VICI Properties Announces Closing of $1.05 Billion Senior Unsecured Notes Offering

Rhea-AI Summary

VICI Properties Inc. completes a public offering of $1.05 billion in senior unsecured notes, consisting of $550 million due in 2034 and $500 million due in 2054, to repay existing debts. Several major financial institutions acted as managers for the offering.

Insights

Financial Analyst

VICI Properties Inc.'s completion of a substantial public offering of senior unsecured notes is a significant financial maneuver. The company's strategic refinance of existing debt, particularly the exchange of notes due in 2024 with higher interest rates for longer-term notes due in 2034 and 2054, indicates a proactive approach to capital management. The choice to lock in interest rates for a longer period could suggest anticipation of a rising interest rate environment. However, investors should note that the new notes have been issued at a discount to par value, which could imply an immediate book loss for the company. The involvement of a broad syndicate of investment banks as book-runners and co-managers reflects the offering's complexity and the need for wide distribution.

Analyzing the interest rates of 5.750% for the 2034 Notes and 6.125% for the 2054 Notes against the backdrop of the current yield curve provides insight into investor sentiment regarding credit risk and the time value of money. The higher interest rate on the longer-dated notes suggests a normal upward-sloping yield curve, but it also increases the long-term interest burden on the company. Investors should evaluate the company's cash flow projections to ensure that the increased interest expense can be managed without affecting operational efficiency.

Debt Market Analyst

The issuance of senior unsecured notes by VICI Properties L.P. reflects a broader trend in the corporate bond market where firms are opportunistically tapping capital markets for refinancing to extend debt maturities and reduce refinancing risk. The decision to repay existing debt due in the near term with proceeds from the new offering is a common debt management strategy. This move may be well-received by the market as it alleviates short-term liquidity concerns and demonstrates prudent financial planning.

From a credit perspective, the 'senior unsecured' designation of the notes is crucial. It indicates that these debt instruments rank higher in claim priority compared to subordinated debt in the event of a liquidation, but they are not backed by specific assets as collateral. This could affect the recovery rate for investors in a default scenario. The credit rating of the notes, not specified in the article, would be a key determinant of investor appetite and the success of the offering. A strong rating would imply confidence in the company's ability to meet its debt obligations, potentially leading to a tighter credit spread and lower yield demanded by investors.

Real Estate Investment Trust (REIT) Analyst

As a REIT, VICI Properties' operations involve managing a portfolio of real estate properties, often with a focus on gaming, hospitality and entertainment assets. The refinancing activity could be indicative of the management's confidence in stable long-term cash flows from its properties, which is essential for covering the coupon payments of the newly issued notes. The offering's success could be partially attributed to the unique nature of REITs, where investors often seek stable income through dividends and companies require consistent access to capital for property acquisitions and development.

Investors should consider the REIT's sector-specific risks, such as sensitivity to economic downturns, which could impact occupancy rates and rental income. The long-term nature of the issued notes may provide a buffer against short-term market fluctuations, but it also exposes the company to potential changes in real estate market conditions over the next several decades. The health of the commercial real estate market, interest rates and regulatory changes affecting REITs should be monitored closely as they could significantly impact VICI Properties' financial performance and ability to service its debt.

NEW YORK--(BUSINESS WIRE)-- VICI Properties Inc. (NYSE: VICI) (“VICI Properties” or the “Company”) announced today that its subsidiary, VICI Properties L.P. (the “Issuer”), has completed its public offering of $1.05 billion in aggregate principal amount of senior unsecured notes (the “Notes”) consisting of:

• $550 million aggregate principal amount of 5.750% senior unsecured notes due 2034 (the “2034 Notes”). The 2034 Notes were issued at 99.186% of par value and mature on April 1, 2034.
• $500 million aggregate principal amount of 6.125% senior unsecured notes due 2054 (the “2054 Notes”). The 2054 Notes were issued at 98.192% of par value and mature on April 1, 2054.

The Issuer intends to use the net proceeds from the offering to repay its outstanding (i) $1,024.2 million in aggregate principal amount of 5.625% senior exchange notes due 2024 and (ii) $25.8 million in aggregate principal amount of 5.625% senior notes due 2024.

Wells Fargo Securities, J.P. Morgan, BofA Securities, Goldman Sachs & Co. LLC, Barclays, BNP PARIBAS, Citigroup, Citizens Capital Markets, Deutsche Bank Securities, Morgan Stanley, Scotiabank and Truist Securities acted as joint book-running managers for the offering. Capital One Securities, Mizuho and SMBC Nikko acted as senior co-managers for the offering, and Keybanc Capital Markets and Raymond James acted as co-managers for the offering.

The offering was made only pursuant to an effective shelf registration statement filed by the Company and the Issuer with the Securities and Exchange Commission (the “SEC”) and only by means of a prospectus and prospectus supplement. A copy of the prospectus supplement and accompanying prospectus relating to the offering may be obtained from: Wells Fargo Securities, LLC, 608 2nd Avenue South, Suite 1000, Minneapolis, MN 55402, Attn: WFS Customer Service (telephone: (800) 645-3751 or email: wfscustomerservice@wellsfargo.com); J.P. Morgan Securities LLC, 383 Madison Avenue, New York, NY 10179, Attention: Investment Grade Syndicate Desk, 3rd Floor (telephone: (212) 834-4533); BofA Securities, Inc., 201 North Tryon Street, NC1-022-02-25, Charlotte NC 28255-0001, Attn: Prospectus Department (telephone: (800)-294-1322 or email: dg.prospectus_requests@bofa.com); or Goldman Sachs & Co. LLC, Attention: Prospectus Department, 200 West Street, New York, NY 10282 (telephone: (866) 471-2526 or email: prospectus-ny@ny.email.gs.com), or by visiting the EDGAR database on the SEC’s web site at www.sec.gov.

This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor will there be any sale of these securities in any state or other jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.

About VICI Properties

VICI Properties Inc. is an S&P 500® experiential real estate investment trust that owns one of the largest portfolios of market-leading gaming, hospitality and entertainment destinations, including Caesars Palace Las Vegas, MGM Grand and the Venetian Resort Las Vegas, three of the most iconic entertainment facilities on the Las Vegas Strip. VICI Properties owns 93 experiential assets across a geographically diverse portfolio consisting of 54 gaming properties and 39 other experiential properties across the United States and Canada. The portfolio is comprised of approximately 127 million square feet and features approximately 60,300 hotel rooms and over 500 restaurants, bars, nightclubs and sportsbooks. Its properties are occupied by industry-leading gaming, leisure and hospitality operators under long-term, triple-net lease agreements. VICI Properties has a growing array of real estate and financing partnerships with leading operators in other experiential sectors, including Bowlero, Cabot, Canyon Ranch, Chelsea Piers, Great Wolf Resorts, Homefield and Kalahari Resorts. VICI Properties also owns four championship golf courses and 33 acres of undeveloped and underdeveloped land adjacent to the Las Vegas Strip. VICI Properties’ goal is to create the highest quality and most productive experiential real estate portfolio through a strategy of partnering with the highest quality experiential place makers and operators.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,” “will,” and similar expressions that do not relate to historical matters. All statements other than statements of historical fact are forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors which are, in some cases, beyond the Company’s or the Issuer’s control and could materially affect actual results, performance, or achievements. Important risk factors that may affect the Company’s business, results of operations and financial position are detailed from time to time in the Company’s filings with the Securities and Exchange Commission. The Company and the Issuer do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as may be required by applicable law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240318100449/en/

Investor:

Investors@viciproperties.com

(646) 949-4631

Or

David Kieske

EVP, Chief Financial Officer

DKieske@viciproperties.com

Moira McCloskey

SVP, Capital Markets

MMcCloskey@viciproperties.com

Source: VICI Properties Inc.

FAQ

What is the total amount of the public offering completed by VICI Properties Inc.?

VICI Properties Inc. completed a public offering of $1.05 billion in senior unsecured notes.

What are the amounts and due dates of the senior unsecured notes issued by VICI Properties Inc.?

The notes consist of $550 million due in 2034 and $500 million due in 2054.

How does VICI Properties Inc. plan to utilize the net proceeds from the offering?

VICI Properties Inc. intends to use the net proceeds to repay existing debts.

Which major financial institutions acted as managers for the offering by VICI Properties Inc.?

Wells Fargo Securities, J.P. Morgan, BofA Securities, Goldman Sachs & Co. , and several others acted as managers for the offering.