Vici Properties (VICI) Q3 2026 Earnings Call Transcript

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DATE

Oct. 29, 2026

CALL PARTICIPANTS

• General Counsel-Samantha Gallagher
• Chief Executive Officer-Ed Pitoniak
• President and Chief Operating Officer-John Payne
• Executive Vice President and Chief Financial Officer-David Kieske
• Chief Accounting Officer-Jeremy Waxman
• Managing Director of Business Development and V.E.C.S.-Gabe Wasserman
• Senior Vice President of Capital Markets-Moira McCloskey

TAKEAWAYS

• Revenue -- $1.1 billion, representing 5.8% growth year over year driven by non-cash leasing and financing adjustments of $132 million.
• Non-GAAP AFFO Per Share -- $0.62, representing a 4.3% increase from $0.60 in the prior year period.
• Net Income Attributable to Common Stockholders -- $342.5 million, declining 55.1% year over year.
• Full-Year 2026 AFFO Guidance -- $2,695 million to $2,705 million, representing a raise from the prior range of $2,675 million to $2,695 million.
• Stock Buyback Authorization -- $2 billion, established to provide capital allocation flexibility for repurchases through Sept. 30, 2029.
• Net Debt to Adjusted EBITDA -- 4.8x, remaining below the company's target leverage range of 5.0x to 5.5x.
• Senior Unsecured Notes Offering -- $1.75 billion, comprised of $900 million at 5.4% due in 2031 and $850 million at 5.75% due in 2036.
• Total Liquidity -- $2.5 billion, consisting of $270.3 million in cash and $2.2 billion of availability under the revolving credit facility.
• Quarterly Cash Dividend -- $0.46 per share, reflecting a 2.2% year-over-year increase and representing the ninth consecutive year of growth.
• Highfield Master Lease -- CAD 10.7 million in initial annual base rent, scheduled to begin upon the closing of the Century Canada Racinos operations sale.
• Las Vegas Strip Gaming Revenue -- $776 million in July, growing 3.6% year over year and contributing to a trailing 12-month total of nearly $9 billion.
• Interest Rate Hedge Settlement -- $20 million, received upon settling $1.1 billion of swaps and locks to reduce the all-in interest rate on the August notes by 15 basis points.
• Tenant Diversification -- four new tenants added in 2026, including Clairvest, Golden Entertainment, Club Med, and Highfield, across gaming and non-gaming hospitality sectors.
• Capital Deployment -- $221 million, invested during the third quarter into previously announced activities intended to produce future income growth.
• Weighted Average Interest Rate -- 4.6%, as adjusted for hedge activity with a weighted average maturity of six years.
• Allowance for Credit Losses -- $458 million for the quarter, including $313 million attributable to Caesars following a Moody's credit rating downgrade.
• Retained Free Cash Flow -- $720 million on a trailing 12-month basis, providing a capital source independent of public equity markets.
• Nevada Statewide Gaming Revenue -- 3% growth in August, with the Las Vegas Strip increasing 1.8% and the locals business increasing 2.1% through the third quarter.
• Total Debt -- $17.2 billion, with a fully refinanced 2026 maturity schedule following the August notes issuance.
• Commercial Casino Revenue -- 6% growth year over year through July, according to American Gaming Association data.
• Variable Rate Loan Income -- higher-than-anticipated visibility into SOFR curves and accelerated capital deployment contributed to the increased full-year guidance.
• Hard Rock Ottawa Notes -- sold back to the operator at par during the quarter, illustrating potential loan book liquidity.

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RISKS

• Pitoniak stated, "uncertainties around our Caesars regional lease," noting that market concerns regarding the valuation of the income stream from these properties have impacted stock performance.
• Pitoniak warned that "general recent negativity around net lease REIT stocks given the current interest rate environment" remains a primary factor impacting equity performance.
• Kieske noted that the GAAP allowance for credit losses increased significantly because "the merger closed and that Moody's did downgrade Caesars," resulting in a large non-cash charge to net income.

SUMMARY

VICI Properties Inc. (NYSE:VICI) management raised full-year 2026 financial guidance and established its first share repurchase program to enhance capital allocation flexibility. The company successfully refinanced its remaining 2026 debt maturities through a multi-billion-dollar notes offering and maintained its leverage below the target range. Management continues to diversify the tenant roster, adding four new operators during the year across various gaming and hospitality segments. The company is currently evaluating the strategic value of its Caesars regional lease portfolio along both lease management and portfolio management axes while investigating new expansion opportunities in the professional sports infrastructure sector.

• Management identified three key factors weighing on equity performance, specifically interest rate sensitivity, future growth accretion concerns, and uncertainties regarding the Caesars regional lease.
• CEO Pitoniak stated, "We do not believe that we have lost access to capital that can grow shareholder value," citing $720 million in retained free cash flow as a primary internal source.
• The company is analyzing the Caesars regional lease to determine which income-structuring model yields the greatest aggregate value for stockholders.
• Consumer demand in Las Vegas remained steady through the third quarter, with the Strip achieving its fifth monthly gaming revenue gain in six months.
• Management is evaluating sports-anchored mixed-use districts, including a potential arena on land owned adjacent to the Las Vegas Strip in partnership with Caesars.
• The $2 billion share repurchase authorization is intended for opportunistic use when buybacks represent the most productive allocation of excess capital.

INDUSTRY GLOSSARY

• AFFO: Adjusted Funds From Operations, a non-GAAP financial measure used to evaluate the operating performance of REITs by adjusting for non-cash items and capital expenditures.
• CECL: Current Expected Credit Losses, an accounting standard that requires the immediate recognition of estimated credit losses over the life of a financial instrument.
• Triple-Net Lease: A lease agreement where the tenant is responsible for all property-related expenses, including taxes, insurance, and maintenance, in addition to rent.
• SOFR: Secured Overnight Financing Rate, a benchmark interest rate for dollar-denominated loans and derivatives.
• Basis Points: A unit of measure equal to one one-hundredth of one percentage point (0.01%).
• Racino: A facility that combines a horse racing track and a casino.

Full Conference Call Transcript

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the VICI Properties Third Quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. Please note that this conference call is being recorded today, October 29th, 2026. I will now turn the call over to Samantha Gallagher, General Counsel with VICI Properties.

Samantha Gallagher: Thank you, operator, and good morning. Everyone should have access to the company's third quarter 2026 earnings release and supplemental information. The release and supplemental information can be found in the investors section of the VICI Properties website at www.viciproperties.com. Some of our comments today will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements, which are usually identified by the use of words such as will, believe, expect, should, guidance, intends, outlook, projects, or other similar phrases, are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Therefore, you should exercise caution in interpreting and relying on them.

I refer you to the company's SEC filings for a more detailed discussion of the risks that could impact future operating results and financial conditions. During the call, we will discuss certain Non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available on our website, in our third quarter 2026 earnings release, our supplemental information, and our filings with the SEC.

For additional information with respect to Non-GAAP measures of certain tenants and/or counterparties discussed on this call, please refer to the respective company's public filings with the SEC. Hosting the call today, we have Ed Pitoniak, Chief Executive Officer, John Payne, President and Chief Operating Officer, David Kieske, Chief Financial Officer, Jeremy Waxman, Chief Accounting Officer, Gabe Wasserman, Managing Director of Business Development and V.E.C.S., and Moira McCloskey, Senior Vice President of Capital Markets. Ed and team will provide some opening remarks, and then we will open the call to questions. With that, I will turn the call over to Ed.

John Payne: Thanks, Sam. This is John Payne. Ed dropped from the call, so I'm going to start with

Ed Pitoniak: John?

John Payne: Yeah.

Ed Pitoniak: John, sorry. I got back in, and thank you for that, John, and thank you, Samantha, and good morning, everyone. In a moment, you'll hear from John Payne on our investment outlook and activities and from David Kieske on our financial results and updated guidance. To start, I want to thank the VICI team for the work they did in Q3 to continue to grow VICI's investment portfolio and investment earnings. As David will discuss further, we grew our revenues 5.8% in Q3 and our AFFO per share by 4.3%. In addition, within Q3, we deployed $221 million of capital into previously announced investing activities, capital intended to produce income growth in future quarters.

While I'm very proud of the work the VICI team did during Q3 2026 to grow the quality and earnings production of our portfolio, as a fellow VICI stockholder, I'm disappointed with VICI's share price performance during the quarter and year-to-date. I know many of you share that disappointment because I've heard of that disappointment firsthand from you. In our continuous dialogues with VICI stockholders, we generally hear them cite what they justifiably believe are three key factors impacting our equity performance. I will order these three factors from general factors impacting all net lease REITs to factors specific to VICI.

Factor one, general recent negativity around net lease REIT stocks given the current interest rate environment and aversion to duration, especially those net lease REIT stocks that have consumer exposure given the current general negativity around consumer discretionary spending. Factor two, VICI's ability to generate accretive growth in the future given our current capital market conditions and cost of capital. Factor three, uncertainties around our Caesars regional lease. For factor one, general negativity around net lease REITs. We can't do anything to change general credit market conditions and general views around how those conditions impact net lease REITs.

What we have done since our beginning, and will continue to do, is manage our business to protect VICI stakeholders from general market conditions as best we can. Those management actions center on maintaining our target leverage of approximately 5x-5.5x adjusted EBITDA, a payout ratio of approximately 75%, which allows for significant retained free cash flow, and a conservative approach to G&A, with VICI achieving one of the lowest ratios of G&A spending among net lease REITs specifically and all REITs generally, whether measured as a percentage of revenue or percentage of assets under management. For factor two, VICI's ability to generate accretive growth given current capital market conditions and VICI's specific cost of capital.

We do not believe that we have lost access to capital that can grow shareholder value. We have three key capital sources that do not rely on access to public market equity. Capital source one, our retained cash flow after all obligations, G&A, interest expense, and dividend distributions, which averages approximately $720 million on a trailing 12-month basis. Capital source two, proceeds from future repayment of our outstanding loans as they are repaid over the coming years. Capital source three, as with any REIT practicing proper portfolio management, there is the potential to recover and redeploy capital through asset sales.

Beyond these three sources, we are always exploring and evaluating alternative forms of capital, including the range of structures other REITs across the sector have recently developed. Whatever capital source we rely on at a given time, VICI's management team and VICI's board of directors will always take great care in making sure that capital is used for what we believe are the best economic and strategic purposes, given the circumstances in consideration at a given time. Among those purposes could be potential VICI share repurchasing. Accordingly, we have announced the establishment of VICI's first stock buyback authorization.

If, and let me emphasize that if at a given time in the future we have uncommitted investable capital, whether because of uncommitted retained cash flow, repaid loans, or asset sales, we will rigorously examine the potential uses of that capital. If the best use of that capital is the repurchase of stock, we may potentially do so. Finally, let me conclude with a few words about what I cited as factor three impacting our stock price performance, our Caesars regional lease.

First of all, amid all the market chatter, we believe it's critically important to understand in relation to our Caesars regional lease, what we own, and two, the essential ways of understanding and managing the value of what we own. When it comes to the Caesars regional lease, in the simplest terms, what we own are real assets within which significant economic activity and output are produced, and from those assets, we own an income stream in the form of rent. The VICI team is analyzing every dollar of our VICI income stream within our Caesars regional lease properties through various valuation prisms.

In essence, we are asking in relation to this asset-based income stream, what income structuring model and potential related actions produce the greatest aggregate value for our stockholders? At this time, I cannot tell you what actions our analytical work on our Caesars regional lease will lead to, but I can tell you that the work the VICI team is doing to value what we own is the means by which we will eventually make the decisions and take the actions we believe best serve the long-term strategic and economic interests of our stakeholders.

Again, be assured that the VICI team and VICI board are focused every day on determining and executing the strategies that will produce the best achievable long-term value creation for our stockholders. With that, I will turn the call over to John. John?

John Payne: Thanks, Ed, and good morning to everyone. Ed just spoke about our cost of capital and the care we take in deciding how and when to deploy it. I want to pick up there because that discipline is not an abstraction for our business development team. It shapes every conversation we have and every opportunity we underwrite. We have said for years that we aim to make VICI bigger when it makes VICI better. In an environment like this one, that principle matters more, not less. During the third quarter, VICI continued to further diversify our tenant roster, making VICI better.

In September, in connection with Century Casinos agreement to sell the operations of Century Mile and Century Downs in Alberta to Highfield Investment Group, we agreed to enter a new triple net lease master lease with Highfield, which will add our 17th tenant upon closing. The Highfield lease carries initial annual base rent of CAD 10.7 million with a corresponding reduction under our Century master lease. There is no change to the aggregate rent collected by VICI. The assets remain in steady hands in a Canadian market we know very well, and our rent stream gains another distinct experience local operator behind it. That transaction continues what we delivered over the course of 2026, the diversification of our tenant roster.

Upon the closing of the Highfield transaction, we will have added four new tenants this year, Clairvest, Golden Entertainment, Club Med, and Highfield, spanning Regional Gaming, the Las Vegas locals market, non-gaming hospitality in the Caribbean, and Canadian gaming. Every one of those tenants is led by a tenured experienced operating team, and every one of them makes the income stream of our stockholders own more diverse and therefore more durable. On the investment outlook, we never go pencils down at VICI, and our relationship development across our pipeline continues to be active. We are in continuous dialogue with operators across gaming, hospitality, and really the broader experiential landscape. Those conversations do not stop when the capital markets become volatile.

What changes is the bar. Our underwriting moves with our cost of capital, and we will be patient, selective, and disciplined, only pursuing those opportunities that are portfolio-enhancing and strategically additive on terms that reflect today's environment. Finally, let me turn to what we are seeing inside the portfolio, because while sentiment toward customer-facing net lease REITs has been negative, the consumer inside our buildings keep showing up. In Las Vegas, the Nevada Gaming Control Board reported Strip gaming revenue of more than $776 million in July, up 3.6% year-over-year, the Strip's fifth monthly gain in six months. Over the trailing 12 months, Strip gaming revenue now totals nearly $9 billion.

August brought more modest growth, with Nevada statewide gaming up 3%, and the third quarter ended with Strip revenue up 1.8%, and the Las Vegas locals business increased 2.1%. The picture is similar nationwide. According to the American Gaming Association, through July, overall commercial casino revenue increased 6% year-over-year, with brick-and-mortar, sports betting, and iGaming revenue all up year-over-year. Consumers keep choosing these experiences. Most importantly, our operators keep investing in them, and that demand is the engine underneath the long duration escalating leases that define our portfolio.

While we share the frustration Ed described with where our stock has traded, the work of this company has not slowed, exemplified by a tenant roster that is deeper and more diverse than it was a year ago, a pipeline of relationships that continues to grow, and a portfolio whose underlying demand continues to prove itself. That is the work we control, and we will keep doing it with discipline. Now I will turn the call over to David, who will discuss our financial results and guidance. David?

David Kieske: Thanks, John. Touching on the income statement, AFFO per share was $0.62 for the quarter, an increase of 4.3% compared to $0.60 for the quarter ended September 30, 2025. Just looking at the balance sheet, we had a very active quarter. In August, we fully refinanced our 2026 maturities by executing a $1.75 billion public bond offering comprised of $900 million, 5.4% senior unsecured notes due in 2031 and $850 million, 5.75% senior unsecured notes due in 2036.

In connection with the offering, we settled $1.1 billion of forward starting interest rate swaps and treasury locks and received $20 million of proceeds, which reduced the all-in interest rate on the notes from approximately 5.57%-5.42%, a savings of nearly 15 basis points. Our total debt is $17.2 billion, and our net debt to annualized third quarter adjusted EBITDA is approximately 4.8x below the low end of our target leverage range of 5x-5.5x. We have a weighted average interest rate of 4.57% as adjusted to account for our hedge activity and a weighted average of 6.0 years to maturity.

As of September 30, we have approximately $2.5 billion in total liquidity, comprised of $270 million in cash and $2.2 billion of availability under our revolver. As Ed mentioned, we have implemented a share repurchase program for up to $2 billion. This authorization gives us flexibility. It is not a commitment to repurchase any specific amount or on any specific timeline. We view it as one of the many capital allocation tools we have, and we expect to use it opportunistically. And to cite our friend Mitch Germain, only when it is the most vigilant approach in allocating capital. During the third quarter, we declared a dividend of $0.46 per share.

The quarterly dividend equates to an annualized dividend of $1.84 per share and represents a 2.2% year-over-year increase, representing our ninth consecutive year of dividend growth. Our dividend is very well covered with an AFFO payout ratio of approximately 75% per share based on the midpoint of our 2026 AFFO guidance. Turning to guidance, we are raising AFFO guidance for 2026 in both absolute dollars as well as on a per share basis. AFFO for the year ending December 31, 2026, is expected to be between $2.695 billion and $2.705 billion, or between $2.47 and $2.48 per diluted common share.

Compared to our prior AFFO per share guidance, the update represents an increase at the low end of the range by $0.02 and an increase at the high end by $0.01. Based on the midpoint of our raised 2026 guidance, VICI expects to deliver year-over-year AFFO per share growth of 4%. Just as a reminder, our guidance does not include the impact on operating results from any pending acquisitions without announced expected closing dates, possible future acquisitions or dispositions and related capital markets activity, or other non-recurring transactions or items. With that, operator, please open the line for questions.

Operator: Thank you. At this time, we will conduct a question-and-answer session. As a reminder to ask a question, you will need to press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. Please limit yourself to one question and a follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Anthony Paolone of JPMorgan. Your line is now open.

Anthony Paolone: Yeah. Thank you, and good morning. My first question is related to the buyback, and you talked about comparing other options for the capital before using it, and you have some existing commitments already. But can you talk about just maybe more specifically if you have capacity beyond the existing commitments where the buyback is going to compete with, say, your deal pipeline? Or do you think the existing capital commitments will probably use up your free cash flow and capacity for now?

Ed Pitoniak: Yeah, Tony, I will start and then I am going to hand it over to David. David will talk you through the capital sources that could, again, potentially be a source of share buyback funding. I actually want to address what came out in a couple notes last night, which is that somehow it had been construed that we, VICI, had said, "Oh, we will never do share buybacks." I can tell you, I do not think I ever used the word never. I moved to New York in 1979 when a lot of people said New York would never come back, and it came back, and it has come back repeatedly over those 40+ years.

In the same way, anybody who says VICI can never come back from this is also making the wrong bet. Accordingly, we have never, ever ruled out share buybacks. We have never said we would never do it. We will do it if it is the best choice among all the choices we have in front of us in terms of allocating capital. With that, I will turn it over to David, and David can talk about possible sources of potential share buyback funding given our current circumstances. David?

David Kieske: Yeah. Thanks, Ed. Tony, good to talk to you. Thanks for joining us this morning. Look, at the end of the day, we view it as good corporate hygiene. Ed went through some of the potential sources, and we get a lot of questions on what do you do with the loan proceeds when those get repaid. That is one potential source. Obviously, free cash flow is a potential source. To answer your question directly, Tony, most of the free cash flow is allocated to loan commitments right now. At the end of the day, our job is to grow the left side of the balance sheet with long-term durable real estate.

So we put the tool in place as simply that, a tool, to potentially utilize excess cash flow when the opportunity may arise at a point in time sometime in the future.

Anthony Paolone: Got it. On the loan book, I think in prior periods, the question was always around reinvestment risk, but I guess maybe does that flip now at all? Do you have opportunity to sell loans or any parts of the book liquid where you can actually monetize and repurchase shares?

Ed Pitoniak: David?

David Kieske: Yeah. Tony, it is a great question. This past quarter, the Hard Rock Ottawa notes, we sold those back to Hard Rock at par. Yeah, everything is liquid in there. For the most part, sometimes it comes at a price. It is not our first choice. Obviously, the yield on that loan book is very attractive. But it is an option that we have and a tool that we have in our toolkit.

Ed Pitoniak: Tony, I will just add, I am glad you asked that question, Tony, because I will just add in that we have often had the question over the last few years, what if that money comes back to you and the redeployment of it is not as high yielding as a loan might have been? Well, given both the state of the credit markets, I think that risk is lower. But again, in our current stock price and current FFO yield, share buybacks would potentially be just as productive as the outstanding loan might have been, depending on its interest rate.

Anthony Paolone: Right. Great. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Barry Jonas of Truist Securities. Your line is now open.

Barry Jonas: Hey, guys. Good morning. Churchill Downs just said on its call right before this that their gaming M&A process is going well. I do not know if you want to talk specific processes, but at a broader level, maybe talk about the pipeline and if you think bid-ask spreads are in a reasonable place today. Thank you.

John Payne: Yeah. Good morning, Barry. It is John. Nice to hear from you. Again, I will go back to my opening remarks in the environment that we are in today. We continue to have a robust pipeline variety of, you are talking about gaming, leisure, hospitality, entertainment, sports, health and wellness. But what is key at this time is really being patient, selective, and disciplined with our capital. And as we look at these opportunities, how they fit strategically with our portfolio. And as you mentioned, there is a process with the Churchill assets. There is other gaming assets in the market. But we take that same approach across not only gaming, but the other categories that I walked you through.

Barry Jonas: Great. Just as a follow-up, I appreciate the comments on the Caesars regional lease, but what is the level of urgency from Caesars and their pending acquirer to resolve this, to negotiate around the regional lease? They obviously have a lot going on now, but we do get the question around potential timelines where we could see some potential resolution. Thank you.

Ed Pitoniak: Yeah. I will start and then I will turn it over to John. Barry, but we obviously cannot speak for what Caesars sees as timelines and critical paths to all of the issues, obviously, that they are dealing with right now in terms of M&A. I will tell you that we are using the time very productively to make sure that we understand, that we catalog and understand all of the potential choices available to us when it comes to the decisions and actions we might ever take with the Caesars regional lease. And along that line, whenever you are going to make good decisions, you have to understand the choices in front of you.

And we see our choices as arrayed along two fundamental axes, one of which would be lease management, and that is what do we do with the leases? Do we fix them? Do we potentially not fix them? And then the other axis of choice and decision-making is portfolio management, and that is, do we keep the lease in its entirety and the properties that go with it? Do we sell the lease and the properties go with it? Or is there some gradation along that axis of choice and decision-making in the same way that there are gradations of choice and decision-making along the axis of lease management? John, did you want to add anything?

John Payne: No, I think you described it very well. I do not think we have historically talked enough about on these calls that we are always evaluating our portfolio. We are always talking, you mentioned Caesars, Barry, but we are always talking to our tenants about opportunities. Ed described it very well.

Ed Pitoniak: Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Jim Kammert of Evercore. Sir, your line is now open.

Jim Kammert: Thank you. Good morning. Fully appreciate that the whole CECL allowance is a convoluted, very subjective mathematics. But is there any information value that your consultant may have shared with you regarding the pro forma anticipated sort of cash flows and cap stack of Caesars as a private entity?

Ed Pitoniak: David and team.

David Kieske: Yeah. Hey, Jim, good to hear from you. You are right, the CECL allowance is a very convoluted, esoteric GAAP provision, and I encourage everybody to go read ASC 326 and talk about it at your upcoming Halloween parties, because you will really be the hit of those parties. It is an internal accounting treatment that we go through, Jim, and based on credit ratings and inputs to the Moody's model that we use. And it is a non-cash charge. I think everybody knows that. It is a GAAP accounting provision, and we should not let accounting provisions distort economic reality of what is actually going on in the business.

I think one of the reasons for the change this quarter, as we have laid out in our disclosure, is that the merger closed and that Moody's did downgrade Caesars, downgraded their credit rating. There was, again, some GAAP accounting that had to take place this quarter given some of the events at our tenant.

Jim Kammert: Yeah. You don't really have any, there's no incremental insight as to future cap stack, et cetera. That's fine.

David Kieske: No, there's not, Jim. It's just what gets put out in some credit pieces or whatnot, but we don't have great insight to that.

Jim Kammert: No, that's helpful. If I could, I certainly appreciate Ed's comments regarding, particularly just a moment ago regarding portfolio management. Would you be even open to, if the valuation made sense, to take an MGM lease here, a Caesars lease there, a Century and create sort of a joint venture or a package deal as a way to identify sources of capital?

Ed Pitoniak: It's a very fair question, Jim. Related to that question, Jim, I think you see this in the work you do as well. We're in a rather strange time right now where the public market generally does not put a lot of value on distributed income and duration. On the other hand, there is, in the private capital markets, a big focus, and the insurance capital pools are obviously an example of this, a big focus on distributed income and duration.

As we assess all the choices in front of us and the opportunity to make the best decisions possible for our stakeholders, we're certainly mindful of the fact that the income produced by our assets is very appealing in terms of being very good quality distributed income of duration in a world where there are certain capital pools that still very much value that.

Jim Kammert: Thank you for your comments, guys. Thanks.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Caitlin Burrows of Goldman Sachs. Your line is now open.

Caitlin Burrows: Hi. Good morning, everyone. Maybe just considering where VICI's dividend yield is today and internal rent bumps, it seems like VICI can attain the 10% total return without external growth. Given that, I guess, could you go through VICI's priorities today, and does the urgency of external growth seem less than it's been in the past?

Ed Pitoniak: That is a very good question, Caitlin. Thank you for citing that total return math. We always appreciate that. As you know, we are very focused on the building blocks of total return. Your math is not incorrect. I would say, though, that dividend yield plus the sort of same-store growth that we do enjoy as a net lease REIT does get us there in your math. To build on John's point of a moment ago around our business development activities, we would not, in this situation, choose to stop investigating the opportunities to acquire very good real estate that we believe will have very strong and growing long-term value.

Caitlin Burrows: Okay. Got it. I guess on that, you guys mentioned earlier how you have added a number of new tenants, Clairvest, Club Med, PURE, Highfield, as examples. I guess, where do you see the greatest growth from these kind of partners between those new tenants?

Ed Pitoniak: John?

John Payne: Yeah, very good question as well. Part of why we did these initial deals with these groups is our ability to continue to grow with them. We like these deals individually, but we also like that they continue to look at new opportunities. I will just take one of them, Club Med is one that we announced a deal this year, as we mentioned, and they continue to be a company that are looking for opportunities all over the world, and I think they have found us to be a good partner to continue to have those discussions.

Now, again, whether we announce another deal, do another deal, is all going to depend on how selective and disciplined where our cost of capital is. But Caitlin, you have nailed it. We have found some new partners that are looking to continue to grow their business, and we hope they grow it with our model.

Caitlin Burrows: Thanks.

Operator: Thank you. One moment for our next question. Our next question comes on the line of John DeCree of CBRE. Your line is now open.

John DeCree: Good morning, everyone. Thank you for taking my questions. Maybe to speak about a sector that we've talked about in the past, and that's kind of sports stadiums or kind of sports anchored, mixed-use districts. We're paying attention to a lot of the institutional capital and private equity finding its way to professional sports teams. Ed or John, David, how are you thinking about those potential opportunities for real estate as kind of the professional sports ecosystem evolves with institutional investors? Is it becoming more attractive? Are you seeing more opportunities, and is it still an area of interest for you?

John Payne: John. Good morning, John. It's nice to hear from you. It's a very exciting area. It seems to be in the news almost every day. This sector is definitely worthy of the investment of time that we have been spending learning the ecosystem, meeting the players, understanding the developers. We're also watching how this sector is beginning to overlap even more and more with live entertainment, with multipurpose entertainment centers, with the professional or collegiate sports team arena and stadium becoming the anchor for that development. That's a long way of saying, we continue to be excited about the opportunity here.

We've not made an investment as we continue to be selective and disciplined, but we do think over the coming years, there is opportunity. The only other opportunity I'll mention, John, while I have the mic, is a little bit about Las Vegas and the excitement going on in that town. Obviously, the success of the Raiders, the Golden Knights, soon to be the A's, has the NBA talking about bringing an expansion team. That would be just for us, super exciting that an expansion team ended up in Las Vegas to continue to drive customers there. Another reason to visit Las Vegas.

At the same time, with our partners of Caesars, we are actively involved in the process of talking about arena on the land that we own. I'm obviously a little bit biased here, but we think we have the best site for a new arena should the NBA decide to have a team there. It's been a pleasure coming up with plans with our partners at Caesars.

John DeCree: Thanks, John. That's helpful. Those comments, yeah, every day we're reading about more and more capital going toward the sports ecosystem. Very interesting. Maybe a housekeeping item as a follow-up. Ed, you kind of mentioned the payout ratio around 75%, which leaves retained free cash flow, which has been a core strategy for VICI, and very effective. What are some circumstances or how do you think about maybe altering that payout ratio in the current environment going forward? What would cause you to go up or down other than kind of normal ebbs and flows and just timing?

Ed Pitoniak: Well, I will start, John, and then I will turn it over to David. I would say that benchmark of in and around the 75% range is a benchmark that we have believed in from day one. I do not think our belief in it has altered. We do believe that there is great value in having that amount of free cash flow in and around the 75% level. So the idea of taking it down further is not necessarily that appealing. Yet taking it up for the same reason is not that appealing. David, I do not know if you want to add to that.

David Kieske: Yeah, John, good to hear from you, and I think Ed covered it well. As Ed alluded to, this was kind of a day one decision to, one, generate free cash flow. Two, to make sure we are well distributed in terms of our REIT taxable income distribution requirements. Then to have flexibility in the event that back when we set the payout ratio, we had no idea what the future would hold. We have no idea what the future obviously hold today. But it gives us flexibility to go up in the event that needed for whether it be distribution requirements, payout requirements.

But we like the free cash flow it generates, and we are continuing to watch it and maintain it.

Ed Pitoniak: John, I will just add that sooner or later, I do believe we are going to be right in what we said on our Q2 2025 earnings call when we cited Savita Subramanian from BofA in proclaiming that the total return era has returned. We genuinely believe it will, and with that, there will be greater value placed on dividends than might be the case today.

John DeCree: Okay. Thanks, guys. Thanks, Ed.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Greg McGinniss of Scotiabank. Your line is now open.

Greg McGinniss: Hi, good morning.

Ed Pitoniak: Morning, Greg.

Greg McGinniss: I just want to return to buybacks. We appreciate the clarity provided on your thinking there going to be evaluated in the future versus other potential commitments. This does seem like a near-term concern given current commitments in place implies excess free cash flow in 2027. Are you seeing opportunities today on the debt side that are as attractive as a 10%+ AFFO yield, excuse me? Or maybe deals that improve the longer-term acquisition pipeline, even if the debt investment return doesn't really match the potential accretion from a buyback, it still makes sense as a more viable option.

Ed Pitoniak: Yeah. I actually really like the way you framed that, Greg, in terms of the range of choices available. David, do you want to take that?

David Kieske: Yeah. Greg, good question. We appreciate it. Just in terms of debt investments, we have talked a lot about the size of our loan book and feel good about the current size of our loan book. I think we do see debt investments that are north of our AFFO yield, and it becomes a strategic decision whether or not to grow the loan book, who is the partner, kind of the future opportunities.

Then you are rightly so, there may be a lower yield for assets to go on the left side of the balance sheet, but produce durable income, improve the quality diversification of our income stream and our tenant base, and those are all things that we take into consideration. As I mentioned in my remarks, a share buyback is simply a tool. An ATM program is a tool, and having as many tools in our toolbox is just good, again, good corporate hygiene.

Greg McGinniss: Great. Thanks. Just kind of looking at some of the operator earnings that came out the last couple of days. You had Caesars with a decline in Vegas, but some improvement in the regional side. MGM with some improvement on Vegas, but a major decline on the regional. Is there anything specific asset-wise that is within your portfolio where you are seeing kind of changes from a customer perspective or anything where you expect near-term growth from investments that are being made?

Ed Pitoniak: John?

John Payne: Greg, it's a very good question, and if you sit in this seat long enough, which we've been here nine years, we've had discussions over the time where Vegas is outperforming, the regionals are not. You just quoted this quarter, the regionals are performing, and Vegas had a little bit of a slow summer impacted by some air travel with Spirit pulling out. Again, what's great about these is over the lifetime of our nine years, this is a business that has continued to perform and generate a heck of a lot of cash flow. We continue to get the performance from our tenants.

We continue to be, as we have from the start, active in conversations with our tenants, not only about future growth, but the current portfolio that we have. Again, I mentioned this earlier, we don't talk a ton about portfolio management on these calls. We talk more about what's going to be new. But the majority of time that my team and the asset management team is studying our portfolio and talking to the operators. And you're going to see these ebbs and flows of these size of businesses, but over the course of time, they continue to show growth.

Greg McGinniss: Great. Thanks.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Wesley Golladay of Baird. Your line is now open.

Wesley Golladay: Hey. Good morning, everyone. Can you talk about what's driving the guidance higher? Was that visibility on your CPI-based leases in November?

Ed Pitoniak: David?

David Kieske: Yeah, Wes. Good to hear from you. A little bit of the CPI, a little bit of more clarity around funding commitments on the loan book. Then we got some variable rate loans in our loan book, so a little bit higher SOFR curve, and a little bit quicker deployment of some of the capital. North Fork just opened two days ago, and there is a little bit of acceleration of some capital deployment as some of these projects come online and get open.

Wesley Golladay: Okay. Thanks for that. Then maybe going back to the CECL charge related to the Caesars leases that you called out in the 10-Q. I get that some of that is the technical nature of the rating change by the agencies, but is there also, I guess, something about your best, or your best outcome for shareholders incorporated in that on how you are viewing the lease potential outcome in 2035, I believe?

Ed Pitoniak: David?

David Kieske: Yeah, Wes. It is really driven by GAAP and the GAAP accounting principles around the duration of our lease. Under GAAP, we record the fully extended lease term, so it goes out to 2055. There is not an assumption or inputs in terms of what is the best outcome for shareholders. It is an accounting provision, an accounting disclosures assumptions provision, just given the trigger around the downgrade in terms of the credit rating, and then what may or may not happen at the first lease renewal.

Wesley Golladay: Okay. Thanks for that.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Chris Darling of Green Street. Your line is now open.

Chris Darling: Thanks. Good morning. Going back to the buyback authorization, just hoping you can elaborate on the role of asset sales in tandem with this tool. It sounded to me like free cash flow and/or loan repayments would be the more likely source of capital, but I just want to make sure I sort of understand that aspect, how you're thinking about it.

Ed Pitoniak: Yeah. I'll start, Chris. Those are the more likely sources that you just cited, free cash flow and repayments. I don't think we would be doing our jobs as portfolio managers and fiduciaries if we weren't constantly looking at our portfolio and asking the question, is a given asset worth more today than it might be worth in the future? If so, is a sale of that asset one possible way of creating shareholder value and the liquidity that goes with it?

Chris Darling: Okay. Understood. Probably dovetails a little bit with this conversation, but Ed, in the prepared remarks, you mentioned a range of creative financing structures that other REITs have pursued, I assume, as it relates to potential asset sales. Just hoping you can elaborate on what exactly you were talking about, what those structures might look like. I assume it also relates to some of the comments around insurance capital as well.

Ed Pitoniak: Yeah. That's right, Chris, and I'll have David jump in here in a moment. But I just want to go back to what I said in relation to Jim Kammert's questions a few moments ago, and that is the degree to which distributed income and duration are, frankly, in many cases, more appealing at this point to private capital pools than the common equity market. So, we will evaluate every opportunity in front of us if we believe that use of that potential capital can be additive for our stakeholders.

I will just comment on some writing that Green Street has done around this topic, and I will say that I was a little puzzled by Green Street saying that REITs returning to, for example, high-grade joint venture capital as a substitute for debt. But I would argue it's more likely at this point in the cycle, a substitute for equity, using that instead of, say, the ATM. But I'll turn it over to David so he can add his thoughts.

David Kieske: Yeah, Chris, good to hear from you. As any good stewards of the balance sheet and capital, we've got to look at all sorts of alternatives, and we get a lot of credit to Realty Income, Jonathan and Sumit over there for diversifying their capital base in what is really a shrinking active REIT manager market, right? You had AEW shut their books earlier this year, unfortunately. So you just see a shrinking active manager. So where do we go for capital? Yes, the insurance world is one. You saw two of those high-grade JVs in the last, I guess, 10 days with Alexandria and UDR doing that recently, and you guys wrote on the UDR piece.

But you've seen other REITs. They're all fun businesses. We talked about asset sales. John talked about portfolio management. We were very active in our portfolio management. Are there other avenues of private capital? We had a net lease REIT do a convert this week. We evaluate. There is active term loan market out there given where the 10-year is going. We are always looking at all forms of capital and what would be the right source of capital for the business for the long term and for ultimately generating shareholder return.

Chris Darling: Okay. I appreciate those thoughts. Ed, I guess to your point, like so many things in finance, right, it is probably case by case, depends on the structure. That is maybe a conversation we can have offline sometime.

Ed Pitoniak: I would look forward to that, Chris. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Todd Thomas of KeyBanc Capital Markets. Your line is now open.

Todd Thomas: Yeah, hi. Thanks. Good morning. I wanted to ask about One Beverly Hills. There have been reports that Cain's raising capital by issuing founder's bonds on the residential. I think they're targeting about $1.6 billion or more from residential buyers. Can you just discuss how that financing affects the project's cap stack, if at all, and whether that changes the risk profile of the deal in your view on VICI's mezzanine investment, and maybe provide an update there?

Ed Pitoniak: Yeah. Todd, I'm going to turn it over to David, Aaron, and potentially Samantha in just a moment. I just want to comment on that Wall Street Journal article that made it sound as if founder's bonds are this new thing that's just been invented by Cain, when in fact, they're endemic to the way certain projects in California get developed, like One Beverly Hills. David and team, do you want to more fully address Todd's question?

David Kieske: Yeah. It really comes down to this, that it is not a new structure. It is an option for buyers to participate in. It is not a requirement. This has just been part of the underwriting from day one, and it's not something that's new or come to light post our transaction closing. It does not change the risk profile of the deal in the event that buyers don't sign up for founder bonds. It's a substitute for equity, so if the buyers keep the founder bonds or don't invest in the founder bonds, then there's more equity that comes in from Cain. Net-net, you're in the same spot.

As Ed said, the Wall Street Journal article twisted things a little bit like an unnatural pretzel.

Todd Thomas: Okay. Got it. Just wanted to go back to the Caesars, the CECL charge. David, your comments suggest that it was more about the duration of the lease term through 2055, including the options. Perhaps not the rent level or potential rent, an expiration or renewal. Is that right? Also, sorry if I missed this, but what was the balance of the CECL charge related to? About $145 million. What was that attributable to?

David Kieske: The first part of your question, Todd, you are right. You got that right. So in the orders of magnitude, I think we had $458 million of a total credit loss, $313 million was attributable to Caesars. And there were some changes on the loan side with the loan that we have under non-accrual, and then a bit of an increase in One Beverly Hills made up the majority of the loan changes. The CECL changes for the loan book, excuse me.

Todd Thomas: Okay. All right. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Nick Joseph of Citi. Your line is now open.

Nick Joseph: Thanks. I was hoping you could touch on the performance of the underlying assets in the loan book, maybe specifically Margaritaville Hotel, the golf loan, or any other that are on non-accrual or have been modified. David and Gabe, you want to take that? Gabe Wasserman Managing Director of Business Development and V.E.C.S. Sure, Nick, it's Gabe Wasserman. I can handle that. The loan on non-accrual, which was placed on non-accrual in Q4 2025. Sponsorship is still looking to raise equity to recapitalize that project, and we are working with them closely to try to support them in those efforts and help them raise equity and make introductions. We continue to monitor that one closely.

There was one other loan that was modified during the second quarter, which we disclosed in last quarter's 10-Q, working with sponsorship very closely. They put a lot of equity and continue to put equity into that asset to de-lever us quarterly. They put up additional collateral and personal guarantees. We feel really good about that one and really appreciate their partnership and support and their commitment to the investment. Thanks. Are there any other loans on your watch list? Maybe you can provide an update on the Fontainebleau in Las Vegas. Gabe Wasserman Managing Director of Business Development and V.E.C.S. Sure. We actually don't have a watch list.

We go through every single investment in our lease and loan portfolio on a quarterly basis as a management team, so don't have separate lists. On the Fontainebleau, they're approaching an extension test in January 2027. That one fully matures in 2028 and expect that money to come back to us. As we spoke about, that'd be a good opportunity to redeploy that into a myriad of options, whether it's other investment opportunities, other unfunded loan commitments, stock buybacks. That's a good example of capital that will come back to us, and we'll have some good options to redeploy it. Great. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Jordan Bender of Citizens. Your line is now open.

Jordan Bender: Hey, everyone. Good morning. Thanks for the question. Over the years, we've seen casino greenfield projects come and go, including a proposal to get several integrated resorts up in Ontario over the last 24-48 hours. Ed, as you think through your uses of capital, curious to where a greenfield project that you develop, whether it's in the U.S. or internationally, sit on your list of priorities. Thank you.

Ed Pitoniak: Yeah. I'm going to turn this over to John in just a moment, Jordan, but it's a good question to ask because it also gets to what can be the value as part of portfolio growth activity of build to suit projects, which can eventually be of considerable economic value and magnitude. But it do not require writing one big check on day one. It allows you to put capital out at a cadence. So that can be appealing as not the sole investment activity, but as a component of investment activity. But John, I'll turn it over to you if you want to offer any thoughts on Canada or any other growth activities-

John Payne: No, it's a great-

Ed Pitoniak: Greenfield activities

John Payne: You had a great answer, Ed. It's definitely something we continue to look at. We're very careful of who the partner is, what is the market, how to size the market, what is the capital investment. We have seen over years, if you're as old as I am, 30+ years in the space where there are great markets and great operators, but they put too much capital into the business and it's tough to maintain. We are definitely involved in discussions, but we also are very careful in the underwriting and being selective and disciplined and patient and really take time to understand how the operator is thinking about the opportunity.

Jordan Bender: Great. Thank you very much.

Operator: Thank you. One moment for our next question. Our next question comes from the line of David Katz of Jefferies. Your line is now open.

David Katz: Good morning. Thanks for taking my question. I am not sure, and I know we have in many past calls discussed the sports facilities opportunities, which had been a kind of a growth avenue and one that was just developing and taking a long time. Perhaps this is for John. Is that still an avenue that is on some burner on the stove?

Ed Pitoniak: It absolutely is. I will turn it over to John in just a second here, David. But I think one of the things we have learned as we have gotten to know this landscape better is that there are certain players in this marketplace of sports investing that are really the key conduits to activity and that have pipelines already developed that give them access to multiple opportunities across multiple sports and multiple geographies. I would say, as well as getting to know individual team owners or universities, we are also very focused on figuring out who the fulcrum players are that force multiply John and the team's efforts. But John, I will turn it over to you.

John Payne: Yeah, David, to answer the question, we are definitely, it is still worthy of our investment and our time. Ed has described it well. As you know, we are a provider of capital and partnership, but we are not developers, we are not designers. What Ed described is what we have been spending our time is understanding who are the players, who is going to have access to these projects, how can we participate in the short term and the long term, what structures can we put in place? But it definitely is an area where we are smarter today than we were a year ago, and we continue to look at the right opportunities for our capital.

David Katz: Appreciate it. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes to the line of Dan Guglielmo of Capital One Securities. Your line is now open.

Dan Guglielmo: Hi, everyone. Thank you for taking my question. Just one from me, and it is a follow-up to Chris's question. You mentioned the third access to capital right now as being proper portfolio management through potential asset sales. If you did tap that third source of capital, what would be the ultimate goal there before declaring success and then moving on?

Ed Pitoniak: If I understand your question, Dan, and by the way, Dan, ski season is coming, just in case you forgot. Our ultimate goal would be what it always is, which is to make sure that both the recovery and the reallocation of capital are value-enhancing. We end up with an investment, and mainly a property investment, that we believe will grow in value over time, that is occupied by a very good operator that we believe in and will continue to believe in for years to come.

Dan Guglielmo: Appreciate it. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Haendel St. Juste of Mizuho. Your line is now open.

Haendel St. Juste: Hey, guys. Thanks for taking my questions. Got two quick ones here. I guess, first, Dave, for you, can you share some early thoughts? I think you have $1 billion, $1.5 billion of debt maturities next February, two bonds, average rate, I think 4.75%. Curious if you are open to shorter term debt convertibles, and where you think you could issue 10-year debt today. Thanks.

Ed Pitoniak: David?

David Kieske: Yeah. Haendel, great to hear from you. Yeah, we have $1.5 billion due in February. We have looked to refinance that maybe later this year or early next year. We got plenty of time. Credit markets continue to be conducive for VICI. They value the corporate guarantee that we have. Just going back to the August issuance, we raised $1.75 billion of paper and had $7.2 billion of orders in the books. The fixed income markets continue to look at our cash flows as very stable. But we will evaluate timing, we will evaluate tenors we have in the past.

Moira leads us those efforts and does a phenomenal job of ensuring that we are balancing the tension of demand in the market. We will also look at, as I mentioned, we evaluate term loans, we evaluate converts. Converts don't make a lot of sense for us today, but we continue to watch and see what others are doing. We will address that. We will have obviously a little bit of FFO headwinds given where the rates are on that paper. I think one of those is a legacy high yield note when high yield was at 3.5%. Folks can remember those days.

But it is on our radar, and we will address it in due course and as efficiently as possible.

Haendel St. Juste: Got it. Helpful. Thank you. Then just one follow-up. We saw your peer monetize some of their excess land by partnering with Prologis to form an industrial partnership. I am curious if you guys have any land parcels you think that could fit an opportunity like this. Is it something you would consider, or are you only focused on experiential JVs? Then more broadly, Ed, I just wanted to get your kind of maybe updated perspective. Just curious if I am interpreting correctly that you seem a bit more open today broadly to the idea of potential funds or JVs to expand your opportunity. Just curious on some thoughts there. Thanks.

Ed Pitoniak: Yeah. Well, Haendel, first of all, I am so glad you asked that question. It gives me an opportunity to congratulate our friends at GLPI, Peter, Steve, Desiree, Carlo, and others, on what I think is a very good deal with Prologis. Obviously, the largest REIT in the world, blue chip. What it demonstrates is something that I think people have been a little skeptical about, which is what is the residual value of gaming real estate as real estate. I give full marks to GLPI for creating that partnership with Prologis on that land. Then to go to the second part of your question. We obviously react to the facts as they exist on the ground.

We are not in the business of denial. If the world is going to continue to evolve in such a way that the relative merits of an option become more positive, more productive, we will certainly pay more attention to them.

Haendel St. Juste: Okay. Thank you.

Operator: Thank you. This concludes the question and answer session. I would like to turn it back to Ed for closing remarks.

Ed Pitoniak: Well, thank you, Marvin, and moreover, thanks to all of you on the call today. We really appreciate you being involved and invested in VICI, and we look forward to talking to you again in February.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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