Vici Properties reported third-quarter funds from operations of $342 million, down 55.1 percent from $762 million in the prior year. The REIT, which owns casino and entertainment properties, recorded $458 million in current expected credit losses for the quarter, with $331 million related to its regional master lease agreement with Caesars Entertainment through 2055.
Uncertainty around Fertitta Entertainment's potential acquisition of Caesars contributed to the decline. CEO Edward Pitoniak said the company is "analyzing every dollar of our Vici income stream within our Caesars regional lease properties through various valuation prisms" to determine the best strategy for shareholders.
Pitoniak cited additional headwinds including elevated interest rates and reduced consumer spending amid high inflation, which have pressured net-lease REIT stocks broadly. Vici aims to maintain a target leverage ratio of 5.5 times earnings before interest, taxes and amortization.
Total revenues for the quarter reached $1.07 billion, a 5.8 percent increase from the year-ago period and above analyst estimates of $1.06 billion.
Pitoniak said the company may access capital through loan repayments, asset sales, and retained cash flow to fund growth. Vici announced a $2 billion share repurchase program expiring September 30, 2029. Pitoniak stated that if capital becomes available, "if the best use of that capital is the repurchase of stock, we may potentially do so."