Jefferies Names VICI Properties Top REIT

Jefferies Names VICI Properties Top REIT

The biggest casino landlord, VICI Properties, was praised on the sell side in 2023.

In a letter to clients on Monday, Jonathan Peterson, a Jefferies analyst, called the REIT a top pick for 2023 with a $43 price goal. That means the stock went up 30% from where it closed in 2022.

As soon as the costs of traditional debt and triple-net lease financing are the same, we expect growth to continue,” Peterson said. Given that rent escalators and prospective acquisitions are not yet fully represented in forecasts, the 15.9x EBITDA multiple and 4.77% yield are appealing.

They own the Caesars Palace on the Las Vegas Strip, and 2022 was a good year for them. The stock went up 7.61% last year, which was more than the S&P 500 and real estate indices.

Name a defensive sector that is growing VICI

VICI is a defensive REIT, but its rise is hard to ignore.

The New York-based business became the largest experiential REIT in the US and the largest Las Vegas Strip property owner after two years of deals. Jefferies’ Peterson said VICI is paying for acquisitions with cash instead of borrowing or selling shares. High interest rates lower lending expenses.

Last month, VICI bought Tunica’s Fitz Casino & Hotel and Vicksburg’s WaterView Casino.

In December, VICI financed the Fountainbleu on the Strip, signed a triple-net leasing arrangement with Hard Rock International for the Mirage Las Vegas, bought 49.9% of Mandalay Bay and MGM Grand on the Strip, and financed two Missouri gambling facilities with Century Casinos.

2023?

VICI owns 45 US casinos and four luxury golf courses. The REIT has financed tourist-oriented properties outside casinos.

“VICI Properties intends to build its nationally wide portfolio of real estate by partnering with leading experiential operators and capitalizing on strategic expansion opportunities through highly complementary single-asset and portfolio acquisitions,” the business said.

As operators try to monetize gaming real estate, VICI may be a player in 2023. An activist investor wants Six Flags to sell its real estate and suggested VICI as a buyer.