This is a top pick across Wall Street in the net lease group, and it is an ideal pick for investors who are more conservative and looking for gaming exposure. VICI Properties Inc. (NYSE: VICI) is a triple net lease REIT that was spun out of Caesars Entertainment post-bankruptcy.
VICI Properties has 23 mixed-use gaming, lodging and entertainment properties in its portfolio, and a subsidiary that owns four championship golf courses. The company also owns roughly 34 acres of undeveloped land in Las Vegas, which it leases to Caesars.
Much of the focus has been on VICI’s recent deal to acquire the real estate of the Venetian Resort in Las Vegas, with Apollo as a new tenant. Looking ahead, many on Wall Street are very positive on VICI’s embedded growth pipeline with Caesars Entertainment, including a put/call on the Centaur properties in Indiana (starting in January) and a right of first refusal on a strip asset sale for Caesars, which could occur soon after a full earnings before interest, taxes, depreciation, amortization and restructuring or rent costs recovery.
In addition, the company closed a $17.2 billion deal in April to buy out rival gaming REIT MGM Growth Properties, which owns the real estate of 15 casinos and resorts in eight states, including seven properties on the Las Vegas Strip. All of MGM Growth’s properties are operated by MGM Resorts International.
Holders of VICI Properties stock receive a 4.68% distribution. BofA Securities has a $36 target price, but the consensus target is just higher at $37.51. The shares closed on Wednesday at $33.73.
If the stock market takes a huge beating in 2023, these stocks will not be as safe as government bonds, and that is a certainty in terms of price performance. However, given their solid dividends and very defensive posture, they will hold up far better than aggressive growth stocks or high-yield junk debt. Plus, to enhance income, covered call options can be sold on all the stocks at strikes above where investors own them.
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