Strip landlord doesn’t fear recession, citing ‘resilient’ customers

A major Strip landlord said it does not fear the effects of a recession and believes in the resiliency of gaming customers.

Vici Properties Inc. and its tenants will weather any short-term storm, CEO Ed Pitoniak said on a conference call with analysts Thursday to discuss its second-quarter earnings.

“The gaming customer has proven to be more resilient through both garden-variety recessions and full-blown crises than just about any other discretionary consumer out there,” he said. “That was proven through both the great financial crisis and throughout the COVID-19 pandemic.”

Vici, a New York-based real estate investment trust that is a spinoff of Caesars Entertainment, owns 660 acres of real estate on Las Vegas Boulevard, including Caesars Palace, the MGM Grand and The Venetian. Pitoniak noted in the call that roughly 45 percent of its portfolio income stems from its tenants on the Strip.

President and Chief Operating Officer John Payne was blunt in reminding investors that even if some casino operators face challenges during a recession, Vici would not be affected such as during the COVID-19 pandemic.

“While many of you enjoy asking questions about on the ground operating trends, I would like to remind you that we are a triple-net lease landlord,” he said. “We collect fixed rent streams with annual escalations over very long periods of time. Those who have followed our story will recall that we continued to collect 100 percent of cash rent when every one of our properties was forced to close due to the government-mandated restrictions in response to COVID-19.”

Vici’s revenue was $662.6 million in the second quarter that ended June 30, up 76 percent from $376.4 million in the same period last year.

Vici posted a net loss of $57.7 million — attributed to closing its $17.2 billion buyout of MGM Growth Properties, MGM Resorts International’s real estate spinoff, in April — compared to $300.7 million in the second quarter of 2021.

Pitoniak said Vici would look to densify its properties on the Strip, citing the MSG Sphere at The Venetian as an example. He said the company plans to look over its 660-acre portfolio and “identify either unoccupied acreage or acreage that is otherwise not being put to its highest and best use.”

Payne said it will also continue to look at nongaming areas, including indoor water parks, theme parks and family entertainment centers.

Pitoniak said the company was also considering sports ventures but he felt stadiums were a risk because they tend to become obsolete in about 20 years. Team training facilities might be a more attractive option, he said.

Vici shares, traded on the New York Stock Exchange, closed Thursday at $33.80, up 0.9 percent.

Contact Jim Barnes at jbarnes@reviewjournal.com or 702-383-0277. Follow @JimBarnesLV on Twitter.