Vici reveals first quarter growth as $700 million Venetian financing confirmed

Vici Properties has reported a year-on-year increase in revenue and net profit for the first quarter of its 2024 financial year, while the group has also confirmed it will reach $700.0 million (£557.7 million/€652.0 million) in financing to the Venetian resort of Las Vegas.

Total sales at Vici in the three months to March 31 were $951.5 million. This is 8.4% higher than in the first quarter of last year, with the group noticing a number of important developments.

These include a construction loan agreement for up to $105.0 million to finance the development of a Margaritaville Resort in Kansas City, Kansas. Financing is provided to Homefield Kansas City affiliates. This deal also provides a right of first refusal to acquire real estate from a future Homefield site, should Homefield monetize assets in a sale-leaseback transaction.

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

Sales increased in all segments during Q1

Looking at the financial performance in the first quarter, the majority of Vici’s revenue came from sales-related leases. In total, revenue from such agreements was $512.8 million, up 7.2% year over year.

Revenue from lease finance receivables, loans and securities was also up 10.3% in the first quarter at $409.3 million. In addition, other revenues rose 5.5% to $19.3 million, while golf revenues rose 3.1% to $10.1 million.

In terms of costs, despite rising revenue, operating expenses remained virtually flat in the first quarter at $150.4 million. This was actually marginally lower than the $150.6 million Vici spent last year.

The group recorded another $199.7 million in non-operating expenses, almost all of which was due to interest expense. As such, it ended the first quarter with pre-tax profits of $601.4 million, up 13.7% from its 2023 total.

Vici paid $1.6 million in taxes and also discounted $9.8 million in minority interest profits. This meant that net profit attributable to Vici in the first quarter was $590.0 million, an increase of 13.8% compared to $518.7 million last year.

Additionally, adjusted EBITDA for the quarter was 7.7% higher at $765.3 million.

Vici concludes a financing agreement with the Venetians

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

Vici will provide up to $700 million in financing to support major reinvestment projects. This work includes the renovation of hotel rooms, optimization of the gaming floor and improvements to entertainment and conference centers.

This package includes $400.0 million, which will be provided in quarterly tranches of $100.0 million, $150.0 million and $150.0 million throughout 2024. There is also the option of an additional $300.0 million, valid until November 1, 2026.

The annual rent under the existing Venetian Resort lease will increase at a rate of return of 7.25% beginning on the first day of the quarter following each capital financing. The incremental Venetian rent will increase by 2.0% annually on March 1, 2029.

Subsequently, this rate will increase from March 1 under the same conditions as the remainder of the rent payable under the Venetian Resort Lease. This will happen with an annual escalation equal to the higher of 2.0% or the consumer price index (CPI), with a maximum of 3.0%.

Vici calls it ‘impressive’ Venetian

Vici agreed to acquire the Venetian in March 2021 as part of a broader deal that included all of Las Vegas Sands’ Las Vegas properties and operations. In total, the scheme was worth US$6.25 billion and was completed in February 2022.

“Since we acquired this Las Vegas property, the Venetian operations team has delivered impressive performance on the ground,” said Vici President and Chief Operating Officer John Payne.

“We are excited to be a partner in their innovative efforts to maximize 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 dynamics that exist within each of our properties. .

“Our capital is well suited to serve our operating partners who are energetically and creatively seeking ways to continually improve the profitability and operations of our assets.”