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VICI Properties Inc. announced an agreement to provide up to $700 million in capital to The Venetian Resort Las Vegas for various reinvestment projects through its Partner Property Growth Fund strategy. The investment will fund renovations, optimization of the gaming floor, and enhancement of entertainment and convention center facilities. The financing will be drawn in stages, with annual rent increases starting in 2024.
VICI Properties Inc. ha annunciato un accordo per fornire fino a 700 milioni di dollari di capitale a The Venetian Resort Las Vegas per vari progetti di reinvestimento attraverso la sua strategia del Fondo di Crescita per Proprietà Partner. L'investimento servirà a finanziare ristrutturazioni, ottimizzazione della sala giochi e miglioramento delle strutture del centro di intrattenimento e congressi. I fondi saranno erogati in fasi successive, con incrementi dell'affitto annuale a partire dal 2024.
VICI Properties Inc. anunció un acuerdo para proporcionar hasta 700 millones de dólares en capital a The Venetian Resort Las Vegas para diversos proyectos de reinversión a través de su estrategia de Fondo de Crecimiento de Propiedades Asociadas. La inversión financiará renovaciones, la optimización de la sala de juegos y la mejora de las instalaciones del centro de entretenimiento y convenciones. La financiación se realizará en etapas, con incrementos en el alquiler anual a partir de 2024.
VICI Properties Inc.는 파트너 소유지 성장 기금 전략을 통해 라스베가스의 베네치안 리조트에 최대 7억 달러의 자본을 제공하기로 한 계약을 발표했습니다. 이 투자는 리노베이션, 게임 플로어 최적화 및 엔터테인먼트 및 컨벤션 센터 시설의 향상을 위한 자금을 지원할 것입니다. 자금 조달은 여러 단계에 걸쳐 진행되며, 2024년부터 연간 임대료가 증가할 예정입니다.
VICI Properties Inc. a annoncé un accord pour fournir jusqu'à 700 millions de dollars de capitaux au Venetian Resort Las Vegas pour divers projets de réinvestissement via sa stratégie de Fonds de Croissance de Propriétés Partenaires. L'investissement financera des rénovations, l'optimisation du plancher de jeu et l'amélioration des installations du centre de divertissement et de congrès. Le financement sera effectué par étapes, avec des augmentations de loyer annuelles à partir de 2024.
VICI Properties Inc. gab eine Vereinbarung bekannt, bis zu 700 Millionen Dollar Kapital für das Venetian Resort Las Vegas im Rahmen seiner Partner Property Growth Fund Strategie bereitzustellen. Die Investition wird Renovierungen, die Optimierung der Spielfläche und die Verbesserung der Einrichtungen des Unterhaltungs- und Kongresszentrums finanzieren. Die Finanzierung wird in Stufen erfolgen, mit jährlichen Mietsteigerungen ab 2024.
Positive
Enhancement of guest experience at The Venetian Resort Las Vegas through extensive reinvestment projects.
Potential increase in the overall value of the property due to the funded projects.
Opportunity for VICI Properties to continue growing its partnership with The Venetian Resort and Apollo Global Management.
Attractive capital deployment opportunities for VICI Properties through the Partner Property Growth Fund strategy.
Negative
Potential risks associated with the capital investment in terms of return on investment and project success.
Dependence on The Venetian Resort's performance and economic conditions for the success of the funded projects.
Possible impact on VICI Properties' financials and cash flows due to the significant investment amount.
Insights
VICI Properties' decision to provide capital for The Venetian Resort's renovation is a strategic move designed to enhance the asset's value. The structured capital infusion, staggered over time, reflects a calculated approach to investment. The Incremental Venetian Rent, with an initial yield of 7.25%, seems to align with the industry's expected returns on such investments, although the 2.0% annual increase may not fully compensate for potential higher inflation rates in the future. The funding mechanism, which involves a mix of cash and equity sale agreements, could indicate a balanced approach to financing, avoiding excessive leverage. Retail investors should note the potential for increased revenue from the enhanced property, balanced by the risk associated with the capital being tied up in a significant long-term project.
The capital commitment to The Venetian Resort through VICI Properties' Partner Property Growth Fund showcases a proactive asset management strategy typical of a REIT. By targeting improvements that could increase foot traffic and guest spending, VICI is positioning itself to capture higher rental income, thus potentially enhancing shareholder distributions. The timeline and yield structure demonstrate prudence, yet the CPI cap at 3.0% could be a point of concern in an inflationary environment, potentially capping the real yield. The transaction overview suggests that VICI is leveraging its portfolio's scale and diversification, which could be a bulwark against localized downturns in the hospitality sector.
NEW YORK--(BUSINESS WIRE)--
VICI Properties Inc. (NYSE: VICI) (the “Company”, “VICI” or “VICI Properties”) announced today that it will provide capital to The Venetian Resort Las Vegas (“The Venetian Resort”) for extensive reinvestment projects through VICI’s Partner Property Growth Fund strategy (the “Venetian Capital Investment”). The Venetian Capital Investment will fund several projects, including hotel room product renovations, gaming floor optimization, and entertainment and convention center enhancements, among others, seeking to improve the overall guest experience and enhance the value of the property.
VICI has agreed to provide up to $700 million of financing through the Venetian Capital Investment, comprised of $400 million to be drawn in 2024 and an incremental $300 million that The Venetian Resort will have the option, but not the obligation, to draw in whole or in part until November 1, 2026. The initial $400 million investment will be funded in three quarterly draws based on a fixed funding schedule: $100 million in Q2 2024, $150 million in Q3 2024 and $150 million in Q4 2024.
Annual rent under the existing Venetian Resort lease (the “Venetian Resort Lease”) will increase commencing on the first day of the quarter immediately following each capital funding at a 7.25% yield (the “Incremental Venetian Rent”). The Incremental Venetian Rent will begin escalating annually at 2.0% on March 1, 2029, and commencing on March 1, 2031, will begin escalating on the same terms as the rest of the rent payable under the Venetian Resort Lease with annual escalation equal to the greater of 2.0% or CPI, capped at 3.0%.
John Payne, President and Chief Operating Officer of VICI Properties, said, “We are thrilled to continue to grow our partnership with The Venetian Resort by funding impactful expansion projects through our Partner Property Growth Fund. Since we acquired this marquee Las Vegas asset alongside funds managed by Apollo Global Management, Inc. in 2022, The Venetian Resort operating team has driven impressive performance at the property, and we are excited to be a partner in their innovative efforts to maximize the economic productivity of this iconic asset.”
David Kieske, Chief Financial Officer of VICI Properties, said, “We continue to believe that our Partner Property Growth Fund strategy can provide us with attractive capital deployment opportunities given the scale and quality of our real estate assets, and the operating dynamism that exists within each of our properties. Our capital is well-suited to serve our operating partners who are energetically and creatively looking for ways to continuously enhance the profitability and operations of our assets.”
The Venetian Capital Investment is expected to be funded with a combination of cash and the partial settlement of outstanding forward equity sale agreements.
In addition to this release, the Company has furnished a Transaction Overview presentation available on VICI’s website in the “Investors” section, under the menu heading “Events & Presentations.” For the presentation, please visit https://investors.viciproperties.com/events-and-presentations/.
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. For additional information, please visit www.viciproperties.com.
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 VICI’s control and could materially affect actual results, performance, or achievements. Important risk factors that may affect VICI’s business, results of operations and financial position (including those risks relating to VICI’s pending and recently completed transactions) are detailed from time to time in VICI’s filings with the Securities and Exchange Commission. VICI does 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.
What is the capital amount VICI Properties will provide to The Venetian Resort Las Vegas?
VICI Properties will provide up to $700 million in capital to The Venetian Resort Las Vegas.
What projects will be funded through the Venetian Capital Investment?
The funding will support hotel room product renovations, gaming floor optimization, and entertainment and convention center enhancements, among other projects.
When will the initial $400 million investment be funded?
The initial $400 million investment will be funded in three quarterly draws in 2024: $100 million in Q2, $150 million in Q3, and $150 million in Q4.
How will the annual rent increase under the Venetian Resort Lease be determined?
The annual rent will increase at a 7.25% yield after each capital funding, with further escalations based on a fixed schedule and CPI, capped at 3.0%.
Where can investors find the Transaction Overview presentation related to the capital investment?
Investors can access the presentation on VICI's website in the 'Investors' section under the menu heading 'Events & Presentations' at https://investors.viciproperties.com/events-and-presentations/.
