | $0.15 | $1.98 | $1.75 | $0.23 | | Diluted EPS | $0.70 | $0.55 | $0.15 | $1.98 | $1.75 | $0.23 | Consolidated Statements of Stockholders' Equity (VICI Properties Inc.) VICI Inc.'s stockholders' equity increased from $25.26 billion to $26.11 billion, driven by $2.10 billion in net income and $115.1 million from common stock issuance, partially offset by $1.32 billion in dividends Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric (in thousands) | Dec 31, 2023 | Sep 30, 2024 | | :------------------------------------- | :----------- | :----------- | | Total VICI Stockholders' Equity | $25,255,931 | $26,111,294 | | Net income (9 months ended Sep 30, 2024) | N/A | $2,097,037 | | Issuance of common stock, net | N/A | $115,111 | | Dividends and distributions declared (9 months ended Sep 30, 2024) | N/A | $(1,318,701) | Consolidated Statements of Cash Flows (VICI Properties Inc.) Operating cash flow increased by $132.9 million to $1.74 billion, investing activities used $662.6 million (a $1.28 billion decrease), and financing activities shifted to a net use of $1.24 billion, resulting in a $166.9 million net cash decrease Cash Flow Summary (in thousands) | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Net cash provided by operating activities | $1,737,401 | $1,604,517 | $132,884 | | Net cash used in investing activities | $(662,606) | $(1,944,885) | $1,282,279 | | Net cash (used in) provided by financing activities | $(1,242,227) | $642,441 | $(1,884,668) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(166,907) | $301,951 | $(468,858) | Financial Statements of VICI Properties L.P. (Unaudited) Consolidated Balance Sheets (VICI Properties L.P.) VICI L.P.'s total assets increased from $43.93 billion to $44.83 billion, driven by lease and loan investments, while cash decreased and partners' capital rose Consolidated Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Change (in thousands) | | :------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Total Assets | $44,832,444 | $43,930,049 | $902,395 | | Investments in leases - sales-type, net | $23,429,732 | $23,015,931 | $413,801 | | Investments in leases - financing receivables, net | $18,410,105 | $18,211,102 | $199,003 | | Investments in loans and securities, net | $1,550,680 | $1,144,177 | $406,503 | | Cash and cash equivalents | $348,651 | $471,584 | $(122,933) | | Total Liabilities | $18,376,997 | $18,382,420 | $(5,423) | | Total Capital attributable to partners | $26,455,447 | $25,547,629 | $907,818 | Consolidated Statements of Operations and Comprehensive Income (VICI Properties L.P.) VICI L.P. reported total revenue growth of $60.2 million (6.7%) for the quarter and $192.1 million (7.2%) for nine months, with net income attributable to partners increasing by $179.2 million (31.9%) and $301.9 million (16.9%), respectively Consolidated Statements of Operations and Comprehensive Income (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change (3 Months) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change (9 Months) | | :------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Total Revenues | $957,121 | $896,893 | $60,228 | $2,843,853 | $2,651,707 | $192,146 | | Income from sales-type leases | $518,691 | $500,212 | $18,479 | $1,543,752 | $1,473,961 | $69,791 | | Income from lease financing receivables, loans and securities | $419,115 | $378,502 | $40,613 | $1,242,151 | $1,122,703 | $119,448 | | Total Operating Expenses | $5,344 | $132,341 | $(126,997) | $140,795 | $269,164 | $(128,369) | | Change in allowance for credit losses | $(31,626) | $95,997 | $(127,623) | $32,292 | $166,119 | $(133,827) | | Net Income attributable to partners | $741,519 | $562,350 | $179,169 | $2,081,840 | $1,779,908 | $301,932 | | Basic EPU | $0.70 | $0.55 | $0.15 | $1.97 | $1.75 | $0.22 | | Diluted EPU | $0.70 | $0.55 | $0.15 | $1.97 | $1.74 | $0.23 | Consolidated Statements of Partners' Capital (VICI Properties L.P.) VICI L.P.'s total partners' capital increased from $25.55 billion to $26.46 billion, driven by $2.09 billion in net income and $166.6 million in parent contributions, partially offset by distributions Consolidated Statements of Partners' Capital Highlights (in thousands) | Metric (in thousands) | Dec 31, 2023 | Sep 30, 2024 | | :------------------------------------- | :----------- | :----------- | | Total Capital attributable to partners | $25,547,629 | $26,455,447 | | Net income (9 months ended Sep 30, 2024) | N/A | $2,090,562 | | Contributions from Parent | N/A | $166,552 | | Distributions to Parent (9 months ended Sep 30, 2024) | N/A | $(1,336,598) | Consolidated Statements of Cash Flows (VICI Properties L.P.) Operating cash flow increased by $140.9 million to $1.73 billion, investing activities used $660.7 million (a $1.28 billion decrease), and financing activities shifted to a net use of $1.19 billion, resulting in a $122.9 million net cash decrease Cash Flow Summary (in thousands) | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Net cash provided by operating activities | $1,728,005 | $1,587,087 | $140,918 | | Net cash used in investing activities | $(660,671) | $(1,944,885) | $1,284,214 | | Net cash (used in) provided by financing activities | $(1,190,792) | $676,344 | $(1,867,136) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(122,933) | $318,424 | $(441,357) | Notes to Consolidated Financial Statements Note 1 — Business and Organization VICI is an internally managed REIT focused on owning and acquiring gaming, hospitality, and entertainment assets under long-term triple-net leases - VICI is a REIT primarily engaged in owning and acquiring gaming, hospitality, and entertainment destinations under long-term triple-net leases[41] - As of September 30, 2024, the portfolio includes 93 experiential assets (54 gaming, 39 other experiential) across the US and Canada, plus four championship golf courses[41] - VICI's REIT status generally exempts it from U.S. federal income taxes on taxable income, provided it distributes all net taxable income to stockholders[42] Note 2 — Summary of Significant Accounting Policies This note details VICI's GAAP-compliant accounting policies, including consolidation, lease classification, credit loss allowances, derivatives, and recent accounting pronouncements - Financial statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions that may differ from actual results[43][46] - The company consolidates subsidiaries where it has a controlling interest, including VICI LP, and presents non-controlling interests as a component of equity[49][50] - Leases are classified as sales-type or direct financing, with income recognized on an effective interest basis; an allowance for current expected credit losses (CECL) is measured for investments in leases, loans, and securities[57][61][66] - Derivative financial instruments are used to mitigate interest rate volatility and are recorded at fair value, with changes reported in accumulated other comprehensive income for qualifying hedges[80][81][83] - The company is evaluating the impact of recent accounting pronouncements (ASU 2023-09, ASU 2023-07) and tax legislation (OECD Pillar 2) on its financial statements[88][89][90][92] Note 3 — Real Estate Transactions VICI initiated the Venetian Capital Investment of up to $700.0 million for resort reinvestment, with $400.0 million funded, and originated $365.0 million in real estate debt - VICI entered into the Venetian Capital Investment to fund up to $700.0 million for reinvestment projects at the Venetian Resort, with $400.0 million already funded in Q2 and Q3 2024[93][94] - The Venetian Capital Investment will increase annual rent under the Venetian Lease at a 7.25% yield, with annual escalations starting at 2.0% in March 2029[95] 2024 Real Estate Debt Origination Activity | Investment Name | Maximum Principal Amount (in thousands) | Investment Type | Collateral | | :------------------------ | :-------------------------------------- | :---------------- | :----------------------------------------------------------------------------------------------------- | | Great Wolf Mezzanine Loan | $250,000 | Mezzanine | Portfolio of nine Great Wolf Lodge resorts across the United States | | Chelsea Piers One Madison Loan | $10,000 | Senior Secured Loan | Certain equipment of the fitness club at the One Madison building in New York, New York, under development | | Homefield Margaritaville Loan | $105,000 | Senior Secured Loan | Margaritaville Resort in Kansas City, Kansas, under development | | Total | $365,000 | | | Note 4 — Real Estate Portfolio VICI's real estate portfolio totals $43.54 billion, comprising 93 assets under long-term lease agreements with annual rent escalations and tenant capital expenditure requirements Real Estate Portfolio Balances (in thousands) | Investment Type (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :----------------------------- | :----------- | :----------- | | Investments in leases – sales-type, net | $23,429,732 | $23,015,931 | | Investments in leases – financing receivables, net | $18,410,105 | $18,211,102 | | Total investments in leases, net | $41,839,837 | $41,227,033 | | Investments in loans and securities, net | $1,550,680 | $1,144,177 | | Land | $150,727 | $150,727 | | Total real estate portfolio | $43,541,244 | $42,521,937 | Total Lease Revenue Components (in thousands) | Revenue Component (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income from sales-type leases – fixed rent | $494,641 | $478,419 | $1,467,825 | $1,410,692 | | Income from sales-type leases – contingent rent | $24,050 | $21,793 | $75,927 | $63,269 | | Income from lease financing receivables – fixed rent | $379,657 | $356,206 | $1,135,643 | $1,062,508 | | Income from lease financing receivables – contingent rent | $3,211 | $2,511 | $9,634 | $7,532 | | Total lease revenue | $901,559 | $858,929 | $2,689,029 | $2,544,001 | - The weighted average remaining lease term for the total portfolio is 42.0 years, including reasonably assured tenant renewal options[103] - Lease agreements generally include annual base rent escalations (fixed or CPI-based) and, for certain leases, a variable rent component based on property revenues[107] - Tenants are required to invest in capital improvements, with specific minimum expenditure requirements outlined in their lease agreements to manage residual asset risk[110][111] Note 5 — Allowance for Credit Losses VICI's total CECL allowance was $1.49 billion (3.26% of amortized cost) as of September 30, 2024, decreasing by $31.6 million in Q3 due to positive macroeconomic forecasts, with all investments remaining current Allowance for Credit Losses by Investment Type (in thousands) | Investment Type (in thousands) | Amortized Cost (Sep 30, 2024) | Allowance (Sep 30, 2024) | Allowance as % of Amortized Cost | | :----------------------------- | :---------------------------- | :----------------------- | :------------------------------- | | Investments in leases – sales-type | $24,169,942 | $(740,210) | 3.06% | | Investments in leases – financing receivables | $19,118,954 | $(708,849) | 3.71% | | Investments in loans and securities | $1,572,447 | $(21,767) | 1.38% | | Other assets – sales-type sub-leases | $864,343 | $(19,329) | 2.24% | | Totals | $45,725,686 | $(1,490,155) | 3.26% | - The allowance for credit losses decreased by $31.6 million in Q3 2024, primarily due to positive changes in macroeconomic forecasts and tenant equity market performance[117] - For the nine months ended September 30, 2024, the allowance increased by $32.3 million, driven by tenant market performance and negative macroeconomic forecast changes, as well as adjustments to cash flow projections for one investment[118] - All lease agreements and loan/security investments are current in payment, with no investments on non-accrual status as of September 30, 2024[121] Note 6 — Other Assets and Other Liabilities VICI's other assets totaled $1.02 billion, primarily sales-type sub-leases, while other liabilities amounted to $999.3 million, mainly finance sub-lease liabilities Components of Other Assets (in thousands) | Other Assets (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :-------------------------- | :----------- | :----------- | | Sales-type sub-leases, net | $845,014 | $847,330 | | Property and equipment used in operations, net | $70,255 | $66,946 | | Right of use assets and sub-lease right of use assets | $40,036 | $38,345 | | Total other assets | $1,021,195 | $1,015,330 | Components of Other Liabilities (in thousands) | Other Liabilities (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :------------------------------- | :----------- | :----------- | | Finance sub-lease liabilities | $864,343 | $866,052 | | Deferred financing liabilities | $73,600 | $73,600 | | Lease liabilities and sub-lease liabilities | $39,707 | $38,345 | | CECL allowance for unfunded commitments | $13,338 | $19,131 | | Total other liabilities | $999,272 | $1,013,102 | Note 7— Debt VICI's total debt obligations were $17.12 billion with a 4.358% weighted average interest rate as of September 30, 2024, including Senior Unsecured Notes and CMBS Debt, with $2.05 billion maturing in 2025 Debt Obligations (September 30, 2024) | Description of Debt | Maturity | Interest Rate | Principal Amount (in thousands) | Carrying Value (in thousands) | | :--------------------------- | :------------ | :------------ | :------------------------------ | :---------------------------- | | Revolving Credit Facility | Mar 31, 2026 | Variable | $167,704 | $167,704 | | MGM Grand/Mandalay Bay CMBS Debt | Mar 5, 2032 | 3.558% | $3,000,000 | $2,793,787 | | Senior Unsecured Notes (various) | 2025-2054 | 3.500%-6.125% | $13,950,000 | $13,782,093 | | Total Debt | | 4.358% (W.A.) | $17,117,704 | $16,743,584 | Future Minimum Principal Payments of Debt Obligations (in thousands) | Year | Future Minimum Principal Payments (in thousands) | | :--------------- | :----------------------------------------------- | | 2025 | $2,050,000 | | 2026 | $1,917,704 | | 2027 | $1,500,000 | | 2028 | $1,600,000 | | 2029 | $1,750,000 | | Thereafter | $8,300,000 | | Total | $17,117,704 | - VICI LP issued $1.05 billion in Senior Notes in March 2024 to redeem existing notes, including $1.02 billion of 5.625% Senior Notes due 2024[133] - The company was in compliance with all financial covenants under its debt obligations as of September 30, 2024[144][259] Note 8 — Derivatives VICI uses derivative financial instruments, primarily forward-starting interest rate swaps totaling $400.0 million notional, to hedge interest rate volatility, and foreign currency borrowings for net investment hedges Outstanding Interest Rate Derivatives (September 30, 2024) | Instrument | Number of Instruments | Fixed Rate | Notional (in thousands) | Index | Maturity | | :------------------------------ | :-------------------- | :--------- | :---------------------- | :---------------- | :------------- | | Forward-starting interest rate swap | 6 | 3.3072% | $300,000 | USD SOFR-COMPOUND | Dec 10, 2031 | | Forward-starting interest rate swap | 1 | 3.6170% | $50,000 | USD SOFR-COMPOUND | May 14, 2032 | | Forward-starting interest rate swap | 1 | 3.2280% | $50,000 | USD SOFR-COMPOUND | Mar 27, 2035 | - In Q3 2024, VICI entered into eight new forward-starting interest rate swap agreements for an aggregate notional amount of $400.0 million to hedge against future interest rate changes for senior unsecured notes refinancing in 2025[145][208] - Foreign currency borrowings (C$200.0 million and £14.5 million) under the Revolving Credit Facility are designated as net investment hedges to mitigate exchange rate variations on Canadian and UK investments[151] Note 9 — Fair Value This note summarizes fair value measurements for VICI's financial instruments, including derivatives (Level 2), lease/loan investments (Level 3), and debt instruments (Level 2) Fair Value of Financial Instruments (September 30, 2024) | Financial Instrument (in thousands) | Carrying Amount | Fair Value | Fair Value Hierarchy Level | | :---------------------------------- | :-------------- | :----------- | :------------------------- | | Derivative instruments – forward-starting interest rate swaps (assets) | $745 | $745 | Level 2 | | Derivative instruments – forward-starting interest rate swaps (liabilities) | $3,459 | $3,459 | Level 2 | | Investments in leases – financing receivables | $18,410,105 | $17,769,698 | Level 3 | | Investments in loans and securities | $1,550,680 | $1,461,516 | Level 3 | | Revolving Credit Facility | $167,704 | $167,704 | Level 2 | | MGM Grand/Mandalay Bay CMBS Debt | $2,793,787 | $2,775,600 | Level 2 | | Senior Unsecured Notes | $13,782,093 | $13,864,637 | Level 2 | Note 10 — Commitments and Contingent Liabilities VICI is not subject to material litigation and has various lease commitments, including $3.04 billion in financing sub-lease commitments - VICI is not subject to any litigation believed to have a material adverse effect on its business as of September 30, 2024[156] - The company has operating lease commitments for golf course land and corporate headquarters, and sub-lease commitments for ground and use leases where it is the primary obligor, with costs passed to tenants[157] Future Minimum Lease Commitments (September 30, 2024, in thousands) | Commitment Type (in thousands) | Total Minimum Lease Commitments | | :----------------------------- | :------------------------------ | | Operating Lease Commitments | $31,583 | | Operating Sub-Lease Commitments | $19,689 | | Financing Sub-Lease Commitments | $3,038,420 | Note 11 — Stockholders' Equity VICI Inc. had 1.05 billion shares outstanding as of September 30, 2024, sold 11.7 million shares under its ATM Program for $368.5 million, and has $630.2 million in potential proceeds from unsettled forward shares - As of September 30, 2024, VICI Properties Inc. had 1,047,172,481 shares of common stock outstanding[176] - During the nine months ended September 30, 2024, VICI sold approximately 11.7 million shares under its ATM Program, all subject to forward sale agreements, for estimated aggregate total proceeds of $368.5 million[208] - As of September 30, 2024, approximately 20.9 million forward shares remained to be settled under the ATM Program, representing potential net cash proceeds of $630.2 million[172] Dividends Declared Per Common Share | Declaration Date | Record Date | Payment Date | Period | Dividend Per Share | | :--------------- | :--------------- | :--------------- | :------------------------------ | :----------------- | | March 7, 2024 | March 21, 2024 | April 4, 2024 | Jan 1, 2024 – Mar 31, 2024 | $0.4150 | | June 7, 2024 | June 18, 2024 | July 3, 2024 | April 1, 2024 – June 30, 2024 | $0.4150 | | September 5, 2024 | September 18, 2024 | October 3, 2024 | July 1, 2024 – Sep 30, 2024 | $0.4325 | Note 12 — Earnings Per Share and Earnings Per Unit This note details the calculation of basic and diluted EPS for VICI Inc. and EPU for VICI OP, with VICI Inc. reporting $1.98 EPS and VICI OP reporting $1.97 EPU for the nine months ended September 30, 2024 VICI Properties Inc. EPS (in thousands, except per share data) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income attributable to common stockholders | $732,898 | $556,329 | $2,064,216 | $1,765,771 | | Weighted-average shares outstanding (Basic) | 1,046,627 | 1,012,987 | 1,043,922 | 1,007,110 | | Basic EPS | $0.70 | $0.55 | $1.98 | $1.75 | | Diluted weighted-average shares outstanding | 1,048,338 | 1,013,590 | 1,044,897 | 1,008,437 | | Diluted EPS | $0.70 | $0.55 | $1.98 | $1.75 | VICI Properties L.P. EPU (in thousands, except per unit data) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income attributable to partners | $741,519 | $562,350 | $2,081,840 | $1,779,908 | | Weighted-average units outstanding (Basic) | 1,058,858 | 1,025,218 | 1,056,153 | 1,019,341 | | Basic EPU | $0.70 | $0.55 | $1.97 | $1.75 | | Diluted weighted-average units outstanding | 1,060,570 | 1,025,821 | 1,057,129 | 1,020,669 | | Diluted EPU | $0.70 | $0.55 | $1.97 | $1.74 | Note 13 — Stock-Based Compensation Stock-based compensation expense for the nine months ended September 30, 2024, was $12.97 million, with 9.6 million shares remaining available under the incentive plan and $22.7 million in unrecognized compensation cost Stock-Based Compensation Expense (in thousands) | Period | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Stock-based compensation expense | $4,601 | $4,019 | $12,973 | $11,517 | - As of September 30, 2024, approximately 9.6 million shares of common stock remained available for issuance under the 2017 Stock Incentive Plan[185] - Unrecognized compensation cost related to non-vested stock-based compensation was $22.7 million, expected to be recognized over a weighted average period of 1.8 years[189] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of VICI's financial condition and operating results, including business overview, significant activities, revenue and expense analysis, non-GAAP reconciliations, and liquidity assessment OVERVIEW VICI is a REIT specializing in owning and acquiring gaming, hospitality, and entertainment assets under long-term triple-net leases, with a portfolio of 93 experiential assets and a weighted average lease term of 41.0 years - VICI owns 93 experiential assets (54 gaming, 39 other experiential) across the United States and Canada, including iconic Las Vegas Strip properties[196] - The portfolio is 100% leased with a weighted average lease term, including extension options, of approximately 41.0 years as of September 30, 2024[197] - Long-term triple-net lease agreements provide predictable revenue, with tenants responsible for all operational expenses, including property taxes, insurance, and capital expenditures[198][199] - Recent macroeconomic volatility, including heightened interest rates and inflation, introduces uncertainty for VICI and its tenants, though VICI's triple-net lessor structure provides some insulation from operational impacts[203] SIGNIFICANT ACTIVITIES DURING 2024 In 2024, VICI initiated the Venetian Capital Investment of up to $700.0 million, originated $365.0 million in real estate debt, and executed $1.05 billion in Senior Unsecured Notes offerings and $368.5 million in ATM Program share sales - VICI entered into the Venetian Capital Investment to fund up to $700.0 million for capital investment into the Venetian Resort, with $400.0 million funded by Q3 2024, resulting in incremental rent increases[205][206] 2024 Real Estate Debt Origination Activity (in millions) | Real Estate Debt Investment | Date | Investment Type | Principal Amount | | :-------------------------- | :----------- | :---------------- | :--------------- | | Great Wolf Mezzanine Loan | May 9, 2024 | Mezzanine Loan | $250.0 | | Chelsea Piers One Madison Loan | Feb 7, 2024 | Senior Secured Loan | $10.0 | | Homefield Margaritaville Loan | Jan 23, 2024 | Senior Secured Loan | $105.0 | | Total | | | $365.0 | - During the nine months ended September 30, 2024, VICI sold approximately 11.7 million shares under its ATM Program, all subject to forward sale agreements, for estimated aggregate total proceeds of $368.5 million[208] - VICI LP issued $1.05 billion in Senior Unsecured Notes in March 2024 to redeem $1.05 billion of existing senior notes due 2024[208] RESULTS OF OPERATIONS Revenue Total revenues increased by $60.4 million (6.7%) for the three months and $193.0 million (7.2%) for the nine months ended September 30, 2024, driven by leasing revenue and income from loans and securities Total Revenues by Source (in thousands) | Revenue Source | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change (3 Months) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change (9 Months) | | :------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Leasing revenue | $901,559 | $858,929 | $42,630 | $2,689,029 | $2,544,001 | $145,028 | | Income from loans and securities | $36,247 | $19,785 | $16,462 | $96,874 | $52,663 | $44,211 | | Other income | $19,315 | $18,179 | $1,136 | $57,950 | $55,043 | $2,907 | | Golf revenues | $7,548 | $7,425 | $123 | $29,300 | $28,416 | $884 | | Total revenues | $964,669 | $904,318 | $60,351 | $2,873,153 | $2,680,123 | $193,030 | - Leasing revenue increased primarily due to the acquisition of the remaining 49.9% of the MGM Grand/Mandalay Bay portfolio, Rocky Gap Casino, Canadian portfolio, Bowlero, Chelsea Piers, and incremental rent from the Venetian Capital Investment[215] - Income from loans and securities increased due to the origination and funding of new debt investments[216] Operating Expenses Total operating expenses significantly decreased by $126.4 million for the three months and $126.8 million for the nine months ended September 30, 2024, primarily due to a $127.6 million decrease in the change in allowance for credit losses Operating Expenses (in thousands) | Operating Expense Item | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change (3 Months) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change (9 Months) | | :------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :-------------------------- | :-------------------------- | :-------------------- | | General and administrative | $16,458 | $14,422 | $2,036 | $48,418 | $44,347 | $4,071 | | Other expenses | $19,315 | $18,179 | $1,136 | $57,950 | $55,043 | $2,907 | | Change in allowance for credit losses | $(31,626) | $95,997 | $(127,623) | $32,292 | $166,119 | $(133,827) | | Transaction and acquisition expenses | $1,164 | $3,566 | $(2,402) | $1,728 | $3,385 | $(1,657) | | Total operating expenses | $13,143 | $139,507 | $(126,364) | $163,669 | $290,480 | $(126,811) | - The decrease in allowance for credit losses was primarily due to positive macroeconomic forecast changes and tenant market performance in Q3 2024, and lower initial CECL allowances on acquisition and loan origination activity for the nine-month period[222][223] Non-Operating Income and Expenses Interest expense increased by $2.4 million for the quarter and $5.1 million for the nine months, while interest income decreased, and other (losses) gains improved for the quarter but declined for the nine months Non-Operating Income and Expenses (in thousands) | Item | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change (3 Months) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change (9 Months) | | :---------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Interest expense | $(207,317) | $(204,927) | $(2,390) | $(617,976) | $(612,881) | $(5,095) | | Interest income | $2,797 | $7,341 | $(4,544) | $12,016 | $16,194 | $(4,178) | | Other (losses) gains | $(64) | $(1,122) | $1,058 | $770 | $4,295 | $(3,525) | - Interest expense increased due to higher debt from Revolving Credit Facility draws and the assumption of $3.0 billion CMBS debt, along with a slightly higher weighted average interest rate[228][229] - Interest income decreased due to an overall decrease in cash on hand[230] RECONCILIATION OF NON-GAAP MEASURES This section reconciles VICI's GAAP net income to non-GAAP measures: FFO, AFFO, and Adjusted EBITDA, providing supplemental insights into operating performance - FFO, AFFO, and Adjusted EBITDA are non-GAAP measures used to provide a meaningful perspective of VICI's underlying operating performance, supplementing GAAP measures like net income[233][237] Reconciliation of VICI's Net Income to FFO, AFFO, and Adjusted EBITDA (in thousands, except per share data) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income attributable to common stockholders | $732,898 | $556,329 | $2,064,216 | $1,765,771 | | FFO attributable to common stockholders | $732,898 | $556,329 | $2,064,216 | $1,767,197 | | AFFO attributable to common stockholders | $593,858 | $547,614 | $1,769,454 | $1,616,626 | | Adjusted EBITDA attributable to common stockholders | $777,995 | $726,406 | $2,319,118 | $2,160,122 | | Diluted FFO per common share | $0.70 | $0.55 | $1.98 | $1.75 | | Diluted AFFO per common share | $0.57 | $0.54 | $1.69 | $1.60 | LIQUIDITY AND CAPITAL RESOURCES VICI maintains $3.32 billion in liquidity, sufficient to meet obligations, supported by predictable lease revenue, while managing $17.12 billion in debt and adhering to REIT distribution policies Liquidity As of September 30, 2024, VICI's total available liquidity was $3.32 billion, comprising cash, Revolving Credit Facility capacity, and net proceeds from forward sale agreements, deemed sufficient for future cash requirements Available Liquidity (September 30, 2024, in thousands) | Source | Amount | | :-------------------------------------------- | :----------- | | Cash and cash equivalents | $355,667 | | Capacity under Revolving Credit Facility | $2,332,296 | | Net proceeds available from settlement of Forward Sale Agreements | $630,222 | | Total | $3,318,185 | - The company believes it has sufficient liquidity to meet material cash requirements through available cash, credit facility capacity, and proceeds from future debt/equity issuances[242] Material Cash Requirements VICI's material cash requirements include $17.12 billion in debt principal, $5.46 billion in scheduled interest, and $803.88 million in future funding commitments, with $2.05 billion in debt maturing in 2025 Total Contractual Commitments (September 30, 2024, in thousands) | Commitment Type | Total | 2024 (remaining) | 2025 | 2026 | 2027 | 2028 and Thereafter | | :---------------------------------- | :----------- | :--------------- | :---------- | :---------- | :---------- | :------------------ | | Long-term debt, principal | $17,117,704 | $0 | $2,050,000 | $1,917,704 | $1,500,000 | $11,650,000 | | Scheduled interest payments | $5,463,660 | $202,605 | $734,367 | $682,656 | $566,348 | $3,277,684 | | Future funding commitments – loan investments and Partner Property Growth Fund | $803,882 | $420,858 | $264,878 | $117,020 | $1,126 | $0 | | Golf course operating lease and contractual commitments | $40,539 | $530 | $2,153 | $2,197 | $2,241 | $33,418 | | Corporate office leases | $15,429 | $0 | $73 | $1,742 | $871 | $12,743 | | Total contractual commitments | $23,441,213 | $623,993 | $3,051,471 | $2,721,318 | $2,070,586 | $14,973,845 | - The company has $300.0 million of additional potential future funding commitments for the Venetian Capital Investment, which the tenant has the option, but not the obligation, to draw[251] Cash Flow Analysis Operating cash flow increased by $132.9 million to $1.74 billion, investing activities used $662.6 million (a $1.28 billion decrease), and financing activities shifted to a net use of $1.24 billion, resulting in a $166.9 million net cash decrease Cash Flow Summary (in thousands) | Cash Flow Activity | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change | | :-------------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Provided by operating activities | $1,737,401 | $1,604,517 | $132,884 | | Used in investing activities | $(662,606) | $(1,944,885) | $1,282,279 | | (Used in) provided by financing activities | $(1,242,227) | $642,441 | $(1,884,668) | | Net (decrease) increase in cash | $(166,907) | $301,951 | $(468,858) | - Operating cash flow increased due to acquisitions (MGM Grand/Mandalay Bay, Rocky Gap, Canadian portfolio, Bowlero, Chelsea Piers) and rent escalators[253] - Investing cash flow decreased significantly due to the absence of a large acquisition comparable to the MGM Grand/Mandalay Bay JV Interest Acquisition in 2023[254] Debt VICI's debt obligations, including types, maturities, and interest rates, are summarized in Note 7, reflecting active management of its debt portfolio - For a summary of debt obligations, refer to Note 7 - Debt[258] Covenants VICI's debt obligations are subject to customary financial and protective covenants, with the company in compliance with all such covenants as of September 30, 2024 - VICI was in compliance with all financial covenants under its debt obligations as of September 30, 2024[259] Distribution Policy VICI intends to make regular quarterly distributions to common stockholders to comply with REIT requirements, distributing at least 90% of its REIT taxable income annually - VICI intends to make regular quarterly distributions to comply with REIT requirements, which mandate distributing at least 90% of its REIT taxable income annually[261][262] Dividends Declared Per Common Share (9 Months Ended Sep 30, 2024) | Period | Dividend Per Share | | :------------------------------ | :----------------- | | January 1, 2024 – March 31, 2024 | $0.4150 | | April 1, 2024 – June 30, 2024 | $0.4150 | | July 1, 2024 – September 30, 2024 | $0.4325 | Critical Accounting Policies and Estimates No significant changes occurred in VICI's critical accounting policies and estimates for the nine months ended September 30, 2024 - No significant changes in critical accounting policies and estimates for the nine months ended September 30, 2024[263] Item 3. Quantitative and Qualitative Disclosures About Market Risk VICI is exposed to interest rate risk, with 99.0% of its $17.1 billion debt fixed-rate, and faces capital markets risks due to its reliance on debt and equity for REIT distribution requirements - As of September 30, 2024, 99.0% of VICI's $17.1 billion outstanding debt has fixed interest rates, with 1.0% (approximately $167.7 million) at variable rates[264] - A one percent increase or decrease in the annual interest rate on variable-rate borrowings would change annual cash interest expense by approximately $1.7 million[264] - As a REIT, VICI is required to distribute a significant portion of its taxable income annually, making it reliant on debt or equity capital markets for financing, exposing it to related capital markets risks[266] Item 4. Controls and Procedures Both VICI Properties Inc. and VICI Properties L.P. maintained effective disclosure controls and procedures as of September 30, 2024, with no material changes in internal control over financial reporting - VICI Properties Inc.'s disclosure controls and procedures were evaluated as effective as of September 30, 2024[268] - VICI Properties L.P.'s disclosure controls and procedures were evaluated as effective as of September 30, 2024[271] - No material changes in internal control over financial reporting occurred for either VICI Properties Inc. or VICI Properties L.P. during the three months ended September 30, 2024[269][272] PART II. OTHER INFORMATION Item 1. Legal Proceedings VICI Properties Inc. and VICI Properties L.P. are not subject to any material legal proceedings as of September 30, 2024 - No material legal proceedings affecting the company as of September 30, 2024[274] Item 1A. Risk Factors There have been no material changes to VICI's risk factors for the nine months ended September 30, 2024, as compared to its Annual Report on Form 10-K - No material changes to risk factors for the nine months ended September 30, 2024, as compared to the Annual Report on Form 10-K[275] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds VICI Properties Inc. repurchased 267 shares at $33.59 per share in Q3 2024 from employees to satisfy tax obligations related to restricted stock vesting, while VICI L.P. made no repurchases VICI Properties Inc. Issuer Purchases of Equity Securities (Q3 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----------------------------------- | :------------------------------- | :--------------------------- | | September 1, 2024 through September 30, 2024 | 267 | $33.59 | | Total | 267 | $33.59 | - Shares were surrendered by employees to satisfy tax obligations related to vesting of restricted common stock[276] - VICI Properties L.P. did not repurchase any equity securities during the three months ended September 30, 2024[278] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported by VICI Properties Inc. or VICI Properties L.P. during the period - No defaults upon senior securities[278] Item 4. Mine Safety Disclosures This item is not applicable to VICI Properties Inc. or VICI Properties L.P - Not applicable[279] Item 5. Other Information No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q3 2024 - No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q3 2024[280] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications from principal executive and financial officers for both VICI entities, and Inline XBRL documents - Includes certifications of Principal Executive and Financial Officers for both VICI Properties Inc. and VICI Properties L.P. (Exhibits 31.1-31.4 and 32.1-32.4)[281] - Includes Inline XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, and Presentation Linkbase Documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE)[281] Signatures The report is duly signed by the Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer for both VICI Properties Inc. and VICI Properties L.P., certifying compliance with the Securities Exchange Act of 1934 - The report is signed by Edward B. Pitoniak (Chief Executive Officer and Director), David A. Kieske (Chief Financial Officer), and Gabriel F. Wasserman (Chief Accounting Officer) for both VICI Properties Inc. and VICI Properties L.P.[284][285]