VICI Properties Provides Company and COVID-19 Update

4/17/20

NEW YORK--(BUSINESS WIRE)--VICI Properties Inc. (NYSE: VICI), with respect to the ongoing COVID-19 pandemic, today provided an update on its liquidity position, real estate portfolio, the impact of a new accounting standard and the status of 2020 guidance.

“From Day 1 at VICI we’ve been committed to full and forthright dialogue with our stockholders and other key stakeholders and that dialogue is more important than ever in a time like this,” said Edward Pitoniak, Chief Executive Officer of VICI Properties. “We believe that our nation, our sector, our tenants and our REIT will ultimately come through the COVID-19 pandemic by means of our collaborative strength. Today we wish to share with you how VICI strengthened itself coming into the pandemic and how we’re currently responding to the pandemic.”

Liquidity Update

“Since our emergence in October 2017 we have been working to strengthen our balance sheet, ladder out our maturities, maintain a low payout ratio, and, overall, sustain a strong liquidity position,” said David Kieske, Executive Vice President and Chief Financial Officer of VICI Properties.

  • On February 5, 2020, we issued (i) $750.0 million of 3.500% senior unsecured 5-year notes due 2025 (the “2025 Notes”), (ii) $750.0 million of 3.750% senior unsecured 7-year notes due 2027 and (iii) $1.0 billion of 4.125% senior unsecured 10.5-year notes due 2030.
    • $2.0 billion of the net proceeds were placed into escrow pending the consummation of the Eldorado transaction, which amount is subject to a special mandatory redemption if such transaction does not close.
    • On February 20, 2020 the remaining net proceeds from the 2025 Notes were used to redeem in full the outstanding $498.5 million of 8.0% Senior Secured Second Priority Notes due 2023.
  • On February 7, 2020, we sold 7,500,000 shares under our at-the-market (“ATM”) offering program for aggregate net proceeds of $200.0 million.
  • On March 12, 2020, we declared a regular quarterly cash dividend of $0.2975 per share, which was paid on April 9, 2020 to stockholders of record as of the close of business on March 31, 2020. The aggregate dividend payment was approximately $139.3 million.

Taking into account the foregoing, as of April 16, 2020, we have approximately $310 million in unrestricted cash and cash equivalents and $1.0 billion of availability under our undrawn revolving credit facility. In addition, we have access to approximately $1.3 billion in proceeds from settlement of the 65,000,000 shares that are subject to the forward sale agreements entered into in June 2019. We also have no debt maturities until December 2024.

Real Estate Portfolio Update

In connection with the COVID-19 pandemic, various state governments and/or regulatory authorities have issued directives, mandates, orders or similar actions restricting non-essential business operations, resulting in the closure of our tenants’ operations at our properties (as well as our golf course properties), and at this time, we cannot predict the length of time our tenants’ operations will remain closed. All of our tenants fulfilled their rent obligations in full for the month of April. As of April 16, 2020, we are actively engaged in discussions with our five tenants regarding how best to respond to the COVID-19 pandemic as it specifically impacts each tenant’s financial and operating situation. While we have not yet agreed to any lease modifications or other concessions with any of our tenants, if the current environment persists we may ultimately support tenants during the short term in ways that we believe will benefit the Company over the long term.

Eldorado / Caesars Merger

Eldorado continues to pursue the regulatory approvals necessary to close its merger with Caesars. As noted above, between the $1.3 billion in proceeds from the settlement of the forward sale agreements and the $2.0 billion held in escrow from the February unsecured notes offering, we have raised all equity and debt funding necessary to close on our part of the overall Eldorado/Caesars transaction.

New Accounting Standard – Non-Cash Impact to Financial Statements

We have historically determined that our leases effectively have 35-year durations, given the mission-criticality of the assets to our tenants. This lease duration, and other factors, led to our leases being classified as direct-financing and sales type leases for accounting purposes. As previously disclosed in our 2019 Annual Report on Form 10-K and as a result of our leases being recorded as direct financing and sales type leases, we adopted ASU No. 2016-13 - Financial Instruments-Credit Losses (Topic 326) - June 2016 (as amended through May 2019) (“CECL”)effective January 1, 2020. As a result of the amended accounting standard, beginning with our Q1 2020 reporting, we will be required to estimate and record a non-cash provision, or allowance, for future credit losses related to all existing, and any future investments in, direct financing and sales-type leases and similar assets. This allowance is derived from estimated probabilities of lease default and any resulting losses over the full life of the leases, inclusive of all extension options. We anticipate that the impact of the COVID-19 pandemic will materially affect the calculation of this allowance. This resulting non-cash allowance will be recorded through our Statement of Operations, impacting net income and funds from operations (FFO), but will be excluded from the calculation of adjusted funds from operations (AFFO) due to its non-cash nature.

2020 Guidance

Our prior 2020 guidance was provided before the COVID-19 pandemic had materially impacted the U.S. economy. Given the economic uncertainty and rapidly-evolving circumstances related to the COVID-19 pandemic, together with the implementation of a new CECL accounting standard, we are withdrawing our previously issued 2020 guidance and are not providing an updated outlook at this time.

About VICI Properties

VICI Properties is an experiential real estate investment trust that owns one of the largest portfolios of market-leading gaming, hospitality and entertainment destinations, including the world-renowned Caesars Palace. VICI Properties’ national, geographically diverse portfolio consists of 28 gaming facilities comprising over 40 million square feet and features approximately 15,600 hotel rooms and more than 180 restaurants, bars and nightclubs. Its properties are leased to industry leading gaming and hospitality operators, including Caesars Entertainment Corporation, Century Casinos Inc., Hard Rock International, JACK Entertainment and Penn National Gaming, Inc. VICI Properties also owns four championship golf courses and 34 acres of undeveloped land adjacent to the Las Vegas Strip. VICI Properties’ strategy is to create the nation’s highest quality and most productive experiential real estate portfolio. For additional information, please visit www.viciproperties.com.