Q4 2025 Earnings Call Transcript

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the VICI Properties Fourth Quarter and Full Year 2025 Earnings Conference call. [Operator Instructions] Please note that this conference call is being recorded today, February 26, 2026. I will now turn the call over to Samantha Gallagher, General Counsel with VICI Properties.

Thank you, operator, and good morning. Everyone should have access to the company's fourth quarter and full year 2025 earnings release and supplemental information. The release and supplemental information can be found in the Investors section of the VICI Properties website at www.viciproperties.com. Some of our comments today will be forward-looking statements within the meaning of the federal securities laws.

Forward-looking statements, which are usually identified by the use of words such as will, believe, expect, should, guidance, intends, outlook, projects or other similar phrases are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Therefore, you should exercise caution in interpreting and relying on them. I refer you to the company's SEC filings for a more detailed discussion of the risks that could impact future operating results and financial condition. During the call, we will discuss certain non-GAAP measures, which we believe can be useful in evaluating the company's operating performance.

These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available on our website, in our fourth quarter and full year 2025 earnings release, our supplemental information and our filings with the SEC. For additional information with respect to non-GAAP measures of certain tenants and/or counterparties discussed on this call, please refer to the respective company's public filings with the SEC. Hosting the call today, we have Ed Pitoniak, Chief Executive Officer; John Payne, President and Chief Operating Officer; David Kieske, Chief Financial Officer; Gabe Wasserman, Chief Accounting Officer; and Moira McCloskey, Senior Vice President of Capital Markets.

Ed and team will provide some opening remarks, and then we'll open the call to questions. With that, I'll turn the call over to Ed.

Thank you, Samantha, and good morning, everyone. In the next few minutes, you'll hear from John Payne on our growth outlook and David Kieske on our financial results and our 2026 guidance. To start, I would like to thank the members of the VICI team for their hard work and dedication. Their contributions are the foundation of our success, and we're grateful for everything they do for our company and our shareholders.

I'd also like to thank our operating partners for all that they do in bringing our buildings to life each and every day. Our leases are triple net. We don't get involved in how our tenants operate their businesses, but that doesn't mean we don't pay attention. We pay attention, of course, to what they produce, that is their operating results, but we also pay attention to how they produce results because how they operate today can impact the results they produce in future quarters and years.

How gaming, leisure and hospitality companies produce results isn't usually captured in financial statements. And that's because financial statements don't directly tell you much, if anything, about one of the key factors that drives financial results and that key factor is people, namely employees and customers. When I entered leisure and hospitality in the mid-1990s through Ski resort operations, I had the good fortune to be introduced right away to the model that I believe best captures how value is created and sustained in a service-based business, including leisure and hospitality businesses like gaming and other experiential categories.

That model was the service profit chain authored by a group of Harvard Business School professors that included Gary Loveman. Here's the essential dynamic of the service profit chain as described in the original Harvard Business Review article published in 1994, "the service profit chain establishes relationships between profitability, customer loyalty and employee satisfaction, loyalty and productivity. The links in the chain are as follows. Profit and growth are stimulated primarily by customer loyalty.

Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers." This sounds simple and logical.

Why wouldn't every service business operate this way? Well, there are lots of reasons, starting with creating and sustaining this chain is hard, ceaseless work, especially in operationally intense businesses like gaming, which operate 24 hours a day, 365 days a year with multiple guest experience, service and profit units within a single operation. Because putting the service profit chain into full effect is hard to achieve, it's worth recognizing and celebrating when it is achieved. Last year, Harvard Business School, yes, back to them again, recognized such an achievement when it published a case study entitled: The Venetian Resort: Frontline Engagement as Value Driver.

It's almost exactly 5 years ago that we announced our acquisition of The Venetian together with our partners at Apollo. The time was winter 2021 and the COVID pandemic was still severely impacting Las Vegas. As Apollo and VICI collectively underwrote that acquisition, our hope and our stated intention on announcement was that the asset could recover to 2019 levels of profitability by 2026. We'll let Harvard Business School tell you how we collectively fared, and I quote, "to bring Apollo's investment thesis to life, the Venetian's Board of Directors made 3 decisions. First, they appointed Patrick Nichols to lead the transformation.

Second, they committed over $1 billion in capital to enhance the guest experience from room renovations to convention center upgrades. And third, they implemented a broad-based equity-like program called the Venetian Las Vegas Appreciation Award, grounded in the belief that employee ownership could drive both cultural and operational change. Continuing to quote, 3 years later, the results were strong. Employee engagement increased materially above historic levels, signaling that cultural change was taking root.

Guest satisfaction scores rebounded from pandemic lows of 56% to 61% and the EBITDAR of the property had increased from $487 million pre-pandemic to $777 million in 2024." From VICI's perspective, since Patrick Nichols took over leadership of The Venetian in early 2022, we've been privileged to witness the transformation that ensues when an experiential management team is attentive and responsive every single day to employee effectiveness and morale and its impact on guest behavior, satisfaction and loyalty. I strongly encourage you to read the HBS case study on The Venetian. You can find a link to a PDF of the case study on our website, www.viciproperties.com.

To reiterate, given our triple net leases, we don't operate anything that goes on within our real estate, but we pay attention to operations and greatly appreciate all that our operators do every day to make our real estate relevant to their end customers. And it's those end customers after all, who produce the revenue that eventually funds our rent. With that, I'll now turn the call over to John Payne. John?

Thanks, Ed. Good morning to everyone. As Ed highlighted, the operating prowess of our tenants is important. When we underwrite new transactions, not only are we assessing the financial profile and projections of these operating businesses, but we're also intentional about deeply understanding the partners with whom we are doing business.

As Ed points out, it is an operator's managerial style and ability to retain and attract consumers that filters down to the bottom line. Over the course of 2025, we formed and announced several new partnerships that we believe are emblematic of the energized, experienced and effective operators we seek. Last February, we established a long-term strategic relationship with Cain and Eldridge Industries, 2 companies highly aligned with VICI-owned experiential real estate through a $450 million mezzanine loan investment related to One Beverly Hills. In May, we initiated our first partnership with Red Rock Resorts, one of the premier gaming operators through a $510 million delayed draw term loan for the development of North Fork.

Red Rock's fourth quarter results demonstrate how their thoughtful and creative operating model is leading to superior results. In October, we welcomed Clairvest as our future 14th tenant following the announcement of their pending acquisition of operations at MGM Northfield Park. And finally, in November, we announced a $1.16 billion sale leaseback of 7 casino properties in Nevada with Golden Entertainment and Blake Sartini, a highly seasoned gaming operator, which will add our 15th tenant when the transaction closes, which is expected later this year. These announcements combined represents $2.1 billion of committed capital in 2025 at a weighted average initial yield of 8.9%.

This volume of commitment and quality of partnership is what differentiates VICI. I'd like to take a moment to focus on the Golden transaction. We're very proud to have announced a $1.16 billion fee simple real estate deal in the gaming sector involving 7 properties located in Nevada, a state that is very protective in land-based brick-and-mortar gaming. We also look forward to our future partnership with Blake Sartini, current Chairman and CEO of Golden Entertainment, who we will own and control a newly formed entity that will acquire the operating business of Golden in connection with the closing of the transaction, subject to Golden shareholder vote as well as customary closing conditions and regulatory approvals.

Blake has a long tenured history of over 30 years in casino operations and has established reputation as an effective operator with a strategic focus on Nevada gaming landscape. We hope to grow together in the coming years. At VICI, we've talked about investing in the local -- the Las Vegas locals market for years, and Golden has allowed us the opportunity to do so. The market is demographically attractive.

Median household income in the locals Las Vegas market has a 10-year CAGR of 5.5% compared to the national median household income 10-year CAGR of 1.9%. The Las Vegas locals market has also maintained incredible resiliency as demonstrated by most recent market results. We acknowledge that the Las Vegas strip had a relatively softer 2025 compared to prior years. But as we've discussed over the last few quarters, we view 2025 as more of a normalization than a pullback.

For instance, though the number of passengers traveling through Harry Reid Airport was down on a year-over-year basis, largely due to a dip in Canadian visitation, it was still the third busiest year in the airport's history. But as John DeCree astutely noted in a recent research report, despite many domestic casino stocks being out of favor at present, credit spreads for casino companies remain tighter than ever. We agree with John that these spreads are the more appropriate barometer for the health and durability of the casino operating model. Looking ahead to 2026 in Las Vegas, the strong convention calendar has already started to have an impact with the highly attended CES in January and with CON/AGG CONEXPO approaching in March, the group segment that has historically been a pillar of strip demand should provide meaningful support through the first half of 2026. Our operators' ability to react and respond to changes in the macroeconomic picture and shifting consumer demand contributes to the longevity of the experiential sectors in which we've invested and we'll seek to continue to diversify our partnerships across best-in-class experiential operators just as we did in 2025. Now I will turn the call over to David, who will discuss our financial results and guidance.

David?

Great. Thank you, John. In terms of financial results, for the quarter, AFFO increased 6.8% year-over-year to $642.5 million and on a per share basis, increased 5.6% year-over-year to $0.60. For the full year 2025, AFFO increased 6.6% year-over-year to $2.5 billion and on a per share basis increased 5.1% year-over-year to $2.38. This compelling growth in AFFO on a per share basis for both the fourth quarter and full year 2025 was delivered primarily through the reinvestment of our free cash flow. We only increased our share count by 1% in 2025, highlighting VICI's ability to deliver sustainable per share returns as our portfolio continues to scale.

Our results once again highlight our highly efficient triple net model. Our G&A was $19.3 million for the quarter, $65.1 million for the year and as a percentage of total revenues was only 1.9% and 1.6%, respectively. Our net income margin for the year was approximately 69%, one of the highest net income margins in the S&P 500. Touching on the balance sheet and liquidity. Our total debt is $17.1 billion, and our net debt to annualized fourth quarter adjusted EBITDA is approximately 5x at the low end of our target leverage range of 5 to 5.5x.

We have a weighted average interest rate of 4.46% as adjusted for our hedge activity and a weighted average 6 years to maturity. As of December 31, we have approximately $3.2 billion in total liquidity comprised of approximately $608 million in cash, $243 million of proceeds available under our outstanding forwards and $2.4 billion of availability under our revolver. And turning to guidance. As you saw in our press release last night, we are initiating AFFO guidance for 2026 in both absolute dollars as well as on a per share basis.

AFFO for the year ended December 31, 2026, is expected to be between $2.59 billion and $2.625 billion or between $2.42 and $2.45 per diluted common share. And just as a reminder, our guidance does not include any transactions that have not closed, interest income from any loans that do not yet have final draw structures, possible future acquisitions or dispositions and related capital markets activity or other nonrecurring transactions or items. With that, Adam, please open the line for questions.

[Operator Instructions] And our first question comes from Caitlin Burrows from Goldman Sachs.

I guess it seems like you guys have had some preliminary discussions with Caesars regarding the master lease. So wondering if you could give any updates on what has been discussed, potential update -- potential outcomes and timing. And to the extent you don't want to discuss those, perhaps you could say maybe what's off the table or that an announcement before X date is probably not reasonable.

Yes, Caitlin, good to talk to you. Yes, we're obviously not going to get into any kind of detail on what we might have discussed already with Caesars or more importantly, what we will be discussing. But what I want to emphasize, Caitlin, is that as we address lease issues with Caesars, we're going to do so within the context of our overall approach to portfolio and risk management. So that any solutions that we develop and agree to with Caesars help further our larger portfolio goals of optimizing our exposure to any single tenant to any single category to any single geography.

And that's the way in which we will evaluate any possible solutions that get shared at the table. We can't obviously and won't specify any single date by which an agreement is made or arrived at. But I would reemphasize the degree to which our history over 8 years has been a history in which we've continually used our strategies to achieve our goal of getting better. I would remind everyone, not that probably anyone needs reminding that we started out with 100% exposure to Caesars and only Caesars.

Today, we're in the high 30s as a percentage of our annual rent roll. But what we undertake with Caesars again, will be a solution that we believe can and will be a win-win, but win-win for us insofar as it also helps further our portfolio optimization goals.

Got it. Okay. And then I guess I saw in the 10-K that it mentioned you had placed a senior loan collateralized by golf development on nonaccrual status. So wondering, can you give more color on this, maybe what visibility you had, what's going on at the property and any assumed impact to AFFO in 2026 guidance?

Yes. So this -- one of the benefits for us, Caitlin, of having so small partner roster, whether it be on the asset investment side or on the lending side is that when issues do arise, we are able to get all over them. In this particular case, it became clear that our partner, in this case, the borrower was facing a working capital issue, and we made what we think is a very sound tactical decision in relation to this tactical issue of making sure that they would have the working capital to continue to operate and develop in a way that preserves the value of the property so that during that time, they could also focus on recapitalization on their side, and they are working very intensely on that, and we are tracking that with them day by day.

In terms of any impact on earnings for 2026, again, this is a de minimis part of both our loan book and, of course, our overall asset base. But Gabe, I don't know if you want to offer any thoughts in regard to Caitlin's question around earnings impact.

Yes. I'd just reiterate, it is de minimis and it's not included in guidance for 2026.

By not included, you mean there's not a headwind included.

Correct. There's no income related to that loan included in 2026 guidance.

The next question comes from Barry Jonas from Truist.

I mean, I guess, just broadly speaking, can you talk about the deal environment, what you're seeing out there between sale leaseback or increasing loan book discussions.

John?

Yes. Barry, it's nice to speak with you. And I know we've talked before. I can't tell you exactly what's in our pipeline, but I will take a moment.

I do think it's important to remind everyone what we at VICI, we get paid for. On the short-term incentive, it's 100% based on a rolling 2-year AFFO per share growth and our long-term incentive is based on an absolute relative total return. And we aim for 8% to 10% total return annually. And I simply bring that up to orient you on how we approach the pipeline and external growth.

We're all very clear here, and we have been since we started the company that we need to line up sustainable external growth. So with that said, we continue to prioritize real estate ownership while also using our loan book and we've talked about to develop new relationships. So we continue to be active. I'll remind you, Barry, from -- at this point last year, I think we had only announced our partnership with Cain and Eldridge.

We had not even announced our partnership with Red Rock Resorts or Golden this time last year. So we continue to do our work. We're aware of -- we'll continue to employ our relationship-based approach to future transactions, and we feel good about what's out there.

Got it. And then maybe related, maybe not, but I noticed there's a change in your accounting leadership with Mr. Wasserman moving to an expanded role for biz dev and experiential credit solutions. So just wondering if any ramifications to Gabe's shift there as you think about VICI's strategy or focus?

Well, Gabe is on the call right now. So I don't want this to go to his head a little bit, Barry, but I couldn't be more excited to have Gabe shift over and help me and help us grow our business development. He's going to be a great resource. He's already been working with me for the past couple of months primarily on nongaming and experiential.

But I know the whole company, but particular me is excited to have him be working on business development. He is on the call. He can weigh in as well if he'd like.

Barry, thanks for the shout out. And I also want to give a shout out to Jeremy Waxman, the new Chief Accounting Officer. Jeremy has been part of the team for 8 years, joined at the same time as I did, and we're all incredibly excited for his promotion here, and he'll continue to do a great job on the accounting side.

The next question comes from Greg McGinniss from Scotiabank.

I was just hoping you could talk about the rationale between -- on the Greektown Margaritaville combination, lease adjustment there and the genesis of how that deal actually happened, who approached who. So any color would be appreciated.

John?

Greg, it's nice to hear from you. Just about who approaches who. Remember, because we only have 13, 14, 15 tenants, we're always talking about a variety of things, whether that's with Penn or with any of the others. Regarding the combination of the leases, we really saw the opportunity to combine 2 leases, simplify the escalation structure, remove the volatility by eliminating the percentage of rent.

This combination clearly enhances our credit protection by cross-collateralizing 2 of our assets in a master lease with a corporate guarantee. While at the same time, it did not change the amount of rent collected by VICI this year. So we saw it as a really good opportunity. Both sides came together and we negotiated.

And obviously, we announced it when we put out our earnings last night.

Okay. And speaking of the kind of limited tenancy and the relationships that you're building on the debt side, how do the debt investments like with Red Rock as the builder out of the tribal casino impact your relationship with them and the discussions that you have with them or how frequently you're communicating with them, right? So like how do you view kind of the long-term benefit of that transaction versus just stepping in as bank adjacent, someone that has a pocket book as opposed to someone that's a long-term partner.

David?

Yes, Greg, it's a good question because we approach all of our investments from a fundamental relationship-based position. And particularly Red Rock, as we talked about when we announced that last year, I mean John and Ed and team and I have been meeting with Frank, Lorenzo and Steve and team for years and just getting to know them, getting to know their business. And when they called us last fall to come into that syndicate, it was very much -- this is a way to continue to grow that relationship and develop that relationship, and we still have frequent dialogue with them, even though they are the developer and the tribe will operate the asset, but it's via Red Rock relationship that we did that investment with their credibility and expertise around development.

If you've been out or seen any renderings of the North Fork asset, it's on time and slightly under budget, and we'll open here in the fall. So we are not just a lend and stick the credit on the shelf and walk away. It's everything is relationship-based and who's our partner and is there strategic merits to the capital that we deploy, whether it be through equity investments or the debt investments.

The next question comes from Haendel St. Juste from Mizuho.

First question is on the guidance. I understand a large majority of the growth you have is locked in through your bumps. So I guess I'm curious on some of the variables that could drive us to the upper and lower end of the range. I know it's not a wide range, but it also doesn't assume transactions or capital markets.

So some thoughts there and maybe also some thoughts on the debt coming due later this year. I think it's $1.75 billion in the low 4% range.

Yes. Haendel, I'll start, and then I'm going to hand it over to David. Yes, we obviously do not guide to investment activity that has not yet been announced or even to loan draws that haven't been formally calendarized. And that's obviously -- that sets us apart somewhat.

And when we boil down the key reasons as to why we don't give investment guidance like many of our net lease peers do, there's really, I think, 2 key reasons. The first one is, obviously, visibility and predictability would be hard to achieve. Secondly, I, as a risk manager, I'm a little hesitant around the whole idea of investment guidance because if you give an investment target, and you don't know exactly with certainty how you're going to achieve it, it can, in some cases, I'm not saying all, can, in some cases, lead investment teams to make investments for the sake of making damn sure they hit the target, and that can often be a road to trouble.

But I will now turn it over to David to answer the back half of your question.

Yes. Just in terms of the range, Haendel, I mean, we have some draw schedules for Kalahari North Fork that we just talked about and a few others. So we bake in some flexibility around that in terms of percentages that they may draw each month. There's obviously -- you got on our income statement, there's not a lot of other lines.

There's a little bit of fluctuation around G&A. There's a little bit of fluctuation around interest income. And then we do bake in some conservatism, not specificity around the refis, which you've mentioned that we have upcoming at the end of this year, maturity in September of $500 million and a maturity in December of $1.25 billion and then you roll into the first part of '27, and we have another $1.5 billion coming due. So we'll look to access the -- it wasn't exactly your question, we'll look to access the bond market later this year, obviously, ahead of those maturities to continue to term out our debt wall, debt ladder as we have been doing since inception.

Would your preference be to do term? And just curious on kind of where you see the ballpark estimated cost of new unsecured debt?

Yes. We're getting close kind of on a 10-year is how we look at it, 125, 130 over the 10-year right now. So I don't know what the 10 year is exactly this morning, but low 5s all-in coupon. So as we've done last year, a mix of -- we'd love to do 10s, 30s if the market is there, but we've got optionality in a very deep fixed income investor base that we're very grateful for and we'll come to the market at the right time for the company.

Got it. Got it. My second question is on Golden. I wanted to go back to the pricing on that transaction for a moment.

I appreciate the stats on the Las Vegas local market, certainly some encouraging things we heard there. But the mid-7 cap rates inside of where we've seen other regional deals trade largely in the 8% plus range. So I was curious how we should think about -- and how you're think about cap rates for regional versus strip assets going forward? And if this is a new pricing level you think or expecting in the market?

John? David?

Yes. Look, we felt very good about the pricing, being able to get 7 assets with the team at Golden and then being able to operate them and understand them and then also be able to grow with them, we felt that, that was the appropriate price at the time. We are obviously getting more exposure to Nevada, which we're excited about. So it's easy to kind of lump everything into regional assets, but there's no question there's a big difference between middle market regional assets as well as what we describe as Nevada regional or local assets.

So we think the price was appropriate for getting a whole portfolio of assets and helping the team grow their business. And I think over the years, we would hope that we do more with the Golden team. David, anything to add?

No, you covered it well. There is a difference between regional assets in the locals market and the regulatory environment that Nevada or the importance of the regulatory environment in Nevada and the bricks and mortar and the income and the taxes that they generate and the employment base that they support through that state and their economy.

The next question comes from Jim Kammert from Evercore.

It seems like Sphere Entertainment is pretty likely to go forward on their deal down National Harbor. I was just curious, does VICI had any talks with the Sphere or their Peterson company partners about participating in that deal?

Well, Jim, good to talk to you. Obviously, we don't really -- we never talk about deals in progress of any kind or whether or not any kind of conversations are in progress. But I guess I will say that we've been obviously able to have a ringside seat on Sphere's success at The Venetian. And from what we have seen and heard and witnessed through the results, Sphere has created, obviously, a very compelling offering.

Sphere is run by a very strong management team, not only on the entertainment programming side, but on the construction and development and risk management side. So we're obviously paying attention and perhaps I'll leave it in there unless any of my colleagues want to offer anything more.

The only thing I would add, Ed, is that where we're seeing this potentially could go. Obviously, we are the owners of National Harbor and MGM runs it. And what we've seen, as Ed mentioned, in Las Vegas for the Sphere is the amount of new customers that get attracted to that. So it could only help our business and MGM's business should the Sphere -- the next Sphere be built on that campus.

That's helpful. I appreciate the caveats. And then I know, Ed, again, you can't really speak to the Caesars discussions. But given the strong report between the 2 companies, I mean, can you say, is there just sort of like a regular -- to use your term, calendarized sort of series of discussions?

I mean is this ongoing? Or is this sporadic? I'm just trying to understand kind of what the interaction feels like?

Yes. Yes. It's obviously -- it's regular by nature of us needing, obviously, to have a regular dialogue with the single biggest tenant on our rent roll. And again, there's conversations that obviously have to take place around issues that are not necessarily specific to the regional lease. But John, I don't know if you want to add any more than that?

No. Look, I mean, we -- if the question was just about the lease, that's a different question than are we talking to Caesars and our tenants about their business to understand the trends. And the latter we do all the time, and it's, again, one of the benefits of our model where we don't have 500 or 1,000 tenants where you can't understand the business and trends. By having 14, 15 tenants, we can talk to them and understand specifics about our assets.

So I speak frequently, Danny, the lawyer works and our group speaks frequently, not only with Caesars, but really all our operators.

Yes. And yes, let me just reiterate, Jim, what I said in response to Caitlin's question at the outset. For both Caesars and for us, I really believe the ultimate best solutions will be solutions that simply do not only address issues of lease coverage, but solutions that enhance both portfolios, which is to say, I think there's going to be multiple levers, multiple strategies to achieve portfolio optimization for both parties.

The next question comes from Anthony Paolone from JPMorgan.

Maybe for John, can you go through some of the bigger buckets of investments and give us a sense as to where you're more or less active in terms of seeing things these days, whether it's sports, wellness, gaming, international and so forth?

I'd just say yes. But let me just give you some really -- I'll talk about experiential. Obviously, we'll continue to grow our gaming portfolio, and I feel that we're well aware of potential opportunities in that space really all over the world, obviously, here in the U.S. When we turn to experiential or non-gaming, there's a couple of areas I'll just touch on.

And don't assume that's all we're looking at, but we only have 35 seconds here for me to talk about this. So a little bit about -- you mentioned sports, and this has been really interesting for me, and you hear Gabe's in a new role, he's spending a lot of time on this. And we are in discussions with a variety of sports operators, teams, leagues. And frankly, it just takes time, just like it did when we started the company, taking time to learn all the gaming operators, we're needing to take time to introduce ourselves to sports operators, teams and leagues.

And frankly, the sports financing world is changing rapidly. You can pick up your news, however you get your news, I almost said newspaper, no one does that anymore. But pick up your news and look and you'll see there's always something happening in the sports finance world. And really, whether it's a university, whether it's a pro team, they want to understand their options before moving forward.

What I'd tell you about the VICI team is we're getting in front of the right people. We're staying patient because we really do believe there's an opportunity for great growth in the sports infrastructure space. And the other area we're spending time with because we really like the data we see is in live entertainment. If you look at the data from millennials and Gen Z, there seems to be a large appetite and willingness to spend a great amount of money on live entertainment.

So we continue to spend time understanding is there an opportunity for our capital in those type of infrastructure developments. So Tony, I'll hit on those and see what else you got.

Okay. My only other one maybe for David. Just I think one of the Cain loans has an initial maturity that's perhaps next month, if I recall. Like what's the likelihood of getting paid back on that? Or does that just get extended out?

Yes, Tony, you're right. There's an initial maturity next March -- or this March, sorry, next month. The likelihood is it gets rolled -- unlikely it gets repaid, but it gets rolled into a broader construction syndicate that the Cain team is working on and timing of that is TBD. It's hard to predict.

It's a big construction loan, but it's something they're very focused on and ensuring that they get that done in a timely manner.

The next question comes from David Katz at Jefferies.

John, I wanted to -- I was hoping to just go back to the sports opportunity because we have been talking about it for a while, and I understand the answer about patience and persistence. Have you talked about any TAM or sizing that opportunity? Just a little something more that we can chew on while we're waiting.

We don't have an exact number. I'll let Dave weigh in a little bit. What I would tell you, David, is that we have approached 50, 60, 70 universities to date. There is clearly a need for capital to build sports infrastructure.

And because we've not announced the deal yet, we're trying to see how our capital can work in that environment. So what I do know is there's a large TAM, and that's just in universities, we're not even talking about professional sports teams, mixed-use facilities around new arenas, new stadiums as well. So David, I can't give you an exact number, but what I do know when I meet with these groups is that there is a need for capital and there are projects that are on the board. Now how they ultimately get financed is something that we continue to be, as I mentioned, being patient discussion about how our capital can work.

Gabe, anything else you'd add to answer David's question?

Yes. I think just to, everyone we've talked about really has almost like a 9-figure need for athletic infrastructure on campus. Time line is shorter for some and more immediate. Others, it's part of a long-term plan. And hopefully, our capital can be a good fit and can help with their future development goals and opportunities.

Perfect. And then just to follow that up, when we look at, John, noting some of your commentary about live entertainment venues, which is certainly relevant in our coverage as well as the sports opportunity that's a little bit new. How can we think about the duration or durability of that real estate in comparison to your initial core, which was casinos. I know we've talked about we know what the strip is essentially going to be in 20, 30 years.

How do we feel about that in those other types of real estate venues?

Dave, do you want to take that since you've been leading this charge?

Yes. I think, David, as I'm sure you're seeing in your meetings, a lot of these sports anchored mixed entertainment districts are popping up all over the country, and they're trying to get some live entertainment to anchor them and to drive visitation, which really activates the site and increases the value of the surrounding real estate. I think if you talk to any operators that would operate these venues, they see them as a 25-year plus investment, 25- to 50-year horizon, which really aligns really well with our investment horizon and looking at these as permanent capital investments. So we see these as really kind of core infrastructure that are part of the development and is a really good fit for our capital and our long-term outlook.

Yes, David Katz, I'm really glad you asked that question because it's not only timely, it's also a perpetual question. And you've probably heard David Katz, the kind of acronym of the week, Halo, H-A-L-O, which is to say in the last couple of weeks, as software stocks have self-immolated, suddenly, there's a focus on heavy assets, low obsolescence, halo. And yet one thing we can never be smug about is obsolescence risk because it is the key value destruction risk in every category of real estate. So it is something we very much focus on category by category, location by location, use by use.

And I think, Gabe answered well how we would look, for instance, at sport assets and their likely both useful life, but moreover their relevant life. But certainly, as we look across experiential categories, that is probably, at least for me, the #1 risk factor, which is to say how relevant will this real estate be 20 or 30 years from now. John, I don't know if you wanted to add something more.

No, you got it, Ed.

The next question comes from Wes Golladay from Baird.

I just got a question for you on the cost of capital. Your 10-K highlighted that sometimes it falls out of favor. I'm just curious if you're looking at different ways to diversify your equity source, whether it's joint ventures, maybe even start to fund business at some point, but is that becoming a bigger priority?

David and Samantha, do you want to talk about that?

Yes. Wes, it's a good question. And we have the benefit of those that have come before us. Obviously, Prologis has a very robust and high-quality fund business.

We're watching and seeing what Realty Income does with their fund business. Welltower is diversified. And it's something more broadly we think about what is the evolution of the REIT market. And is it becoming more of an asset management market or more of an asset management model, excuse me, because obviously, fund flows over the last 5, 10, 15 years have been very, very anemic with in the REIT world.

So it's something that we're watching and learning and thinking about. There's nothing imminent on the horizon, but it's like any good stewards of capital. We want to make sure that we're forward thinking and putting the best practices forward.

David said it, my job is to make sure we can basically structure anything we need to structure to accomplish our objectives.

The next question comes from John DeCree from CBRE.

I know we've talked about New York casinos in prior calls, but with 3 licenses awarded, Ed, John, Dave, whoever wants to take this, how are you thinking about New York development opportunities and your appetite to get involved in financing in whole or part. Can you kind of walk us through your view on the New York City development opportunity right now?

John and David.

I'll start and then David can jump in. John, good to talk to you this morning. Obviously, it's a very large developments that are going to happen with these licenses. We do already have a partnership, as you know, with Hard Rock organization that are rebuilding the Mirage in Las Vegas.

We also have a partnership with them in Cincinnati. So we're watching to see where there are opportunities for us to be part of a capital stack, so to speak, in New York. So it's still a wait and see, still seeing what's going on and where our capital could be productive and the projections of these businesses as well, we're getting a better handle on. David?

I think you covered it well, John. Obviously, we've got 2 ground-up developments that will be further out. And obviously, Resorts World has a bit of a head start given the existing facility. So John DeCree, timing and amount and magnitude and what partners is a bit TBD still at this point.

David, John, I appreciate that. And I wanted to circle back to your prepared remarks as it relates to The Venetian and the case study that you've referenced and the success that Pat had there and the development capital. I'm curious to get your views on opportunities where that could be replicated, where there's large assets, great assets in great locations, casino assets that with the right focus and capital could earn significantly more. And I mean an asset like The Strat is coming into your portfolio that's a fantastic asset that could maybe have a lot more potential.

So it was such a unique opportunity for The Venetian, but can you see that being replicated anywhere.

Yes, John, very much so. And then obviously, it is -- the fundamental approach that Patrick and The Venetian team have taken is an approach that I believe you fundamentally see across the street at The Wynn. You see it in many other assets up and down the strip. And if I was going to distill what I think is essential to increasing the vitality and relevance of an asset, it's that the management team has really strong, really broad, really deep cultural insights into how people want to experience the world and how much of those consumer desires they can capitalize on in terms of how they program the asset.

Because at The Venetian, as at so many other places, what you're seeing is acting on really strong cultural insights on how people want to be entertained, how people want to dine, how people want to socially gather, how people want to shop, how people want to pursue wellness. And that, I think, is the key ingredient. An old friend of ours -- and David, I don't know if John or Raabe coined the term relevant real estate. But at any rate, we stole it from him.

And that's what we fundamentally believe in, John, is making the real estate as relevant as it can possibly be to consumer desires. And I think that is an opportunity that can be realized on the Las Vegas Strip. It can be realized in regional assets, and it can be realized in so many different experiential categories. And again, it really takes having a really profound feel for where not only the culture is, but where it can or should go.

And John, before you drop off, I'll just say, if Patrick was on the phone, I don't think he'd say they're done at The Venetian. I think they still think that, yes, they've grown, but they are a management team that continues to look for opportunities to grow the business in a variety of ways there.

The next question comes from Smedes Rose from Citi.

I know you've covered a lot of ground here, but I just -- I wanted to circle back on something, maybe just a little bit of a clarification. The combination of the 2 PENN leases, you mentioned there's no change in rent this year to VICI. But if I -- maybe I'm not reading this right, but it looks like the escalators going forward were reduced? Or is that -- or is the rent going forward the same as well?

We simplified -- yes, Smedes, we simplified the escalation structure there. If you remember, there was a percentage rent in these leases. We removed the volatility by eliminating the percentage rent. I think that's important to see. David, do you want to jump in as well?

No. I mean creating a master lease with a much simpler structure going forward, the aggregate rent does not change. There is a change in the potential escalation going forward, but it's a much cleaner, simpler structure going forward.

Yes. No, that makes sense. I just -- so less upside, but I guess, less downside, too. I wanted to ask you on the loan book, are there -- I mean, just in general, I mean, I know you can't name names, but I mean, is there anything kind of on your watch list or things that you're concerned about coverage going forward given that you had one that obviously moved to nonaccrual.

I realize it's small, but these are the kinds of things that people care about. And I'm just sort of wondering if you can give any color on that.

Sure. Gabe, do you want to talk about our approach?

Yes. Thank you. So all the other loans in our portfolio are performing and are current on their obligations. But we have an active asset management approach where we review every single lease and loan investment in our portfolio on a quarterly basis.

So as John Payne has been emphasizing, I have really great insight into all of our partners, all of our tenants, all of our borrowers and their underlying financial performance and business plan. So continue to stay close to them and understand future forward-looking performance.

And I'm just going to add that Gabe came to us from the Blackstone mortgage REIT. So Gabe has done this before. Have you not Gabe.

Yes.

The next question comes from Rich Hightower of Barclays.

I know we've covered quite a lot of ground this morning, but I think I want to piggyback off of -- I think it was Wes Golladay's question earlier and also referring to, Ed, you said VICI has sort of a target total return annually of 8% to 10%. And if I look at current dividend yield plus AFFO growth is embedded in guidance, you're essentially already there without really investing another dollar in anything that hasn't been announced. And so I guess in that context, where do share repurchases fit into the capital allocation framework. I know that's unusual for a REIT, but sometimes circumstances are unusual.

Yes. Well, Samantha would justifiably smack me if I said we would never do share buybacks. So I'm not going to say we would never do share buybacks, but I would consider them highly unlikely, Rich, given what we fundamentally believe is the better use of our cash, retained cash resources and any other incremental capital that we were able to source to invest in experiential assets that we think will give our investors better long-term returns than would the repurchase of shares. I mean you're right, the math as it is, certainly adds up to what should be a compelling total return.

If we've learned anything, though, Rich, in the last few years, and you've lived this right alongside us, you never want to make assumptions about where multiples are going to go in any given cycle and what that is going to mean for the capitalization of earnings growth or frankly, the capitalization of base earnings. But as we look out over the course of this year, I think you've heard from John and the team, the energy that they are bringing to growth activities. And I would reiterate that while we do not obviously give investment guidance, we have a track record of working hard to produce growth within a given year, both for the year and for the following year.

And so we start the year with the guidance that we do, but I would also encourage everybody to look at our track record over our history of where we end up in relation to where we started. In other words, where do we end up with year-end earnings in relation to where we started at the beginning of the year with our initial guidance. And I think you'll see a pretty strong track record of the team working hard to produce results in the year for the year.

Our final question today comes from Chad Beynon from Macquarie.

Just one for me. I just wanted to go back to the Golden transaction. I know you guys hit on the cap rate and the opportunities in that region. Just wanted to focus on the coverage of 1.9. Can you talk about kind of how you thought about that level at this time in the cycle maybe versus prior negotiations?

And then more importantly, does this portend for future negotiations in terms of the -- how you're thinking about the coverage? Or is every deal a different snowflake, so to speak?

John?

Yes. I'll take the last part of your question, which is every deal we have is just so different, whether it's a portfolio of assets, whether it's a single asset. So as it pertains to your question about coverage, every time we look at something, we go through what is the appropriate coverage to start with. Regarding Golden, it's a belief, these deals, they're real estate deals, but we're really, as I said in my opening remarks, underwriting the management team and understanding their plans for the assets and where the markets are and how these assets can perform.

So as we put it all together and we're looking at a portfolio deal of the Golden assets, our team and our investment committee took a look and believe that, that was the appropriate way to start at that coverage. And we believe that the operating team will be successful running the business based on their future plans.

Thank you. I'll now hand the call back to Ed for any closing comments.

Yes. Adam, thank you. I will just close out by thanking everybody for dialing in today at the end of what I know has been for all of you, both on the sell and buy side, a very long earnings season. We look forward to seeing many of you at the conferences over the next few weeks and then, of course, again in about 2 months for our Q1 call. And Adam, that will conclude the call.

This does indeed conclude today's call. Thank you all very much for your attendance. You may now disconnect your lines.