EPR - VICI Properties: Undervalued Despite Elite Business Metrics; I'm Buying
2024-06-03 09:56:53 ET
Summary
- VICI Properties is a leading triple net lease REIT focused on gaming properties, with recent expansion into the non-gaming experiential segment.
- These sectors are accompanied by unique value drivers, which help VICI uphold elite business metrics.
- The company remains undervalued when compared to some of the most popular triple net lease REITs, despite its top-tier business and recent outperformance.
- VICI offers a clear path to double-digit total returns.
Investment thesis
VICI Properties ( VICI ) pays high, growing, and well-covered dividends yielding ~5.7% . The company operates within the gaming and non-gaming experiential sectors, which unique value drivers accompany. This aside, VICI has outstanding business metrics with a 100% occupancy rate, impressive rent escalators, and long lease terms, which resulted in VICI outperforming some of the most popular triple-net lease rates on the AFFO per share growth basis. However, the company remains undervalued as the market underestimated its long-term ability to generate cash flows.
I have a bullish view on VICI as it currently offers one of the best risk-to-reward ratios in the REIT industry and a clear path to double-digit total returns resulting from:
- multiple appreciation
- high, growing, and well-covered dividends
- further growth resulting from its healthy project pipeline and impressive rent escalators embedded within VICI's contracts