☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Maryland
|
|
81-4177147
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(State or other jurisdiction of incorporation or organization)
|
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(I.R.S. Employer Identification No.)
|
Title of each class
|
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Trading Symbol
|
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Name of each exchange on which registered
|
Common stock, $0.01 par value
|
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VICI
|
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New York Stock Exchange
|
Large Accelerated Filer
|
☒
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Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
VICI PROPERTIES INC.
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FORM 10-Q
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FOR THE QUARTER ENDED JUNE 30, 2019
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TABLE OF CONTENTS
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Page
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PART I
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FINANCIAL INFORMATION
|
Item 1.
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Financial Statements
|
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June 30, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Real estate portfolio:
|
|
|
|
||||
Investments in direct financing and sales-type leases, net
|
$
|
9,897,031
|
|
|
$
|
8,916,047
|
|
Investments in operating leases
|
1,086,658
|
|
|
1,086,658
|
|
||
Land
|
94,711
|
|
|
95,789
|
|
||
Cash and cash equivalents
|
1,205,335
|
|
|
577,883
|
|
||
Restricted cash
|
28,217
|
|
|
20,564
|
|
||
Short-term investments
|
97,586
|
|
|
520,877
|
|
||
Other assets
|
112,508
|
|
|
115,550
|
|
||
Total assets
|
$
|
12,522,046
|
|
|
$
|
11,333,368
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Debt, net
|
$
|
4,124,448
|
|
|
$
|
4,122,264
|
|
Accrued interest
|
13,965
|
|
|
14,184
|
|
||
Deferred financing liability
|
73,600
|
|
|
73,600
|
|
||
Deferred revenue
|
5
|
|
|
43,605
|
|
||
Dividends payable
|
132,441
|
|
|
116,287
|
|
||
Other liabilities
|
105,164
|
|
|
62,406
|
|
||
Total liabilities
|
4,449,623
|
|
|
4,432,346
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 10)
|
|
|
|
|
|
||
|
|
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|
||||
Stockholders’ equity
|
|
|
|
||||
Common stock, $0.01 par value, 700,000,000 shares authorized and 461,004,546 and 404,729,616 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
|
4,610
|
|
|
4,047
|
|
||
Preferred stock, $0.01 par value, 50,000,000 shares authorized and no shares outstanding at June 30, 2019 and December 31, 2018
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
7,814,829
|
|
|
6,648,430
|
|
||
Accumulated other comprehensive loss
|
(70,003
|
)
|
|
(22,124
|
)
|
||
Retained earnings
|
239,301
|
|
|
187,096
|
|
||
Total VICI stockholders’ equity
|
7,988,737
|
|
|
6,817,449
|
|
||
Non-controlling interests
|
83,686
|
|
|
83,573
|
|
||
Total stockholders’ equity
|
8,072,423
|
|
|
6,901,022
|
|
||
Total liabilities and stockholders’ equity
|
$
|
12,522,046
|
|
|
$
|
11,333,368
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Income from direct financing and sales-type leases
|
$
|
201,549
|
|
|
$
|
182,319
|
|
|
$
|
397,299
|
|
|
$
|
364,355
|
|
Income from operating leases
|
10,914
|
|
|
12,209
|
|
|
21,827
|
|
|
24,418
|
|
||||
Tenant reimbursement of property taxes
|
—
|
|
|
18,932
|
|
|
—
|
|
|
36,175
|
|
||||
Golf operations
|
8,283
|
|
|
7,515
|
|
|
15,622
|
|
|
14,303
|
|
||||
Revenues
|
220,746
|
|
|
220,975
|
|
|
434,748
|
|
|
439,251
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
General and administrative
|
6,518
|
|
|
7,160
|
|
|
12,743
|
|
|
14,468
|
|
||||
Depreciation
|
1,018
|
|
|
922
|
|
|
1,948
|
|
|
1,828
|
|
||||
Property taxes
|
—
|
|
|
18,932
|
|
|
—
|
|
|
36,175
|
|
||||
Golf operations
|
4,848
|
|
|
4,513
|
|
|
8,940
|
|
|
8,608
|
|
||||
Transaction and acquisition expenses
|
2,867
|
|
|
—
|
|
|
3,756
|
|
|
—
|
|
||||
Total operating expenses
|
15,251
|
|
|
31,527
|
|
|
27,387
|
|
|
61,079
|
|
||||
Operating income
|
205,495
|
|
|
189,448
|
|
|
407,361
|
|
|
378,172
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(54,819
|
)
|
|
(51,440
|
)
|
|
(108,405
|
)
|
|
(104,314
|
)
|
||||
Interest income
|
4,004
|
|
|
3,799
|
|
|
9,171
|
|
|
5,477
|
|
||||
Loss from extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,040
|
)
|
||||
Income before income taxes
|
154,680
|
|
|
141,807
|
|
|
308,127
|
|
|
256,295
|
|
||||
Income tax expense
|
(553
|
)
|
|
(448
|
)
|
|
(1,074
|
)
|
|
(832
|
)
|
||||
Net income
|
154,127
|
|
|
141,359
|
|
|
307,053
|
|
|
255,463
|
|
||||
Less: Net income attributable to non-controlling interests
|
(2,078
|
)
|
|
(2,315
|
)
|
|
(4,155
|
)
|
|
(4,297
|
)
|
||||
Net income attributable to common stockholders
|
$
|
152,049
|
|
|
$
|
139,044
|
|
|
$
|
302,898
|
|
|
$
|
251,166
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.37
|
|
|
$
|
0.38
|
|
|
$
|
0.74
|
|
|
$
|
0.70
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
0.38
|
|
|
$
|
0.74
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
412,309,577
|
|
|
369,932,843
|
|
|
409,040,025
|
|
|
356,454,441
|
|
||||
Diluted
|
412,821,400
|
|
|
369,991,738
|
|
|
409,473,202
|
|
|
356,491,047
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common stockholders
|
$
|
152,049
|
|
|
$
|
139,044
|
|
|
$
|
302,898
|
|
|
$
|
251,166
|
|
Unrealized loss on cash flow hedges
|
(30,688
|
)
|
|
(4,640
|
)
|
|
(47,879
|
)
|
|
(4,640
|
)
|
||||
Comprehensive income attributable to common stockholders
|
$
|
121,361
|
|
|
$
|
134,404
|
|
|
$
|
255,019
|
|
|
$
|
246,526
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Retained Earnings
|
|
Total VICI Stockholders’ Equity
|
|
Non-controlling Interests
|
|
Total Stockholders’ Equity
|
||||||||||||||
Balance as of December 31, 2017
|
$
|
3,003
|
|
|
$
|
4,645,824
|
|
|
$
|
—
|
|
|
$
|
42,662
|
|
|
$
|
4,691,489
|
|
|
$
|
84,875
|
|
|
$
|
4,776,364
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
112,122
|
|
|
112,122
|
|
|
1,981
|
|
|
114,103
|
|
|||||||
Issuance of common stock, net
|
695
|
|
|
1,306,424
|
|
|
—
|
|
|
—
|
|
|
1,307,119
|
|
|
—
|
|
|
1,307,119
|
|
|||||||
Distribution to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,856
|
)
|
|
(3,856
|
)
|
|||||||
Dividends declared ($0.16 per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(59,221
|
)
|
|
(59,221
|
)
|
|
—
|
|
|
(59,221
|
)
|
|||||||
Stock-based compensation, net of forfeitures
|
3
|
|
|
388
|
|
|
—
|
|
|
—
|
|
|
391
|
|
|
—
|
|
|
391
|
|
|||||||
Balance as of March 31, 2018
|
3,701
|
|
|
5,952,636
|
|
|
—
|
|
|
95,563
|
|
|
6,051,900
|
|
|
83,000
|
|
|
6,134,900
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
139,044
|
|
|
139,044
|
|
|
2,316
|
|
|
141,360
|
|
|||||||
Issuance of common stock, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Distribution to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,982
|
)
|
|
(1,982
|
)
|
|||||||
Dividends declared ($0.2625 per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(97,163
|
)
|
|
(97,163
|
)
|
|
—
|
|
|
(97,163
|
)
|
|||||||
Stock-based compensation, net of forfeitures
|
—
|
|
|
468
|
|
|
—
|
|
|
—
|
|
|
468
|
|
|
—
|
|
|
468
|
|
|||||||
Unrealized loss on cash flow hedges
|
—
|
|
|
—
|
|
|
(4,640
|
)
|
|
—
|
|
|
(4,640
|
)
|
|
—
|
|
|
(4,640
|
)
|
|||||||
Balance as of June 30, 2018
|
$
|
3,701
|
|
|
$
|
5,953,104
|
|
|
$
|
(4,640
|
)
|
|
$
|
137,444
|
|
|
$
|
6,089,609
|
|
|
$
|
83,334
|
|
|
$
|
6,172,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance as of December 31, 2018
|
$
|
4,047
|
|
|
$
|
6,648,430
|
|
|
$
|
(22,124
|
)
|
|
$
|
187,096
|
|
|
$
|
6,817,449
|
|
|
$
|
83,573
|
|
|
$
|
6,901,022
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
150,849
|
|
|
150,849
|
|
|
2,077
|
|
|
152,926
|
|
|||||||
Issuance of common stock, net
|
62
|
|
|
128,203
|
|
|
—
|
|
|
—
|
|
|
128,265
|
|
|
—
|
|
|
128,265
|
|
|||||||
Distributions to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,031
|
)
|
|
(2,031
|
)
|
|||||||
Dividends declared ($0.2875 per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(118,154
|
)
|
|
(118,154
|
)
|
|
—
|
|
|
(118,154
|
)
|
|||||||
Stock-based compensation, net of forfeitures
|
1
|
|
|
1,050
|
|
|
—
|
|
|
—
|
|
|
1,051
|
|
|
—
|
|
|
1,051
|
|
|||||||
Unrealized loss on cash flow hedges
|
—
|
|
|
—
|
|
|
(17,191
|
)
|
|
—
|
|
|
(17,191
|
)
|
|
—
|
|
|
(17,191
|
)
|
|||||||
Balance as of March 31, 2019
|
4,110
|
|
|
6,777,683
|
|
|
(39,315
|
)
|
|
219,791
|
|
|
6,962,269
|
|
|
83,619
|
|
|
7,045,888
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
152,049
|
|
|
152,049
|
|
|
2,078
|
|
|
154,127
|
|
|||||||
Issuance of common stock, net
|
500
|
|
|
1,035,780
|
|
|
—
|
|
|
—
|
|
|
1,036,280
|
|
|
—
|
|
|
1,036,280
|
|
|||||||
Distributions to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,011
|
)
|
|
(2,011
|
)
|
|||||||
Dividends declared ($0.2875 per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(132,539
|
)
|
|
(132,539
|
)
|
|
—
|
|
|
(132,539
|
)
|
|||||||
Stock-based compensation, net of forfeitures
|
—
|
|
|
1,366
|
|
|
—
|
|
|
—
|
|
|
1,366
|
|
|
—
|
|
|
1,366
|
|
|||||||
Unrealized loss on cash flow hedges
|
—
|
|
|
—
|
|
|
(30,688
|
)
|
|
—
|
|
|
(30,688
|
)
|
|
—
|
|
|
(30,688
|
)
|
|||||||
Balance as of June 30, 2019
|
$
|
4,610
|
|
|
$
|
7,814,829
|
|
|
$
|
(70,003
|
)
|
|
$
|
239,301
|
|
|
$
|
7,988,737
|
|
|
$
|
83,686
|
|
|
$
|
8,072,423
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
307,053
|
|
|
$
|
255,463
|
|
Adjustments to reconcile net income to cash flows provided by operating activities:
|
|
|
|
||||
Direct financing and sales-type lease adjustments
|
(4,789
|
)
|
|
(26,110
|
)
|
||
Stock-based compensation
|
2,417
|
|
|
859
|
|
||
Depreciation
|
1,948
|
|
|
1,828
|
|
||
Amortization of debt issuance costs and original issue discount
|
3,364
|
|
|
2,982
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
23,040
|
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Other assets
|
(6,924
|
)
|
|
(3,679
|
)
|
||
Accrued interest
|
(219
|
)
|
|
(7,341
|
)
|
||
Deferred revenue
|
(43,600
|
)
|
|
3,844
|
|
||
Other liabilities
|
3,692
|
|
|
(4,223
|
)
|
||
Net cash provided by operating activities
|
262,942
|
|
|
246,663
|
|
||
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
||||
Investments in direct financing and sales-type leases
|
(970,763
|
)
|
|
—
|
|
||
Capitalized transaction costs
|
(1,105
|
)
|
|
—
|
|
||
Investments in short-term investments
|
(97,586
|
)
|
|
(39,906
|
)
|
||
Maturities of short-term investments
|
520,877
|
|
|
—
|
|
||
Proceeds from sale of land
|
1,044
|
|
|
—
|
|
||
Acquisition of property and equipment
|
(1,481
|
)
|
|
(557
|
)
|
||
Net cash used in investing activities
|
(549,014
|
)
|
|
(40,463
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from offering of common stock, net
|
1,165,008
|
|
|
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
|
(5,371
|
)
|
|
(1,003
|
)
|
||
Distributions to non-controlling interests
|
(4,042
|
)
|
|
(5,838
|
)
|
||
Dividends paid
|
(234,418
|
)
|
|
(59,278
|
)
|
||
Net cash provided by financing activities
|
921,177
|
|
|
550,942
|
|
||
|
|
|
|
||||
Net increase in cash, cash equivalents and restricted cash
|
635,105
|
|
|
757,142
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
598,447
|
|
|
197,406
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
1,233,552
|
|
|
$
|
954,548
|
|
|
|
|
|
||||
Supplemental cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
105,484
|
|
|
$
|
107,822
|
|
Cash paid for income taxes
|
$
|
1,500
|
|
|
$
|
1,024
|
|
Supplemental non-cash investing and financing activity:
|
|
|
|
||||
Dividends declared, not paid
|
$
|
132,539
|
|
|
$
|
97,107
|
|
Right-of-use asset and lease liability recorded upon adoption of ASC 842
|
$
|
11,133
|
|
|
$
|
—
|
|
Deferred transaction costs payable
|
$
|
4,454
|
|
|
$
|
—
|
|
Debt issuance costs payable
|
$
|
5,783
|
|
|
$
|
—
|
|
Equity issuance costs payable
|
$
|
650
|
|
|
$
|
—
|
|
(In thousands)
|
June 30, 2019
|
|
June 30, 2018
|
||||
Cash and cash equivalents
|
$
|
1,205,335
|
|
|
$
|
940,740
|
|
Restricted cash
|
28,217
|
|
|
13,808
|
|
||
Total cash, cash equivalents and restricted cash shown in the Statement of Cash Flows
|
$
|
1,233,552
|
|
|
$
|
954,548
|
|
•
|
Costs that are paid directly by the lessee to a third party, such as real estate taxes and insurance, are no longer recognized in our Statement of Operations. Prior to our adoption of ASC 842, we presented on a gross basis the real estate taxes that were paid by our tenants directly to the taxing authority. Subsequent to our adoption of ASC 842, Tenant reimbursements of property taxes and Property taxes expense are presented on a net basis, as the lessee pays for such costs directly. However, consistent with our effective date adoption approach, we have not re-cast prior year financial results to conform to the current period presentation.
|
•
|
Initial direct costs associated with the execution of lease agreements, such as legal fees and certain transaction costs will no longer be capitalizable and instead are expensed in the period incurred.
|
•
|
Long-term leases entered into or modified subsequent to our adoption of ASC 842 will most likely be considered sales-type leases, as defined in ASC 842. The accounting for a sales-type lease is materially consistent with that of the current accounting for our direct financing leases. If we determine that the lease meets the definition for a sale leaseback transaction, the lease is considered a financing receivable and is accounted for in accordance with ASC 310 “Receivables” (“ASC 310”).
|
•
|
Prior to our adoption of ASC 842, the residual value component of our Lease Agreements was assessed for impairment under ASC 360 “Property, Plant and Equipment” while the receivable component was separately assessed for impairment under ASC 310. Upon adoption of ASC 842, both the receivable and residual value components of the direct financing and sales-type leases are assessed for impairment under ASC 310.
|
•
|
Acquisition of the MTA Properties. We have agreed to acquire all of the land and real estate assets associated with Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City (or, if necessary, certain replacement properties designated in the Master Transaction Agreement) (collectively, the “MTA Properties” and each, an “MTA Property”) for an aggregate purchase price of $1,809.5 million (the “MTA Properties Acquisitions” and each, an “MTA Property Acquisition”). Simultaneous with the closing of each MTA Property Acquisition, we will enter into a triple-net lease with a subsidiary of ERI as tenant, by amending the Non-CPLV Lease Agreement to include such MTA Property, with (i) initial aggregate total annual rent payable to us and attributable to the MTA Properties of $154.0 million, (ii) so long as the MTA Property Acquisitions are consummated concurrent with the closing of the ERI/Caesars Merger, an initial term of approximately 15 years and (iii) the same renewal terms available to the other tenants under the Non-CPLV Lease Agreement at such time. The Non-CPLV Lease Agreement will also be amended to adjust certain minimum capital expenditure requirements and other related terms and conditions as a result of the MTA Properties being included in the Non-CPLV Lease Agreement.
|
•
|
CPLV Lease Agreement Amendment. In consideration of a payment by us to ERI of $1,189.9 million, we and ERI will amend the CPLV Lease Agreement to (i) increase the annual rent payable to us under the CPLV Lease Agreement by $83.5 million (the “CPLV Additional Rent Acquisition”) and (ii) provide for the amended terms described below.
|
•
|
HLV Lease Agreement Termination and Creation of Las Vegas Master Lease. In consideration of a payment by us to ERI of $213.8 million, we and ERI will terminate the HLV Lease Agreement and the related lease guaranty. Annual rent previously payable to us with respect to the Harrah’s Las Vegas property will be increased by $15.0 million (the “HLV Additional Rent Acquisition”). The CPLV Lease Agreement will be amended (as amended, the “Las Vegas Master Lease Agreement”) to provide, among other things, that the Harrah’s Las Vegas property, which is currently subject to the HLV Lease Agreement, will be leased pursuant thereto (with the Harrah’s Las Vegas property subject to the higher rent escalator currently in place under the CPLV Lease Agreement). Thereafter the Las Vegas Master Lease Agreement will be a multi-property master lease whereby the Harrah’s Las Vegas property tenant and the Caesars Palace Las Vegas property tenant will collectively be the tenant.
|
•
|
Centaur Properties Put/Call Agreement. Affiliates of Caesars currently own two gaming facilities in Indiana - Hoosier Park and Indiana Grand (together the “Centaur Properties”). At the closing of the ERI/Caesars Merger, a right of first refusal that we have with respect to the Centaur Properties will terminate and we will enter into a put/call agreement with ERI, whereby (i) we will have the right to acquire all of the land and real estate assets associated with the Centaur Properties at a price equal to 13.0x the initial annual rent of each facility (determined as provided below), and to simultaneously lease back each such property to a subsidiary of ERI for initial annual rent equal to the property’s trailing four quarters EBITDA at the time of acquisition divided by 1.3 (i.e., the initial annual rent will be set at 1.3x rent coverage) and (ii) ERI will have the right to require us to acquire the Centaur Properties at a price equal to 12.5x the initial annual rent of each facility, and to simultaneously lease back each such Centaur Property to a subsidiary of ERI for initial annual rent equal to the property’s trailing four quarters EBITDA at the time of acquisition divided by 1.3 (i.e., the initial annual rent will be set at 1.3x rent coverage). Either party will be able to trigger its respective put or call, as applicable, beginning on January 1, 2022 and ending on December 31, 2024. The put/call agreement will provide that the leaseback of the Centaur Properties will be implemented through addition of the Centaur Properties to the Non-CPLV Lease Agreement.
|
•
|
Las Vegas Strip Assets ROFR. We will enter into a right of first refusal agreement with ERI (the “Las Vegas ROFR”) whereby we will have the first right, with respect to the first two of certain specified Las Vegas Strip assets that ERI proposes to sell, whether pursuant to a sale leaseback or a WholeCo sale, to a third party, to acquire any such asset (it being understood that we will have the opportunity to find an operating company should ERI elect to pursue a WholeCo sale). Pursuant to the Master Transaction Agreement, the specified Las Vegas Strip assets subject to the Las Vegas ROFR will be the land and real estate assets associated (i) with respect to the first such asset subject to the Las Vegas ROFR, the Flamingo Las Vegas, Paris Las Vegas, Planet Hollywood and Bally’s Las Vegas gaming facilities, and (ii) with respect to the second asset subject to the Las Vegas ROFR, the foregoing assets plus The LINQ gaming facility. If we enter into a sale leaseback transaction with ERI on any of these facilities, the leaseback will be implemented through the addition of such properties to the CPLV Lease Agreement.
|
•
|
Horseshoe Baltimore ROFR. We and ERI agreed to enter into a right of first refusal agreement pursuant to which we will have the first right to enter into a sale leaseback transaction with respect to the land and real estate assets associated with the Horseshoe Baltimore gaming facility (subject to any consent required from ERI’s joint venture partners with respect to this asset) (the “Horseshoe Baltimore ROFR”).
|
•
|
Lease Guaranties and MLSA Terminations. ERI will execute new guaranties (the “ERI Guaranties”) of the CPLV Lease Agreement, the Non-CPLV Lease Agreement and the Joliet Lease Agreement, and the existing guaranties by Caesars of such leases, along with all covenants and other obligations of Caesars incurred in connection with such guaranties, will be terminated with respect to Caesars (which will become a subsidiary of ERI following the closing of the ERI/Caesars Merger). The ERI Guaranties will guaranty the prompt and complete payment and performance in full of: (i) all monetary obligations of the tenants under the respective leases, including all rent and other sums payable by the tenants under the leases and any obligation to pay monetary damages in connection with any breach and to pay any indemnification obligations of the tenants under the leases; and (ii) the performance when due of all other covenants, agreements and requirements to be performed and satisfied by the tenants under the leases. In addition, we and ERI will terminate the Management and Lease Support Agreements with respect to the CPLV Lease Agreement, the Non-CPLV Lease Agreement and the Joliet Lease Agreement, and certain provisions currently set forth therein will be added to the respective leases, as amended, and the ERI Guaranties.
|
•
|
Other Lease Amendments. The CPLV Lease Agreement, the Non-CPLV Lease Agreement and the Joliet Lease Agreement will be amended to, among other things, (i) remove the rent coverage floors, which coverage floors serve to reduce the rent escalators under such leases in the event that the “EBITDAR to Rent Ratio” (as defined in each of the CPLV Lease Agreement, the Non-CPLV Lease Agreement and the Joliet Lease Agreement) coverage is below the stated floor and (ii) extend the term of each such lease by such additional period of time as necessary to ensure that following the consummation of the ERI/Caesars Merger, each lease will have a full 15-year initial lease term. The Non-CPLV Lease Agreement also will be amended to, among other things: (a) permit the tenant under the Non-CPLV Lease Agreement to cause facilities subject to the Non-CPLV Lease Agreement that in the aggregate represent up to five percent of the aggregate EBITDAR of (A) all of the facilities under such Non-CPLV Lease Agreement and (B) the Harrah’s Joliet facility, for the 2018 fiscal year (defined as the “2018 EBITDAR Pool” in the Non-CPLV Lease Agreement, without giving effect to any increase in the 2018 EBITDAR Pool as a result of a facility being added to the Non-CPLV Lease Agreement) to be sold (whereby the tenant and landlord under the Non-CPLV Lease Agreement would sell the operations and real estate, respectively, with respect to such facility), provided, among other things, that (1) we and ERI mutually agree to the split of proceeds
|
•
|
CPLV CMBS Debt Lender Consent. Subject to the satisfaction of certain conditions, we will obtain the consent of the CPLV CMBS Debt holders that is required in connection with the consummation of certain elements of the ERI/Caesars Merger and the Eldorado Transaction or cause the CPLV CMBS Debt to be repaid in full prior to the closing of the ERI/Caesars Merger. ERI has agreed to reimburse us for 50% of our out-of-pocket costs in connection with obtaining and consummating the consent of the CPLV CMBS Debt holders, including any prepayment penalties should the lender not consent and we have to refinance the debt (which reimbursement obligations exist pursuant to the MTA regardless of whether the ERI/Caesars Merger is consummated).
|
•
|
Eldorado Bridge Facility. On June 24, 2019, in connection with the Eldorado Transaction, VICI Propco entered into a commitment letter (the “Commitment Letter”) with Deutsche Bank Securities Inc. and Deutsche Bank AG Cayman Islands Branch (collectively, the “Bridge Lender”), pursuant to which and subject to the terms and conditions set forth therein, the Bridge Lender has agreed to provide (i) a 364-day first lien secured bridge facility of up to $3.3 billion in the aggregate (the “Eldorado Senior Bridge Facility”) and (ii) a 364-day second lien secured bridge facility of up to $1.5 billion in the aggregate (the “Eldorado Junior Bridge Facility,” and, together with the Eldorado Senior Bridge Facility, the “Bridge Facilities”), for the purpose of providing a portion of the financing necessary to fund the consideration to be paid pursuant to the terms of the Eldorado Transaction documents and related fees and expenses. We currently intend to incur additional long-term senior secured term loans and/or opportunistically access the debt capital markets to fund a portion of the cash consideration for the Eldorado Transaction, but, absent such a long-term debt financing, we expect to draw on the Bridge Facilities in connection with the closing of the Eldorado Transaction to fund a portion of the cash consideration, and, in the future, raise long-term debt financing to refinance such amounts borrowed under the Bridge Facilities, subject to market and other conditions. On June 28, 2019 and July 11, 2019, additional parties joined the Commitment Letter as commitment parties thereunder. There can be no assurances that we will be able to refinance the Bridge Facilities on terms satisfactory to us, or at all. Refer to Note 7 - Debt for further information.
|
•
|
Investments in direct financing and sales-type leases, representing our investment in 23 casino assets leased on a triple net basis to our tenants, Caesars and Penn National, under six separate lease agreements;
|
•
|
Investments in operating leases, representing the portion of land separately classified and accounted for under the operating lease model associated with our investment in Caesars Palace Las Vegas and certain operating land parcels contained in the Non-CPLV Lease Agreement; and
|
•
|
Land, representing our investment in the Eastside Property and certain non-operating, vacant land parcels contained in the Non-CPLV Lease Agreement.
|
(In thousands)
|
June 30, 2019
|
|
December 31, 2018
|
||||
Minimum lease payments receivable under direct financing and sales-type leases (1)
|
$
|
29,653,093
|
|
|
$
|
27,285,943
|
|
Estimated residual values of leased property (not guaranteed)
|
2,344,954
|
|
|
2,135,312
|
|
||
Gross investment in direct financing and sales-type leases
|
31,998,047
|
|
|
29,421,255
|
|
||
Unamortized initial direct costs
|
37,321
|
|
|
22,822
|
|
||
Less: Unearned income
|
(22,138,337
|
)
|
|
(20,528,030
|
)
|
||
Investment in direct financing and sales-type leases, net
|
9,897,031
|
|
|
8,916,047
|
|
||
Investment in operating leases
|
1,086,658
|
|
|
1,086,658
|
|
||
Total Investments in leases, net
|
10,983,689
|
|
|
10,002,705
|
|
||
Land
|
94,711
|
|
|
95,789
|
|
||
Total Real estate portfolio
|
$
|
11,078,400
|
|
|
$
|
10,098,494
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Income from direct financing and sales-type leases
|
$
|
201,549
|
|
|
$
|
182,319
|
|
|
$
|
397,299
|
|
|
$
|
364,355
|
|
Income from operating leases (1)
|
10,914
|
|
|
12,209
|
|
|
21,827
|
|
|
24,418
|
|
||||
Total lease revenue
|
212,463
|
|
|
194,528
|
|
|
419,126
|
|
|
388,773
|
|
||||
Less: Direct financing and sales-type lease adjustment (2)
|
(2,277
|
)
|
|
(13,197
|
)
|
|
(4,789
|
)
|
|
(26,110
|
)
|
||||
Total contractual lease revenue
|
$
|
210,186
|
|
|
$
|
181,331
|
|
|
$
|
414,337
|
|
|
$
|
362,663
|
|
($ In thousands)
|
|
|
|
|
|
|
Lease Provision (1)
|
|
Non-CPLV Lease Agreement and Joliet Lease Agreement
|
|
CPLV Lease Agreement
|
|
HLV Lease Agreement
|
Initial Term
|
|
15 years
|
|
15 years
|
|
15 years
|
Renewal Terms
|
|
Four, five-year terms
|
|
Four, five-year terms
|
|
Four, five-year terms
|
Initial Base Rent (2)
|
|
$493,925
|
|
$200,000
|
|
$87,400
|
Current Base Rent (3)
|
|
$501,019
|
|
$204,358
|
|
$88,274
|
Escalator commencement
|
|
Lease year two
|
|
Lease year two
|
|
Lease year two
|
Escalator (4)
|
|
Lease years 2-5 - 1.5%
Lease Years 6-15 - Consumer price index subject to 2% floor
|
|
Consumer price index subject to 2% floor
|
|
Lease years 2-5 - 1%
Lease Years 6-15 - Consumer price index subject to 2% floor
|
EBITDAR to Rent Ratio floor (5)
|
|
1.2x commencing lease year 8
|
|
1.7x commencing lease year 8
|
|
1.6x commencing lease year 6
|
Variable Rent commencement/reset
|
|
Lease years 8 and 11
|
|
Lease years 8 and 11
|
|
Lease years 8 and 11
|
Variable Rent split (6)
|
|
Lease years 8-10 - 70% Base Rent and 30% Variable Rent
Lease years 11-15- 80% Base Rent and 20% Variable Rent
|
|
80% Base rent and 20% Variable rent
|
|
80% Base rent and 20% Variable rent
|
Variable Rent percentage (6)
|
|
4%
|
|
4%
|
|
4%
|
($ In thousands)
|
|
|
|
|
Lease Provision
|
|
Margaritaville Lease Agreement
|
|
Greektown Lease Agreement
|
Initial term
|
|
15 years
|
|
15 years
|
Renewal terms
|
|
Four, five-year terms
|
|
Four, five-year terms
|
Building base rent
|
|
$17,200
|
|
$42,800
|
Escalation commencement
|
|
Lease year two
|
|
Lease year two
|
Escalation
|
|
2% of Building base rent, subject to the EBITDAR to rent ratio floor
|
|
2% of Building base rent, subject to the EBITDAR to rent ratio floor
|
EBITDAR to rent ratio floor (1)
|
|
1.9x commencing lease year two
|
|
1.85x commencing lease year two
|
Land base rent (2)
|
|
$3,000
|
|
$6,400
|
Percentage rent (3)
|
|
$3,000 (fixed for lease year one and two)
|
|
$6,400 (fixed for lease year one and two)
|
Percentage rent reset
|
|
Lease year three and each and every other lease year thereafter
|
|
Lease year three and each and every other lease year thereafter
|
Percentage rent multiplier
|
|
The product of (i) 4% and (ii) the excess (if any) of (a) the average annual net revenue of a trailing two-year period preceding such reset year over (b) a threshold amount (defined as 50% of LTM net revenues prior to acquisition)
|
|
The product of (i) 4% and (ii) the excess (if any) of (a) the average annual net revenue of a trailing two-year period preceding such reset year over (b) a threshold amount (defined as 50% of LTM net revenues prior to acquisition)
|
Total current rent (4)
|
|
$23,200
|
|
$55,600
|
Provision
|
|
Non-CPLV Lease Agreement and Joliet Lease Agreement
|
|
CPLV Lease Agreement
|
|
HLV Lease Agreement
|
|
Penn National Lease Agreements
|
Yearly minimum expenditure
|
|
1% of net revenues (1)
|
|
1% of net revenues (1)
|
|
1% of net revenues commencing in 2022
|
|
1% of net revenues based on four-year average
|
Rolling three-year minimum (2)
|
|
$255 million
|
|
$84 million
|
|
N/A
|
|
N/A
|
Initial minimum capital expenditure
|
|
N/A
|
|
N/A
|
|
$171 million (2017 - 2021)
|
|
N/A
|
(In thousands)
|
June 30, 2019
|
|
December 31, 2018
|
||||
Property and equipment used in operations, net
|
$
|
71,046
|
|
|
$
|
71,513
|
|
Debt issuance costs
|
16,392
|
|
|
6,190
|
|
||
Right of use asset
|
11,074
|
|
|
—
|
|
||
Deferred acquisition costs
|
7,217
|
|
|
7,062
|
|
||
Other
|
4,227
|
|
|
1,253
|
|
||
Prepaid expenses
|
1,403
|
|
|
3,060
|
|
||
Interest receivable
|
1,149
|
|
|
886
|
|
||
Tenant receivable for property taxes
|
—
|
|
|
25,586
|
|
||
Total other assets
|
$
|
112,508
|
|
|
$
|
115,550
|
|
(In thousands)
|
June 30, 2019
|
|
December 31, 2018
|
||||
Land and land improvements
|
$
|
58,823
|
|
|
$
|
58,573
|
|
Buildings and improvements
|
14,572
|
|
|
14,572
|
|
||
Furniture and equipment
|
4,036
|
|
|
2,805
|
|
||
Total property and equipment used in operations
|
77,431
|
|
|
75,950
|
|
||
Less: accumulated depreciation
|
(6,385
|
)
|
|
(4,437
|
)
|
||
Total property and equipment used in operations, net
|
$
|
71,046
|
|
|
$
|
71,513
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Depreciation expense
|
$
|
1,018
|
|
|
$
|
922
|
|
|
$
|
1,948
|
|
|
$
|
1,828
|
|
(In thousands)
|
June 30, 2019
|
|
December 31, 2018
|
||||
Derivative liability
|
$
|
70,003
|
|
|
$
|
22,124
|
|
Other accrued expenses
|
17,305
|
|
|
30,951
|
|
||
Lease liability
|
11,074
|
|
|
—
|
|
||
Accrued payroll and other compensation
|
3,320
|
|
|
4,934
|
|
||
Deferred income taxes
|
3,011
|
|
|
3,340
|
|
||
Accounts payable
|
451
|
|
|
1,057
|
|
||
Total other liabilities
|
$
|
105,164
|
|
|
$
|
62,406
|
|
($ in thousands)
|
|
June 30, 2019
|
||||||||||
Description of Debt
|
|
Final
Maturity
|
|
Interest Rate
|
|
Face Value
|
|
Carrying Value(1)
|
||||
VICI PropCo Senior Secured Credit Facilities
|
|
|
|
|
|
|
|
|
||||
Revolving Credit Facility (2)
|
|
2024
|
|
L + 2.00%
|
|
$
|
—
|
|
|
$
|
—
|
|
Term Loan B Facility (3)
|
|
2024
|
|
L + 2.00%
|
|
2,100,000
|
|
|
2,075,968
|
|
||
Second Lien Notes (4)
|
|
2023
|
|
8.00%
|
|
498,480
|
|
|
498,480
|
|
||
CPLV Debt
|
|
|
|
|
|
|
|
|
||||
CPLV CMBS Debt (5)
|
|
2022
|
|
4.36%
|
|
1,550,000
|
|
|
1,550,000
|
|
||
Total Debt
|
|
$
|
4,148,480
|
|
|
$
|
4,124,448
|
|
($ in thousands)
|
|
December 31, 2018
|
||||||||||
Description of Debt
|
|
Final
Maturity
|
|
Interest Rate
|
|
Face Value
|
|
Carrying Value(1)
|
||||
VICI PropCo Senior Secured Credit Facilities
|
|
|
|
|
|
|
|
|
||||
Revolving Credit Facility (2)
|
|
2022
|
|
L + 2.00%
|
|
$
|
—
|
|
|
$
|
—
|
|
Term Loan B Facility (3)
|
|
2024
|
|
L + 2.00%
|
|
2,100,000
|
|
|
2,073,784
|
|
||
Second Lien Notes (4)
|
|
2023
|
|
8.00%
|
|
498,480
|
|
|
498,480
|
|
||
CPLV Debt
|
|
|
|
|
|
|
|
|
||||
CPLV CMBS Debt (5)
|
|
2022
|
|
4.36%
|
|
1,550,000
|
|
|
1,550,000
|
|
||
Total Debt
|
|
$
|
4,148,480
|
|
|
$
|
4,122,264
|
|
(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. The Revolving Credit Facility initially bore interest at LIBOR plus 2.25% and was subject to a 0.5% commitment fee. Upon our initial public offering, on February 5, 2018, the interest rate was reduced to LIBOR plus 2.00%. On May 15, 2019, we amended our Revolving Credit Facility to, among other things, increase borrowing capacity by $600 million to a total of $1.0 billion and extend the maturity date to May 2024. After giving effect to the amendments executed on May 15, 2019, borrowings under the Revolving Credit Facility will bear interest at a rate based on a leverage based pricing grid with a range of 1.75% to 2.00% over LIBOR, or between 0.75% and 1.00% over the base rate depending on our total net debt to adjusted total assets ratio. Additionally, after giving effect to the amendments executed on May 15, 2019, the commitment fee under the Revolving Credit Facility is calculated on a leverage-based pricing grid with a range of 0.375% to 0.5%, in each case depending on our total net debt to adjusted total assets ratio. For the three and six months ended June 30, 2019 the commitment fee was 0.5%.
|
(3)
|
Interest on any outstanding balance is payable monthly. The Term Loan B Facility initially bore interest at LIBOR plus 2.25%. Upon our initial public offering, on February 5, 2018, the interest rate was reduced to LIBOR plus 2.00%. As of June 30, 2019, we had six interest rate swap agreements outstanding with third-party financial institutions having an aggregate notional amount of $2.0 billion at a blended LIBOR rate of 2.7173%. As of December 31, 2018, we had four interest rate swap agreements outstanding with third-party financial institutions having an aggregate notional amount of $1.5 billion at a LIBOR rate of 2.8297%. 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. 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).
|
(4)
|
Interest is payable semi-annually.
|
(5)
|
Interest is payable monthly.
|
(In thousands)
|
|
Future Minimum Payments
|
||
2019 (remaining)
|
|
$
|
—
|
|
2020
|
|
—
|
|
|
2021
|
|
—
|
|
|
2022
|
|
1,560,000
|
|
|
2023
|
|
520,480
|
|
|
2024
|
|
2,068,000
|
|
|
Total minimum repayments
|
|
$
|
4,148,480
|
|
($ in thousands)
|
|
June 30, 2019
|
||||||||||
Instrument
|
|
Number of Instruments
|
|
Fixed Rate
|
|
Notional
|
|
Index
|
|
Maturity
|
||
Interest Rate Swaps
|
|
4
|
|
2.8297%
|
|
$
|
1,500,000
|
|
|
USD LIBOR
|
|
April 22, 2023
|
Interest Rate Swaps
|
|
2
|
|
2.3802%
|
|
$
|
500,000
|
|
|
USD LIBOR
|
|
January 22, 2021
|
($ in thousands)
|
|
December 31, 2018
|
||||||||||
Instrument
|
|
Number of Instruments
|
|
Fixed Rate
|
|
Notional
|
|
Index
|
|
Maturity
|
||
Interest Rate Swaps
|
|
4
|
|
2.8297%
|
|
$
|
1,500,000
|
|
|
USD LIBOR
|
|
April 22, 2023
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Unrealized loss recorded in other comprehensive income
|
$
|
30,688
|
|
|
$
|
4,640
|
|
|
$
|
47,879
|
|
|
$
|
4,640
|
|
Interest recorded in interest expense
|
$
|
1,280
|
|
|
$
|
1,413
|
|
|
$
|
2,430
|
|
|
$
|
1,413
|
|
|
June 30, 2019
|
||||||||||||||
(In thousands)
|
|
|
Fair Value
|
||||||||||||
|
Carrying Amount
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Short-term investments (1)
|
$
|
97,586
|
|
|
$
|
—
|
|
|
$
|
97,586
|
|
|
$
|
—
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative instruments - interest rate swaps (2)
|
$
|
70,003
|
|
|
$
|
—
|
|
|
$
|
70,003
|
|
|
$
|
—
|
|
|
December 31, 2018
|
||||||||||||||
(In thousands)
|
|
|
Fair Value
|
||||||||||||
|
Carrying Amount
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Short-term investments (1)
|
$
|
520,877
|
|
|
$
|
—
|
|
|
$
|
520,877
|
|
|
$
|
—
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative instruments - interest rate swaps (2)
|
$
|
22,124
|
|
|
$
|
—
|
|
|
$
|
22,124
|
|
|
$
|
—
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
(In thousands)
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
1,205,335
|
|
|
$
|
1,205,335
|
|
|
$
|
577,883
|
|
|
$
|
577,883
|
|
Restricted cash
|
28,217
|
|
|
28,217
|
|
|
20,564
|
|
|
20,564
|
|
||||
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Debt (1)
|
|
|
|
|
|
|
|
||||||||
Revolving Credit Facility
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Term Loan B Facility
|
2,075,968
|
|
|
2,079,000
|
|
|
2,073,784
|
|
|
2,016,000
|
|
||||
Second Lien Notes
|
498,480
|
|
|
548,328
|
|
|
498,480
|
|
|
535,866
|
|
||||
CPLV CMBS Debt
|
1,550,000
|
|
|
1,598,905
|
|
|
1,550,000
|
|
|
1,539,040
|
|
(1)
|
The fair value of our debt instruments was estimated using quoted prices for identical or similar liabilities in markets that are not active and, as such, these fair value measurements are considered Level 2 of the fair value hierarchy.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Rent expense
|
$
|
414
|
|
|
$
|
326
|
|
|
$
|
779
|
|
|
$
|
593
|
|
(In thousands)
|
|
Lease Commitments
|
||
2019 (remaining)
|
|
$
|
635
|
|
2020
|
|
1,042
|
|
|
2021
|
|
933
|
|
|
2022
|
|
951
|
|
|
2023
|
|
970
|
|
|
2024
|
|
990
|
|
|
Thereafter
|
|
15,905
|
|
|
Total minimum lease commitments
|
|
$
|
21,426
|
|
Discounting factor
|
|
10,352
|
|
|
Lease liability
|
|
$
|
11,074
|
|
|
|
Six Months Ended June 30,
|
||||
Common Stock Outstanding
|
|
2019
|
|
2018
|
||
Beginning Balance December 31 (1)
|
|
404,729,616
|
|
|
300,278,938
|
|
Issuance of common stock in initial public offering
|
|
—
|
|
|
69,575,000
|
|
Issuance of common stock in primary follow-on offerings (2)
|
|
50,000,000
|
|
|
—
|
|
Issuance of common stock under the at-the-market offering program
|
|
6,107,633
|
|
|
—
|
|
Issuance of restricted and unrestricted common stock under the stock incentive program, net of forfeitures (3)
|
|
167,297
|
|
|
295,983
|
|
Ending Balance June 30
|
|
461,004,546
|
|
|
370,149,921
|
|
(1)
|
The beginning balance as of December 31, 2018 includes 34,500,000 shares issued in our November 2018 primary follow-on offering.
|
(2)
|
Excludes the 65,000,000 shares subject to Forward Sale Agreements to be settled by September 26, 2020.
|
(3)
|
For the six months ended June 30, 2019, excludes 157,512 share units issued under the performance-based stock incentive program.
|
Six Months Ended June 30, 2019
|
||||||||||
Declaration Date
|
|
Record Date
|
|
Payment Date
|
|
Period
|
|
Dividend
|
||
March 14, 2019
|
|
March 29, 2019
|
|
April 11, 2019
|
|
January 1, 2019 - March 31, 2019
|
|
$
|
0.2875
|
|
June 13, 2019
|
|
June 28, 2019
|
|
July 12, 2019
|
|
April 1, 2019 - June 30, 2019
|
|
$
|
0.2875
|
|
Six Months Ended June 30, 2018
|
||||||||||
Declaration Date
|
|
Record Date
|
|
Payment Date
|
|
Period
|
|
Dividend
|
||
March 15, 2018 (1)
|
|
March 29, 2018
|
|
April 13, 2018
|
|
February 5, 2018 - March 31, 2018
|
|
$
|
0.16
|
|
June 14, 2018
|
|
June 28, 2018
|
|
July 13, 2018
|
|
April 1, 2018 - June 30, 2018
|
|
$
|
0.2625
|
|
(1)
|
The dividend was pro-rated for the period commencing upon the closing of our initial public offering and ending on March 31, 2018, based on a quarterly distribution rate of $0.2625 per share.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
(In thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Determination of shares:
|
|
|
|
|
|
|
|
|
|||
Weighted-average common shares outstanding
|
412,310
|
|
|
369,933
|
|
|
409,040
|
|
|
356,454
|
|
Assumed conversion of restricted stock
|
321
|
|
|
59
|
|
|
363
|
|
|
37
|
|
Assumed settlement of Forward Sale Agreements
|
190
|
|
|
—
|
|
|
70
|
|
|
—
|
|
Diluted weighted-average common shares outstanding
|
412,821
|
|
|
369,992
|
|
|
409,473
|
|
|
356,491
|
|
Basic and Diluted Earnings Per Share
|
|||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands, except per share data)
|
2019
|
|
2018
|
|
2018
|
|
2018
|
||||||||
Basic:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common stockholders
|
$
|
152,049
|
|
|
$
|
139,044
|
|
|
$
|
302,898
|
|
|
$
|
251,166
|
|
Weighted-average common shares outstanding
|
412,310
|
|
|
369,933
|
|
|
409,040
|
|
|
356,454
|
|
||||
Basic EPS
|
$
|
0.37
|
|
|
$
|
0.38
|
|
|
$
|
0.74
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common stockholders
|
$
|
152,049
|
|
|
$
|
139,044
|
|
|
$
|
302,898
|
|
|
$
|
251,166
|
|
Diluted weighted-average common shares outstanding
|
412,821
|
|
|
369,992
|
|
|
409,473
|
|
|
356,491
|
|
||||
Diluted EPS
|
$
|
0.37
|
|
|
$
|
0.38
|
|
|
$
|
0.74
|
|
|
$
|
0.70
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Stock-based compensation expense
|
$
|
1,366
|
|
|
$
|
467
|
|
|
$
|
2,417
|
|
|
$
|
859
|
|
|
Six Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2018
|
||||||||||
(In thousands, except per share data)
|
Shares
|
|
Weighted Average Grant Date Fair Value
|
|
Shares
|
|
Weighted Average Grant Date Fair Value
|
||||||
Outstanding at beginning of period
|
398
|
|
|
$
|
19.60
|
|
|
124
|
|
|
$
|
15.61
|
|
Granted
|
336
|
|
|
22.03
|
|
|
121
|
|
|
19.79
|
|
||
Vested
|
(93
|
)
|
|
19.41
|
|
|
(28
|
)
|
|
19.97
|
|
||
Forfeited
|
(12
|
)
|
|
20.78
|
|
|
—
|
|
|
—
|
|
||
Canceled
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Outstanding at end of period
|
629
|
|
|
$
|
20.90
|
|
|
217
|
|
|
$
|
17.38
|
|
|
|
Three Months Ended June 30, 2019
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||
(In thousands)
|
|
Real Property Business
|
|
Golf Course Business
|
|
VICI Consolidated
|
|
Real Property Business
|
|
Golf Course Business
|
|
VICI Consolidated
|
||||||||||||
Revenues (1)
|
|
$
|
212,463
|
|
|
$
|
8,283
|
|
|
$
|
220,746
|
|
|
$
|
213,460
|
|
|
$
|
7,515
|
|
|
$
|
220,975
|
|
Operating income
|
|
203,077
|
|
|
2,418
|
|
|
205,495
|
|
|
187,367
|
|
|
2,081
|
|
|
189,448
|
|
||||||
Interest expense
|
|
(54,819
|
)
|
|
—
|
|
|
(54,819
|
)
|
|
(51,440
|
)
|
|
—
|
|
|
(51,440
|
)
|
||||||
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Income before income taxes
|
|
152,186
|
|
|
2,494
|
|
|
154,680
|
|
|
139,726
|
|
|
2,081
|
|
|
141,807
|
|
||||||
Income tax expense
|
|
—
|
|
|
(553
|
)
|
|
(553
|
)
|
|
—
|
|
|
(448
|
)
|
|
(448
|
)
|
||||||
Net income
|
|
152,186
|
|
|
1,941
|
|
|
154,127
|
|
|
139,726
|
|
|
1,633
|
|
|
141,359
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Depreciation
|
|
2
|
|
|
1,016
|
|
|
1,018
|
|
|
2
|
|
|
920
|
|
|
922
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total assets
|
|
$
|
12,423,049
|
|
|
$
|
98,997
|
|
|
$
|
12,522,046
|
|
|
$
|
10,482,823
|
|
|
$
|
81,880
|
|
|
$
|
10,564,703
|
|
|
|
Six Months Ended June 30, 2019
|
|
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 (1)
|
|
$
|
419,126
|
|
|
$
|
15,622
|
|
|
$
|
434,748
|
|
|
$
|
424,948
|
|
|
$
|
14,303
|
|
|
$
|
439,251
|
|
Operating income
|
|
402,623
|
|
|
4,738
|
|
|
407,361
|
|
|
374,303
|
|
|
3,869
|
|
|
378,172
|
|
||||||
Interest expense
|
|
(108,405
|
)
|
|
—
|
|
|
(108,405
|
)
|
|
(104,314
|
)
|
|
—
|
|
|
(104,314
|
)
|
||||||
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,040
|
)
|
|
—
|
|
|
(23,040
|
)
|
||||||
Income before income taxes
|
|
303,276
|
|
|
4,851
|
|
|
308,127
|
|
|
252,426
|
|
|
3,869
|
|
|
256,295
|
|
||||||
Income tax expense
|
|
—
|
|
|
(1,074
|
)
|
|
(1,074
|
)
|
|
—
|
|
|
(832
|
)
|
|
(832
|
)
|
||||||
Net income
|
|
303,276
|
|
|
3,777
|
|
|
307,053
|
|
|
252,426
|
|
|
3,037
|
|
|
255,463
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Depreciation
|
|
5
|
|
|
1,943
|
|
|
1,948
|
|
|
2
|
|
|
1,826
|
|
|
1,828
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total assets
|
|
$
|
12,423,049
|
|
|
$
|
98,997
|
|
|
$
|
12,522,046
|
|
|
$
|
10,482,823
|
|
|
$
|
81,880
|
|
|
$
|
10,564,703
|
|
(1)
|
Upon the adoption of ASC 842 on January 1, 2019, we ceased recording tenant reimbursement of property taxes as these taxes are paid directly by our tenants to the applicable government entity.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Acquisition of the MTA Properties. We have agreed to acquire all of the land and real estate assets associated with Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City (or, if necessary, certain replacement properties designated in the Master Transaction Agreement) (collectively, the “MTA Properties” and each, an “MTA Property”) for an aggregate purchase price of $1,809.5 million (the “MTA Properties Acquisitions” and each, an “MTA Property Acquisition”). Simultaneous with the closing of each MTA Property Acquisition, we will enter into a triple-net lease with a subsidiary of ERI as tenant, by amending the Non-CPLV Lease Agreement to include such MTA Property, with (i) initial aggregate total annual rent payable to us and attributable to the MTA Properties of $154.0 million, (ii) so long as the MTA Property
|
•
|
CPLV Lease Agreement Amendment. In consideration of a payment by us to ERI of $1,189.9 million, we and ERI will amend the CPLV Lease Agreement to (i) increase the annual rent payable to us under the CPLV Lease Agreement by $83.5 million (the “CPLV Additional Rent Acquisition”) and (ii) provide for the amended terms described below.
|
•
|
HLV Lease Agreement Termination and Creation of Las Vegas Master Lease. In consideration of a payment by us to ERI of $213.8 million, we and ERI will terminate the HLV Lease Agreement and the related lease guaranty. Annual rent previously payable to us with respect to the Harrah’s Las Vegas property will be increased by $15.0 million (the “HLV Additional Rent Acquisition”). The CPLV Lease Agreement will be amended (as amended, the “Las Vegas Master Lease Agreement”) to provide, among other things, that the Harrah’s Las Vegas property, which is currently subject to the HLV Lease Agreement, will be leased pursuant thereto (with the Harrah’s Las Vegas property subject to the higher rent escalator currently in place under the CPLV Lease Agreement). Thereafter the Las Vegas Master Lease Agreement will be a multi-property master lease whereby the Harrah’s Las Vegas property tenant and the Caesars Palace Las Vegas property tenant will collectively be the tenant.
|
•
|
Centaur Properties Put/Call Agreement. Affiliates of Caesars currently own two gaming facilities in Indiana - Hoosier Park and Indiana Grand (together the “Centaur Properties”). At the closing of the ERI/Caesars Merger, a right of first refusal that we have with respect to the Centaur Properties will terminate and we will enter into a put/call agreement with ERI, whereby (i) we will have the right to acquire all of the land and real estate assets associated with the Centaur Properties at a price equal to 13.0x the initial annual rent of each facility (determined as provided below), and to simultaneously lease back each such property to a subsidiary of ERI for initial annual rent equal to the property’s trailing four quarters EBITDA at the time of acquisition divided by 1.3 (i.e., the initial annual rent will be set at 1.3x rent coverage) and (ii) ERI will have the right to require us to acquire the Centaur Properties at a price equal to 12.5x the initial annual rent of each facility, and to simultaneously lease back each such Centaur Property to a subsidiary of ERI for initial annual rent equal to the property’s trailing four quarters EBITDA at the time of acquisition divided by 1.3 (i.e., the initial annual rent will be set at 1.3x rent coverage). Either party will be able to trigger its respective put or call, as applicable, beginning on January 1, 2022 and ending on December 31, 2024. The put/call agreement will provide that the leaseback of the Centaur Properties will be implemented through addition of the Centaur Properties to the Non-CPLV Lease Agreement.
|
•
|
Las Vegas Strip Assets ROFR. We will enter into a right of first refusal agreement with ERI (the “Las Vegas ROFR”) whereby we will have the first right, with respect to the first two of certain specified Las Vegas Strip assets that ERI proposes to sell, whether pursuant to a sale leaseback or a WholeCo sale, to a third party, to acquire any such asset (it being understood that we will have the opportunity to find an operating company should ERI elect to pursue a WholeCo sale). Pursuant to the Master Transaction Agreement, the specified Las Vegas Strip assets subject to the Las Vegas ROFR will be the land and real estate assets associated (i) with respect to the first such asset subject to the Las Vegas ROFR, the Flamingo Las Vegas, Paris Las Vegas, Planet Hollywood and Bally’s Las Vegas gaming facilities, and (ii) with respect to the second asset subject to the Las Vegas ROFR, the foregoing assets plus The LINQ gaming facility. If we enter into a sale leaseback transaction with ERI on any of these facilities, the leaseback will be implemented through the addition of such properties to the CPLV Lease Agreement.
|
•
|
Horseshoe Baltimore ROFR. We and ERI agreed to enter into a right of first refusal agreement pursuant to which we will have the first right to enter into a sale leaseback transaction with respect to the land and real estate assets associated with the Horseshoe Baltimore gaming facility (subject to any consent required from ERI’s joint venture partners with respect to this asset).
|
•
|
Lease Guaranties and MLSA Terminations. ERI will execute new guaranties (the “ERI Guaranties”) of the CPLV Lease Agreement, the Non-CPLV Lease Agreement and the Joliet Lease Agreement, and the existing guaranties by Caesars of
|
•
|
Other Lease Amendments. The CPLV Lease Agreement, the Non-CPLV Lease Agreement and the Joliet Lease Agreement will be amended to, among other things, (i) remove the rent coverage floors, which coverage floors serve to reduce the rent escalators under such leases in the event that the “EBITDAR to Rent Ratio” (as defined in each of the CPLV Lease Agreement, the Non-CPLV Lease Agreement and the Joliet Lease Agreement) coverage is below the stated floor and (ii) extend the term of each such lease by such additional period of time as necessary to ensure that following the consummation of the ERI/Caesars Merger, each lease will have a full 15-year initial lease term. The Non-CPLV Lease Agreement also will be amended to, among other things: (a) permit the tenant under the Non-CPLV Lease Agreement to cause facilities subject to the Non-CPLV Lease Agreement that in the aggregate represent up to five percent of the aggregate EBITDAR of (A) all of the facilities under such Non-CPLV Lease Agreement and (B) the Harrah’s Joliet facility, for the 2018 fiscal year (defined as the “2018 EBITDAR Pool” in the Non-CPLV Lease Agreement, without giving effect to any increase in the 2018 EBITDAR Pool as a result of a facility being added to the Non-CPLV Lease Agreement) to be sold (whereby the tenant and landlord under the Non-CPLV Lease Agreement would sell the operations and real estate, respectively, with respect to such facility), provided, among other things, that (1) we and ERI mutually agree to the split of proceeds from such sales, (2) such sales do not result in any impairment(s)/asset write down(s) by us, (3) rent under the Non-CPLV Lease Agreement remains unchanged following such sale and (4) the sale does not result in us recognizing certain taxable gain; (b) restrict the ability of the tenant thereunder to transfer and sell the operating business of Harrah’s New Orleans and Harrah’s Atlantic City to replacement tenants without our consent and remove such restrictions with respect to Horseshoe Southern Indiana (in connection with the restrictions applying to Harrah’s New Orleans) and Horseshoe Bossier City (in connection with the restrictions applying to Harrah’s Atlantic City), provided that the tenant under the Non-CPLV Lease Agreement may only sell such properties if certain terms and conditions are met, including that replacement tenants meet certain criteria provided in the Non-CPLV Lease Agreement; and (c) require that the tenant under the Non-CPLV Lease Agreement complete and pay for all capital improvements and other payments, costs and expenses related to the extension of the existing operating license with respect to Harrah’s New Orleans, including, without limitation, any such payments, costs and expenses required to be made to the City of New Orleans, the State of Louisiana or any other governmental body or agency.
|
•
|
CPLV CMBS Debt Lender Consent. Subject to the satisfaction of certain conditions, we will obtain the consent of the CPLV CMBS Debt holders that is required in connection with the consummation of certain elements of the ERI/Caesars Merger and the Eldorado Transaction or cause the CPLV CMBS Debt to be repaid in full prior to the closing of the ERI/Caesars Merger. ERI has agreed to reimburse us for 50% of our out-of-pocket costs in connection with obtaining and consummating the consent of the CPLV CMBS Debt holders, including any prepayment penalties should the lender not consent and we have to refinance the debt (which reimbursement obligations exist pursuant to the MTA regardless of whether the ERI/Caesars Merger is consummated).
|
•
|
Eldorado Bridge Facility. On June 24, 2019, in connection with the Eldorado Transaction, VICI PropCo entered into a commitment letter (the “Commitment Letter”) with Deutsche Bank Securities Inc. and Deutsche Bank AG Cayman Islands Branch (collectively, the “Bridge Lender”), pursuant to which and subject to the terms and conditions set forth therein, the Bridge Lender has agreed to provide (i) a 364-day first lien secured bridge facility of up to $3.3 billion in the aggregate (the “Eldorado Senior Bridge Facility”) and (ii) a 364-day second lien secured bridge facility of up to $1.5 billion in the aggregate (the “Eldorado Junior Bridge Facility,” and, together with the Eldorado Senior Bridge Facility, the “Bridge Facilities”), for the purpose of providing a portion of the financing necessary to fund the consideration to be paid pursuant to the terms of the Eldorado Transaction documents and related fees and expenses. We currently intend to incur additional long-term senior secured term loans and/or opportunistically access the debt capital markets to fund a portion of the cash consideration for the Eldorado Transaction, but, absent such a long-term debt financing, we expect to draw on the Bridge Facilities in connection with the closing of the Eldorado Transaction to fund a portion of the cash consideration, and, in the future, raise long-term debt financing to refinance such amounts borrowed under the Bridge Facilities, subject to market and other conditions. On June 28, 2019 and July 11, 2019, additional parties joined the Commitment Letter as
|
|
Three Months Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
||||||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
Variance
|
|
2019
|
|
2018
|
|
Variance
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income from direct financing and sales-type leases
|
$
|
201,549
|
|
|
$
|
182,319
|
|
|
$
|
19,230
|
|
|
$
|
397,299
|
|
|
$
|
364,355
|
|
|
$
|
32,944
|
|
Income from operating leases
|
10,914
|
|
|
12,209
|
|
|
(1,295
|
)
|
|
21,827
|
|
|
24,418
|
|
|
(2,591
|
)
|
||||||
Tenant reimbursement of property taxes
|
—
|
|
|
18,932
|
|
|
(18,932
|
)
|
|
—
|
|
|
36,175
|
|
|
(36,175
|
)
|
||||||
Golf operations
|
8,283
|
|
|
7,515
|
|
|
768
|
|
|
15,622
|
|
|
14,303
|
|
|
1,319
|
|
||||||
Revenues
|
220,746
|
|
|
220,975
|
|
|
(229
|
)
|
|
434,748
|
|
|
439,251
|
|
|
(4,503
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
General and administrative
|
6,518
|
|
|
7,160
|
|
|
(642
|
)
|
|
12,743
|
|
|
14,468
|
|
|
(1,725
|
)
|
||||||
Depreciation
|
1,018
|
|
|
922
|
|
|
96
|
|
|
1,948
|
|
|
1,828
|
|
|
120
|
|
||||||
Property taxes
|
—
|
|
|
18,932
|
|
|
(18,932
|
)
|
|
—
|
|
|
36,175
|
|
|
(36,175
|
)
|
||||||
Golf operations
|
4,848
|
|
|
4,513
|
|
|
335
|
|
|
8,940
|
|
|
8,608
|
|
|
332
|
|
||||||
Transaction and acquisition expenses
|
2,867
|
|
|
—
|
|
|
2,867
|
|
|
3,756
|
|
|
—
|
|
|
3,756
|
|
||||||
Total operating expenses
|
15,251
|
|
|
31,527
|
|
|
(16,276
|
)
|
|
27,387
|
|
|
61,079
|
|
|
(33,692
|
)
|
||||||
Operating income
|
205,495
|
|
|
189,448
|
|
|
16,047
|
|
|
407,361
|
|
|
378,172
|
|
|
29,189
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
(54,819
|
)
|
|
(51,440
|
)
|
|
(3,379
|
)
|
|
(108,405
|
)
|
|
(104,314
|
)
|
|
(4,091
|
)
|
||||||
Interest income
|
4,004
|
|
|
3,799
|
|
|
205
|
|
|
9,171
|
|
|
5,477
|
|
|
3,694
|
|
||||||
Loss from extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,040
|
)
|
|
23,040
|
|
||||||
Income before income taxes
|
154,680
|
|
|
141,807
|
|
|
12,873
|
|
|
308,127
|
|
|
256,295
|
|
|
51,832
|
|
||||||
Income tax expense
|
(553
|
)
|
|
(448
|
)
|
|
(105
|
)
|
|
(1,074
|
)
|
|
(832
|
)
|
|
(242
|
)
|
||||||
Net income
|
154,127
|
|
|
141,359
|
|
|
12,768
|
|
|
307,053
|
|
|
255,463
|
|
|
51,590
|
|
||||||
Less: Net income attributable to non-controlling interests
|
(2,078
|
)
|
|
(2,315
|
)
|
|
237
|
|
|
(4,155
|
)
|
|
(4,297
|
)
|
|
142
|
|
||||||
Net income attributable to common stockholders
|
$
|
152,049
|
|
|
$
|
139,044
|
|
|
$
|
13,005
|
|
|
$
|
302,898
|
|
|
$
|
251,166
|
|
|
$
|
51,732
|
|
|
Three Months Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
||||||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
Variance
|
|
2019
|
|
2018
|
|
Variance
|
||||||||||||
Leasing revenue
|
$
|
212,463
|
|
|
$
|
194,528
|
|
|
$
|
17,935
|
|
|
$
|
419,126
|
|
|
$
|
388,773
|
|
|
$
|
30,353
|
|
Tenant reimbursement of property taxes
|
—
|
|
|
18,932
|
|
|
(18,932
|
)
|
|
—
|
|
|
36,175
|
|
|
(36,175
|
)
|
||||||
Golf operations
|
8,283
|
|
|
7,515
|
|
|
768
|
|
|
15,622
|
|
|
14,303
|
|
|
1,319
|
|
||||||
Total revenue
|
$
|
220,746
|
|
|
$
|
220,975
|
|
|
$
|
(229
|
)
|
|
$
|
434,748
|
|
|
$
|
439,251
|
|
|
$
|
(4,503
|
)
|
|
Three Months Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
||||||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
Variance
|
|
2019
|
|
2018
|
|
Variance
|
||||||||||||
Income from direct financing and sales-type leases
|
$
|
201,549
|
|
|
$
|
182,319
|
|
|
$
|
19,230
|
|
|
$
|
397,299
|
|
|
$
|
364,355
|
|
|
$
|
32,944
|
|
Income from operating leases (1)
|
10,914
|
|
|
12,209
|
|
|
(1,295
|
)
|
|
21,827
|
|
|
24,418
|
|
|
(2,591
|
)
|
||||||
Total lease revenue
|
212,463
|
|
|
194,528
|
|
|
17,935
|
|
|
419,126
|
|
|
388,773
|
|
|
30,353
|
|
||||||
Less: Direct financing and sales-type lease adjustment (2)
|
(2,277
|
)
|
|
(13,197
|
)
|
|
10,920
|
|
|
(4,789
|
)
|
|
(26,110
|
)
|
|
21,321
|
|
||||||
Total contractual lease revenue
|
$
|
210,186
|
|
|
$
|
181,331
|
|
|
$
|
28,855
|
|
|
$
|
414,337
|
|
|
$
|
362,663
|
|
|
$
|
51,674
|
|
|
Three Months Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
||||||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
Variance
|
|
2019
|
|
2018
|
|
Variance
|
||||||||||||
General and administrative
|
$
|
6,518
|
|
|
$
|
7,160
|
|
|
$
|
(642
|
)
|
|
$
|
12,743
|
|
|
$
|
14,468
|
|
|
$
|
(1,725
|
)
|
Depreciation
|
1,018
|
|
|
922
|
|
|
96
|
|
|
1,948
|
|
|
1,828
|
|
|
120
|
|
||||||
Property taxes
|
—
|
|
|
18,932
|
|
|
(18,932
|
)
|
|
—
|
|
|
36,175
|
|
|
(36,175
|
)
|
||||||
Golf operations
|
4,848
|
|
|
4,513
|
|
|
335
|
|
|
8,940
|
|
|
8,608
|
|
|
332
|
|
||||||
Transaction and acquisition expenses
|
2,867
|
|
|
—
|
|
|
2,867
|
|
|
3,756
|
|
|
—
|
|
|
3,756
|
|
||||||
Total operating expenses
|
$
|
15,251
|
|
|
$
|
31,527
|
|
|
$
|
(16,276
|
)
|
|
$
|
27,387
|
|
|
$
|
61,079
|
|
|
$
|
(33,692
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands, except share data and per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income attributable to common stockholders
|
$
|
152,049
|
|
|
$
|
139,044
|
|
|
$
|
302,898
|
|
|
$
|
251,166
|
|
Real estate depreciation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
FFO
|
152,049
|
|
|
139,044
|
|
|
302,898
|
|
|
251,166
|
|
||||
Direct financing and sales-type lease adjustments attributable to common stockholders
|
(2,210
|
)
|
|
(12,863
|
)
|
|
(4,656
|
)
|
|
(25,776
|
)
|
||||
Transaction and acquisition expenses
|
2,867
|
|
|
—
|
|
|
3,756
|
|
|
—
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
23,040
|
|
||||
Non-cash stock-based compensation
|
1,366
|
|
|
468
|
|
|
2,417
|
|
|
859
|
|
||||
Amortization of debt issuance costs and original issue discount
|
1,899
|
|
|
1,489
|
|
|
3,364
|
|
|
2,982
|
|
||||
Other depreciation
|
1,016
|
|
|
919
|
|
|
1,943
|
|
|
1,825
|
|
||||
Capital expenditures
|
(212
|
)
|
|
(211
|
)
|
|
(1,403
|
)
|
|
(557
|
)
|
||||
AFFO
|
156,775
|
|
|
128,846
|
|
|
308,319
|
|
|
253,539
|
|
||||
Interest expense, net
|
48,916
|
|
|
46,152
|
|
|
95,870
|
|
|
95,855
|
|
||||
Income tax expense
|
553
|
|
|
448
|
|
|
1,074
|
|
|
832
|
|
||||
Adjusted EBITDA
|
$
|
206,244
|
|
|
$
|
175,446
|
|
|
$
|
405,263
|
|
|
$
|
350,226
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
0.37
|
|
|
$
|
0.38
|
|
|
$
|
0.74
|
|
|
$
|
0.70
|
|
FFO per common share
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
0.37
|
|
|
$
|
0.38
|
|
|
$
|
0.74
|
|
|
$
|
0.70
|
|
AFFO per common share
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
0.38
|
|
|
$
|
0.35
|
|
|
$
|
0.75
|
|
|
$
|
0.71
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
412,309,577
|
|
|
369,932,843
|
|
|
409,040,025
|
|
|
356,454,441
|
|
||||
Diluted
|
412,821,400
|
|
|
369,991,738
|
|
|
409,473,202
|
|
|
356,491,047
|
|
(In thousands)
|
June 30, 2019
|
||
Cash and cash equivalents
|
$
|
1,205,335
|
|
Restricted cash
|
28,217
|
|
|
Short-term investments
|
97,586
|
|
|
Capacity under Revolving Credit Facility (1)
|
1,000,000
|
|
|
Total
|
$
|
2,331,138
|
|
(1)
|
Subject to compliance with the financial covenants and other applicable provisions of our Revolving Credit Facility.
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
Variance
|
|||||||
Cash, cash equivalents and restricted cash
|
|
|
|
|
|
|
|||||||
|
Provided by operating activities
|
|
$
|
262,942
|
|
|
$
|
246,663
|
|
|
$
|
16,279
|
|
|
Used in investing activities
|
|
(549,014
|
)
|
|
(40,463
|
)
|
|
(508,551
|
)
|
|||
|
Provided by financing activities
|
|
921,177
|
|
|
550,942
|
|
|
370,235
|
|
|||
|
Net increase in cash, cash equivalents and restricted cash
|
|
635,105
|
|
|
757,142
|
|
|
(122,037
|
)
|
|||
|
Cash, cash equivalents and restricted cash, beginning of period
|
|
598,447
|
|
|
197,406
|
|
|
401,041
|
|
|||
|
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
1,233,552
|
|
|
$
|
954,548
|
|
|
$
|
279,004
|
|
•
|
Net proceeds from the sale of an aggregate of $1,165.0 million of our common stock from a primary follow-on offering and our at-the-market program;
|
•
|
Dividend payments of $234.4 million.
|
•
|
Distributions of $4.0 million to non-controlling interests; and
|
•
|
Net proceeds from our initial public offering of $1,307.1 million 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 $290.1 million in aggregate principal amount of our Second Lien Notes; and
|
•
|
Dividend payments of $59.3 million.
|
•
|
Distributions of $5.8 million to non-controlling interests.
|
Six Months Ended June 30, 2019
|
||||||||||
Declaration Date
|
|
Record Date
|
|
Payment Date
|
|
Period
|
|
Dividend
|
||
March 14, 2019
|
|
March 29, 2019
|
|
April 11, 2019
|
|
January 1, 2019 - March 31, 2019
|
|
$
|
0.2875
|
|
June 13, 2019
|
|
June 28, 2019
|
|
July 12, 2019
|
|
April 1, 2019 - June 30, 2019
|
|
$
|
0.2875
|
|
Six Months Ended June 30, 2018
|
||||||||||
Declaration Date
|
|
Record Date
|
|
Payment Date
|
|
Period
|
|
Dividend
|
||
March 15, 2018 (1)
|
|
March 29, 2018
|
|
April 13, 2018
|
|
February 5, 2018 - March 31, 2018
|
|
$
|
0.16
|
|
June 14, 2018
|
|
June 28, 2018
|
|
July 13, 2018
|
|
April 1, 2018 - June 30, 2018
|
|
$
|
0.2625
|
|
(1)
|
The dividend was pro-rated for the period commencing upon the closing of our initial public offering and ending on March 31, 2018, based on a quarterly distribution rate of $0.2625 per share.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 1A.
|
Risk Factors
|
•
|
we have incurred and expect to continue to incur significant transaction expenses relating to these transactions, such as legal, accounting and financial advisory fees, whether or not any or all of these transactions are completed;
|
•
|
time and resources committed by our management to matters relating to these transactions could otherwise have been devoted to pursuing other opportunities;
|
•
|
the market price of our common stock could decline to the extent that the current market price reflects a market assumption that these transactions will be completed; and
|
•
|
we would not realize the potential benefits, including the increased rental revenue, that we expect to realize from consummating these transactions, and our earnings, FFO and AFFO per share could be materially and adversely affected.
|
•
|
it or its affiliate (x) is unable in its commercially reasonable good faith judgment to hedge its exposure under the applicable Forward Sale Agreements because insufficient shares of common stock have been made available for borrowing by
|
•
|
we declare any dividend, issue or distribution on our common stock (x) payable in cash in excess of specified amounts, (y) payable in securities of another company that we acquire or own (directly or indirectly) as a result of a spin-off or similar transaction or (z) payable in any other type of securities (other than our common stock), rights, warrants or other assets for payment at less than the prevailing market price;
|
•
|
certain ownership thresholds applicable to the forward purchasers and their respective affiliates are exceeded;
|
•
|
an event (x) is announced that, if consummated, would result in a specified extraordinary event (including certain mergers or tender offers, as well as certain events involving our nationalization, or insolvency, or a delisting of our common shares) or (y) occurs that would constitute a delisting or change in law; or
|
•
|
certain other events of default or termination events occur, including, among others, any material misrepresentation made in connection with the Forward Sale Agreements or our insolvency (each as more fully described in the Forward Sale Agreements).
|
•
|
return shares of our common stock to securities lenders in order to unwind its hedge (after taking into consideration any shares of our common stock to be delivered by us to such forward purchaser, in the case of net share settlement); and
|
•
|
if applicable, in the case of net share settlement, deliver shares of common stock to us to the extent required in settlement of such Forward Sale Agreements.
|
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
|
Item 6.
|
Exhibits
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number |
|
Exhibit Description
|
|
Filed Herewith
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
10.1
|
|
May 15, 2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
10.2
|
|
May 15, 2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
10.3
|
|
May 15, 2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
10.1
|
|
June 24, 2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
10.2
|
|
June 24, 2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
1.2
|
|
June 28, 2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
1.3
|
|
June 28, 2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
1.4
|
|
June 28, 2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
1.5
|
|
June 28, 2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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
|
|
July 31, 2019
|
Edward B. Pitoniak
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ DAVID A. KIESKE
|
|
Chief Financial Officer
|
|
July 31, 2019
|
David A. Kieske
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ GABRIEL F. WASSERMAN
|
|
Chief Accounting Officer
|
|
July 31, 2019
|
Gabriel F. Wasserman
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of VICI Properties Inc.;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
a)
|
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;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
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
|
d)
|
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
|
5.
|
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):
|
a)
|
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
|
b)
|
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.
|
Date:
|
July 31, 2019
|
|
|
|
|
By:
|
/s/ EDWARD B. PITONIAK
|
|
|
|
Edward B. Pitoniak
|
|
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of VICI Properties Inc.;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
a)
|
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;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
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
|
d)
|
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
|
5.
|
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):
|
a)
|
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
|
b)
|
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.
|
Date:
|
July 31, 2019
|
|
|
|
|
By:
|
/s/ DAVID A. KIESKE
|
|
|
|
David A. Kieske
|
|
|
|
Chief Financial Officer
|
Date:
|
July 31, 2019
|
|
|
|
|
By:
|
/s/ EDWARD B. PITONIAK
|
|
|
|
Edward B. Pitoniak
|
|
|
|
Chief Executive Officer
|
Date:
|
July 31, 2019
|
|
|
|
|
By:
|
/s/ DAVID A. KIESKE
|
|
|
|
David A. Kieske
|
|
|
|
Chief Financial Officer
|