Entertainment Powerhouse: A Hidden Gem in the REIT Space
A Misunderstood Opportunity
Vici Properties, a real estate investment trust (REIT) specializing in experiential properties, has been overlooked by investors lately. Despite its impressive portfolio of top entertainment facilities, the stock has taken a hit, dropping nearly 12% in the past six months. This decline is particularly striking when compared to the S&P 500 index’s modest 2% rise during the same period.
A Unique Advantage
Vici’s portfolio boasts an unbeatable mix of iconic entertainment properties, including Caesars Palace, MGM Grand, and the Venetian Resort on the Las Vegas Strip. Additionally, the company owns a 38-property chain of bowling alleys operated by Lucky Strike Entertainment. This diverse range of assets sets Vici apart from its peers.
Growing Fundamentals
The company’s long-term, triple-net leases ensure a steady stream of revenue, as tenants are responsible for key property-related expenses in addition to rent. This arrangement has contributed to Vici’s consistent growth, with revenue rising by almost 7% year over year to nearly $965 million in its most recent quarter. Adjusted funds from operations (AFFO) saw an even greater improvement, increasing by over 8% to a shade under $594 million.
Dividend Growth
As a REIT, Vici is required to distribute at least 90% of its taxable income to shareholders. Since its IPO in 2018, the company has consistently raised its quarterly dividend, with the payout increasing sharply from $0.16 per share to the current level of just over $0.43. This translates to a dividend yield of almost 6%, significantly higher than that of a typical blue-chip stock.
Resilience in Uncertain Times
Despite concerns about inflation and economic uncertainty, Vici’s entertainment properties have proven resilient. People will continue to seek out entertainment options, even in times of trouble, making Vici’s portfolio a safe haven for investors.
Undervalued and Overlooked
Vici’s stock has been unfairly punished by investor fears, making it an attractive buy opportunity. With its strong portfolio, growing fundamentals, and generous dividend yield, Vici Properties is a hidden gem in the REIT space. Don’t miss out on this chance to invest in a first-in-class owner of experiential properties.
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