Vici Properties reveals Q1 growth as $700m Venetian financing confirmed

Vici Properties has reported a year-on-year increase in revenue and net profit for Q1 of its 2024 financial year, while the group has also confirmed that it will provide up to $700.0m (£557.7m/€652.0m) in funding to the Venetian Resort Las Vegas.

Total revenue at Vici in the three months to 31 March amounted to $951.5m. This is 8.4% higher than in Q1 of last year, with the group noting several major developments.

These include a construction loan agreement for up to $105.0m to finance the development of a Margaritaville Resort in Kansas City. Funding is being provided to affiliates of Homefield Kansas City. This deal also offers right of first refusal to acquire real estate of any future Homefield site, should Homefield monetise assets in a sale-leaseback transaction.

“After closing 2023 with our acquisition of the primary leasehold interest in Chelsea Piers, we further expanded our investment into youth sports and recreation through our Homefield Kansas City transaction,” Vici CEO Edward Pitoniak said.

Revenue up in all segments during Q1

Breaking down financial performance in Q1, the majority of revenue at Vici came from sales-type leases. In total, revenue generated by such agreements hit $512.8m, up 7.2% year-on-year.

Revenue from lease financing receivables, loans and securities was also 10.3% higher in Q1 at $409.3m. In addition, other revenue climbed 5.5% to $19.3m, while golf revenue edged up 3.1% to $10.1m.

In terms of costs, despite revenue increasing, operating spend was kept almost level in Q1 at $150.4m. This was actually marginally lower than the $150.6m spent by Vici last year.

The group noted an additional $199.7m in non-operating costs, almost all of which was due to interest expense. As such, it ended Q1 with a pre-tax profit of $601.4m, up 13.7% on the 2023 total.

Vici paid $1.6m in tax and also discounted $9.8m in profit from non-controlling interests. This meant net profit attributable to Vici in Q1 hit $590.0m, an increase of 13.8% from $518.7m last year.

In addition, adjusted EBITDA was 7.7% higher for the quarter at $765.3m.

Vici strikes financing deal with the Venetian 

The Q1 results were published alongside the news that Vici has entered a capital agreement with the Venetian Resort Las Vegas. 

Vici will provide up to $700.0m in financing to support extensive reinvestment projects. This work will include hotel room renovations, gaming floor optimisation and entertainment and convention centre improvements.

This package comprises $400.0m, which will be provided in quarterly tranches of $100.0m, $150.0m and $150.0m throughout 2024. There is also the option of a further $300.0m, valid until 1 November 2026.

Annual rent under the existing Venetian Resort lease will increase from the first day of the quarter following each capital funding at a 7.25% yield. Incremental Venetian Rent will begin rising annually at 2.0% on 1 March 2029.

Then, from 1 March, this rate will begin escalating on the same terms as the rest of the rent payable under the Venetian Resort Lease. This will be at an annual escalation equal to the greater of 2.0% or consumer price index (CPI), capped at 3.0%.

Vici hails “impressive” Venetian

Vici agreed to acquire the Venetian in March 2021 as part of a wider deal including all the Las Vegas- properties and operations of Las Vegas Sands. In total, the arrangement was worth $6.25bn and completed in February 2022.

“Since we acquired this marquee Las Vegas asset, the Venetian operating team has driven impressive performance at the property,” Vici president and chief operating officer John Payne said.

“We are excited to be a partner in their innovative efforts to maximise the economic productivity of this iconic asset.”

Vici chief financial officer David Kieske added: “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.”

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