Since then, VICI has undergone several transactions, including the acquisition of additional Jack Cleveland properties at a 1.64 times rent coverage ratio but CZR’s pending merger with Eldorado Resorts ( ERI) increases rent coverage for that tenant, which makes up more than 50% of total revenues.Ĭasino triple-net leases differ from the traditional triple-net lease in several ways. VICI’s tenants have rent coverage of around 3 times - as far as I could find, they last disclosed this metric in the first quarter of 2019 as 3.5 times: Casinos historically are very profitable and thus make great tenants. Whereas the most famous triple-net REIT Realty Income ( O) may own your neighborhood CVS ( CVS), VICI exclusively owns casino assets including the trophy asset in Caesars Palace Las Vegas:įor those unfamiliar with casino REITs, it may seem unorthodox to have casino tenants. VICI isn’t your traditional triple-net REIT.

While shares yield a generous 7%, I do not think that this valuation is enough of a risk premium to justify the potential risk for casinos moving forward. VICI maintains a conservatively managed balance sheet and is rapidly diversifying beyond CZR.

While it remains unclear exactly when and to what extent casinos across the nation will be able to reopen, my personal view is that the casino business model will remain more than relevant, based on the precedent in Macau casinos. VICI Properties ( NYSE: VICI) is a triple-net REIT owning, among others, the trophy assets of Caesars Entertainment ( CZR).

Casino properties