Financial reports from Vici Properties for the first quarter ending March 31 have demonstrated a significant rise in revenue, reaching a total of $951.5 million. This marks an 8.4% increase over the same period last year, with the property group highlighting several major developments contributing to this growth.
Among these strategic moves is a construction loan agreement valued at up to $105.0 million earmarked for the development of a new Margaritaville Resort in Kansas City, Kansas. This funding, provided by affiliates of Homefield Kansas City, includes a clause that gives Vici the right of first refusal on the real estate of any future Homefield sites for potential acquisition in sale-leaseback deals.
“By closing 2023 with our acquisition of the primary leasehold interest in Chelsea Piers, and now expanding our investment into youth sports and recreation through our Homefield Kansas City transaction, we are diversifying our portfolio and growing our youth sports and recreation investments,” commented Edward Pitoniak, CEO of Vici.
Dissecting the quarter’s financials, sales-type leases were the largest source of revenue for Vici, generating $512.8 million, a 7.2% year-over-year increase. Lease financing receivables, loans, and securities also saw a 10.3% boost at $409.3 million. Further analysis shows additional growth in other revenue streams: other revenue rose by 5.5% to $19.3 million and golf revenue inched up by 3.1% to $10.1 million.
While revenue showed an upward trajectory, operating expenses for the first quarter remained almost flat at $150.4 million, a slight dip from last year’s $150.6 million. Non-operating costs, largely comprising interest expenses, accumulated to $199.7 million. Consequently, Vici’s pre-tax profit surged by 13.7% to $601.4 million.
The effective and controlled expenditure management led to Vici declaring a notable net profit of $590.0 million attributable to the company, marking an increase of 13.8% from the previous year’s $518.7 million. Additionally, adjusted EBITDA for the quarter stood at $765.3 million, 7.7% higher than the preceding year.
Coinciding with the release of these impressive figures, Vici also announced a significant capital agreement with the Venetian Resort in Las Vegas. The agreement includes up to $700.0 million in financing to support considerable reinvestment into the property, encompassing hotel room renovations, gaming floor upgrades, and improvements to entertainment and convention facilities.
The financing package will be disbursed in tranches throughout 2024, including an initial $400.0 million with options for an additional $300.0 million available until November 1, 2026. Moreover, the annual rent under the existing Venetian Resort lease will experience an increase from the start of the quarter following each capital funding at a 7.25% yield, with incremental Venetian Rent set to rise annually at 2.0% starting March 1, 2029.
Reflecting on the Venetian’s acquisition finalized in February 2022 and its value of $6.25 billion, Vici president and chief operating officer John Payne expressed satisfaction in the property’s performance and enthusiasm in partnering with the Venetian team to maximize the iconic asset’s economic productivity.
David Kieske, CFO of Vici, voiced confidence in the Partner Property Growth Fund strategy, stating, “The scale and quality of our real estate assets, along with the dynamism of our operating partners, provide us with attractive capital deployment opportunities. We stand ready to support initiatives that enhance profitability and operations.”
This strategic partnership and substantial investment in The Venetian positions Vici Properties not only to realize direct financial benefits but also to strengthen their footprint in the Las Vegas market while reinforcing their commitment to innovation and asset enhancement.
