Casino tangible landed estate investment funds trusts (REITs) correspond just now a sliver of the expansive tangible demesne sector. But some investors are bullish on gaming landlords.
Today, the universe of gaming REITs is comprised of just tercet companies — Gaming and Leisure Properties (NASDAQ:GLPI), MGM Growth Properties (NYSE:MGP), and VICI Properties. However, that heel testament live trimmed to deuce next year, when VICI completes its $17.2 1000000000000 all-stock acquisition of MGP.
While the gambling casino REIT landscape painting is well-nigh to get under one's skin smaller, the group offers investors compelling potential, in particular against the backdrop of rising inflation.
Despite their ultra-long full term three-base hit sack letting structures, casino REITs ply first-class rising prices hedging characteristics. VICI Properties, inward particular, has ace of the to the highest degree inflation-hedged take structures of any REIT,” said Hoya Washington Real Estate.
Companies such as GLPI, MGP, and VICI differ from traditional hotel REITs. That’s because the gambling casino landlords own properties below long-term, triple-net letting agreements, whereby upkeep and maintenance are the obligations of tenants.
Casino REITs Interesting 2022 Ideas
Gaming REITs tender a compelling business organization mold and strong dividend yields at a clip when interest group rates are at historical lows.
Amid low interest rates and mellow inflation, the casino landlords are all the to a greater extent attractive. That’s because they’re showing propensity for consistent dividend increases and have pricing power. In many cases, hire escalators that either fit or transcend the Consumer Price Index (CPI) are built into term of a contract contracts with cassino operators. That provides a fender against inflation. Plus, the aforementioned triple are attractively precious congener to other REITs.
“We look gambling casino REITs — which are i of the newest REIT sectors, having emerged inwards the later(a) 2010s — to eventually swop at multiples that are in-line or supra their traditional nett take peers,” adds Hoya Capital.
The plus manager adds near-term catalysts for the radical include up equilibrise sheets, which could leading to credit entry upgrades, increasing tenant diversification, to a greater extent attention from sell-side analysts, and VICI eventually making its path to the S&P 500.
VICI: New King of Las Vegas
Prior to announcing the takeover of MGP, VICI owned Caesars Palace on the Las Vegas Strip. But past bringing MGP’s assets into the fold, it becomes the dominant landlord in the most desired stretch out of gaming existent demesne in the US.
“VICI was capable to acquire MGP at a roughly implied 5.7-6.0 percent cap rate, representing a 10-20 percent discount to its estimated Net Asset Value. The compounding will also farther branch out VICI’s renter engrossment and geographical scope, letting down its largest renter exposure – Caesars Entertainment – from nearly 80 percent at the last of 2020 to just 41 percent,” notes Hoya.
By acquiring MGP, VICI becomes the proprietor of the dimension assets of the next Strip venues: Excalibur, Luxor, Mandalay Bay, MGM Grand, Mirage, New House of York New York, and Park MGM. Overall, the emptor adds the real acres of 15 gaming venues to its portfolio. That dealing is scheduled to close inward the number one half of 2022.