Vici Properties: A Steady Performer Amid Interest Rate Challenges

The report highlights Vici Properties, a REIT focused on casinos and entertainment, showcasing its stable performance despite challenges from rising interest rates. With a solid occupancy rate and consistent AFFO growth, it remains a favorable option for income investors, though future gains may be capped.

Date: 28-12-2024

AI Rating: 6

Vici Properties Overview
Vici Properties operates as a real estate investment trust (REIT) focused on casinos and entertainment properties. Its long-term stability and resilience in the face of varying market conditions make it an attractive investment for income-seeking investors.

Key Financial Metrics:
- Vici's adjusted funds from operations (AFFO) per share has shown impressive growth, recording values of $1.82 in 2021, $1.93 in 2022, and $2.15 in 2023, with an expectation to increase by 5% to $2.25-$2.26 for the full year. This consistent growth indicates a strong operational performance in line with investor expectations. The company maintains a perfect occupancy rate of 100% since its IPO in 2018, illustrating its effectiveness in tenant management.

Projected Growth and Earnings Potential:
While Vici has excelled in its current performance, its future potential may be slightly limited by the environment of elevated interest rates. Despite this, its goal to sustain a CAGR of 9% for AFFO per share from 2023 to 2027 shows optimism for continued performance. If successful, it could see shares rise approximately 34% by 2027, solidifying its position as a long-term investment.

Interest Rates and Their Impact:
As highlighted in the report, increased interest rates could create challenges for Vici by raising property acquisition costs and making alternative income investments more appealing. Although the expected interest rate cuts from the Federal Reserve could mitigate some concerns, the broader impact of inflation and macroeconomic conditions remains a concern for investors looking at Vici Properties.

Stocks: VICI