Greetings,

Over the past few months, I’ve been increasing my exposure to VICI Properties (NYSE:VICI) in my investment portfolio. However, the recent dip in the company’s share price to below $30 presents an even more compelling opportunity.

Let me provide an update on VICI Properties and explain why I anticipate double-digit earnings growth and potential multiple expansions, reaching an attractive 18-20x P/FFO ratio.

Notably, the company’s current valuation qualifies it for a minimum annualized upside of 15%, based on conservative analysis.

Now, let’s delve into the reasons why VICI is a superior investment option.

Capitalizing on VICI’s Potential

Since VICI began trading on the market, it has established an appealing valuation range of approximately 12-15x P/FFO. The company’s journey from junk-rated to IG-rated, its 5.14% dividend yield, and its track record of reaching a high above $35/share while hitting a 2-year low below $31/share all contribute to its attractiveness.

In terms of performance, investors who entered the company back in 2018 have enjoyed a commendable return on investment of approximately 11.8%. However, those who took advantage of favorable valuations would have achieved a remarkable 36% annual return or 184% since the COVID-19 downturn. Similar levels of outperformance can be observed across various companies during this period.

VICI Properties stands out as a qualitative owner of mission-critical entertainment and experiential properties. As of its 2Q23 report, the company owns 50 properties and 4 golf courses leased to 11 tenants, 80% of which are publicly traded. Its real estate portfolio extends to both the United States and Canada.

The company boasts a 100% occupancy rate and an average weighted lease of 41.8 years as of June 30th. Furthermore, 96% of its leases benefit from inflation-protected escalators, ensuring long-term stability and revenue growth.

VICI has proven itself as a successful capital allocator, having invested over $30 billion in assets and raised $21 billion in equity proceeds. With a current enterprise value exceeding $50 billion, the company has plenty of potential for future growth.

While VICI may have a smaller level of diversification compared to other REITs of similar size, with 40% of its ABR coming from Caesars and another 36% from MGM, the company is actively expanding into experiential sectors to broaden its portfolio.

What sets VICI apart is the mission-critical nature of its assets. Even Realty Income (O) and Agree (ADC) cannot match the significance of VICI’s infrastructure within the sector.

Notably, VICI Properties boasts some of the best CPI protection among all REITs. Its assets include world-renowned casinos, particularly in Las Vegas.

The company’s growth trajectory encompasses expansion in various experiential sub-segments. It recently entered the wellness sector through the acquisition of Canyon Ranch, a leading provider of integrative wellness experiences. VICI’s strategic move into this sector positions it as a market leader with tremendous potential for success.

Considering the impressive track record of VICI Properties, I expect the company to outperform the market significantly. Led by a skilled management team headed by Ed Pitoniak, VICI is well-positioned for long-term success.

Analysts are also optimistic about VICI’s prospects. Currently, 19 out of 20 analysts recommend a “BUY” rating, with an average price target of $37.84, representing an upside of 23.5%.

Based on my analysis and the consensus among industry experts, I am confident in VICI’s potential as an investment opportunity. As a result, I have increased my allocation to the company and plan to add more shares in the future.

Investment Thesis

• VICI Properties is the leader in experiential triple-net lease REITs, exhibiting solid fundamentals, exceptional management, an attractive yield, and significant upside potential.
• Barring a downturn in fundamentals or substantial overvaluation, VICI is positioned positively for the future.
• Based on my analysis, I consider a conservative price target of no less than $38/share achievable for VICI Properties, offering double-digit returns.
• Therefore, my stance on VICI is a definite “BUY,” and I am actively acquiring shares.

Remember, my investment strategy focuses on buying undervalued companies and capitalizing on their normalization over time. If a company becomes overvalued, I capture gains and reallocate to other undervalued stocks. Additionally, I reinvest dividends and savings to maximize returns.

VICI Properties meets all my investment criteria, except for its current cheapness, which makes it a compelling opportunity to pursue.