Vici Properties Inc. · NYSE:VICI
Vici Properties — Investor Presentation (May 2018)
37 slides from Vici Properties's investor presentation, May 15, 2018
Slide 1: Investor Presentation
INVESTOR PRESENTATION
Slide 2: Disclaimers: Forward-Looking Statements
DISCLAIMERS Forward-Looking Statements Certain statements in this presentation and that may be made in meetings are forward-looking statements. Forward-looking statements are based on the Company’s current plans, expectations and projections about future events and are not guarantees of future perfo
Slide 3: Disclaimers: Forward-Looking Statements (continued)
DISCLAIMERS Forward-Looking Statements Certain statements in this presentation and that may be made in meetings are forward-looking statements. Forward-looking statements are based on the Company’s current plans, expectations and projections about future events and are not guarantees of future perfo
Slide 4: VICI has accomplished more since emergence than many REITs do in their entire history
VICI HAS ACCOMPLISHED MORE SINCE EMERGENCE THAN MANY REITS DO IN THEIR ENTIRE HISTORY DEBT CAPITAL EQUITY CAPITAL GROWTH Refinanced Substantial Completed $1.0bn Equity Acquired Harrah’s Las Vegas Portion of Our Debt, Greatly Private Placement, With (HLV) for $1.14bn at a Cap Reducing Interest Expens
Slide 5: Who We Are
1 WHO WE ARE
Slide 6: VICI is the next generation experiential real estate company
VICI IS THE NEXT GENERATION EXPERIENTIAL REAL ESTATE COMPANY MISSION TO BE AMERICA’S MOST DYNAMIC LEISURE & HOSPITALITY EXPERIENTIAL REAL ESTATE COMPANY VISION WE SEEK TO BE THE REAL ESTATE PARTNER OF CHOICE FOR THE LEADING CREATORS & OPERATORS OF PLACE -BASED, SCALED LEISURE & HOSPITALITY EXPERIENC
Slide 7: Our four key pillars of value
OUR FOUR KEY PILLARS OF VALUE Portfolio Tenant Capital Governance Operational Excellence and Financial Flexibility Institutional REIT Structure Quality and Diversity Strong Credit Attributes to Fund Growth and Experienced Management ✓ 20 Market-Leading Gaming ✓ 3.5x Corporate Level Rent ✓ $6.7 Billi
Slide 8: The advantage of experiential real estate
THE ADVANTAGE OF EXPERIENTIAL REAL ESTATE COMPANIES THAT SELL “EXPERIENCES” HAVE CONSISTENTLY OUTPERFORMED COMPANIES THAT SELL “THINGS”—BOTH FINANCIALLY AND OPERATIONALLY Superior Revenue Growth Superior Returns1 250 450 Experiences Experiences 400 225 200 350 300 175 250 Things 150 Things 200 125 1
Slide 9: Fundamental advantages of our experiential and gaming real estate portfolio
FUNDAMENTAL ADVANTAGES OF OUR EXPERIENTIAL AND GAMING REAL ESTATE PORTFOLIO Diversified High Barriers to 1 2 3 4 State & Local Triple Net REIT Revenue Streams Entry Given Incentives to with 100% from Gaming, Legislative & Ensure Casinos Occupancy F&B, Retail and Regulatory Thrive Entertainment Contr
Slide 10: Investment Highlights
2Investment Highlights
Slide 11: Key investment highlights
KEY INVESTMENT HIGHLIGHTS Diverse, High Quality, Experiential Real Estate Diversification Across Markets and 1 Experiential Portfolio MSAs Parent Guarantee From a Leading 2 Leading Tenant Global Operator with Industry-Leading Brands1 Geographically Diverse Revenue Sources 3 Stable Cash Flows Support
Slide 12: High quality real estate anchored by iconic assets
1 HIGH QUALITY REAL ESTATE ANCHORED BY ICONIC ASSETS Harrah’s Horseshoe Harrah’s Horseshoe Harrah’s Bally’s Atlantic City Harrah’s Reno Council Bluffs Council Bluffs Metropolis Hammond Joliet Caesars Atlantic City Harvey’s Lake Tahoe Harrah’s Atlantic City Hammond / Council Bluffs Joliet Harrah’s La
Slide 13: Broad array of premium experiential amenities
1 BROAD ARRAY OF PREMIUM EXPERIENTIAL AMENITIES VICI IS A REAL ESTATE COMPANY FOCUSED ON OWNING EXPERIENTIAL PROPERTIES IN DYNAMIC MARKETS WHERE HOSPITALITY, GAMING, ENTERTAINMENT, AND LEISURE INTERSECT 1.3mm Casino Space Square Feet State-of-the-art meeting space ~780K Meeting Space including Caesa
Slide 14: Caesars Palace: iconic asset in prime location on Las Vegas Strip
1 CAESARS PALACE: ICONIC ASSET IN PRIME LOCATION ON LAS VEGAS STRIP Over 27,000 Home to The daily visitors Forum Shops, a 680,000 sq. ft. 7 acres of shopping mall and developable land th 4 largest grossing retail shopping mall per sq. ft. ~124,200 sq. ft. Located on ~86 of casino space acres of land
Slide 15: Caesars Entertainment: leading operator as tenant
2 CAESARS ENTERTAINMENT: LEADING OPERATOR AS TENANT Caesars is the Largest Gaming and Entertainment Total Rewards is the Gaming Industry’s Company in the World with #1 or #2 Market Share in Most Markets First, Largest, and Most Preferred Loyalty Program • Over 50 million members, from all 50 states
Slide 16: High lease coverage from strong, well capitalized tenant
2 HIGH LEASE COVERAGE FROM STRONG, WELL CAPITALIZED TENANT Caesars is a Well Capitalized Tenant… …With Strong Rent Coverage Caesars’ Enterprise EBITDAR1 ✓ Leading public casino operator $ in millions $2,120 $2,204 $2,245 $2,213 ✓ Right sized capital structure ✓ Reduced debt post emergence Caesars’ C
Slide 17: Significant diversification in tenant revenue streams
3 SIGNIFICANT DIVERSIFICATION IN TENANT REVENUE STREAMS MSA Diversity Tenant’s Underlying Revenue Diversity 1 New Orleans Nashville 3% 1% Other, 13% Memphis, 3% Omaha, 4% Las Vegas Kansas City Food and 35% 4% Beverage, 19% Dallas 7% Gaming, 50% Louisville 7% Chicago 8% Philadelphia Rooms, 19% San Fr
Slide 18: VICI balance sheet positioned for growth
4 VICI BALANCE SHEET POSITIONED FOR GROWTH Capitalization Summary Disciplined Balance Sheet Management $ and shares in millions Significant Deleveraging Since Emergence3 1Q’18 Revolving Credit Facility ($400 million capacity) $0 Net Leverage Ratio progression 8.4x Term Loan B Facility 2,100 6.5x Sec
Slide 19: Clear path of identifiable and actionable growth
5 CLEAR PATH OF IDENTIFIABLE AND ACTIONABLE GROWTH Broad Opportunities Across Identified and Other Experiential Real Estate Assets # of VICI Properties +84% Increase in As Well as ROFR on Number of Any Caesars Real Properties Estate Purchased Outside Clark County, NV 9 35 3 3 1 19 Caesars Octavius T
Slide 20: Harrah's Las Vegas acquisition demonstrates value of growth pipeline
5 HARRAH’S LAS VEGAS ACQUISITION DEMONSTRATES VALUE OF GROWTH PIPELINE Property Overview Harrah’s Las Vegas Acquisition Attractive Amenities Purchase Price $1.136bn • 2,530 rooms / suites with over 1,600 upgraded over the past 2 years (60%) Year 1 Rent $87.4mm • 1,210 slots, 90 tables, 90,600 sq. ft
Slide 21: Right of first refusal / put-call assets provide incremental acquisitions pipeline
5 RIGHT OF FIRST REFUSAL / PUT-CALL ASSETS PROVIDE INCREMENTAL BUILT IN ACQUISITIONS PIPELINE AS PART OF THE ACQUISITION OF THE HARRAH’S LAS VEGAS REAL ESTATE, VICI SOLD UNDEVELOPED LAND TO CAESARS AND ACQUIRED A ROFR ON THE CENTAUR GAMING REAL ESTATE Centaur Real Estate Caesars Forum Convention Cen
Slide 22: Harrah's Las Vegas acquisition compared to 2016-2017 single-asset trades
5 HARRAH’S LAS VEGAS ACQUISITION COMPARED TO 2016-2017 SINGLE-ASSET TRADES > $70 NOI NOI ($mm) 120 245 Park Ave, NYC 100 1 Fashion Show, LV 1 1095 Sixth Ave, NYC MGM National Harbor, MD 787 Seventh Ave, NYC 1 Harrah’s Las Vegas Wordwide Plaza, NYC 1 80 10 Hudson Yards, NYC 1285 Sixth Ave, NYC 1515 B
Slide 23: Organic growth from three Caesars option properties
5 ORGANIC GROWTH FROM THREE CAESARS OPTION PROPERTIES VICI HAS A 5-YEAR CALL OPTION FROM SPIN-OFF1 TO ACQUIRE THREE PROPERTIES AT A 10% CAP RATE2 WITH $130 MILLION OF TOTAL RENT AS OF JUNE 20163 H A R R A H ’ S AT L A N T I C C I T Y H A R R A H ’ S L A U G H L I N H A R R A H ’ S N E W O R L E A N
Slide 24: Additional Las Vegas land provides opportunity for further growth
5 ADDITIONAL LAS VEGAS LAND PROVIDES OPPORTUNITY FOR FURTHER GROWTH DEMONSTRATED ABILITY TO CAPITALIZE ON STRATEGIC OPPORTUNITIES & MONETIZE EXISTING ASSETS VICI has a Put-Call Rights Agreement on Caesars’ expected The Mirage Caesars Forum Convention Center Caesars Caesars land Palace The LINQ VICI-
Slide 25: Tenant portfolio offers additional acquisition and development opportunities
5 TENANT PORTFOLIO OFFERS ADDITIONAL ACQUISITION AND DEVELOPMENT OPPORTUNITIES Caesars Owned Real Estate Value Creation Through Collaboration • Harrah’s Las Vegas ✓ Prospect to Purchase Additional Properties Caesars Palace Octavius Tower Owned by Tenant Paris Las Vegas Bally’s Las Vegas✓ Future Grow
Slide 26: Multiple avenues for growth
5 MULTIPLE AVENUES FOR GROWTH M&A Framework: Clear Acquisition Criteria 1. Market Quality 2. Asset Real Estate Quality 3. Asset Income Quality 4. Accretion Other Leisure & Hospitality Non-Gaming Resorts Risk International Gaming Opportunities Casino Acquisitions w/ other Gaming Cos. Acquisition & De
Slide 27: Proven and independent management team
6 PROVEN AND INDEPENDENT MANAGEMENT TEAM WITH EXPERTISE IN REAL ESTATE, GAMING & HOSPITALITY EDWARD PITONIAK JOHN PAYNE DAVID KIESKE Chief Executive Officer President and Chief Chief Financial Officer Operating Officer BIOGRAPHY BIOGRAPHY BIOGRAPHY • Previously served as the Vice Chairman of Realter
Slide 28: Independent and experienced board of directors
6 INDEPENDENT AND EXPERIENCED BOARD OF DIRECTORS ✓ N O T E N A N T / D I R E C T O R O V E R L A P✓ S E P A R A T I O N O F C H A I R M A N & C E O R O L E✓ 0 % P A R E N T / T E N A N T C O M P A N Y O W N E R S H I P✓ A N N U A L L Y E L E C T E D B O A R D 1✓ I N D E P E N D E N T C H A I R M A N
Slide 29: Appendix
3Appendix
Slide 30: Master lease agreements: triple net structure provides security & earnings predictability
MASTER LEASE AGREEMENTS: TRIPLE NET STRUCTURE PROVIDES SECURITY & EARNINGS PREDICTABILITY Non-CPLV & Joliet (2 Leases) Caesars Palace Las Vegas Harrah’s Las Vegas Initial Base Rent $465mm $165mm $87mm Greater of 1% per year for years Greater of 2% or change Greater of 2% or change in CPI Annual Esca
Slide 31: Properties located in high density population centers
20 PROPERTIES LOCATED IN HIGH DENSITY POPULATION CENTERS DIVERSIFIED PORTFOLIO OF REGIONAL GAMING ASSETS PROVIDES LOWER VOLATILITY OF REVENUES Omaha Des Moines Kansas City Chicago Indianapolis Sacramento ?? New York San Francisco ?????? Philadelphia ? ?? ? Louisville ??? Los Angeles Nashville? Memph
Slide 32: VICI's strategy for executing on growth
VICI’S STRATEGY FOR EXECUTING ON GROWTH Acquisition Criteria Key Acquisition Guidelines • Demographic projections • Economic projections Market gaming assets) Quality • Propensity to game (for • Gaming trends / share shifting in market Market (for gaming assets) Quality • Location Asset Asset Real `
Slide 33: Reconciliation from GAAP to non-GAAP financial measures
RECONCILIATION FROM GAAP TO NON-GAAP FINANCIAL MEASURES The following table reconciles pro forma net income to FFO, AFFO and Adjusted EBITDA, and Net Debt to Adjusted EBITDA less incremental G&A for the periods presented. For further information, see “Unaudited Pro Forma Combined Condensed Financial
Slide 34: Reconciliation from GAAP to non-GAAP financial measures (continued)
RECONCILIATION FROM GAAP TO NON-GAAP FINANCIAL MEASURES (CONTINUED) The following table reconciles pro forma net income to FFO, AFFO and Adjusted EBITDA, and Net Debt to Adjusted EBITDA for the periods presented. ($ in millions) Three Months Ended March 31, 2018 Net Income $112 Real Estate Depreciat
Slide 35: Calculation of historical corporate level rent coverage of Caesars
RECONCILIATION FROM GAAP TO NON-GAAP FINANCIAL MEASURES: CALCULATION OF HISTORICAL CORPORATE LEVEL RENT COVERAGE OF CAESARS The following table reconciles net income/(loss) of Caesars and CEOC to Adjusted EBITDA of Caesars and CEOC, respectively, for the periods indicated. Commencing January 15, 201
Slide 36: Calculation of historical corporate level rent coverage of Caesars (cont'd)
RECONCILIATION FROM GAAP TO NON-GAAP FINANCIAL MEASURES: CALCULATION OF HISTORICAL CORPORATE LEVEL RENT COVERAGE OF CAESARS1 (CONT’D) CEOC2 ($ in millions) Year Ended December 31, 20153 Net income/(loss) ($2,434) Loss from discontinued operations, net of income taxes 13 Income tax provision/(benefit
Slide 37: Calculation of historical corporate level rent coverage of Caesars (cont'd)
RECONCILIATION FROM GAAP TO NON-GAAP FINANCIAL MEASURES: CALCULATION OF HISTORICAL CORPORATE LEVEL RENT COVERAGE OF CAESARS (CONT’D) Caesars adopted the ASU 2014-09 standard effective January 1, 2018, using the full retrospective method, which requires the recasting of each prior reporting period pr