Core Viewpoint - AGNC (NASDAQ: AGNC) offers a high forward yield of 12.8%, but its earnings are declining, raising concerns about the sustainability of its dividend [1][2] Group 1: AGNC Overview - AGNC is a mortgage real estate investment trust (mREIT) that generates income by buying mortgages and mortgage-backed securities (MBS) [2] - The projected EPS for AGNC is $1.51, which covers its forward dividend rate of $1.44, indicating a potential for dividend sustainability [1] - AGNC's current trading discount is attributed to declining earnings, which may lead to challenges in maintaining its dividend if the payout ratio exceeds 100% [2][3] Group 2: Interest Rate Impact - AGNC's profitability relies on the Fed's short-term rates being lower than long-term rates; however, recent interest rate cuts have not effectively reduced MBS yields and borrowing costs [2] - The company has been forced to take out loans at higher rates to purchase lower-yielding MBS, creating an ongoing imbalance if the real estate market remains weak [2] Group 3: Comparison with Vici Properties - Vici Properties (NYSE: VICI) is presented as a more stable investment option compared to AGNC, as it operates as an equity REIT that owns physical properties and has a consistent occupancy rate [3][4] - Vici has maintained a 100% occupancy rate since its IPO in 2018 by locking tenants into long-term leases, which are indexed to the Consumer Price Index (CPI) [5] - Vici's business model allows it to raise rents in line with inflation, and it has successfully increased its dividend every year since its IPO, currently offering a forward yield of 6% [6]

Core Viewpoint - The article discusses the potential for real estate investment trusts (REITs) to attract investors as interest rates decline, comparing two specific REITs: Realty Income and Vici Properties, to determine which is a better investment for the future [1][2]. Group 1: Overview of Realty Income - Realty Income owns over 15,500 commercial properties primarily leased to recession-resistant retailers, maintaining an occupancy rate of 98.7% in 2024 [4]. - The company has a history of paying monthly dividends and has raised its payout 132 times since its IPO [4]. - Realty's adjusted funds from operations (AFFO) per share grew at a compound annual growth rate (CAGR) of 5% from 2019 to 2024, with expectations of a slight increase in AFFO for 2025 [11][12]. Group 2: Overview of Vici Properties - Vici Properties owns 93 casinos and entertainment properties, focusing on long-term leases with major tenants like Caesar's Entertainment and MGM Resorts, achieving a perfect occupancy rate of 100% since its IPO [6][7]. - The company has raised its dividend annually for seven consecutive years and expects its AFFO per share to rise by 4% to 5% in the near future [7][13]. - Vici's AFFO per share grew at a CAGR of 9% from 2019 to 2024, indicating strong performance despite macroeconomic challenges [13]. Group 3: Comparative Analysis - Both Realty and Vici are triple net lease REITs, requiring them to distribute at least 90% of their taxable income as dividends [3]. - Vici is considered a better investment due to its stronger AFFO growth, perfect occupancy rates, lower valuation, and higher dividends compared to Realty [15]. - As interest rates decline, both companies are expected to benefit from cheaper expansion opportunities and milder macroeconomic headwinds for their tenants [14].

Financial Data and Key Metrics Changes - The first quarter results were in line with expectations, primarily impacted by the absence of last year's Super Bowl in Las Vegas, particularly affecting The Strat [5] - EBITDA from other casinos increased year over year, while EBITDA from taverns stabilized [5] - The company ended the quarter with over $400 million in debt, $50 million in cash, and $225 million in remaining availability under the revolving credit facility, with a low net leverage of 2.4 times EBITDA [9][10] Business Line Data and Key Metrics Changes - The Strat experienced a 5% decline in occupancy for the quarter, with a 13% drop in February, leading to a $3 million EBITDA headwind [6] - In Laughlin, EBITDA increased by reducing expenses and focusing on more profitable concerts, maintaining leading market share [7] - Revenue for Nevada locals casinos was flat year over year, but EBITDA increased by 2%, with consistent performance and EBITDA margins at 46% for the second consecutive quarter [8] Market Data and Key Metrics Changes - The company observed increasing strength in the locals business in April, indicating a strong start for Q2 [8] - The tavern segment saw slight declines in revenue and EBITDA year over year, but sequentially improved over Q4 [9] Company Strategy and Development Direction - The company is focused on a disciplined reinvestment strategy and has prioritized share repurchases over M&A opportunities due to current market conditions [10][19] - The management believes that the current macroeconomic environment allows for continued reinvestment in assets, paying dividends, and opportunistically acquiring stock [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted that the business remains resilient and is improving despite an uncertain macroeconomic environment [11] - The company is optimistic about the upcoming months, with April showing stable operating trends and May starting strong [5][11] Other Important Information - The company has repurchased 3.2 million shares totaling nearly $100 million since the start of 2024 and paid out $35 million in dividends [10] - A nationally recognized food and beverage concept is set to open at The Strat, which is expected to enhance the property’s offerings [45] Q&A Session Summary Question: Can you provide insights on The Strat's booking window and OTA mix? - Management indicated that the booking window is relatively short, with 25% to 30% of occupancy materializing within a seven-day period, and the OTA mix is currently around 65%, trending downward as they improve direct bookings [13][17] Question: How is the M&A environment affecting discussions? - Management stated that the current market dislocation has dampened strategic M&A discussions, with high price expectations for marketed assets [18][19] Question: Can you elaborate on the tavern business and competition from smaller operators? - Management noted increased promotional activity from smaller operators but emphasized that such trends are typically unsustainable and that their disciplined approach has led to improved performance [24][28] Question: How is the company addressing capital allocation and potential leverage for stock repurchases? - Management confirmed a commitment to aggressive stock buybacks, utilizing available liquidity, but expressed skepticism about the effectiveness of tender offers in the gaming space [66] Question: What are the key drivers for increasing hotel room rates at The Strat? - Management highlighted the importance of citywide events and improved direct booking strategies, with a focus on midweek occupancy to drive higher rates [70][72]