Vici Properties, a real estate investment trust focused on gaming and experiential properties, released its fourth-quarter earnings on February 20. The company reported strong revenue growth, with revenues reaching $976.1 million, surpassing the analysts’ consensus forecast of $970 million. However, the trust’s adjusted earnings per share fell short of expectations, registering at $0.58 compared to the anticipated $0.68. The adjusted funds from operations (AFFO), a crucial metric for assessing the profitability of a REIT, increased to $0.57 per share, a rise of $0.02 per share. The quarter was characterized by solid revenue growth, although earnings were impacted by adjustments related to credit.
In terms of financial performance metrics, the AFFO per share for the fourth quarter of 2024 stood at $0.57, marking a 3.6% increase from $0.55 in the previous year. Revenue saw a 4.7% uptick, climbing to $976.1 million from $931.9 million. Conversely, net income per share dropped to $0.58, missing analysts’ expectations by 16.2%, primarily due to a $157.7 million adjustment in the Current Expected Credit Loss (CECL) allowance.
Vici Properties operates by focusing on long-term triple net leases with major tenants such as Caesars and MGM, which contribute significantly to its rental income. This leasing model allows the company to have more predictable revenue streams. Recently, Vici has been expanding its portfolio through strategic partnerships and investments, including collaborations with The Venetian Resort Las Vegas and Cain International.
During the quarter, Vici strengthened its portfolio by committing $1.1 billion to various ventures, anticipated to yield 8.1%. The entire portfolio remained fully leased by the end of 2024, with a weighted average lease term of 40.7 years, ensuring stable revenue prospects. However, the company faced challenges related to earnings, notably influenced by the CECL adjustment, reflecting risks that require careful management.
Looking forward, Vici Properties has projected an AFFO target for 2025 ranging from $2.455 billion to $2.485 billion, which equates to AFFO per diluted share of $2.32 to $2.35. This outlook suggests stability, though it excludes the impact of potential extraordinary transactions. Investors are advised to keep an eye on macroeconomic conditions, such as interest rate changes and the economic performance of key partners like Caesars and MGM.
