x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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81-4177147
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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x
(Do not check if a smaller reporting company)
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Smaller reporting company
|
o
|
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Emerging growth company
|
o
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VICI PROPERTIES INC.
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||||
FORM 10-Q
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||||
FOR THE QUARTER ENDED JUNE 30, 2018
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||||
TABLE OF CONTENTS
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Page
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Item 5
.
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||||
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PART I
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FINANCIAL INFORMATION
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Item 1.
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Financial Statements
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June 30, 2018
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December 31, 2017
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||||
Assets
|
|
|
|
||||
Real estate portfolio:
|
|
|
|
||||
Investments in direct financing leases, net
|
$
|
8,294,753
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|
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$
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8,268,643
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Investments in operating leases
|
1,110,400
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1,110,400
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Land
|
73,600
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73,600
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Property and equipment used in operations, net
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73,029
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74,300
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Cash and cash equivalents
|
940,740
|
|
|
183,646
|
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Restricted cash
|
13,808
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|
|
13,760
|
|
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Short-term investments
|
39,906
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|
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—
|
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Other assets
|
18,467
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|
|
15,363
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Total assets
|
$
|
10,564,703
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$
|
9,739,712
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|
||||
Liabilities
|
|
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|
||||
Debt, net
|
$
|
4,120,141
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$
|
4,785,756
|
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Accrued interest
|
14,254
|
|
|
21,595
|
|
||
Deferred financing liability
|
73,600
|
|
|
73,600
|
|
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Deferred revenue
|
71,961
|
|
|
68,117
|
|
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Dividends payable
|
97,107
|
|
|
—
|
|
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Other liabilities
|
10,979
|
|
|
10,562
|
|
||
Deferred income taxes
|
3,718
|
|
|
3,718
|
|
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Total liabilities
|
4,391,760
|
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4,963,348
|
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|
||||
Commitments and Contingencies (Note 11)
|
|
|
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||||
Stockholders’ equity
|
|
|
|
||||
Common stock, $0.01 par value, 700,000,000 shares authorized and 370,149,921 and 300,278,938 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively
|
3,701
|
|
|
3,003
|
|
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Additional paid-in capital
|
5,953,104
|
|
|
4,645,824
|
|
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Accumulated other comprehensive income
|
(4,640
|
)
|
|
—
|
|
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Retained earnings
|
137,444
|
|
|
42,662
|
|
||
Total VICI stockholders’ equity
|
6,089,609
|
|
|
4,691,489
|
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Non-controlling interests
|
83,334
|
|
|
84,875
|
|
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Total stockholders’ equity
|
6,172,943
|
|
|
4,776,364
|
|
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Total liabilities and stockholders’ equity
|
$
|
10,564,703
|
|
|
$
|
9,739,712
|
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Three Months Ended
June 30, 2018
|
|
Six Months Ended
June 30, 2018
|
||||
Revenues
|
|
|
|
||||
Income from direct financing leases
|
$
|
182,319
|
|
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$
|
364,355
|
|
Income from operating leases
|
12,209
|
|
|
24,418
|
|
||
Tenant reimbursement of property taxes
|
18,932
|
|
|
36,175
|
|
||
Golf operations
|
7,515
|
|
|
14,303
|
|
||
Revenues
|
220,975
|
|
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439,251
|
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||
|
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|
||||
Operating expenses
|
|
|
|
||||
General and administrative
|
7,160
|
|
|
14,468
|
|
||
Depreciation
|
922
|
|
|
1,828
|
|
||
Property taxes
|
18,932
|
|
|
36,175
|
|
||
Golf operations
|
4,513
|
|
|
8,608
|
|
||
Total operating expenses
|
31,527
|
|
|
61,079
|
|
||
Operating income
|
189,448
|
|
|
378,172
|
|
||
|
|
|
|
||||
Interest expense
|
(51,440
|
)
|
|
(104,314
|
)
|
||
Interest income
|
3,799
|
|
|
5,477
|
|
||
Loss from extinguishment of debt
|
—
|
|
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(23,040
|
)
|
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Income before income taxes
|
141,807
|
|
|
256,295
|
|
||
Income tax expense
|
(448
|
)
|
|
(832
|
)
|
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Net income
|
$
|
141,359
|
|
|
$
|
255,463
|
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Less: Net income attributable to non-controlling interests
|
(2,315
|
)
|
|
(4,297
|
)
|
||
Net income attributable to common stockholders
|
$
|
139,044
|
|
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$
|
251,166
|
|
|
|
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|
||||
Net income per common share
|
|
|
|
||||
Basic
|
$
|
0.38
|
|
|
$
|
0.70
|
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Diluted
|
$
|
0.38
|
|
|
$
|
0.70
|
|
|
|
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||||
Dividends declared per common share
|
$
|
0.2625
|
|
|
$
|
0.4225
|
|
|
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|
||||
Weighted average number of common shares outstanding
|
|
|
|
||||
Basic
|
369,932,843
|
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356,454,441
|
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Diluted
|
369,991,738
|
|
|
356,491,047
|
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||
|
|
|
|
||||
Other comprehensive income
|
|
|
|
||||
Net income attributable to common stockholders
|
$
|
139,044
|
|
|
$
|
251,166
|
|
Unrealized loss on cash flow hedges
|
(4,640
|
)
|
|
(4,640
|
)
|
||
Comprehensive income attributable to common stockholders
|
$
|
134,404
|
|
|
$
|
246,526
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income
|
|
Retained Earnings
|
|
Total VICI Stockholders’ Equity
|
|
Non-controlling Interests
|
|
Total Stockholders’ Equity
|
||||||||||||||
Balance at December 31, 2017
|
$
|
3,003
|
|
|
$
|
4,645,824
|
|
|
$
|
—
|
|
|
$
|
42,662
|
|
|
$
|
4,691,489
|
|
|
$
|
84,875
|
|
|
$
|
4,776,364
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
251,166
|
|
|
251,166
|
|
|
4,297
|
|
|
255,463
|
|
|||||||
Issuance of common stock from Initial Public Offering
|
695
|
|
|
1,306,424
|
|
|
—
|
|
|
—
|
|
|
1,307,119
|
|
|
—
|
|
|
1,307,119
|
|
|||||||
Distributions to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,838
|
)
|
|
(5,838
|
)
|
|||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(156,384
|
)
|
|
(156,384
|
)
|
|
—
|
|
|
(156,384
|
)
|
|||||||
Share-based compensation
|
3
|
|
|
856
|
|
|
—
|
|
|
—
|
|
|
859
|
|
|
—
|
|
|
859
|
|
|||||||
Unrealized loss on cash flow hedges
|
—
|
|
|
—
|
|
|
(4,640
|
)
|
|
—
|
|
|
(4,640
|
)
|
|
—
|
|
|
(4,640
|
)
|
|||||||
Balance at June 30, 2018
|
$
|
3,701
|
|
|
$
|
5,953,104
|
|
|
$
|
(4,640
|
)
|
|
$
|
137,444
|
|
|
$
|
6,089,609
|
|
|
$
|
83,334
|
|
|
$
|
6,172,943
|
|
|
Six Months Ended
June 30, 2018
|
||
Cash flows from operating activities
|
|
||
Net income
|
$
|
255,463
|
|
Adjustments to reconcile net income to cash flows provided by operating activities:
|
|
||
Direct financing lease adjustments
|
(26,110
|
)
|
|
Share-based compensation
|
859
|
|
|
Depreciation
|
1,828
|
|
|
Amortization of debt issuance costs and original issue discount
|
2,982
|
|
|
Loss on extinguishment of debt
|
23,040
|
|
|
Change in operating assets and liabilities:
|
|
||
Other assets
|
(3,679
|
)
|
|
Accrued interest
|
(7,341
|
)
|
|
Deferred revenue
|
3,844
|
|
|
Other liabilities
|
(4,223
|
)
|
|
Net cash provided by operating activities
|
246,663
|
|
|
|
|
||
Cash flows from investing activities
|
|
||
Investments in short-term commercial paper
|
(39,906
|
)
|
|
Acquisition of property and equipment, net of change in related payables
|
(557
|
)
|
|
Net cash used in investing activities
|
(40,463
|
)
|
|
|
|
||
Cash flows from financing activities
|
|
||
Proceeds from initial public offering of common stock
|
1,307,119
|
|
|
Payment of Term Loan B Facility
|
(100,000
|
)
|
|
Payment of Revolving Credit Facility
|
(300,000
|
)
|
|
Payment of Second Lien Notes
|
(290,058
|
)
|
|
Debt issuance costs
|
(1,003
|
)
|
|
Distributions to non-controlling interests
|
(5,838
|
)
|
|
Dividends paid
|
(59,278
|
)
|
|
Net cash provided by financing activities
|
550,942
|
|
|
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
757,142
|
|
|
Cash, cash equivalents and restricted cash, beginning of period
|
197,406
|
|
|
Cash, cash equivalents and restricted cash, end of period
|
$
|
954,548
|
|
|
|
||
Supplemental cash flow information:
|
|
||
Cash paid for interest
|
$
|
107,822
|
|
Cash paid for income taxes
|
$
|
1,024
|
|
Supplemental non-cash investing and financing activity:
|
|
||
Dividends declared, not paid
|
$
|
97,107
|
|
(In thousands)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
940,740
|
|
|
$
|
183,646
|
|
Restricted cash
|
13,808
|
|
|
13,760
|
|
||
Total cash, cash equivalents and restricted cash shown in the Statement of Cash Flows
|
$
|
954,548
|
|
|
$
|
197,406
|
|
(In thousands)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Minimum lease payments receivable under direct financing leases
(1)
|
$
|
28,963,921
|
|
|
$
|
29,302,166
|
|
Estimated residual values of leased property (not guaranteed)
|
1,987,651
|
|
|
1,987,651
|
|
||
Gross investment in direct financing leases
|
30,951,572
|
|
|
31,289,817
|
|
||
Unamortized initial direct costs
|
—
|
|
|
—
|
|
||
Less: Unearned income
|
(22,656,819
|
)
|
|
(23,021,174
|
)
|
||
Investment in direct financing leases, net
|
8,294,753
|
|
|
8,268,643
|
|
||
Investment in operating leases
(2)
|
1,110,400
|
|
|
1,110,400
|
|
||
Land
(3)
|
73,600
|
|
|
73,600
|
|
||
Total Real estate portfolio
|
$
|
9,478,753
|
|
|
$
|
9,452,643
|
|
(In thousands)
|
Three Months Ended
June 30, 2018
|
|
Six Months Ended
June 30, 2018
|
||||
Income from direct financing leases
|
$
|
182,319
|
|
|
$
|
364,355
|
|
Income from operating leases
|
12,209
|
|
|
24,418
|
|
||
Total leasing revenue
|
194,528
|
|
|
388,773
|
|
||
Less: Direct financing lease adjustment
(1)
|
(13,197
|
)
|
|
(26,110
|
)
|
||
Total contractual leasing revenue
|
$
|
181,331
|
|
|
$
|
362,663
|
|
(In thousands)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Land and land improvements
|
$
|
58,223
|
|
|
$
|
57,901
|
|
Buildings and improvements
|
14,572
|
|
|
14,572
|
|
||
Furniture and equipment
|
2,813
|
|
|
2,578
|
|
||
Total property and equipment used in operations
|
75,608
|
|
|
75,051
|
|
||
Less: accumulated depreciation
|
(2,579
|
)
|
|
(751
|
)
|
||
Total property and equipment used in operations, net
|
$
|
73,029
|
|
|
$
|
74,300
|
|
|
|
|
|
||||
(In thousands)
|
Three Months Ended
June 30, 2018
|
|
Six Months Ended
June 30, 2018
|
||||
Depreciation expense
|
$
|
922
|
|
|
$
|
1,828
|
|
(In thousands)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Accounts payable
|
$
|
1,317
|
|
|
$
|
5,207
|
|
Accrued payroll and other compensation
|
2,506
|
|
|
2,559
|
|
||
Derivative liability
|
4,640
|
|
|
—
|
|
||
Other accrued expenses
|
2,516
|
|
|
2,796
|
|
||
Total other liabilities
|
$
|
10,979
|
|
|
$
|
10,562
|
|
($ in thousands)
|
|
June 30, 2018
|
||||||||||
Description of Debt
|
|
Final
Maturity
|
|
Interest Rate
|
|
Face Value
|
|
Carrying Value
(1)
|
||||
VICI PropCo Senior Secured Credit Facilities
|
|
|
|
|
|
|
|
|
||||
Senior Secured Revolving Credit Facility (“Revolving Credit Facility”)
(2)
|
|
2022
|
|
L + 2.00%
|
|
$
|
—
|
|
|
$
|
—
|
|
First Lien Senior Secured Term Loan (“Term Loan B Facility”)
(3)(4)
|
|
2024
|
|
L + 2.00%
|
|
2,100,000
|
|
|
2,071,661
|
|
||
Second Priority Senior Secured Notes (“Second Lien Notes”)
(5)
|
|
2023
|
|
8.00%
|
|
498,480
|
|
|
498,480
|
|
||
CPLV Debt
|
|
|
|
|
|
|
|
|
||||
CMBS Debt (the “CPLV CMBS Debt”)
(6)
|
|
2022
|
|
4.36%
|
|
1,550,000
|
|
|
1,550,000
|
|
||
Total Debt
|
|
$
|
4,148,480
|
|
|
$
|
4,120,141
|
|
($ in thousands)
|
|
December 31, 2017
|
||||||||||
Description of Debt
|
|
Final
Maturity
|
|
Interest Rate
|
|
Face Value
|
|
Carrying Value
(1)
|
||||
VICI PropCo Senior Secured Credit Facilities
|
|
|
|
|
|
|
|
|
||||
Revolving Credit Facility
(2)
|
|
2022
|
|
L + 2.25%
|
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Term Loan B Facility
(3)(4)
|
|
2024
|
|
L + 2.25%
|
|
2,200,000
|
|
|
2,168,864
|
|
||
Second Lien Notes
(5)
|
|
2023
|
|
8.00%
|
|
766,892
|
|
|
766,892
|
|
||
CPLV Debt
|
|
|
|
|
|
|
|
|
||||
CPLV CMBS Debt
(6)
|
|
2022
|
|
4.36%
|
|
1,550,000
|
|
|
1,550,000
|
|
||
Total Debt
|
|
$
|
4,816,892
|
|
|
$
|
4,785,756
|
|
(1)
|
Carrying value is net of unamortized original issue discount and unamortized debt issuance costs incurred in conjunction with debt.
|
(2)
|
Interest on any outstanding balance is payable monthly. Any unused balance is subject to a
0.5%
commitment fee paid quarterly.
|
(3)
|
Interest is payable monthly. On April 24, 2018, we entered into
four
interest rate swap agreements with third party financial institutions having an aggregate notional amount of
$1.5 billion
. The interest rate swaps are designated as cash flow hedges that effectively fix the LIBOR component of the interest rate on a portion of the outstanding debt at
2.8297%
.
|
(4)
|
Final maturity is December 2024 or, to the extent the Second Lien Notes remain outstanding, July 2023 (three months prior to the maturity of the Second Lien Notes).
|
(5)
|
Interest is payable semi-annually.
|
(6)
|
Interest is payable monthly.
|
(In thousands)
|
|
Future Minimum Repayments
|
||
2018 (remaining)
|
|
$
|
—
|
|
2019
|
|
—
|
|
|
2020
|
|
—
|
|
|
2021
|
|
—
|
|
|
2022
|
|
1,560,000
|
|
|
Thereafter
|
|
2,588,480
|
|
|
Total minimum repayments
|
|
$
|
4,148,480
|
|
($ in thousands)
|
|
June 30, 2018
|
||||||||
Instrument
|
|
Number of Instruments
|
|
Fixed Rate
|
|
Notional
|
|
Index
|
|
Maturity
|
Interest Rate Swaps
|
|
4
|
|
2.8297%
|
|
$1,500,000
|
|
USD LIBOR
|
|
April 22, 2023
|
|
June 30, 2018
|
||||||
(In thousands)
|
Carrying Amount
|
|
Fair Value
|
||||
Financial assets:
|
|
|
|
||||
Short-term investments
|
39,906
|
|
|
39,906
|
|
||
Financial liabilities:
|
|
|
|
||||
Derivative instruments - interest rate swaps
|
$
|
4,640
|
|
|
$
|
4,640
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
(In thousands)
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
940,740
|
|
|
$
|
940,740
|
|
|
$
|
183,646
|
|
|
$
|
183,646
|
|
Restricted cash
|
13,808
|
|
|
13,808
|
|
|
13,760
|
|
|
13,760
|
|
||||
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Debt
|
|
|
|
|
|
|
|
||||||||
Revolving Credit Facility
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Term Loan B Facility
|
2,071,661
|
|
|
2,086,875
|
|
|
2,168,864
|
|
|
2,200,000
|
|
||||
Second Lien Notes
|
498,480
|
|
|
550,820
|
|
|
766,892
|
|
|
853,167
|
|
||||
CPLV CMBS Debt
|
1,550,000
|
|
|
1,546,167
|
|
|
1,550,000
|
|
|
1,559,486
|
|
(In thousands)
|
|
Lease Commitments
|
||
2018 (remaining)
|
|
$
|
672
|
|
2019
|
|
1,242
|
|
|
2020
|
|
983
|
|
|
2021
|
|
933
|
|
|
2022
|
|
951
|
|
|
Thereafter
|
|
17,865
|
|
|
Total minimum lease commitments
|
|
$
|
22,646
|
|
(In thousands)
|
|
Golf Operations Maintenance Agreements
|
||
2018 (remaining)
|
|
$
|
1,396
|
|
2019
|
|
225
|
|
|
Total golf operations maintenance agreement commitments
|
|
$
|
1,621
|
|
(In thousands)
|
Three Months Ended
June 30, 2018
|
|
Six Months Ended
June 30, 2018
|
||
Determination of shares:
|
|
|
|
|
|
Weighted-average common shares outstanding
|
369,933
|
|
|
356,454
|
|
Assumed conversion of restricted stock
|
59
|
|
|
37
|
|
Diluted weighted-average common shares outstanding
|
369,992
|
|
|
356,491
|
|
Basic and Diluted Earnings Per Share
|
|||||||
(In thousands, except per share data)
|
Three Months Ended
June 30, 2018
|
|
Six Months Ended
June 30, 2018
|
||||
Basic:
|
|
|
|
||||
Net income attributable to common stockholders
|
$
|
139,044
|
|
|
$
|
251,166
|
|
Weighted-average common shares outstanding
|
369,933
|
|
|
356,454
|
|
||
Basic EPS
|
$
|
0.38
|
|
|
$
|
0.70
|
|
|
|
|
|
||||
Diluted:
|
|
|
|
||||
Net income attributable to common stockholders
|
$
|
139,044
|
|
|
$
|
251,166
|
|
Diluted weighted-average common shares outstanding
|
369,992
|
|
|
356,491
|
|
||
Diluted EPS
|
$
|
0.38
|
|
|
$
|
0.70
|
|
(In thousands, except per share data)
|
Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Outstanding as of December 31, 2017
|
124
|
|
|
$
|
15.61
|
|
Granted
|
121
|
|
|
19.79
|
|
|
Vested
|
(28
|
)
|
|
19.97
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Canceled
|
—
|
|
|
—
|
|
|
Outstanding as of June 30, 2018
|
217
|
|
|
$
|
17.38
|
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
(In thousands)
|
|
Real Property Business
|
|
Golf Course Business
|
|
VICI Consolidated
|
|
Real Property Business
|
|
Golf Course Business
|
|
VICI Consolidated
|
||||||||||||
Revenues
|
|
$
|
213,460
|
|
|
$
|
7,515
|
|
|
$
|
220,975
|
|
|
$
|
424,948
|
|
|
$
|
14,303
|
|
|
$
|
439,251
|
|
Operating income
|
|
187,367
|
|
|
2,081
|
|
|
189,448
|
|
|
374,303
|
|
|
3,869
|
|
|
378,172
|
|
||||||
Interest expense
|
|
(51,440
|
)
|
|
—
|
|
|
(51,440
|
)
|
|
(104,314
|
)
|
|
—
|
|
|
(104,314
|
)
|
||||||
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,040
|
)
|
|
—
|
|
|
(23,040
|
)
|
||||||
Income before income taxes
|
|
139,726
|
|
|
2,081
|
|
|
141,807
|
|
|
252,426
|
|
|
3,869
|
|
|
256,295
|
|
||||||
Income tax expense
|
|
—
|
|
|
(448
|
)
|
|
(448
|
)
|
|
—
|
|
|
(832
|
)
|
|
(832
|
)
|
||||||
Net income
|
|
139,726
|
|
|
1,633
|
|
|
141,359
|
|
|
252,426
|
|
|
3,037
|
|
|
255,463
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Depreciation
|
|
2
|
|
|
920
|
|
|
922
|
|
|
2
|
|
|
1,826
|
|
|
1,828
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total assets
|
|
$
|
10,482,823
|
|
|
$
|
81,880
|
|
|
$
|
10,564,703
|
|
|
$
|
10,482,823
|
|
|
$
|
81,880
|
|
|
$
|
10,564,703
|
|
|
Three Months Ended
June 30, 2017
|
|
Six Months Ended
June 30, 2017
|
|
||||
Revenues
|
|
|
|
|
||||
Golf ($1,628 and $2,670 attributable to related parties)
|
$
|
3,894
|
|
|
$
|
7,464
|
|
|
Food and beverage
|
580
|
|
|
1,105
|
|
|
||
Retail and other
|
618
|
|
|
1,156
|
|
|
||
Net revenues
|
5,092
|
|
|
9,725
|
|
|
||
|
|
|
|
|
||||
Operating expenses
|
|
|
|
|
||||
Direct
|
|
|
|
|
||||
Golf
|
1,831
|
|
|
3,627
|
|
|
||
Food and beverage
|
468
|
|
|
884
|
|
|
||
Retail and other
|
469
|
|
|
856
|
|
|
||
Property costs
|
1,030
|
|
|
1,709
|
|
|
||
Depreciation
|
796
|
|
|
1,601
|
|
|
||
Administrative and other
|
498
|
|
|
1,048
|
|
|
||
Total operating expenses
|
5,092
|
|
|
9,725
|
|
|
||
|
|
|
|
|
||||
Net income
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Six Months Ended
June 30, 2017
|
||
Cash flows from operating activities
|
|
||
Net income (loss)
|
$
|
—
|
|
Adjustments to reconcile net income to cash flows provided by operating activities:
|
|
||
Depreciation
|
1,601
|
|
|
Provisions for (recoveries of) bad debt
|
12
|
|
|
Change in current assets and liabilities:
|
|
||
Receivables
|
13
|
|
|
Inventories
|
21
|
|
|
Prepayments
|
(72
|
)
|
|
Accounts payable
|
(13
|
)
|
|
Accrued expenses
|
74
|
|
|
Cash flows provided by operating activities
|
1,636
|
|
|
|
|
||
Cash flows from investing activities
|
|
||
Acquisitions of property and equipment, net of change in related payables
|
(200
|
)
|
|
Cash flows used in investing activities
|
(200
|
)
|
|
|
|
||
Cash flows from financing activities
|
|
||
Repayments for capital leases
|
(14
|
)
|
|
Transactions with parent, net
|
(2,167
|
)
|
|
Cash flows used in financing activities
|
(2,181
|
)
|
|
|
|
||
Net increase (decrease) in cash and cash equivalents
|
(745
|
)
|
|
Cash and cash equivalents, beginning of period
|
920
|
|
|
Cash and cash equivalents, end of period
|
$
|
175
|
|
Supplemental Cash Flow Information:
|
|
||
Cash paid for interest
|
$
|
—
|
|
(1)
|
The Statement of Operations included allocated overhead costs for certain functions historically performed by CEOC and Caesars’ affiliates, including allocations of direct and indirect operating and maintenance costs and expenses for procurement, logistics and general and administrative costs and expenses related to executive oversight, marketing, information technology, accounting, treasury, tax, and legal. These costs were allocated on the basis of either revenue or payroll costs.
|
(2)
|
See Business and Basis of Presentation - Golf Revenue.
|
(3)
|
Primarily includes transactions where CEOC and Caesars affiliates’ customers charge their golf, food and beverage and retail purchases directly to their hotel bill. Amounts collected from the customer by the hotel are remitted to the golf course.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
(In thousands)
|
Three Months Ended
June 30, 2018
|
|
Six Months Ended
June 30, 2018
|
||||
Real property business revenue
|
$
|
213,460
|
|
|
$
|
424,948
|
|
Golf course business revenue
|
7,515
|
|
|
14,303
|
|
||
Total revenue
|
$
|
220,975
|
|
|
$
|
439,251
|
|
(In thousands)
|
Three Months Ended
June 30, 2018
|
|
Six Months Ended
June 30, 2018
|
||||
Income from direct financing leases
|
$
|
182,319
|
|
|
$
|
364,355
|
|
Income from operating leases
|
12,209
|
|
|
24,418
|
|
||
Total leasing revenue
|
194,528
|
|
|
388,773
|
|
||
Less: Direct financing lease adjustment
(1)
|
(13,197
|
)
|
|
(26,110
|
)
|
||
Total contractual leasing revenue
|
$
|
181,331
|
|
|
$
|
362,663
|
|
(In thousands, except share data and per share data)
|
Three Months Ended
June 30, 2018
|
|
Six Months Ended
June 30, 2018
|
||||
Net income attributable to common stockholders
|
$
|
139,044
|
|
|
$
|
251,166
|
|
Real estate depreciation
|
—
|
|
|
—
|
|
||
FFO
|
139,044
|
|
|
251,166
|
|
||
Direct financing lease adjustments attributable to common stockholders
|
(12,863
|
)
|
|
(25,776
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
23,040
|
|
||
Non-cash stock-based compensation
|
468
|
|
|
859
|
|
||
Amortization of debt issuance costs and original issue discount
|
1,489
|
|
|
2,982
|
|
||
Other depreciation
|
919
|
|
|
1,825
|
|
||
Capital expenditures
|
(211
|
)
|
|
(557
|
)
|
||
AFFO
|
128,846
|
|
|
253,539
|
|
||
Interest expense, net
|
46,152
|
|
|
95,855
|
|
||
Income tax expense
|
448
|
|
|
832
|
|
||
Adjusted EBITDA
|
$
|
175,446
|
|
|
$
|
350,226
|
|
|
|
|
|
||||
Net income per common share
|
|
|
|
||||
Basic and diluted
|
$
|
0.38
|
|
|
$
|
0.70
|
|
FFO per common share
|
|
|
|
||||
Basic and diluted
|
$
|
0.38
|
|
|
$
|
0.70
|
|
AFFO per common share
|
|
|
|
||||
Basic and diluted
|
$
|
0.35
|
|
|
$
|
0.71
|
|
Weighted average number of common shares outstanding
|
|
|
|
||||
Basic
|
369,932,843
|
|
|
356,454,441
|
|
||
Diluted
|
369,991,738
|
|
|
356,491,047
|
|
(In thousands)
|
|
Six Months Ended
June 30, 2018
|
|||
Cash, cash equivalents and restricted cash
|
|
|
|||
|
Provided by operating activities
|
|
$
|
246,663
|
|
|
Used in investing activities
|
|
(40,463
|
)
|
|
|
Provided by financing activities
|
|
550,942
|
|
|
|
Net increase in cash, cash equivalents and restricted cash
|
|
757,142
|
|
|
|
Balance at December 31, 2017
|
|
197,406
|
|
|
|
Balance at June 30, 2018
|
|
$
|
954,548
|
|
•
|
Gross proceeds from our initial public offering of $1.4 billion of our common stock
|
•
|
Repayment of $300.0 million on our Revolving Credit Facility;
|
•
|
Repayment of $100.0 million on our Term Loan B Facility;
|
•
|
Redemption of $268.4 million in aggregate principal amount of our Second Lien Notes;
|
•
|
Dividend payments of $59.3 million and
|
•
|
Costs of $84.5 million related to our initial public offering.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number |
|
Exhibit Description
|
|
Filed Herewith
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
8-K
|
|
2.1
|
|
6/19/2018
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
8-K
|
|
2.1
|
|
7/12/2018
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
8-K
|
|
2.2
|
|
7/12/2018
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
8-K
|
|
10.1
|
|
6/19/2018
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
X
|
|
|
|
|
|
|
VICI PROPERTIES INC.
|
||||
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ EDWARD B. PITONIAK
|
|
Chief Executive Officer and Director
|
|
August 2, 2018
|
Edward B. Pitoniak
|
|
(Principal Executive Officer)
|
|
|
|
|
|
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|
/s/ DAVID A. KIESKE
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Chief Financial Officer
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August 2, 2018
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David A. Kieske
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(Principal Financial Officer)
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/s/ GABRIEL F. WASSERMAN
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Chief Accounting Officer
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August 2, 2018
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Gabriel F. Wasserman
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(Principal Accounting Officer)
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(i)
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Executive’s commission of, guilty plea or plea of no contest to, a felony or a misdemeanor (or its equivalent under applicable law),
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(ii)
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conduct by Executive that constitutes fraud or embezzlement, or any acts of dishonesty in relation to Executive’s duties with VICI REIT or the Company,
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(iii)
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Executive’s gross negligence, bad faith, or misconduct which causes either reputational or economic harm to VICI REIT, the Company or any Company Affiliate, as determined by the Board in its sole discretion,
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(iv)
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Executive’s willful refusal or failure to perform Executive’s duties hereunder, as determined by the Board in its sole discretion,
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(v)
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Executive’s refusal or failure to perform any reasonable directive of VICI REIT or the Company,
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(vi)
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Executive’s knowing misrepresentation of any material fact that the Company reasonably requests,
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(vii)
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Executive being found unsuitable for, or having been denied, a gaming license, or having such license revoked by a gaming regulatory
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(viii)
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Executive’s violation, as determined by the Board, of any securities, gaming, or employment laws, rules, or regulations, or
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(ix)
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Executive’s breach of Executive’s obligations under this Agreement or violation of the Policies, as determined by the Board in its sole discretion.
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(i)
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a reduction in Executive’s Base Salary or target or maximum bonus opportunity or failure to pay compensation due under this Agreement, which reduction only may be cured within ten (10) days following written notice by Executive;
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(ii)
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a material diminution in Executive’s duties or responsibilities or the assignment to Executive of duties materially inconsistent with Executive's positions, titles, offices, duties, or responsibilities with
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(iii)
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relocation of Executive’s principal business office to any location outside of New York, NY; or
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(iv)
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any other material breach by VICI REIT or the Company of any of its obligations to the Executive under this Agreement.
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(i)
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The Company shall pay the Accrued Obligations as set forth in Section 4.1.
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(ii)
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Subject to Executive’s delivery of a separation agreement and release in the form attached hereto as Exhibit A (with such changes as may be necessary due to applicable law) (the “
Separation Agreement
”), which Separation Agreement shall have become irrevocable, and subject to Executive’s compliance with the covenants set forth in Section 6, Executive (or Executive’s estate or beneficiaries in the case of Executive’s death) shall be entitled to:
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(A)
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any Accrued Bonus, paid as set forth in Section 4.2(B);
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(B)
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a Pro-Rata Bonus, if any, paid as set forth in Section 4.2(C);
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(C)
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a cash payment equal to the sum of (i) Executive’s Annual Salary (without any proration) and (ii) Executive’s Annual Bonus at the target level for the Contract Year in which Executive’s employment hereunder terminates (without any proration), payable in equal installments over a 12-month period in accordance with the Company’s usual and customary payroll practices;
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(D)
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a cash payment of $27,500;
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(E)
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elimination of any time-based vesting conditions on any restricted stock, stock option or other equity awards in VICI REIT or the Company that Executive had been granted and which Executive then continues to hold, to the extent then unvested;
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(F)
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a pro-rata portion (based on the number of complete months employed during the applicable performance period and applied separately to each performance goal, to the extent applicable) of outstanding unvested equity awards that are subject to
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(G)
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to the extent that Executive holds outstanding vested stock options as of the termination of employment (including to the extent vested pursuant to clause (E) above), such stock options shall remain exercisable until the date six months after the effective date of such termination of employment, or the option expiration date, if earlier; and
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(H)
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to the extent that any of Executive’s vested equity awards are subject to a restriction on transfer within a specified period following vesting, such restriction shall be lifted as of the date the Separation Agreement has become irrevocable;
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(iii)
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Subject to Section 4.7, amounts payable pursuant to clause (C) of Section 4.3(b)(ii) shall commence, and the amount payable pursuant to clause (D) of Section 4.3(b)(ii) shall be paid, on the 74
th
day following the separation from service (the “
Payment Commencement Date
”), provided Executive has delivered the Separation Agreement to the Employer and such Separation Agreement has become irrevocable, and provided, further, that the first such payment with respect to clause (C) shall be equal to the amount that would have been payable under such clauses between the date of termination and the Payment Commencement Date had such payments commenced at the separation from service.
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(iv)
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Executive shall have no further rights to any other compensation or benefits hereunder on or after the termination of employment, or any other rights hereunder.
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(i)
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The Company shall pay the Accrued Obligations as set forth in Section 4.1.
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(ii)
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Subject to Executive’s delivery of a Separation Agreement, which shall have become irrevocable, and subject to Executive’s compliance with the covenants set forth in Section 6, Executive (or Executive’s estate or beneficiaries in the case of the death of Executive) shall be entitled to:
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(A)
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any Accrued Bonus, paid as set forth in Section 4.2(B);
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(B)
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a Pro-Rata Bonus, if any, paid as set forth in Section 4.2(C) assuming achievement of all performance goals at target and regardless of whether the Company pays bonuses to employees generally for such Contract Year;
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(C)
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a cash payment equal to 150% of the sum of (i) Executive’s Annual Salary (without any proration) and (ii) Executive’s Annual Bonus at the target level for the Contract Year in which Executive’s employment hereunder terminates (without any proration), payable in a lump sum;
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(D)
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a cash payment of $40,000;
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(E)
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elimination of any time-based vesting conditions on any restricted stock, stock option or other equity awards in VICI REIT or the Company that Executive had been granted and which Executive then continues to hold, to the extent then unvested;
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(F)
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all performance-based equity will remain outstanding and eligible to vest, subject solely to achievement of the applicable performance goals prorated through the date of termination;
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(G)
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to the extent that Executive holds outstanding stock options as of the termination of employment, such stock options shall remain exercisable until the date six months after the effective date of such termination of employment, or the option expiration date, if earlier; and
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(H)
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to the extent that any of Executive’s vested equity awards are subject to a restriction on transfer within a specified period following vesting, such restriction shall be lifted as of the date the Separation Agreement has become irrevocable.
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(iii)
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Subject to Section 4.7, amounts payable pursuant to clauses (B), (C) and (D) of Section 4.4(ii) shall be paid on the Payment Commencement Date, provided Executive has delivered the Separation Agreement to the Employer and such Separation Agreement has become irrevocable.
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(iv)
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Executive shall have no further rights to any other compensation or benefits hereunder on or after the termination of employment, or any other rights hereunder.
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(v)
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For purposes of this Agreement, a “Change in Control” shall mean:
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(A)
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any transaction or group of related transactions (whether a merger, consolidation, sale or otherwise) pursuant to which any Person, as defined below, (in any case, excluding the Company and any Company Affiliate) or group (within the meaning of Section 13(d)(3) of the Exchange Act) of such Persons acting together pursuant to which such Person or group of Persons acquires a majority of the aggregate voting power of the capital stock ordinarily entitled to elect directors of VICI REIT;
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(B)
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any disposition in one transaction or a series of related transactions, of all or substantially all of the assets of VICI REIT and its Subsidiaries (which shall be defined to include any corporation, partnership, limited liability company or other entity of which more than 50% of the economic interest in such entity is owned directly or indirectly by VICI REIT or another subsidiary of VICI REIT), determined on a consolidated basis, to any Person or Persons (in any case, excluding the Company and any Company Affiliate); or
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(C)
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within a 12-month period, a majority of the members of the Board cease to be Continuing Directors; as used herein, a “Continuing Director” means any member of the Board who was a member of such Board on the date hereof; provided that any person becoming a director subsequent to such date whose election or nomination for election was supported by a majority of the directors who then comprised the Continuing Directors shall be considered to be a Continuing Director.
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(i)
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Executive shall (subject, in the case of the following clause (C), to Executive’s delivery of a Separation Agreement, which shall have become irrevocable and Executive’s compliance with the covenants set forth in Section 6) be entitled to:
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(A)
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the Accrued Obligations, paid as set forth in Section 4.1;
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(B)
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any Accrued Bonus, paid as set forth in Section 4.2(B);
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(C)
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elimination of any time-based vesting conditions on any restricted stock, stock option or other equity awards in the Company that Executive had been granted and which Executive then continues to hold, to the extent then unvested;
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(D)
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the long-term incentive plan of VICI REIT or the grant documents issued thereunder will set forth the treatment of any performance-based equity in the event of such non-renewal, which treatment will be no less favorable to Executive than the treatment applied to other Executive Vice Presidents of VICI REIT; and
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(E)
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to the extent that any of Executive’s vested equity awards are subject to a restriction on transfer within a specified period following vesting, such restriction shall be lifted as of the date the Separation Agreement has become irrevocable.
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(ii)
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Executive shall have no further rights to any other compensation or benefits hereunder on or after the termination of employment, or any other rights hereunder.
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(i)
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is proprietary to, about or created by the Company or the Company Affiliates;
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(ii)
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gives the Company or any of the Company Affiliates some competitive advantage, the opportunity of obtaining such advantage or the disclosure of which could be detrimental to the interests of the Company or the Company Affiliates;
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(iii)
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is not typically disclosed to non-executives by the Company or otherwise is treated as confidential by the Company or the Company Affiliates; or
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(iv)
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is designated as Confidential Information by the Company or the Company Affiliates or from all the relevant circumstances should reasonably be assumed by Executive to be confidential to the Company or any Company Affiliates;
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(i)
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Such arbitration shall be conducted in New York, New York or such other location as the Company’s headquarters may be located at such time, and the arbitrator will apply New York law, including federal law as applied in New York courts. The arbitration shall be conducted in accordance with the AAA’s Employment Arbitration Rules, as modified by the terms set forth in this Agreement. The arbitration will be conducted by a single arbitrator, who shall be an attorney who specializes in the field of employment law and shall have prior experience arbitrating employment disputes. The fees and costs of the arbitrator and/or the AAA shall be divided among the Company and Executive, subject to reallocation as provided in Section 8(iv) below.
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(ii)
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The arbitrator shall not have the authority to modify the terms of this Agreement except to the extent that the Agreement violates any governing statue, in which case the arbitrator may modify the Agreement solely as necessary to not conflict with such statute. The arbitrator shall have the authority to award any remedy or relief that a court of the State of New York or federal court located in the State of
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(iii)
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The award of the arbitrator shall be final and binding on VICI REIT, the Company and Executive, and judgment on the award may be confirmed and entered in any state or federal court located in New York, New York. The arbitration shall be conducted on a strictly confidential basis, and Executive shall not disclose the existence of a claim, the nature of a claim, any documents, exhibits, or information exchanged or presented in connection with any such a claim, or the result of any arbitration (collectively, “
Arbitration Materials
”), to any third party, with the sole exception of Executive’s legal counsel, who Executive shall ensure adheres to all confidentiality terms in this Agreement. In the event of any court proceeding to challenge or enforce an arbitrator’s award, the Company and Executive hereby consent to the exclusive jurisdiction of the state and federal courts in New York and agree to venue in that jurisdiction. VICI REIT, the Company and Executive agree to take all steps necessary to protect the confidentiality of the Arbitration Materials in connection with any such proceeding, agree to file all Confidential Information (and documents containing Confidential Information) under seal to the extent possible, and agree to the entry of an appropriate protective order encompassing the confidentiality terms of this Agreement.
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(iv)
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Each of VICI REIT, the Company and Executive agrees to pay its own costs and fees in connection with any arbitration of a dispute arising under this Agreement, and any court proceeding arising therefrom, provided, however, that (a) the arbitrator shall be authorized to award attorneys’ fees and costs to any party in accordance with applicable law and (b) the arbitrator shall award to the party substantially prevailing in such arbitration her or its costs, including reasonable attorneys’ fees.
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(v)
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TO THE EXTENT ANY DISPUTE IS FOUND NOT TO BE SUBJECT TO THIS ARBITRATION PROVISION, VICI REIT, THE COMPANY AND EXECUTIVE EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
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1.
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I have reviewed this Quarterly Report on Form 10-Q of VICI Properties Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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c)
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disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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August 2, 2018
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By:
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/s/ EDWARD B. PITONIAK
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Edward B. Pitoniak
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Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of VICI Properties Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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c)
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disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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August 2, 2018
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By:
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/s/ DAVID A. KIESKE
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David A. Kieske
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Chief Financial Officer
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Date:
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August 2, 2018
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By:
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/s/ EDWARD B. PITONIAK
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Edward B. Pitoniak
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Chief Executive Officer
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Date:
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August 2, 2018
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By:
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/s/ DAVID A. KIESKE
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David A. Kieske
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Chief Financial Officer
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