VICI Properties Inc (VICI) — Q4 2025 Earnings Call Transcript

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 the 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 the fact that 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 at the 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: '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 represent $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 of 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 tenure history of over 30 years in casino operations and has established a reputation as an effective operator with a strategic focus on Nevada's gaming landscape. We hope to grow together in the coming years. At VICI, we've talked about investing in the local Las Vegas market for years, and Golden has allowed us the opportunity to do so. The market is demographically attractive. Median household income in the local 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 local market has also maintained incredible resiliency, as demonstrated by the 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 of 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 non-recurring transactions or items. With that, Adam, please open the line for questions.

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 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 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 a 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. One of the advantages of having a small partner roster, both in asset investment and lending, is that we can promptly address any issues that arise. In this situation, it was apparent that our partner, the borrower, was experiencing a working capital issue. We made a well-reasoned tactical decision to ensure they had the necessary working capital to continue operating and developing the property, thereby preserving its value. This also allows them to focus on their recapitalization efforts, which they are working hard on, and we are monitoring closely. Regarding any potential impact on earnings for 2026, this is a minor aspect of both our loan portfolio and overall asset base. Gabe, do you have any additional insights concerning Caitlin's inquiry about the 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.

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 share specific details about our pipeline, but I think it's important to emphasize what VICI is compensated for. Our short-term incentives are entirely based on a rolling two-year AFFO per share growth, while our long-term incentives focus on absolute relative total return, aiming for an annual total return of 8% to 10%. I mention this to give you insight into how we view our pipeline and external growth opportunities. We have been clear from the beginning that we need to secure sustainable external growth. Therefore, we prioritize real estate ownership but also utilize our loan portfolio to foster new relationships. We remain active in our efforts. Last year at this time, we had only announced our partnership with Cain and Eldridge and had not yet revealed our collaboration with Red Rock Resorts or Golden. We are continuing our work and will persist in using our relationship-driven strategy for future transactions, and we are optimistic about the opportunities that exist.

Got it. And then maybe related, 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 non-gaming and experiential. But I know the whole company, but particularly 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.

I was hoping you could discuss the reasoning behind the Greektown Margaritaville combination, the lease adjustment involved, and how that deal came about, including who initiated it. Any insights 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 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, that’s a great question. We approach all of our investments from a fundamental relationship-based standpoint. With Red Rock, as we previously mentioned when we announced that investment last year, our team has been meeting with Frank, Lorenzo, and Steve for years to build a relationship and understand their business. When they reached out to us last fall to join their syndicate, it was an opportunity to further develop that relationship. We maintain regular communication with them, even though they are the developer and the tribe will manage the asset. Our investment was made based on Red Rock's credibility and expertise in development. If you’ve seen any renderings of the North Fork asset, it's on schedule and slightly under budget, with an opening planned for this fall. We don’t just lend and then step back. Everything we do is relationship-focused, considering who our partners are and the strategic value of the capital we invest, whether through equity or debt.

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 about 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.

I will start, and then I will hand it over to David. We do not provide guidance on investment activity that has not yet been announced or on loan draws that haven't been formally scheduled. This distinguishes us from many others in the net lease sector. There are two main reasons for not giving investment guidance. First, achieving visibility and predictability can be challenging. Second, as a risk manager, I am cautious about the concept of investment guidance. If we set an investment target without certainty on how to reach it, it could lead teams to make decisions just to meet targets, which can lead to issues. I will now turn it over to David to address the latter part of your question.

We have some draw schedules for Kalahari North Fork and a few other projects, allowing for flexibility in the percentages they may draw each month. Our income statement shows limited lines, with slight fluctuations in general and administrative expenses and interest income. We are also being conservative about the upcoming refinancings, which include a $500 million maturity in September and a $1.25 billion maturity in December, as well as another $1.5 billion coming due in early 2027. We plan to access the bond market later this year ahead of these maturities to manage our debt wall and debt ladder as we have done since the beginning.

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 approaching a 10-year perspective, currently around 125 to 130. I don't have the exact figure for this morning, but we're looking at low 5s for the all-in coupon. As we did last year, we would certainly like to issue 10s or 30s if market conditions allow. However, we have flexibility with a robust fixed income investor base that we're thankful for, and we will enter the market at the right time for the company.

Got it. My second question is about Golden. I wanted to revisit the pricing on that transaction for a moment. I appreciate the information on the Las Vegas local market; certainly, we've heard some encouraging things there. However, the mid-7 cap rates are significantly lower compared to other regional deals, which have largely traded in the 8% plus range. I'm curious about how we should view cap rates for regional versus strip assets going forward, and whether you believe this represents a new pricing level 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.

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

Well, Jim, it's great to speak with you. We don't discuss ongoing deals or any current conversations. However, I can mention that we've had a close view of Sphere's success at The Venetian. Based on what we've observed and learned from the results, Sphere has developed a very appealing offering. They have a strong management team overseeing not only entertainment programming but also construction, development, and risk management. We're clearly taking note of this, and I’ll hold off on adding anything further unless my colleagues have more to contribute.

The only thing I would add, Ed, is that we see potential in this situation. We own National Harbor, and MGM operates it. As Ed mentioned, the Sphere in Las Vegas has attracted a significant number of new customers. Therefore, if another Sphere were to be built on that campus, it would likely benefit both our business and MGM's business.

That's helpful. I appreciate the caveats. Ed, even though you can't really discuss the conversations with Caesars, can you tell me if there is a regular series of discussions between the two companies? Is this ongoing or sporadic? I'm trying to get a sense of what the interaction is like.

Yes, it's necessary for us to maintain a regular dialogue with our largest tenant. There are discussions that need to happen about issues that aren't always directly related to the regional lease. John, do you want to add anything?

No. If the question was just about the lease, that's different from whether we are talking to Caesars and our tenants about their business to understand the trends. We do that all the time, and it's one of the benefits of our model. Because we have 14 or 15 tenants, we can talk to them and understand specifics about our assets. I speak frequently with them; Danny, the lawyer, works, and our group communicates regularly, not only with Caesars but with 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.

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?

Yes. Let me discuss experiential. We will continue to expand our gaming portfolio, and we are aware of potential opportunities in that sector worldwide, especially in the U.S. Regarding experiential or non-gaming areas, I will mention a few points. We are exploring various avenues, particularly in sports. Gabe, in his new role, is dedicating significant time to this effort. We are currently engaging with different sports operators, teams, and leagues, which takes time, much like our initial interactions with gaming operators. The landscape in sports financing is changing quickly; news outlets frequently report developments in that area. Whether it's universities or professional teams, everyone is keen to explore their options before proceeding. The VICI team is connecting with the right contacts and remaining patient, as we believe there is significant growth potential in sports infrastructure. We are also focusing on live entertainment, as data indicates that millennials and Gen Z are eager to spend money on such experiences. We're actively assessing opportunities for our capital in these infrastructure projects. Tony, I’ll stop there and see what questions you have.

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 correct. There's an initial maturity next month. It's unlikely it will be repaid, but it will likely be rolled into a larger construction syndicate that the Cain team is managing, and the timing for that is yet to be determined. It's difficult to forecast. It's a significant construction loan, but they're very focused on ensuring it's completed in a timely manner.

John, I wanted to revisit the sports opportunity since we've been discussing it for a while. I understand your point about patience and persistence. Have you provided any insights on the total addressable market or the sizing of that opportunity? It would be helpful to have a bit more information while we wait.

We don't have an exact number. I'll let David 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 and 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. The timeline is shorter for some and more immediate for others; it's part of a long-term plan. And hopefully, our capital can be a good fit and 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?

Yes, David. 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 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 at, for instance, 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.

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. 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 within 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.

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 development that is going to happen with these licenses. We do already have a partnership, as you know, with Hard Rock organization that is 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, absolutely. The fundamental approach that Patrick and The Venetian team have adopted is similar to what you see at The Wynn and many other locations along the strip. To enhance the vitality and relevance of an asset, it’s essential for the management team to possess strong cultural insights into how people want to experience the world and how these consumer desires can be leveraged in their programming. At The Venetian and other venues, there is a focus on understanding how people wish to be entertained, dine, socialize, shop, and pursue wellness. This insight is crucial. We borrowed the term 'relevant real estate' from a friend of ours. We fundamentally believe in making real estate as relevant as possible to consumer desires. This opportunity can be realized on the Las Vegas Strip, in regional assets, and across various experiential categories. It requires a deep understanding of where the culture is and where it can or should evolve.

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.

I know you’ve discussed a lot, but I wanted to revisit something for clarification. Regarding the two PENN leases, you mentioned there’s no change in rent this year for VICI. However, it seems that the escalators moving forward have been reduced. Is that correct, or is the rent going forward the same?

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, that makes sense. I see less upside, but also less downside. Regarding the loan book, I understand you can't mention specific names, but are there any items on your watch list or areas of concern about coverage going forward, especially since there was one that recently moved to nonaccrual? I know it's a small issue, but these details matter to people, and I wonder if you can provide any insight 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?

I know we've discussed a lot today, but I would like to follow up on Wes Golladay's earlier question. Ed, you mentioned that VICI has a target total return of 8% to 10% annually. When I consider the current dividend yield combined with the growth in AFFO that is included in our guidance, it seems we are already achieving that without needing to invest anything new that hasn't already been announced. In this context, where do share repurchases fit into our capital allocation strategy? Although it's not common for a REIT, sometimes the circumstances call for it.

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.

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 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.

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.