{"id":305693,"date":"2024-01-04T16:23:44","date_gmt":"2024-01-04T22:23:44","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=305693"},"modified":"2024-01-05T12:50:36","modified_gmt":"2024-01-05T18:50:36","slug":"vici-properties-nongaming-ma-could-affect-credit-rating","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/vici-properties-nongaming-ma-could-affect-credit-rating\/","title":{"rendered":"VICI Properties Credit Grade Could Be Affected by Nongaming Acquisitions"},"content":{"rendered":"

VICI Properties (NYSE: VICI) is the largest domestic owner of casino real estate. But the company\u2019s nongaming acquisitions could affect its corporate credit rating.<\/p>\n

\"Casino
Caesars Palace on the Las Vegas Strip. Owner VICI Properties’ credit rating could be affected by a recent string of nongaming deals. (Image: Bloomberg<\/em>)<\/figcaption><\/figure>\n

The Caesars Palace owner is currently rated \u201cBBB-\u201c by Fitch Ratings — the lowest investment grade — but that market could be affected in either direction by a recent flurry of nongaming deals executed by the real estate investment trust (REIT). Those include financing for experiential properties such as Canyon Ranch and Cabot, among others.<\/p>\n

Central to VICI\u2019s ratings is the push and pull between the company\u2019s relatively high tenant and asset concentration with gaming operators with weaker, high-yield credit profiles, and the offsetting effect of structural strengths provided by casino properties, as well as VICI\u2019s own lease structures,\u201d<\/strong> according to Fitch Ratings.<\/p><\/blockquote>\n

Venturing away from casino properties diversifies VICI\u2019s tenant base<\/a>, which is largely comprised of Caesars Entertainment (NASDAQ: CZR) and MGM Resorts International (NYSE: MGM), as well as the REIT\u2019s geographic footprint. However, there are potential pros and cons to the REIT venturing further into nongaming experiential properties.<\/p>\n

VICI Nongaming Perks, Risks<\/h2>\n

One of the primary benefits of VICI\u2019s emphasis on gaming real estate is that there are barriers to entry in the industry. Additionally, tenants are increasingly financially sound, confirming they are able to service lease obligations to landlords, and specific to Las Vegas<\/a>, casino real estate is appreciating.<\/p>\n

Over time, those traits may become applicable to other forms of experiential real estate. But there could be volatility along the way.<\/strong><\/p>\n

\u201cVICI\u2019s recent investments with Canyon Ranch, Bowlero, Kalahari, Chelsea Piers, and Cabot depart from this dynamic in terms of size, strategic importance, and regulatory barriers to entry,\u201d added Fitch. \u201cThese operators may also see increased cyclicality compared to gaming operations, which is a key risk. However, VICI still maintains strong legal and structural protections in these deals, as evidenced by its master lease with Bowlero.\u201d<\/p>\n

On the other hand, those deals improve VICI\u2019s tenant diversification while providing avenues for top-line and acquired funds from operations<\/a> (AFFO) growth.<\/p>\n

VICI Credit Implications Not Clear<\/h2>\n

As noted above, VICI sports the lowest investment-grade credit rating, and at the moment, downgrade probability is low. But the REIT probably won\u2019t see an imminent upgrade, either.<\/p>\n

\n

The bottom line is it will likely take time for nongaming acquisitions and investments to have a material impact on VICI\u2019s revenue and profits, and thus its credit rating. An improved credit grade could lower VICI\u2019s financing costs, an obvious plus for a company with a knack for acquisitions.<\/p>\n<\/div>\n

\u201cWhile individual deals have been relatively small so far, they may add up over time to a more material part of the company\u2019s operations,\u201d concluded Fitch. \u201cFitch believes VICI\u2019s investments in non-gaming experiential properties has merit; however, despite historically had sound underwriting, risks remain. Fitch will continue to monitor the performance of non-gaming properties and VICI\u2019s overall credit profile as it continues to invest in this space.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

VICI Properties (NYSE: VICI) is the largest domestic owner of casino real estate. But the company\u2019s nongaming acquisitions could affect its corporate credit rating. The Caesars Palace owner is currently rated \u201cBBB-\u201c by Fitch Ratings — the lowest investment grade — but that market could be affected in either direction by a recent flurry of […]<\/p>\n","protected":false},"author":46,"featured_media":196258,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,33810,32093],"tags":[81903,81898,81966],"acf":[],"yoast_head":"\nVICI Properties Nongaming M&A Could Affect Credit Rating<\/title>\n<meta name=\"description\" content=\"VICI Properties Credit Grade Could Be Affected by Nongaming Acquisitions.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/vici-properties-nongaming-ma-could-affect-credit-rating\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"VICI Properties Nongaming M&A Could Affect Credit Rating\" \/>\n<meta property=\"og:description\" content=\"VICI Properties Credit Grade Could Be Affected by Nongaming Acquisitions.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/vici-properties-nongaming-ma-could-affect-credit-rating\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2024-01-04T22:23:44+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-01-05T18:50:36+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/12\/czr.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2000\" \/>\n\t<meta property=\"og:image:height\" content=\"1133\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/vici-properties-nongaming-ma-could-affect-credit-rating\/\",\"url\":\"https:\/\/www.casino.org\/news\/vici-properties-nongaming-ma-could-affect-credit-rating\/\",\"name\":\"VICI Properties Nongaming M&A Could Affect Credit Rating\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/vici-properties-nongaming-ma-could-affect-credit-rating\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/vici-properties-nongaming-ma-could-affect-credit-rating\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/12\/czr.jpg\",\"datePublished\":\"2024-01-04T22:23:44+00:00\",\"dateModified\":\"2024-01-05T18:50:36+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"VICI Properties Credit Grade Could Be Affected by Nongaming Acquisitions.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/vici-properties-nongaming-ma-could-affect-credit-rating\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/vici-properties-nongaming-ma-could-affect-credit-rating\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/vici-properties-nongaming-ma-could-affect-credit-rating\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/12\/czr.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/12\/czr.jpg\",\"width\":2000,\"height\":1133,\"caption\":\"Caesars Palace on the Las Vegas Strip. 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