VICI Properties Inc (VICI) — Q4 2019 Earnings Call Transcript

Thank you, operator and good afternoon. Everyone should have access to the company's fourth quarter 2019 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, expect, should, guidance, intends, projects and 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 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 in our fourth quarter 2019 earnings release and our supplemental information. Hosting the call today, we have Ed Pitoniak, Chief Executive Officer; John Payne, President and Chief Operating Officer; David Kieske, Chief Financial Officer; and Gabe Wasserman Chief Accounting Officer. 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 afternoon to everyone on this call. We greatly appreciate you joining us. Over the course of our opening remarks and the call, we will discuss with you our 2019 Q4 and 2019 full year key activities and results. John will cover our portfolio and business growth activities and results. David will cover for you our financial results and the continuing institutionalization of our capital structure. I'll begin by sharing our thoughts on 2019 as evidence of what we've been building over the last two years or so since VICI was born. From VICI’s earliest days, we've focused relentlessly on the methods by which we will manage and grow your REIT. Taking advantage of our collective REIT experience, as a management team and as a board, we've attacked the following two questions with as much energy and rigor as we can manage. Question number one, what's the character of the culture that a great REIT grows out of? How do we attract and retain the best people on both our board and our management team, so that we can live up to what I believe is axiomatic in Real Estate Investment Management, and that axiom is simply the best people, plus the lowest cost of capital wins. Question number two, what are the partnership principles and methods to build and sustain a great REIT? With our own people, with transaction partners, with advisory partners, with capital partners, both equity and credit, and with long term operating partners or tenants. We focus relentlessly on these two questions, because we believe finding the right answers to these questions is key to instilling and maintaining the right methods for managing, governing, and growing the REIT. And we focus intensely on our methods, or means, because we fundamentally believe that the scalability of our REIT management and governance methods ultimately drives the scalability of our REIT results or performance. Our 2019 achievements were of a magnitude matched by very few other American REITs in 2019. We had one of the most productive and value-creating years of any REIT in recent history. I'm proud of our achievements, but even more proud that these outcomes are the result of the management team and the management method that we've been building since VICI day one. And that's because the results of 2019 are done. They are history. But what our management team and method can and will achieve in 2020 and beyond represents our future and the value we can continue to create for our stakeholders. Here is the essence of our strategic method; growing relationships. It is absolutely as simple as that. If we grow the right relationships in the right way, we will grow and sustain the value of the REIT in the right way. The right way comes down to growing and constantly bettering our business by growing new relationships with new partners and sustaining and broadening mutually beneficial relationships with existing partners. Let me quickly run you through our key partnerships. Number one, our people. In 2019, in our second full year of operation, VICI was one of only eight American REITs to win certification as a great place to work. We are using the great places to work program to ceaselessly monitor and improve the experience of our people because VICI’s success depends on the unceasing energy and engagement of our people. Number two, gaming partners. In 2019, we grew and bettered our portfolio by growing new relationships with operating partners in Reno, Nevada, Eldorado, Hollywood Florida, Hard Rock, Vienna Austria, Century Casinos, Detroit Michigan, and Jack Gaming. In doing so, we added to the relationships we already had with great partners in Las Vegas, Nevada, Caesars, and Wyomissing, Pennsylvania Penn gaming. Number three, equity partners. In 2019, we grew and bettered our capital structure by growing our relationships with the equity investment community, becoming by the end of Q4, 2019 the most highly regarded triple net REIT by America's dedicated REIT investment managers as measured both as a percentage of market cap and in absolute dollars. And it will come, when it comes to Europe's top real estate investors, VICI was their number one triple net holding at the end of Q4, 2019. Number four, credit partners. In late 2019 and early 2020, we improved our capital structure by initiating and quickly growing a relationship with the fixed-income community, raising nearly $5 billion of unsecured debt at some of the best pricing achieved in recent history, by our grade of credit. And we achieved that because in part, we are recognized and given credit for our ambition to become an investment-grade credit. Number five, learning partners, it is through our relationships with great operators and knowledgeable advisers that we learn about the gaming marketplaces, those where we already own gaming real estate and where we will potentially acquire more gaming real estate. Finally, number six potential new sector partners. It is also by growing relationships with operators and advisory controllers and advisers in other experiential sectors that we are learning and will learn about these other sectors. Learning that will determine if, when, with whom, and how we will invest in other experiential sectors. This fundamental strategic method, growing our REIT and our value by growing our relationships with valuable partners, sounds simple and basic, and it is. But during my career in real estate, I've been struck over and over, by the tendency of real estate investment companies, in many different sectors to sacrifice relationships for the sake of maximizing their takes in a transaction. They sacrifice potential future growth by leaving the current counterparty saying to themselves, and others in the marketplace, I will never do business with that company again if I can help it. That is not who we are at VICI, not today, not tomorrow, not ever. We are relationship builders, not destroyers and by doing so, we believe we are value creators. Since our very first day, VICI's business development has been led by one of the very best relationship builders in American commercial real estate, John Payne. I will now turn the call over to John, and he will tell you about the relationships and value we built in 2019, and how we're approaching growth in 2020. John over to you.

Thanks Ed. Good afternoon to everyone. As Ed highlighted, 2019 was a transformative year for VICI, our investors and our team. Over the course of the year, we were by far the most active, and led the gaming REIT sector in acquisition activity. Indeed, we were the only gaming REIT to announce arm’s length transactions in 2019. In total, we announced $4.9 billion of transactions across regional and Las Vegas assets, at a blended 7.9% cap rate. Including the pending Eldorado transaction, we increased our annualized rent by approximately 45%. We doubled our roster of best-in-class tenants, and demonstrated consistent, accretive acquisition activity for the third consecutive year. We believe our independence focus on relationships and ability to structure creative transactions that worked for VICI and our partners over the long term will only add to our momentum for years to come. During the fourth quarter on December 6, we closed the acquisition of three regional properties with Century Casinos. This $278 million transaction adds $25 million of annual rent under a master lease, representing an attractive 9% cap rate. This transaction has important strategic significance in that it creates a partnership with Century Casino, an expert operator of small to midsize assets with ambitions to grow their U.S. platform and demonstrates that we can partner with operators of all sizes. Just a few weeks ago on January 24th, we closed on the acquisition of JACK Cleveland Casino and JACK Thistledown Racino in a sale-leaseback transaction with Jack Entertainment. We paid a total of $843 million and added $65.9 million of annual rent to our portfolio through a master lease, which represents an attractive 7.8% cap rate for urban core real estate in Ohio, one of the fastest-growing regional markets in the country. Additionally, on January 15th, we announced the disposition of Harrah's Reno for $50 million. Not only will we receive $37.5 million of gross proceeds for this sale, but we will also have no change to the existing annual rent under the master lease with Caesars. This is a great example of how VICI works constructively with our tenants while redeploying the sale of proceeds towards other attractive growth opportunities. As we head further into 2020, the transaction environment remains active, and we see plenty of opportunity, both within and outside the gaming industry. We also remind you that we have worked diligently to secure an embedded growth pipeline that ensures the company maintains visible, long-term growth. Upon the closing of the Eldorado transaction, this embedded pipeline includes two row four opportunities on the Las Vegas strip assets, a put-call option on two high-quality assets in the growing Indianapolis gaming market, a ROFR on the world-class Caesars Forum Convention Center in Las Vegas, and an additional ROFR on an urban core casino in Baltimore. We believe VICI remains in a great position to capitalize on opportunities that the market presents, and we will continue to put your capital to work, growing our portfolio, accretively building a world-class REIT and driving superior shareholder value. With that, I'll turn the call over to David who will discuss our balance sheet and guidance.

Thanks John. I want to start with our balance sheet. Since our emergence just a little over two years ago, we brought relentless focus to ensuring that we have a capital structure that will weather all cycles and provide the safety and protection our equity and credit partners deserve. During 2019, and into the first part of 2020, we continued to transform our balance sheet through extremely disciplined capital allocation. To summarize; in June 2019 we raised $2.4 billion of equity through the largest REIT primary share offering ever to fully fund all the equity required for the Eldorado transaction as well as the JACK Cleveland Thistledown transaction. As a reminder, we upsized the offering to 115 million shares comprised of a 50 million share regular way common stock offering resulting in immediate net proceeds of approximately $1 billion with such shares being added to our total share account on June 28. We also entered into forward sale agreements for the additional 65 million shares. Upon settlement, the forward component of the offering is anticipated to raise remaining net proceeds of approximately $1.3 billion. In addition, in March 2019, we officially raised $128 million of net proceeds through our ATM program. This efficiency was demonstrated again earlier this month where we sold $200 million of equity via the ATM to ensure funding for our active transaction pipeline. We upsized our line of credit by $600 million, making 2019 increasing the total capacity to $1 billion, enhancing our liquidity profile and extending the maturity from 2020 out to 2024. We continued on our mission of strengthening our balance sheet with the ultimate goal of achieving an investment grade rating. In November 2019, we executed our very successful inaugural unsecured notes offering with an upsize offering of $2.25 billion, which was 3.6 times oversubscribed, comprised of a billion and a quarter of seven-year notes at 4.25% and $1 billion of ten-year notes at four and five-eighths percent. The proceeds from this offering were used to retire the secured CPLV CMBS debt where we replaced a standalone secured mortgage that carried a rate of 4.36% with a blended rate of 4.32% on the new unsecured notes that were used to retire this secured debt. We incurred total breakage costs of $110.8 million but as part of the Eldorado transaction, we will be reimbursed for half of these costs upon the closing of the ERI transaction. We took advantage of this partnership from the credit markets and on February 5th 2020, we closed on a subsequent $2.5 billion unsecured notes offering, which was 4.9 times oversubscribed comprised of $750 million of five-year notes at 3.5%, $750 million of seven-year notes at 3.750% and $1 billion of 10.5-year notes at 4.125%. $2 billion of the proceeds from the February notes offering were put into escrow and along with the proceeds from the equity forward agreements from June’s equity offering we now have $3.2 billion of capital earmarked for the Eldorado transaction. The remaining $500 million of proceeds from the February notes offering were used to retire the 8% Second Lien Notes which were redeemed earlier today. All of this debt financing significantly improves our composition and weighted cost of debt. At Emergence, we had 100% secured debt with a weighted average interest rate of 5.49% and a weighted average maturity of 2.9 years. As we sit here today, post the activity in early 2020, we have $6.85 billion of total debt outstanding, 69% of our debt is unsecured with a weighted average interest rate of 4.2%, a weighted average year to maturity of 7.1% and we have no maturities until 2024, a significant improvement providing VICI with the ability to continue to finance highly creative transactions. Overall, 2019 highlighted our guiding principles on how we approach our balance sheet: maintain a very disciplined composition and lettering of debt whereby in any one year, we strive to have less than 20% of our total debt coming due; safeguard the company's balance sheet against future market volatility; opportunistically access the capital markets to lock in funding certainty for all real estate transactions; and develop continued access and partnership from the equity and credit markets to finance accretive acquisitions. Maintain a long-term target leverage goal at 5 to 5.5 on a net-debt-to-EBITDA basis, which we will be well within pro forma for all the transactions we have announced and migrate the balance sheet to an unsecured issuer and ultimately achieve an investment grade rating. In terms of our financial results, this afternoon we reported that total revenue in Q4, 2019 excluding tenant reimbursements for property taxes increased 15.2% over Q4, 2018 to $237.5 million. For the full year 2019, revenues increased 9.6% over 2018 excluding tenant reimbursement of property taxes. These increases were the result of adding $146.6 million of annual rent during the year from the Margaritaville, Greektown, Hard Rock Cincinnati and the Century acquisitions which all closed in 2019. AFFO was $176.6 million or $0.37 per share for the fourth quarter bringing full year 2019 AFFO to $649.6 million or $1.48 per share in line with our 2019 guidance. AFFO increased 23.6% year-over-year while AFFO per share increased approximately 3.5% over the prior year, which is due to the increased share account and resulting temporary dilution from the June 2019 equity offering. Our G&A was $5.1 million for the quarter and as a percentage of total revenues was only 2.2% for the quarter, which is in line with our full year projections and represents one of the lowest ratios in the triple net sector. Our results once again highlight our highly efficient triple net model, as flow-through of cash revenue to adjusted EBITDA was approximately 100%. As always, for additional transparency, we point you to our financial supplement for a detailed breakdown of our cash rent by lease, which is located in the Investor’s section of our website under the menu heading, 'Financials' and as always we welcome any feedback on the materials. As John mentioned on acquisitions, we closed on the Century portfolio on December 6, adding $25 million in annual cash rent at a 9% cap rate. We funded the Century acquisition using cash on our balance sheet because the JACK Cleveland Thistledown acquisitions subsequent to year-end on January 24th added $65.9 million in annual cash rent at a 7.8% capitalization rate. We funded this transaction using cash on our balance sheet. We continue to expect the Eldorado transaction to close by the end of the second quarter. We will add $253 million of annual rent increasing our total annual rent by approximately 25%. As for guidance, we are continuing to present our guidance in absolute dollars as well as on a per share basis. The per share estimates reflect the dilutive impact from the additional 50 million shares of common stock issued on June 28, 2019 as well as an estimate of the additional shares from the unsettled forward sale agreements that are required to be included in the fully diluted earnings per share calculation under the treasury stock method. We estimate AFFO for the year ending December 31, 2020 will be between $728 million and $748 million or between $1.50 and $1.54 per diluted share. As always, our guidance does not reflect the pending Eldorado acquisition nor any other potential acquisition activity. Finally, in the fourth quarter, we paid a dividend of $0.2975 based on the annualized dividend of $1.19 per share. The dividend was paid on January 9th to stockholders of record as of the close of business on December 27. With that, operator, please open the line for questions.

Good afternoon. Thanks for all the color on the guidance. David, to simplify you. You filed an 8-K along with one of the recent financing transactions outlining I believe is $1.85 and pro forma FFO per share for all the transactions you have in process. Can you just talk to the puts and takes of this pro forma number as we think about what has changed since that filing which included excluding also compare and contrast this to the guidance for $1.50 to $1.54? Thanks.

Yes. Stephen, this is Ed. I’ll start off and turn it over to David. Yes. What you've cited is a number that represents an annualized run rate, once the Eldorado transaction closes and that again I must emphasize does not constitute our 2020 guidance. Our 2020 guidance which David just shared with you obviously does not include the impact of the Eldorado closing. We obviously do not yet know with precision exactly when our Eldorado transaction will close, and when the new rent will start coming in. But once the new rent starts coming in, if you annualize that over the forward 12 months, you get to a number very much like the number that you picked up on in the offering memorandum in the high yield document. And as to how that might or might not have changed any since then, I'll turn it over to David and he can address any other technicalities here.

Yes, the only thing I'd add Stephen is that it’s an annualized run rate for Eldorado, but for all the other transactions that we have announced obviously we've done a lot in 2019. So with the annualized run rate for Century, for Cleveland, JACK Cleveland, Thistledown. The $1.85 is based on the pro forma share count that in there, that obviously there's some slight changes to our share count with the ATM 7.5 million shares that we issued under the ATM just recently. So, but the run rate number is a good number based on a full year impact of all the transactions that are pro forma in that number.

Got it. That's helpful. And then maybe an unrelated follow up. So now that you've had a little bit more news and action in the space from private equity and MGM, but also one of your peers, are you seeing any change in the opportunities set for gaming deals? In other words, are owners changing their view of real estate value, and their willingness to think about monetizing that? Thanks.

Yes, I'll start off, and turn it over to John, Stephen. Yes absolutely. We're seeing increased interest in the sector which we have always hoped for and wished for. We cannot claim that this is a sector deserving of institutionalization and potential cap rate compression if there's not increased interest in it. That is fundamental to any institutionalization or cap rate compression story. And as operators or asset controllers have seen this level of activity and have seen the valuations they are understanding the role that REITs can play in helping them grow their store count or crystallize value. And I'll turn it over to John for more…

And now I think Ed described it very well. I mean, we can't be a company that started three years ago and talked about what great real estate these gaming assets are, and not expect there to be the others who noticed that. And so it's a great time in this space and operators are understanding how REIT can help them grow their business. So it's great.

Great, I'll jump back in the queue. Thanks so much.

Hi, I'm curious if you think there might come a time when you would consider partnering with larger private equity firms, as they may start to focus more on this sector, which is among the last to be institutionalized. I wonder if they bring a more consistent cost of capital and if that would be something you need to consider moving forward. How do you view this?

We are certainly open to the idea, Smedes. If we can achieve the best outcome for our shareholders by collaborating with another capital provider, we would definitely consider it. However, it's important to note that what we've observed is not the entry of traditional private equity, but rather the emergence of a non-traded REIT. There is a distinction here. A non-traded REIT, particularly one of high quality like the Blackstone REIT, operates differently than private equity firms. Unlike private equity, which typically has an exit strategy in five to seven years, the Blackstone REIT functions as a permanent capital vehicle. We believe this represents a stable source of institutional real estate capital, distinct from private equity.

Thank you for that clarification. My other question is whether you are waiting for the Eldorado transaction to close before establishing a pipeline related to it. Are you planning to continuously explore other opportunities, or will you take a break to evaluate what arises from the Eldorado deal?

I didn't know I was allowed to take a pause. But no, I think we are operating in the same way that we've been operating since we started the company. We're out here, and then started this call about relationship building and making sure people understand how we would structure a deal or look at a deal. So, yes, we've got this great transaction that we hope to close by the middle of this year with Eldorado and we obviously have spent a long time developing our embedded pipeline, but that doesn't stop us from continuing to grow the company where we see unique opportunities with great real estate.

Okay. Thanks guys.

Hey, good afternoon guys.

Hey, Rich.

I think you may have overlooked this in your prepared comments, but could you clarify whether the ATM issuance is related to an unannounced deal or something that has already been announced?

Yes. Neither. We just taking advantage of an attractive stock price and a very efficient tool to access the equity markets to make sure that we've got funding for our future pipeline or any future needs that do arise.

Okay. So it was just totally opportunistic in that sense and just maybe safer to have a little extra equity on the balance sheet basically?

Exactly. Yep.

Okay. Fair enough. And then maybe bigger picture on the topic of non-gaming assets. Can you just maybe help us define the landscape of non-gaming hospitality opportunities out there? How do you think about it? How do you think about operators in the space? And are you discovering any hospitality-focused operators that might be interested in a net lease structure along the lines of the way that casino companies have done it?

Yes, Rich. We have discussed this before. We evaluate other sectors the same way we evaluate gaming. We're looking for sectors with low cyclicality, similar to gaming, and sectors that aren't facing long-term threats. These sectors should focus on shared experiences that cannot be easily delivered by Amazon. We also seek a healthy supply-demand balance since overinvestment can lead to a loss in value. A key factor for us is ensuring there is a strong user experience that has shown loyalty over decades. We are identifying sectors with these traits and are meeting operators with solid platforms and strong user relationships. We've mentioned some of these sectors before. We believe demographic trends, like the aging Baby Boomers and Millennials starting families, will create significant advantages for these sectors. We're particularly focused on sectors that have or can support a triple-net model, which relies heavily on operators being motivated and rewarded for managing that leverage. For instance, we've discussed the hotel industry, where there are challenges due to misalignment in operating responsibilities and ownership. We prefer to avoid that model and will focus on sectors where the operator's financial interests align with our structure.

Got it. I would appreciate that color. Thanks.

Thank you. I think most of our questions were already answered. Appreciate it.

Thanks a lot.

Hi, this is a question on behalf of David. With the recent ATM issuance and increased debt issuance, do you currently have excess cash on your balance sheet? Are you planning to enter that market again soon for additional acquisitions in the pipeline?

Yes, as we consider future acquisitions, we will continue to follow our established approach upon announcing a transaction. If equity is needed, we will go to the market that day to raise the necessary equity. To clarify, the proceeds from the debt offerings we have completed so far have been allocated for either the Eldorado transaction or the refinancing of today's second liens. The ATM was simply an effective way to access the equity markets and gather additional capital for our ongoing transaction pipeline.

Okay. Thank you.

Hey, it's Steve on for Carlo. Thanks for taking our questions. First, we just wanted to clarify one thing regarding the $58 million debt extinguishment charge. Does that relate to the CMBS? And will there be a reimbursement from ERI at the conclusion of the transaction since I believe you are splitting the cost of the breakage?

Yes. It's David. And just as I mentioned in my remarks, the total charge is $110.8 million. We split that 50/50 with Eldorado. So the $58 million that shows up on our income statement is $55.4, plus some transaction legal fees related to the retirement of that debt.

Okay. Thanks. That's helpful. And then given one of your competitors had some circumstances at present that one can imagine, puts them potentially at a bit of a pause. Do you believe there to be opportunities at present with less potential competition presenting themselves to you?

We really never look at these deals as if there's less competition especially back to our opening remarks about how attractive this real estate is and how we've been communicating that since we started the company. So at least from our philosophy how we go into looking at a deal especially one that we know is on the market, I don't think we approach it to say there's less competition today than there has been in the past.

Okay, great. Thank you.

Hey, guys. Thanks for taking my questions. Given your cap rate compression and the recent lift that we've seen in publicly traded operators in recent months, i.e., Penn. I'm wondering if you're noticing an increased willingness at all from sellers to transact?

I don't know if it's because of the last activity that you're talking about and they're seeing that their opco multiples are going up. I think it's just a matter, as we've said before, as more people are educated on this space, they're understanding how a REIT can fit into their portfolio. How we can help them grow their businesses. So I think you may be seeing some of that. I'm not sure necessarily it has to do with the stock price moving on the opcos or the propcos right now, I think its just a matter. There's been years now of helping folks to understand that. And I think there's increasing understanding through the work we're doing, as well as our colleagues in the sector are better understanding, Dan, around how to think about the capital we provide, whether in a sale-leaseback or by partnering with someone when it comes to helping them increase their store count by partnering with them on their purchase of the opco and our purchase of the propco. And I think there's a greater and greater understanding that we are a permanent capital provider. The capital we provide does not have a maturity date. It does not need to be paid back. And I think as everyone thinks over the long-term about how they're managing their own capital structures and the risks associated with their capital structures, they realized the value of not having large bullet maturities to the extent that doing either sale-leaseback with a gaming REIT or partnering with the gaming REIT to acquire an opco accretively, enables them to reduce their risk profile over time when it comes to again the laddering of their liability.

Great. That color is very helpful. And I know that you alluded to this both in the prepared remarks and I think John and Ed in prepared remarks, and Ed in another question. But it's interesting that this morning the question of monetizing real estate actually came up on Six Flags earnings call. And I'm just wondering what opportunities, specifically what experiential markets in particular do you see the biggest opportunity outside of the gaming space for you guys? Thanks.

Yes. Again, I think it would be in the context of that, if you will that four-lens framework I spoke of regarding cyclicality, there's secular threat, supply-demand balance and durability they experienced. Certainly the theme park business looked at broadly is a business that has certainly proven its durability over time. The supply-demand balance tends to be pretty healthy and so far as these are very expensive assets to build. I don't know when we last had a Greenfield asset in the theme park, American theme park sector. It is again not something Amazon can ship to your house. And generally speaking, especially drive-to theme parks have tended to weather economic downturns quite well. So it would be representative of the kind of experiential sector, sorry, that takes those boxes.

Okay, great. Thank you.

Hey, good evening guys. My question on the $1.85 run rates for all post-announced transactions, that does include all financing for those transactions. Is that correct?

That's right. Yes. The pro formas in there reflect the recent high yields and obviously the June 2019 equity offering, but again that's not our guidance, that's a pro forma 8-K number.

Fair enough. And I guess, is it fair to assume that you will continue to pursue deals, only deals that are accretive?

Absolutely, RJ. I think we've shared with you, REIT has an opportunity to do one bad deal, because after that we won't have access to the capital or the support of credit markets or the equity market to continue on. So anything we do will be accretive.

And we don't plan to do that one bad deal.

So I guess it's fair to assume then, if you take the $1.85 run rate for the transactions once they close on a pro forma basis, if you were to assume any additional transactions or acquisitions then it would therefore be higher than that $1.85 run rate?

That's the fair assumption.

Yes. Our board certainly wouldn't let us get very far if we came along and said, yes, you know that $1.85 was actually now $1.83 because we just did a bad deal. Not that we would bring anything like that to the board in the first place, but I can tell you they wouldn't certainly say pass go. Now, we're always going to be really determined to generate accretion. It is what our investors deserve. It is how value gets created. And frankly RJ, it's how we get paid. We get paid on total return. And needless to say, total return is likely to suffer whenever we do a deal that causes our FFO per share to decline on a per share basis.

Thanks. That's helpful. Yes, I'm just looking at 2021 consensus is below that $1.85 run rate. So it seems like numbers might be to change?

Yes. And I think in fairness, RJ. We feel for everybody in the work they have to do out there. Like you do, because VICI has been a case of many moving parts and a lot of complexity over the last, especially whatever it is now, nine, 10 months since we announced our transformative deal with Eldorado. To unfairness to everybody, it's been hard to piece things together. But what we did achieve with the January financing, I guess, it closed in early February was cost of funding clarity for every dollar that ends up paying for the Eldorado deal. Is that's a good way to put it, David.

Absolutely.

That's helpful. And my last question is just and I think maybe you mentioned this, but if I may have missed it. Any thoughts on timing on looking at the ROFR assets?

Well, it depends on which rights of first refusal you're referring to. I assume you're talking about the ones in Las Vegas. I think we will be ready if Caesars and Tom Reeg decide to proceed with a transaction concerning those assets. We are prepared for that, whether it happens later in 2020 or in subsequent years.

Okay. Thanks very much.

Hi everyone. I appreciate your taking my question. Earlier today, Bloomberg reported that Las Vegas Sands expressed interest or made inquiries about the new Caesars Forum. I understand you have contractual rights regarding that asset. If Las Vegas Sands or any other operator were to pursue acquiring that asset, how would that process unfold considering your contractual rights?

Yes. Well, Ricardo, I'll start and then John can add in. First of all, we obviously do not comment on rumors, and we don't really speculate on hypotheticals. I think what we'll emphasize is that Caesars has built a magnificent new convention center behind Harrah's Las Vegas, which we own, and we encourage everyone to visit, especially in April.

The NFL draft we hosted there this year.

Yes, it will. Yes, it will. So, sorry, we can't help you out on the rumors of this or any kinds of hypotheticals Ricardo, but we will just leave it at it is a beautiful structure upon which we do have what you refer to which is a put-call agreement with Caesars.

Perfect. Thank you so much.

Good afternoon.

Good afternoon, John.

Touching on Ricardo's question and maybe kind of a different angle. If there was a transaction that occurred because of the put-call, you're right, would survive any transaction, correct?

Yes. That's correct.

That's correct.

Okay. All right. Then I guess shifting over to the balance sheet. When I think about the pricing on the private placement that you closed in February. How do you think that would have compared from a rate perspective to what you could have gotten had you been an investment-grade issuer?

I mean, John, you've seen that earlier this week National Retail Properties looked at a 30-year bond with low threes. So depending on market conditions, there are 75 to 100 basis points that we could potentially reduce from our debt capital pricing over time.

It's significant, John.

Okay. Makes sense. And I guess outside of that are there any other kind of levers you think you can pull with regards to the balance sheet today particularly given with the prepayment of the second lien notes. The balance sheet kind of look like how you want it to look long term or there some other levers that you could potentially pull?

The next critical step, John, is to eliminate the term loan. It has been swapped. We will roll it out early next year and implement further swaps in 2023. However, the term loan burdens all of our assets since they are all secured by it. This is the key issue for the agencies and the factor that would enable us to achieve an investment-grade rating. Therefore, we aim to focus on repaying that loan completely while minimizing the breakage costs associated with those swaps over time.

Understood. And then one last detail question. Is the ATM issuance in Q1 2020, is that baked into the guidance number you put out?

It is, yes.

Okay. That's it for me. Thank you very much.

Thanks John.

Thank you operator and thanks again everybody for your time today. We look forward to providing you an update on our continued progress when we report our first-quarter results. And again thank you for making time this late in your day.