VICI Properties Announces Pricing of Public Offering of $1.05 Billion of Senior Unsecured Notes
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Insights
The pricing of a substantial public offering of senior unsecured notes by VICI Properties Inc. represents a strategic financial maneuver aimed at optimizing the company's capital structure. By issuing $1.05 billion in aggregate principal amount of senior unsecured notes with varying maturities, the company is signaling a proactive approach to managing its debt obligations. The decision to use the net proceeds to repay existing senior exchange notes and senior notes due in 2024 indicates a refinancing strategy to take advantage of current market conditions, potentially reducing interest expenses and extending debt maturities.
From an investment standpoint, the issuance of notes with higher interest rates compared to the notes being repaid could suggest an anticipation of rising interest rates or a perceived increase in credit risk. The pricing below par value for both the 2034 and 2054 Notes further underscores this point. Investors and analysts will be closely monitoring the yield spread between these newly issued notes and benchmark securities to gauge market sentiment towards the company's creditworthiness.
Moreover, the involvement of a syndicate of well-known financial institutions as joint book-running managers and co-managers could enhance investor confidence in the offering, given their role in underwriting and distributing the notes.
The structure of VICI Properties' note offering, which includes long-dated maturities of 10 and 30 years, is indicative of the company's long-term financing strategy. Such maturities provide the company with a stable, long-term source of capital, which is particularly beneficial for a real estate investment trust (REIT) given the nature of their long-term property investments. The issuance of senior unsecured notes also implies that these debt instruments are not backed by specific collateral, which may appeal to investors seeking higher yields in exchange for a higher risk profile.
However, the pricing of these notes at a discount to par value raises the cost of borrowing for the company, which could impact its weighted average cost of capital (WACC). This is a crucial metric for REITs, as it affects their ability to generate returns on investments above their cost of capital. The interest rates set for the 2034 and 2054 Notes, at 5.750% and 6.125% respectively, are relatively high in the current market environment, reflecting the inherent risks associated with the real estate sector and the issuer's credit profile.
The real estate investment sector, where VICI Properties operates, typically requires significant capital for property acquisition and development. By issuing senior unsecured notes, VICI Properties is likely seeking to maintain liquidity and fund ongoing operations without diluting shareholder equity. The choice to repay existing debt with the proceeds can be seen as an effort to improve the company's debt maturity profile and reduce the risk of refinancing under potentially less favorable conditions in the future.
Investors in the REIT space often scrutinize the debt-to-equity ratio and interest coverage ratios as indicators of financial health. By addressing near-term debt maturities, VICI Properties may be aiming to present a stronger balance sheet, which could positively influence its stock performance and ability to raise capital in the future. The terms of the offering will also affect the company's financial flexibility, as higher interest rates on long-term debt could constrain future capital expenditure and acquisition strategies.
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$550 million 5.750% senior unsecured notes due 2034 (the “2034 Notes”). The 2034 Notes will be issued at99.186% of par value and will mature on April 1, 2034. -
$500 million 6.125% senior unsecured notes due 2054 (the “2054 Notes”). The 2054 Notes will be issued at98.192% of par value and will mature on April 1, 2054.
Interest on the 2034 Notes and the 2054 Notes is payable in cash in arrears on April 1 and October 1 of each year, beginning on October 1, 2024. The offering is expected to close on March 18, 2024, subject to the satisfaction of customary closing conditions.
The Issuer intends to use the net proceeds from the offering to repay its outstanding (i)
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 are acting as joint book-running managers for the offering. Capital One Securities, Mizuho and SMBC Nikko are acting as senior co-managers for the offering, and Keybanc Capital Markets and Raymond James are acting as co-managers for the offering.
The offering is being made 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,
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
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/20240307786296/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 announced by VICI Properties Inc.?
What are the two types of senior unsecured notes included in the offering?
When will the 2034 Notes mature?
Which financial institutions are acting as joint book-running managers for the offering?
How will the net proceeds from the offering be utilized by the Issuer?
