To The Moon

$Vici Properties(VICI)$

In the universe of publicly traded REITs, very few companies stand out for their unique blend of yield, quality, and growth potential the way VICI Properties Inc. (NYSE: VICI) does. With a business model built around experiential real estate and anchored by iconic assets on the Las Vegas Strip, VICI has carved out a durable niche that continues to reward long-term income investors. While many REITs have been weighed down by rising interest rates and sluggish sector sentiment, VICI has managed to outperform—with over 21% in total returns over the past year, compared to the S&P 500's broader rally.

But beneath the surface, the story is even more compelling. From its strategic triple-net lease structure to CPI-linked rent escalators, fortress-like balance sheet, and consistent dividend growth, VICI offers an unusually robust investment profile.

With another earnings report due in the coming weeks, and with REITs sitting near a potential inflection point in interest rate trends, now is the time to revisit this high-conviction REIT—and assess whether it still offers compelling long-term value.

The Origin Story: From Spin-Off to Sector Standout

VICI Properties was spun out of Caesars Entertainment in 2017 as part of a strategic restructuring following the casino giant’s bankruptcy. What began as a pure-play gaming REIT has since transformed into one of the largest experiential REITs in the world, with an enterprise value of over $45 billion and a presence that stretches well beyond casinos.

Though its foundation was rooted in Las Vegas, VICI has expanded its portfolio to include other high-traffic entertainment and hospitality venues across the United States. Yet it remains distinct from traditional retail or office REITs: VICI’s focus is on destination-based, high-visibility real estate where people go to spend discretionary dollars—casinos, resorts, sports facilities, and entertainment districts.

That differentiated positioning has made VICI one of the most resilient REITs through both macroeconomic uncertainty and sector-specific turbulence.

Earning Overview

Recent Earnings and the FFO “Miss” That Wasn’t

At first glance, VICI’s most recent earnings report raised concerns. The company reported Funds From Operations (FFO) of $0.58 per share—a 15% miss compared to consensus expectations of $0.67. Naturally, that led to a knee-jerk reaction in some corners of the market. But a closer look reveals that the miss was driven by an accounting rule change, not operational deterioration.

The culprit was the implementation of the Current Expected Credit Loss (CECL) model, which forced VICI to recognize upfront non-cash reserves for hypothetical credit losses. No tenants had defaulted. No cash flows were missed. This was purely an anticipatory measure, akin to provisioning for potential bad debt—a prudent but ultimately non-operational charge.

When you strip that adjustment out and focus on Adjusted Funds From Operations (AFFO)—which is the more relevant metric for REITs—the picture is far stronger. AFFO grew by 5.4% year-over-year, and even on a diluted per-share basis, it rose 3.6%.

Dividend Reliability in a Yield-Starved Market

Perhaps no metric is more important for income investors than a REIT’s dividend track record, and VICI shines in this department.

• Current dividend yield: ~5.3%

• 5-year dividend CAGR: 6.4%

• Dividend CAGR since IPO (2018): ~7.4%

Even during 2020, when many REITs were forced to cut distributions amid lockdowns and rent deferrals, VICI not only maintained but increased its dividend payout. That kind of resilience stems from the quality of its tenant base and the predictability of its income structure.

In the words of the CEO during a recent industry conference:

“Growing our dividend is a top priority, and we see AFO growth and dividend growth as highly correlated over the long term.”

This alignment between operational growth and shareholder returns provides an important foundation for dividend sustainability and capital appreciation alike.

Risk or Competitive Moat?

As of the most recent investor presentation, roughly 85% of VICI’s rental income comes from assets located on the Las Vegas Strip. At first glance, such geographic concentration might seem like a red flag—especially to investors who prize diversification.

But in VICI’s case, this exposure is arguably a competitive advantage.

Las Vegas has undergone a massive transformation over the past decade. No longer just a gambling destination, it's become a world-class entertainment, sports, and convention hub.

Key Tailwinds Supporting VICI’s Vegas Assets:

• 42 million+ visitors to Las Vegas in 2024, up year-over-year

• $8.5 billion in gross gaming revenue in 2024, the highest in the U.S.

• Recent and upcoming events: Formula 1 Grand Prix, Super Bowl LVIII, the Final Four, and NBA events

• The relocation of major sports franchises, including the Raiders (NFL) and Golden Knights (NHL)

VICI owns 1.7 miles of Strip frontage out of the total 4 miles—a staggering footprint that would be nearly impossible to replicate today. The company has also indicated plans to increase exposure to youth sports developments, tapping into rising demand for family-friendly entertainment infrastructure.

So while concentrated, this exposure is to a location that offers scarcity, brand power, secular growth, and global appeal—a formula not easily duplicated by competitors.

Triple Net Lease Advantage and Inflation Protection

VICI operates under a triple-net lease (NNN) model. That means tenants—not VICI—are responsible for:

• Property taxes

• Insurance

• Maintenance and operating expenses

This structure ensures high margins, minimal overhead, and highly predictable income. Every tenant in VICI’s portfolio is under a triple-net lease, which allows the REIT to operate with unmatched capital efficiency.

But there’s more: 42% of VICI’s leases are currently CPI-linked, meaning rent escalates automatically with inflation. Management expects that number to rise to 90% by 2035, providing a built-in inflation hedge that few other REITs can match.

For income investors worried about real returns in an inflationary environment, this is a game-changing feature.

Debt Structure: Durable, Defensive, and Well-Laddered

VICI’s balance sheet is one of the strongest in the REIT sector.

• 99% of debt is fixed-rate

• 83% of debt is unsecured (no property pledged as collateral)

• Weighted average debt maturity: 6.7 years

• Investment-grade ratings from all three major credit agencies

The REIT has also staggered its maturity ladder, ensuring that no single year is overloaded with refinancing needs. For example, its next significant debt maturity occurs in 2026, providing ample runway and flexibility.

With interest rates expected to decline in the next 12–24 months, VICI is well-positioned to refinance at lower rates and potentially reduce interest expense going forward.

Valuation: Still Room to Run

At its current share price of $32.90, VICI still appears undervalued when viewed through multiple lenses.

1. Peer AFFO Multiples

Comparable REITs in the triple-net and gaming-adjacent categories trade at an average price-to-AFFO multiple of ~14.9x. If we apply this multiple to VICI’s projected 2025 AFFO, we arrive at an implied price of ~$34.94 per share.

2. Dividend Discount Model (DDM)

Assuming a conservative:

• Dividend growth rate of 3.75%

• Discount rate of 8.5% This model yields a fair value estimate of ~$37 per share.

Blended Valuation:

Taking the average of both methods, we arrive at a fair value of ~$36 per share, representing approximately 10% upside from today’s levels. With a 20% margin of safety, an ideal buy zone would be below $28.78—levels that have been tested several times over the past year, offering tactical buying opportunities.

Risks to Consider

While the long-term thesis remains intact, investors should be aware of a few key risks:

• Geographic concentration: Heavy Las Vegas exposure ties performance to a single metro market.

• Interest rate environment: Continued high rates may suppress REIT valuations.

• Tenant concentration: Caesars and MGM account for a large share of rent—any credit deterioration would matter.

• Equity issuance dilution: Future growth will likely require more share issuance, impacting per-share growth unless accretive.

However, these risks are largely offset by VICI’s structural strengths, conservative financial management, and clear strategic vision.

Conclusion: VICI Deserves a Place on the Watchlist—Or in the Portfolio

VICI Properties offers something rare in today’s market: a high yield backed by durable, inflation-linked income and growth optionality. Its unique experiential real estate model, combined with triple-net leases and long-term CPI protection, makes it more resilient than many traditional REITs.

With continued growth in Las Vegas, opportunistic expansion into new verticals, and a best-in-class financial structure, VICI has the potential to not only protect capital—but compound it.

Despite recent outperformance, the REIT remains attractively valued, particularly for investors with a 3–5 year horizon looking for stable, growing income streams.

As always, investors should do their own due diligence—but for long-term, income-focused investors seeking durable returns in a rising cost environment, VICI Properties may be one of the most compelling REITs in the market today.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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