VICI Properties' 3 Credit Ratings Point To A Clear Consensus

Core Viewpoint - VICI Properties Inc is positioned at the edge of investment-grade ratings, with three major credit agencies providing consistent ratings of BBB- and Baa3, indicating a consensus on its financial stability but also highlighting the risks associated with its tenant concentration [2][3][4]. Financial Performance - VICI's Q3 2025 AFFO was $0.60 per share, reflecting a 5.3% year-over-year increase, with management raising the full-year 2025 guidance to $2.36–$2.37 per share from an initial range of $2.32–$2.35 [7]. - The quarterly dividend is $0.45, marking the eighth consecutive annual increase since the company's IPO in 2018, with a forward yield of approximately 6.3% [7]. - The payout ratio is around 76% of guided AFFO, indicating limited room for absorbing financial surprises [7]. Debt and Leverage - VICI's net leverage stands at approximately 5.0x debt-to-adjusted-EBITDA, which is at the low end of its target range of 5.0x–5.5x [9]. - Total debt at year-end 2024 was $17.1 billion, with 98.1% at fixed rates and a weighted average maturity of 6.5 years [9]. Tenant Concentration - Approximately 74% of VICI's contractual rent comes from two tenants: Caesars Entertainment (39%) and MGM Resorts (35%) [5]. - VICI has a total of 14 tenants across 93 properties, with 100% occupancy and a weighted average remaining lease term exceeding 40 years, but the concentration of revenue from Caesars and MGM is a concern for credit agencies [5][6]. Rating Agency Insights - All three credit agencies have stable outlooks for VICI, but a downgrade from any agency would jeopardize its investment-grade status [4]. - The recent upgrade from Moody's to Baa3 was attributed to VICI meeting the minimum threshold for investment-grade classification, rather than a change in its business model [3]. Future Considerations - The pace of tenant diversification is critical, as VICI added Clairvest as a 14th tenant and announced a $1.16 billion sale-leaseback with Golden Entertainment, but Caesars and MGM still dominate the rent roll [12]. - A temporary operational issue with either Caesars or MGM could significantly impact VICI's financial stability due to high rent concentration [13]. - For a potential upgrade, VICI would need to reduce the concentration of rent from Caesars and MGM below 65% while maintaining low leverage [13].