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Elevator Pitch
My investment rating for VICI Properties (NYSE:VICI) is a Buy. Even though VICI’s current stock price is near its all-time high, VICI Properties’ shares still have upside potential. VICI boasts the strongest growth outlook among a group of triple-net lease REITs, but it only trades at similar valuations as its peers. Therefore, I am of the opinion that a further expansion of VICI Properties’ valuation multiples and an increase in its stock price are highly probable.
What Is VICI Properties’ Highest Stock Price?
In its fiscal 2021 10-K filing, VICI refers to itself as a “real estate investment trust” or REIT that is “in the business of owning and acquiring gaming, hospitality and entertainment destinations, subject to long-term triple net leases.” VICI was established in October 2017, and it has been listed on the New York Stock Exchange since February 2018.
VICI Properties achieved the highest stock price in its history when it traded as high as $35.69 during intraday trading on August 15, 2022. VICI’s last traded share price of $33.30 as of December 5, 2022 is just 7% below its all-time stock price peak.
I write about VICI’s share price performance in the next section of the article.
Why Has VICI’s Price Been Going Up?
VICI Properties’ shares have been on an upwards trend in the past year. In the last one year, VICI’s stock price rose by +20.4% as compared to a -12.6% pullback for the S&P 500.
VICI’s share price has been going up because of its favorable outlook which I will detail in the subsequent sections.
VICI Stock Key Metrics
There are some metrics relating to VICI Properties’ recent developments which imply that VICI’s growth prospects are reasonably good.
At its Q3 2022 financial results investor call, VICI Properties emphasized that its goal is to “position VICI as the capital partner of choice for gaming and experiential operators.” Recent news and announcements suggest that VICI is making very good progress in achieving its target.
On December 5, 2022, VICI announced that it “will utilize its Partner Property Growth Fund to provide capital” of around $51.9 million for Century Casinos, Inc.’s (CNTY) “new land-based casino” project. Specifically, VICI Properties estimated that it will benefit from a $4.2 million uplift in its “annual rent under the master lease” with CNTY after the project is concluded.
Earlier, Seeking Alpha News reported on December 1, 2022 that VICI Properties entered into a deal to buy out the remaining 49.9% stake in “the MGM Grand Las Vegas and the Mandalay Bay Resort” from Blackstone (BX) for a consideration of roughly $1.27 billion. In its press release announcing this acquisition, VICI guided that this deal should be “immediately accretive to AFFO (Adjusted Funds From Operations) per share upon closing” and disclosed that these two assets generate yearly rental income of $310 million.
Separately, VICI previously raised over $500 million with a new stock offering in early-November 2022.
According to a JPMorgan (JPM) research report (not publicly available) titled “Notes From 44 Meetings/Events At REITworld” published on November 18, 2022, VICI shared the reasons for its equity raise at a recent investor conference. Specifically, VICI Properties stressed at the mid-November conference that it recently raised fresh funds because of “its confidence in its investment pipeline and what it is seeing on the horizon” as highlighted in the JPM report.
In other words, VICI Properties’ recent fund raising has sent a strong signal that the company’s capital deployment and M&A activity for the rest of 2022 and full-year 2023 might exceed market expectations in a significant way.
In summary, I have a favorable view of VICI’s key metrics outlined in this section.
What Is The Future Outlook?
VICI Properties’ future outlook is bright.
The Wall Street analysts’ consensus financial projections point to VICI recording strong growth in its AFFO and dividends for the upcoming fiscal year as per S&P Capital IQ data. Specifically, VICI Properties’ AFFO per share is estimated to expand by +8.1% from $1.92 in fiscal 2022 to $2.07 for fiscal 2023. Also, VICI’s dividend per share is forecasted to increase by +6.7% from $1.49 for FY 2022 to $1.59 in FY 2023.
In terms of downside protection, VICI’s future financial performance is relatively less affected by inflationary cost pressures as compared to some other REITs, because it estimates that 53% of its leases will benefit from “uncapped CPI-linked escalation” in 2023 as disclosed in its November 2022 investor presentation. With respect to upside potential, I mentioned in the preceding section that VICI Properties’ inorganic growth prospects next year might surpass market expectations as evidenced by its recent fund raising.
Will The Share Price Keeping Increasing Or Will A Correction Happen?
I hold the view that VICI Properties’ share price can keep increasing, rather than suffer from a substantial correction.
Peer Valuation Comparison For VICI Properties
| REIT | Consensus Forward Next Twelve Months’ Price-to-AFFO Valuation Multiple | Consensus Forward One Fiscal Year AFFO Per Share Growth Forecast |
| VICI Properties | 16.6 | +8.1% |
| Agree Realty Corporation (ADC) | 18.3 | +2.8% |
| Four Corners Property Trust, Inc.(FCPT) | 16.2 | +2.6% |
| Realty Income Corporation (O) | 15.9 | +3.0% |
| W. P. Carey Inc.(WPC) | 15.6 | +1.2% |
Source: S&P Capital IQ
VICI’s current valuations are roughly in line with where some of the other triple-net lease REITs are trading at as per the peer comparison table presented above. But VICI Properties’ expected AFFO per share growth in the next fiscal year is much higher than its peers.
As such, it is reasonable to expect a positive re-rating of VICI’s valuations to happen in due course, assuming that it can live up to the market’s growth expectations. If VICI does deliver superior AFFO per share growth in FY 2023, it should be able to command a valuation premium over its other triple-net lease REIT peers. This will support a further increase in VICI Properties’ stock price going forward.
Is VICI Stock A Buy, Sell, or Hold?
VICI’s stock is deserving of a Buy rating. VICI Properties’ shares have the potential to rise further, given that its valuations are on par with its peers even though its 2023 growth outlook is more promising.
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