VICI PROPERTIES INC

Previous wording

The following discussion and analysis of the financial position and operating results of VICI Properties Inc. and VICI Properties L.P. for the three and six months ended June 30, 2024 should be read in conjunction with the Financial Statements and related notes thereto and other financial information contained elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes for the year ended December 31, 2023, which were included in our Annual Report on Form 10-K for the year ended December 31, 2023. All defined terms included herein have the same meaning as those set forth in the Notes to the Consolidated Financial Statements contained within this Quarterly Report on Form 10-Q.

Current wording

The following discussion and analysis of the financial position and operating results of VICI Properties Inc. and VICI Properties L.P. for the three and nine months ended September 30, 2024 should be read in conjunction with the Financial Statements and related notes thereto and other financial information contained elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes for the year ended December 31, 2023, which were included in our Annual Report on Form 10-K for the year ended December 31, 2023. All defined terms included herein have the same meaning as those set forth in the Notes to the Consolidated Financial Statements contained within this Quarterly Report on Form 10-Q.

Previous wording

Certain statements in this Quarterly Report on Form 10-Q, including statements such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” or similar expressions, which constitute “forward-looking statements” within the meaning of the federal securities law. Forward-looking statements are based on our current plans, expectations and projections about future events. We therefore caution you against relying on any of these forward-looking statements. They give our expectations about the future and are not guarantees. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements to materially differ from any future results, performance and achievements expressed in or implied by such forward-looking statements.

Current wording

Certain statements in this Quarterly Report on Form 10-Q, including statements such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” or similar expressions, constitute “forward-looking statements” within the meaning of the federal securities law. Forward-looking statements are based on our current plans, expectations and projections about future events. We therefore caution you against relying on any of these forward-looking statements. They give our expectations about the future and are not guarantees. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements to materially differ from any future results, performance and achievements expressed in or implied by such forward-looking statements.

Previous wording

The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results, performance and achievements could differ materially from those set forth in the forward-looking statements and may be affected by a variety of risks and other factors, including, among others: the impact of changes in general economic conditions and market developments, including inflation, interest rates, supply chain disruptions, consumer confidence levels, changes in consumer spending, unemployment levels and depressed real estate prices resulting from the severity and duration of any downturn in the U.S. or global economy; the impact of increased interest rates on us, including our ability to successfully pursue investments in, and acquisitions of, additional properties and to obtain debt financing for such investments at attractive interest rates, or at all; risks associated with our recently closed transactions, including our ability or failure to realize the anticipated benefits thereof; our dependence on our tenants at our properties and their affiliates that serve as guarantors of the lease payments, and the negative consequences any material adverse effect on their respective businesses could have on us; the possibility that any future transactions may not be consummated on the terms or timeframes contemplated, or at all, including our ability to obtain the financing necessary to complete any acquisitions on the terms we expect in a timely manner, or at all, the ability of the parties to satisfy the conditions set forth in the definitive transaction documents, including the receipt of, or delays in obtaining, governmental and regulatory approvals and consents required to consummate such transactions, or other delays or impediments to completing the transactions; the anticipated benefits of certain arrangements with certain tenants in connection with our funding of “same store” capital improvements in exchange for increased rent pursuant to the terms of our agreements with such tenants, which we refer to as the Partner Property Growth Fund; our decision and ability to exercise our purchase rights under our put-call agreements, call agreements, right of first refusal agreements and right of first offer agreements; our borrowers’ ability to repay their outstanding loan obligations to us; our dependence on the gaming industry; our ability to pursue our business and growth strategies may be limited by the requirement that we distribute 90% of our REIT…

Excerpt shortened here; the source contains the full paragraph.

Current wording

The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results, performance and achievements could differ materially from those set forth in the forward-looking statements and may be affected by a variety of risks and other factors, including, among others: the impact of changes in general economic conditions and market developments, including inflation, interest rates, supply chain disruptions, consumer confidence levels, changes in consumer spending, unemployment levels and depressed real estate prices resulting from the severity and duration of any downturn in the U.S. or global economy; the impact of the changing interest rate environment on us, including our ability to successfully pursue investments in, and acquisitions of, additional properties and to obtain debt financing for such investments at attractive interest rates, or at all; risks associated with our completed transactions, including our ability or failure to realize the anticipated benefits thereof; our dependence on our tenants at our properties and their affiliates that serve as guarantors of the lease payments, and the negative consequences any material adverse effect on their respective businesses could have on us; the possibility that any future transactions may not be consummated on the terms or timeframes contemplated, or at all, including our ability to obtain the financing necessary to complete any acquisitions on the terms we expect in a timely manner, or at all, the ability of the parties to satisfy the conditions set forth in the definitive transaction documents, including the receipt of, or delays in obtaining, governmental and regulatory approvals and consents required to consummate such transactions, or other delays or impediments to completing the transactions; the anticipated benefits of certain arrangements with certain tenants in connection with our funding of “same store” capital improvements in exchange for increased rent pursuant to the terms of our agreements with such tenants, which we refer to as the Partner Property Growth Fund; our decision and ability to exercise our purchase rights under our put-call agreements, call agreements, right of first refusal agreements and right of first offer agreements; our borrowers’ ability to repay their outstanding loan obligations to us; our dependence on the gaming industry; our ability to pursue our business and growth strategies may be limited by the requirement that we distribute 90% of …

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We also have a growing array of real estate and financing partnerships with leading operators in other experiential sectors, including Bowlero, Cabot, Canyon Ranch, Chelsea Piers, Great Wolf Resorts, Homefield, and Kalahari Resorts. This portfolio includes certain real estate debt investments that we have originated for strategic reasons, primarily in connection with transactions that either do or may provide the potential to convert our investment into the ownership of certain of the underlying real estate in the future. In addition, we own approximately 33 acres of undeveloped or underdeveloped land on and adjacent to the Las Vegas Strip that is leased to Caesars, which we may look to monetize as appropriate. As of June 30, 2024, our properties are 100% leased with a weighted average lease term, including extension options, of approximately 41.2 years. VICI also owns four championship golf courses located near certain of our properties, two of which are in close proximity to the Las Vegas Strip.

Current wording

We also have a growing array of real estate and financing partnerships with leading operators in other experiential sectors, including Bowlero, Cabot, Canyon Ranch, Chelsea Piers, Great Wolf Resorts, Homefield, and Kalahari Resorts. This portfolio includes certain real estate debt investments that we have originated for strategic reasons, primarily in connection with transactions that either do or may provide the potential to convert our investment into the ownership of certain of the underlying real estate in the future. In addition, we own approximately 33 acres of undeveloped or underdeveloped land on and adjacent to the Las Vegas Strip that is leased to Caesars, which we may look to monetize as appropriate. As of September 30, 2024, our properties are 100% leased with a weighted average lease term, including extension options, of approximately 41.0 years. VICI also owns four championship golf courses located near certain of our properties, two of which are in close proximity to the Las Vegas Strip.

Previous wording

We believe we have a mutually beneficial relationship with each of our tenants, all of which are leading owners and operators of gaming, entertainment and leisure properties. Our long-term triple-net lease agreements with our tenants provide us with a highly predictable revenue stream with embedded growth potential. We believe our geographic diversification limits the effect of changes in any one market on our overall performance. We are focused on driving long-term total returns through managing experiential asset growth and allocating capital diligently, maintaining a highly productive tenant base, and optimizing our capital structure to support external growth. As a growth focused public real estate investment trust with long-term investments, we expect our relationship with our partners will position us for the acquisition of additional properties across leisure and hospitality over the long-term.

Current wording

We believe we have a mutually beneficial relationship with each of our tenants, all of which are leading owners and operators of gaming, entertainment and leisure properties. Our long-term triple-net lease agreements with our tenants provide us with a highly predictable revenue stream with embedded growth potential. We believe our geographic diversification limits the effect of changes in any one market on our overall performance. We are focused on driving long-term total returns through managing experiential asset growth and allocating capital diligently, maintaining a highly productive tenant base, and optimizing our capital structure to support external growth. As a growth focused public real estate investment trust with long-term investments, we believe our relationship with our partners will position us for additional investments in our current properties and the acquisition of additional properties across leisure and hospitality over the long-term.

Previous wording

The financial information included in this Quarterly Report on Form 10-Q is our consolidated results (including the real property business and the golf course business) for the three and six months ended June 30, 2024.

Current wording

The financial information included in this Quarterly Report on Form 10-Q is our consolidated results (including the real property business and the golf course business) for the three and nine months ended September 30, 2024.

Previous wording

Recent macroeconomic volatility has introduced significant uncertainty and heightened risk for businesses, including us and our tenants, including the impact of recent interest rate increases, inflation and increased cost of capital. Our tenants also face additional challenges, including potential changes in consumer confidence levels, which may impact behavior and spending, and increased operational expenses, such as with respect to labor or energy costs. As a triple-net lessor, increased operational expenses at our leased properties are borne by our tenants and do not directly impact their rent obligations (other than with respect to underlying inflation as applied to the CPI-based escalators) or other obligations under our lease agreements. As a triple-net lessor, we believe we are generally in a strong creditor position and structurally insulated from operational and performance impacts of our tenants, both positive and negative. However, the full extent to which these trends adversely affect our tenants and/or ultimately impact us depends on future developments that cannot be predicted with confidence, including our tenants’ financial performance, the direct and indirect effects of such trends (including among other things, interest rate changes, inflation, economic recessions, consumer confidence levels and general conditions in the capital and credit markets) and the impact of any future measures taken in response to such trends on our tenants.

Current wording

Recent macroeconomic volatility has introduced significant uncertainty and heightened risk for businesses, including us and our tenants, including the impact of a heightened interest rate environment (and uncertainty regarding future rate changes), inflation and increased cost of capital. Our tenants also face additional challenges, including potential changes in consumer confidence levels, which may impact consumer behavior and spending, and increased operational expenses, such as with respect to labor or energy costs. As a triple-net lessor, increased operational expenses at our leased properties are borne by our tenants and do not directly impact their rent obligations (other than with respect to underlying inflation as applied to the CPI-based escalators) or other obligations under our lease agreements. As a triple-net lessor, we believe we are generally in a strong creditor position and structurally insulated from operational and performance impacts of our tenants, both positive and negative. However, the full extent to which these trends adversely affect our tenants and/or ultimately impact us depends on future developments that cannot be predicted with confidence, including our tenants’ financial performance, the direct and indirect effects of such trends (including among other things, interest rate changes, inflation, economic recessions, consumer confidence levels and general conditions in the capital and credit markets) and the impact of any future measures taken in response to such trends on our tenants.

Previous wording

•Venetian Capital Investment. On May 1, 2024, we entered into agreements to fund up to $700.0 million of capital investment into our Venetian Resort for extensive reinvestment projects through our Partner Property Growth Fund strategy (the “Venetian Capital Investment”). The invested capital will earn a return through the addition of incremental rent to the Venetian Lease. The up to $700.0 million of funding through the Venetian Capital Investment is comprised of $400.0 million to be funded in 2024 and an incremental $300.0 million that the Venetian Resort will have the option, but not the obligation, to draw in whole or in part until November 1, 2026. The initial $400.0 million investment was or is being funded based on a fixed schedule: $100.0 million was funded in the second quarter of 2024, $150.0 million was funded in the third quarter of 2024 and $150.0 million will be funded in the fourth quarter of 2024. The previous Property Growth Fund Agreement entered into with the tenant in connection with the Venetian Resort acquisition providing for up to $1.0 billion of future development and construction project funding was concurrently terminated.

Current wording

•Venetian Capital Investment. On May 1, 2024, we entered into agreements to fund up to $700.0 million of capital investment into the Venetian Resort for extensive reinvestment projects through our Partner Property Growth Fund strategy (the “Venetian Capital Investment”). The invested capital will earn a return through the addition of incremental rent to the Venetian Lease. The up to $700.0 million of funding through the Venetian Capital Investment is comprised of $400.0 million that has already been funded and an incremental $300.0 million that the Venetian Resort will have the option, but not the obligation, to draw in whole or in part until November 1, 2026. The initial $400.0 million investment was funded based on a fixed schedule: $100.0 million was funded in the second quarter of 2024, $150.0 million was funded in the third quarter of 2024 and $150.0 million was funded on October 1, 2024. The previous Property Growth Fund Agreement entered into with the tenant in connection with the Venetian Resort acquisition providing for up to $1.0 billion of future development and construction project funding was terminated on May 1, 2024 concurrently with the entry into the agreement to fund the Venetian Capital Investment.

Previous wording

In connection with the Venetian Capital Investment, annual rent under the Venetian Lease will increase commencing on the first day of the quarter immediately following each capital funding at a 7.25% yield (the “Incremental Venetian Rent”). In addition to any increase pursuant to the Incremental Venetian Rent, annual rent under the Venetian Lease will begin escalating annually at 2.0% on March 1, 2029 and, commencing on March 1, 2031, will begin escalating on the same terms as the rest of the rent payable under the Venetian Lease with annual escalation equal to the greater of 2.0% or CPI, capped at 3.0%. Subsequent to quarter end, on July 1, 2024, the aggregate annual rent under the Venetian Lease increased by $7.3 million as a result of the first $100.0 million funding.

Current wording

In connection with the Venetian Capital Investment, annual rent under the Venetian Lease will increase commencing on the first day of the quarter immediately following each capital funding at a 7.25% yield (the “Incremental Venetian Rent”). In addition to any increase pursuant to the Incremental Venetian Rent, annual rent under the Venetian Lease will begin escalating annually at 2.0% on March 1, 2029 and, commencing on March 1, 2031, will begin escalating on the same terms as the rest of the rent payable under the Venetian Lease with annual escalation equal to the greater of 2.0% or CPI, capped at 3.0%. On July 1, 2024, the aggregate annual rent under the Venetian Lease increased by $7.3 million as a result of the first $100.0 million funding. Subsequent to quarter-end, on October 1, 2024, the aggregate annual rent under the Venetian Lease increased by $10.9 million as a result of the additional $150.0 million that was funded during the third quarter.

Previous wording

The following table summarizes our real estate debt origination activity (each as defined in the column titled “Real Estate Debt Investment”) for the six months ended June 30, 2024:

Current wording

The following table summarizes our real estate debt origination activity (each as defined in the column titled “Real Estate Debt Investment”) for the nine months ended September 30, 2024:

Previous wording

•At-The-Market Offering Program. During the six months ended June 30, 2024, we sold an aggregate of approximately 9.7 million shares under the ATM Program, all of which were subject to a forward sale agreement, for estimated aggregate total proceeds of $302.4 million based on the initial forward sale price of $31.30. We did not initially receive any proceeds from the sale of the shares of common stock under the ATM Program, which were sold to the underwriters by the forward purchasers or their respective affiliates. Subsequent to quarter-end, on July 1, 2024, we physically settled 4,000,000 forward shares under the ATM Program in exchange for total net settlement proceeds of approximately $115.2 million.

Current wording

•At-The-Market Offering Program. During the nine months ended September 30, 2024, we sold an aggregate of approximately 11.7 million shares under the ATM Program, all of which were subject to ATM forward sale agreements, for estimated aggregate total proceeds of $368.5 million based on the weighted average initial forward sale price of $31.61. We did not initially receive any proceeds from the sale of the shares of common stock under the ATM forward sale agreements, which were sold to the underwriters by the forward purchasers or their respective affiliates. On July 1, 2024, we physically settled 4,000,000 forward shares under the ATM forward sale agreements in exchange for total net settlement proceeds of approximately $115.2 million. Subsequent to quarter-end, on October 1, 2024, we physically settled 7,000,000 forward shares under an ATM forward sale agreement in exchange for total net settlement proceeds of approximately $200.9 million.

Previous wording

•Forward-Starting Interest Rate Swaps. On March 11, 2024, we settled the seven outstanding forward-starting interest rate swap agreements with an aggregate notional amount of $500.0 million resulting in net proceeds of $2.8 million. Since the forward-starting swaps were hedging the interest rate risk on the March 2024 Notes, the unrealized gain in Accumulated other comprehensive income is being amortized over the term of the respective derivative instruments, which matches that of the underlying note, as a decrease in interest expense. Subsequent to quarter-end, during July 2024, we entered into two forward-starting interest rate swap agreements for an aggregate notional amount of $100.0 million to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance of senior unsecured notes expected to be issued in connection with the refinancing of our senior unsecured notes maturing in 2025.

Current wording

•Forward-Starting Interest Rate Swaps. On March 11, 2024, we settled the seven outstanding forward-starting interest rate swap agreements with an aggregate notional amount of $500.0 million resulting in net proceeds of $2.8 million. Since the forward-starting swaps were hedging the interest rate risk on the March 2024 Notes, the unrealized gain in Accumulated other comprehensive income is being amortized over the term of the respective derivative instruments, which matches that of the underlying note, as a decrease in interest expense. During the quarter ended September 30, 2024, we entered into eight forward-starting interest rate swap agreements for an aggregate notional amount of $400.0 million to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance of senior unsecured notes expected to be issued in connection with the refinancing of our senior unsecured notes maturing in 2025.

Previous wording

For the three and six months ended June 30, 2024 and 2023, our revenue was comprised of the following items:

Current wording

For the three and nine months ended September 30, 2024 and 2023, our revenue was comprised of the following items:

Previous wording

Leasing revenue is generated from rent from our lease agreements. Total leasing revenue increased $41.9 million and $102.4 million during the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, respectively. Total contractual leasing revenue increased $40.1 million and $87.7 million during the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, respectively. The increases were primarily driven by the acquisition of the remaining 49.9% of the MGM Grand/Mandalay Bay portfolio in January 2023, the Rocky Gap Casino component of the master lease agreement with Century Casinos, Inc. (“Century Master Lease”) in July 2023, the Century Canadian portfolio component of the Century Master Lease in September 2023, the master lease agreement with Bowlero in October 2023 and the lease agreement with Chelsea Piers in December 2023, as well as the annual rent escalators from certain of our other lease agreements.

Current wording

Leasing revenue is generated from rent from our lease agreements. Total leasing revenue increased $42.6 million and $145.0 million during the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, respectively. Total contractual leasing revenue increased $38.0 million and $125.8 million during the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, respectively. The increases were primarily driven by the acquisition of the remaining 49.9% of the MGM Grand/Mandalay Bay portfolio in January 2023, the Rocky Gap Casino component of the master lease agreement with Century Casinos, Inc. (“Century Master Lease”) in July 2023, the Canadian portfolio component of the Century Master Lease in September 2023, the master lease agreement with Bowlero in October 2023, the lease agreement with Chelsea Piers in December 2023 and the incremental rent increase from the Venetian Capital Investment in July 2024, as well as the annual rent escalators from certain of our other lease agreements.

Previous wording

Income from loans and securities increased $15.6 million and $27.8 million during the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, respectively. The increases were driven by the origination and subsequent funding, as applicable, of our debt investments and the related interest income from the increased principal balances outstanding under such debt investments, partially offset by the full repayment of certain loan investments.

Current wording

Income from loans and securities increased $16.5 million and $44.2 million during the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, respectively. The increases were driven by the origination and subsequent funding, as applicable, of our debt investments and the related interest income from the increased principal balances outstanding under such debt investments, partially offset by the full repayment of certain loan investments.

Previous wording

Other income increased $0.8 million and $1.8 million during the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, respectively. The increase was driven primarily by the additional income as a result of the assumption of certain sub-leases in connection with the closing of the acquisition of the Rocky Gap Casino in July 2023 and the sale-leaseback transaction with Chelsea Piers in December 2023. We determined we are the primary obligor of the respective ground and use leases and, accordingly, record the related income and expense on a gross basis on our Income Statement. The lease agreements require our tenants to cover all costs associated with such ground and use sub-leases and provide for their direct payment to the primary landlord.

Current wording

Other income increased $1.1 million and $2.9 million during the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, respectively. The increase was driven primarily by the additional income as a result of the assumption of certain sub-leases in connection with the closing of the acquisition of the Rocky Gap Casino in July 2023 and the sale-leaseback transaction with Chelsea Piers in December 2023. We determined that we are the primary obligor of the respective ground and use leases and, accordingly, record the related income and expense on a gross basis on our Income Statement. The lease agreements require our tenants to cover all costs associated with such ground and use sub-leases and provide for their direct payment to the primary landlord.

Previous wording

For the three and six months ended June 30, 2024 and 2023, our operating expenses were comprised of the following items:

Current wording

For the three and nine months ended September 30, 2024 and 2023, our operating expenses were comprised of the following items:

Previous wording

General and administrative expenses increased $0.8 million and $2.0 million for the three and six months ended June 30, 2024, respectively, as compared to the three and six months ended June 30, 2023, respectively. The increase was primarily driven by an increase in compensation, including stock-based compensation and the addition of new employees.

Current wording

General and administrative expenses increased $2.0 million and $4.1 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, respectively. The increase was primarily driven by an increase in compensation, including stock-based compensation and the addition of new employees.

Previous wording

Other expenses increased $0.8 million and $1.8 million during the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, respectively. The increase was driven primarily by the additional expense as a result of the assumption of certain sub-leases in connection with the closing of the acquisition of the Rocky Gap Casino in July 2023 and the sale-leaseback transaction with Chelsea Piers in December 2023. We determined we are the primary obligor of the respective ground and use leases and, accordingly, record the related income and expense on a gross basis on our Income Statement. The lease agreements require our tenants to cover all costs associated with such ground and use sub-leases and provide for their direct payment to the primary landlord.

Current wording

Other expenses increased $1.1 million and $2.9 million during the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, respectively. The increase was driven primarily by the additional expense as a result of the assumption of certain sub-leases in connection with the closing of the acquisition of the Rocky Gap Casino in July 2023 and the sale-leaseback transaction with Chelsea Piers in December 2023. We determined we are the primary obligor of the respective ground and use leases and, accordingly, record the related income and expense on a gross basis on our Income Statement. The lease agreements require our tenants to cover all costs associated with such ground and use sub-leases and provide for their direct payment to the primary landlord.

Previous wording

Change in allowance for credit losses decreased $1.6 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily driven by positive changes in the macroeconomic forecast during the current quarter and market performance of our tenants partially offset by certain adjustments made to the assumptions used to project future cash flows for one of our investments.

Current wording

Change in allowance for credit losses decreased $127.6 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily driven by positive changes in the macroeconomic forecast during the current quarter and market performance of our tenants partially offset by certain adjustments made to the assumptions used to project future cash flows for one of our investments.

Previous wording

Change in allowance for credit losses decreased $6.2 million during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily driven by lower initial CECL allowances recorded on our acquisition and loan origination activity. We recorded initial CECL allowances of $2.9 million on our $365.0 million of loan origination activity during the six months ended June 30, 2024 compared to initial CECL allowances of $229.6 million on our $5.7 billion of property acquisition activity and $4.5 million on our $85.0 million of loan origination activity during the six months ended June 30, 2023. The decrease was partially offset by the market performance of our tenants, negative changes in the macroeconomic forecast during the period and adjustments made to the assumptions used to project future cash flows for one of our investments.

Current wording

Change in allowance for credit losses decreased $133.8 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily driven by lower initial CECL allowances recorded on our acquisition and loan origination activity. We recorded initial CECL allowances of $2.9 million on our $365.0 million of loan origination activity during the nine months ended September 30, 2024 compared to initial CECL allowances of $263.6 million on our $6.1 billion of property acquisition activity and $8.0 million on our $375.1 million of loan origination activity during the nine months ended September 30, 2023. The decrease was partially offset by certain adjustments made to the assumptions used to project future cash flows for one of our investments.

Previous wording

Transaction and acquisition expenses decreased $0.5 million and increased $0.7 million during the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, respectively. Changes in transaction and acquisition expenses are related to fluctuations in (i) costs incurred for investments during the period that are not capitalizable under GAAP, and (ii) costs incurred for investments that we are no longer pursuing.

Current wording

Transaction and acquisition expenses decreased $2.4 million and $1.7 million during the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, respectively. Changes in transaction and acquisition expenses are related to fluctuations in (i) costs incurred for investments during the period that are not capitalizable under GAAP, and (ii) costs incurred for investments that we are no longer pursuing.

Previous wording

For the three and six months ended June 30, 2024 and 2023, our non-operating income and expenses were comprised of the following items:

Current wording

For the three and nine months ended September 30, 2024 and 2023, our non-operating income and expenses were comprised of the following items:

Previous wording

Income from unconsolidated affiliate during the six months ended June 30, 2023 represents our 50.1% share of the income of the MGM Grand/Mandalay Bay JV for the period from January 1, 2023 through January 8, 2023, immediately prior to the closing of the MGM Grand/Mandalay Bay JV Interest Acquisition. Beginning on January 9, 2023, upon the closing of the MGM Grand/Mandalay Bay JV Interest Acquisition, we consolidated the operations of the MGM Grand/Mandalay Bay JV, and subsequently, such income is included in Income from sales-type lease on our Statement of Operations and, accordingly, no Income from unconsolidated affiliate was recognized for the three and six months ended June 30, 2024.

Current wording

Income from unconsolidated affiliate during the nine months ended September 30, 2023 represents our 50.1% share of the income of the MGM Grand/Mandalay Bay JV for the period from January 1, 2023 through January 8, 2023, immediately prior to the closing of the MGM Grand/Mandalay Bay JV Interest Acquisition. Beginning on January 9, 2023, upon the closing of the MGM Grand/Mandalay Bay JV Interest Acquisition, we consolidated the operations of the MGM Grand/Mandalay Bay JV, and subsequently, such income is included in Income from sales-type lease on our Statement of Operations and, accordingly, no Income from unconsolidated affiliate was recognized for the three and nine months ended September 30, 2024.

Previous wording

Interest expense increased $2.2 million and $2.7 million during the three and six months ended June 30, 2024, respectively, as compared to the three and six months ended June 30, 2023, respectively. The increase during the three and six months ended June 30, 2024 were primarily related to the increase in debt from the (i) C$140.0 million, C$75.0 million and £9.0 million draws on the Revolving Credit Facility to finance the acquisition of the portfolio of assets leased to PURE Canadian Gaming, Corp. in January 2023, acquisition of the Century Canadian portfolio in September 2023 and the Cabot Highlands loan in December 2023, respectively, and (ii) assumption of $3.0 billion aggregate principal amount of CMBS debt on January 9, 2023, in connection with the MGM Grand/Mandalay Bay JV Interest Acquisition, the combination of which resulted in an additional $3.2 billion in notional amount of debt.

Current wording

Interest expense increased $2.4 million and $5.1 million during the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, respectively. The increase during the three and nine months ended September 30, 2024 were primarily related to the increase in debt from the (i) C$140.0 million, C$75.0 million and £14.5 million draws on the Revolving Credit Facility to finance the acquisition of the portfolio of assets leased to PURE Canadian Gaming, Corp. in January 2023, the acquisition of the Canadian portfolio component of the Century Master Lease in September 2023 and the Cabot Highlands loan in December 2023, respectively, partially offset by a C$15.0 million principal repayment under the Revolving Credit Facility in August 2024 and (ii) assumption of $3.0 billion aggregate principal amount of CMBS debt on January 9, 2023, in connection with the MGM Grand/Mandalay Bay JV Interest Acquisition, the combination of which resulted in an additional $3.2 billion in notional amount of debt.

Previous wording

Additionally, the weighted average annualized interest rate of our debt, net of the impact of the forward-starting interest rate swaps and treasury locks, increased to 4.34% from 4.32% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, and increased to 4.34% from 4.33% during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 as a result of a higher effective interest rate on (i) the draws on the Revolving Credit Facility and (ii) the March 2024 Notes as compared to the debt that was refinanced by such notes, offset by the low interest rate on the MGM Grand/Mandalay Bay CMBS Debt.

Current wording

Additionally, the weighted average annualized interest rate of our debt, net of the impact of the forward-starting interest rate swaps and treasury locks, increased to 4.34% from 4.32% for both the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, as a result of a higher effective interest rate on (i) the draws on the Revolving Credit Facility and (ii) the March 2024 Notes as compared to the debt that was refinanced by such notes.

Previous wording

Interest income, representing interest earned on our excess cash, decreased $1.9 million and increased $0.4 million during the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, respectively. For the three months ended June 30, 2024, the decrease was primarily driven by an overall decrease in our cash on hand throughout the current period as compared to the prior period. For the six months ended June 30, 2024, the increase was primarily driven by an increase in the interest rates and income earned on our excess cash.

Current wording

Interest income, representing interest earned on our excess cash, decreased $4.5 million and $4.2 million during the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, respectively. The decrease was primarily driven by an overall decrease in our cash on hand throughout the current periods as compared to the prior periods.

Previous wording

Other gains decreased $2.5 million and $4.6 million during the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, respectively. The changes primarily relate to foreign currency remeasurement adjustments associated with our investments in Canada and the United Kingdom. In connection with such transactions, we entered into intercompany debt and drew C$215.0 million and £9.0 million on the Revolving Credit Facility, which are denominated in a foreign currency and, since such debt is held at entities with USD as their functional currency, certain of the related assets and liabilities are remeasured through the Statement of Operations.

Current wording

Other (losses) decreased $1.1 million during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 and Other gains decreased $3.5 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The changes primarily relate to foreign currency remeasurement adjustments associated with our investments in Canada and the United Kingdom. In connection with such transactions, we entered into foreign denominated debt on the Revolving Credit Facility, of which C$200.0 million and £14.5 million is currently outstanding and, since such debt is held at entities with USD as their functional currency, certain of the related assets and liabilities are remeasured through the Statement of Operations.

Previous wording

AFFO is a non-GAAP financial measure that we use as a supplemental operating measure to evaluate VICI’s performance. We calculate VICI’s AFFO by adding or subtracting from FFO non-cash leasing and financing adjustments, non-cash change in allowance for credit losses, non-cash stock-based compensation expense, transaction costs incurred in connection with the acquisition of real estate investments, amortization of debt issuance costs and original issue discount, other non-cash interest expense, non-real estate depreciation (which is comprised of the depreciation related to our golf course operations), capital expenditures (which are comprised of additions to property, plant and equipment related to our golf course operations), impairment charges related to non-depreciable real estate, gains (or losses) on debt extinguishment and interest rate swap settlements, other gains (losses), deferred income tax benefits and expenses, other non-recurring non-cash transactions, our proportionate share of non-cash adjustments from our investment in unconsolidated affiliate (including the amortization of any basis differences) with respect to certain of the foregoing and non-cash adjustments attributable to non-controlling interest with respect to certain of the foregoing.

Current wording

AFFO is a non-GAAP financial measure that we use as a supplemental operating measure to evaluate VICI’s performance. We calculate VICI’s AFFO by adding or subtracting from FFO non-cash leasing and financing adjustments, non-cash change in allowance for credit losses, non-cash stock-based compensation expense, transaction costs incurred in connection with the acquisition of real estate investments, amortization of debt issuance costs and original issue discount, other non-cash interest expense, non-real estate depreciation (which is comprised of the depreciation related to our golf course operations), capital expenditures (which are comprised of additions to property, plant and equipment related to our golf course operations), impairment charges related to non-depreciable real estate, gains (or losses) on debt extinguishment and interest rate swap settlements, other (losses) gains, deferred income tax benefits and expenses, other non-recurring non-cash transactions, our proportionate share of non-cash adjustments from our investment in unconsolidated affiliate (including the amortization of any basis differences) with respect to certain of the foregoing and non-cash adjustments attributable to non-controlling interest with respect to certain of the foregoing.

Previous wording

(1)In addition, the Revolving Credit Facility includes the option to increase the revolving loan commitments by up to $1.0 billion to the extent that any one or more lenders (from the syndicate or otherwise) agree to provide such additional credit extensions.

Current wording

(1)In addition, the Revolving Credit Facility includes the option to increase the revolving loan commitments by up to $1.0 billion to the extent that any one or more lenders (from the syndicate or otherwise) agree to provide such additional extensions of credit.

Previous wording

(2)Assumes the physical settlement of the 22,856,855 shares remaining to be settled as of June 30, 2024 under our ATM forward sale agreements at a forward sales price of $29.79, calculated as of June 30, 2024. Subsequent to quarter-end, on July 1, 2024, we physically settled 4,000,000 shares under the ATM Program in exchange for total net settlement proceeds of approximately $115.2 million.

Current wording

(2)Assumes the physical settlement of the 20,853,338 shares remaining to be settled as of September 30, 2024 under our ATM forward sale agreements at a forward sales price of $30.22, calculated as of September 30, 2024. Subsequent to quarter-end, on October 1, 2024, we physically settled 7,000,000 shares under an ATM forward sale agreement in exchange for total net settlement proceeds of approximately $200.9 million.

Previous wording

All of our lease agreements call for an initial term of between fifteen and thirty-two years with additional tenant renewal options and, along with our loans, are designed to provide us with a reliable and predictable long-term revenue stream. Our cash flows from operations and our ability to access capital resources could be adversely affected due to uncertain economic factors and volatility in the financial and credit markets, including as a result of the current inflationary environment, higher interest rates, equity market volatility, and changes in consumer behavior and spending. In particular, we can provide no assurances that our tenants will not default on their leases or fail to make full rental payments if their businesses become challenged due to, among other things, current or future adverse economic conditions. See “Overview — Impact of Material Trends on our Business” above for additional detail. In the event our tenants are unable to make all of their contractual rent payments as provided by our lease agreements, we believe we have sufficient liquidity from the other sources discussed above to meet all of our contractual obligations for a significant period of time. For more information, refer to the risk factors incorporated by reference into Part II. Item 1A. Risk Factors herein from our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

All of our lease agreements call for an initial term of between fifteen and thirty-two years with additional tenant renewal options and, along with our loans, are designed to provide us with a reliable and predictable long-term revenue stream. Our cash flows from operations and our ability to access capital resources could be adversely affected due to uncertain economic factors and volatility in the financial and credit markets, including as a result of the current interest rate environment, inflationary pressures, equity market volatility, and changes in consumer behavior and spending. In particular, we can provide no assurances that our tenants will not default on their leases or fail to make full rental payments if their businesses become challenged due to, among other things, current or future adverse economic conditions. See “Overview — Impact of Material Trends on our Business” above for additional detail. In the event our tenants are unable to make all of their contractual rent payments as provided by our lease agreements, we believe we have sufficient liquidity from the other sources discussed above to meet all of our contractual obligations for a significant period of time. For more information, refer to the risk factors incorporated by reference into Part II. Item 1A. Risk Factors herein from our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

Our ability to raise funds through the issuance of debt and equity securities and access to other third-party sources of capital in the future will be dependent on, among other things, general economic conditions, general market conditions for REITs and investment grade issuers, market perceptions, the trading price of our stock and uncertainties related to the macroeconomic environment. We will continue to analyze which sources of capital are most advantageous to us at any particular point in time, but financing through the capital markets may not be consistently available on terms we deem attractive, or at all.

Current wording

Our ability to raise funds in the future through the issuance of debt and equity securities and access to other third-party sources of capital on attractive terms, or at all, will be dependent on, among other things, general economic conditions, general market conditions for REITs and investment grade issuers, market perceptions, the trading price of our stock and uncertainties related to the macroeconomic environment. We will continue to analyze which sources of capital are most advantageous to us at any particular point in time, but financing through the capital markets may not be consistently available on terms we deem attractive, or at all.

Previous wording

Our long-term obligations consist primarily of principal payments on our outstanding debt obligations and future funding commitments under our lease and loan agreements. As of June 30, 2024, we have $17.1 billion of debt obligations outstanding of which $750.0 million matures on February 15, 2025, $500.0 million matures on May 15, 2025 and $800.0 million matures on

Current wording

Our long-term obligations consist primarily of principal payments on our outstanding debt obligations and future funding commitments under our lease and loan agreements. As of September 30, 2024, we have $17.1 billion of debt obligations outstanding of which $750.0 million matures on February 15, 2025, $500.0 million matures on May 15, 2025 and $800.0 million matures on June 15, 2025. For a summary of principal debt balances and their maturity dates and principal terms, refer to Note 7 - Debt. For a summary of our future funding commitments under our loan portfolio, refer to Note 4 - Real Estate Portfolio.

Previous wording

(3) The allocation of our future funding commitments is based on construction draw schedules, commitment funding dates, expiration dates or other information, as applicable; however, we may be obligated to fund these commitments earlier than such applicable date. Amounts include the remaining $300.0 million future funding commitment required in connection with the Venetian Capital Investment.

Current wording

(3) The allocation of our future funding commitments is based on construction draw schedules, commitment funding dates, expiration dates or other information, as applicable; however, we may be obligated to fund these commitments earlier than such applicable date. Amounts include (i) the remaining $150.0 million funding commitment in connection with the Venetian Capital Investment outstanding as of September 30, 2024 (which was funded subsequent to quarter-end on October 1, 2024).

Previous wording

The table below summarizes our cash flows for the six months ended June 30, 2024 and 2023:

Current wording

The table below summarizes our cash flows for the nine months ended September 30, 2024 and 2023:

Previous wording

Net cash provided by operating activities increased $105.9 million for the six months ended June 30, 2024 compared with the six months ended June 30, 2023. The increase was primarily driven by the acquisition of the remaining 49.9% of the MGM Grand/Mandalay Bay portfolio in January 2023, and an increase in rental payments from the addition of the Rocky Gap Casino component of the Century Master Lease in July 2023, the Century Canadian portfolio component of the Century Master Lease in September 2023, the master lease agreement with Bowlero in October 2023 and the lease agreement with Chelsea Piers in December 2023, as well as additional loan fundings and originations.

Current wording

Net cash provided by operating activities increased $132.9 million for the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023. The increase was primarily driven by the acquisition of the remaining 49.9% of the MGM Grand/Mandalay Bay portfolio in January 2023, and an increase in rental payments from the addition of the Rocky Gap Casino component of the Century Master Lease in July 2023, the Canadian portfolio component of the Century Master Lease in September 2023, the master lease agreement with Bowlero in October 2023, the lease agreement with Chelsea Piers in December 2023, the annual rent escalators on our Caesars Leases and certain of our other lease agreements, and the incremental rent increase from the Venetian Capital Investment in July 2024, as well as the incremental interest income associated with additional loan fundings and originations.

Previous wording

Net cash used in investing activities decreased $789.7 million for the six months ended June 30, 2024 compared with the six months ended June 30, 2023.

Current wording

Net cash used in investing activities decreased $1,282.3 million for the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023.

Previous wording

During the six months ended June 30, 2024, the primary sources and uses of cash from investing activities included:

Current wording

During the nine months ended September 30, 2024, the primary sources and uses of cash from investing activities included:

Previous wording

•Disbursements to fund investments in our loan and securities portfolio in the amount of $387.3 million;

Current wording

•Disbursements to fund investments in our loan and securities portfolio in the amount of $473.7 million;