Casino REITs: Hold'Em As Others Fold

• The lone property sector in positive-territory this year, Casino REITs have benefited from their attractive “inflation-hedging” lease structure, the rebound in Las Vegas travel demand, and broader institutional investor acceptance.
• Casino REITs remain a favorite for investors seeking inflation-hedged assets. VICI boasts inflation-linked escalators on 96% of leases while GLPI benefits from indirect inflation hedges linked to tenant performance.
• Casino REITs have been thrust into the spotlight as apparent beneficiaries of outflows at Blackstone’s non-traded REIT platform BREIT, spawning a $5.5B acquisition of two Vegas casinos by VICI.
• Balance sheet “firepower” and access to longer-term capital have become a significant competitive advantage for public REITs. VICI and GLPI appear particularly well-positioned to play offense while more-highly-levered private peers seek an exit.
• Operational execution is critical, of course, and the potential for a deeper-than-anticipated economic slowdown is an evident risk, but the impressive track record in capital deployment from these REITs justifies our willingness to “pay up” at these moderately elevated multiples.

REIT Rankings: Casinos

Within the Hoya Capital Casino REIT Index, we track the two casino REITs: VICI Properties (VICI) - which owns a dominant share of the Las Vegas casino market following its acquisition of former REIT MGM Properties earlier this year - and Gaming and Leisure Properties (GLPI) - which owns a portfolio of regional casinos.

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