Casino REITs: The House Always Wins
- Ready to roll the dice? Casino REITs aren't the gamble that may appear on the surface. Despite the ongoing coronavirus pandemic, casino REITs have actually outperformed the broader REIT sector.
- Double down: Casino REITs have nearly doubled from their lows in late March when the sector was off by as much as 60% amid fears of significant operator distress.
- Despite the temporary closure of many gaming properties across the country, rent collection has been spotless since the start of the pandemic and dividends have been essentially untouched.
- Critically, casino REITs operate under a long-term, triple-net lease structure, leaving most of the financial and operational risk - both on the upside and the downside - to their tenants.
- Risks remain, however, as these long-term leases are only as safe as the tenant's ability to pay. The pandemic has stretched some major operators to the brink.
