Caesars real estate owner raises more money than expected in IPO

Updated February 1, 2018 - 4:20 pm

VICI, the owner of nearly two dozen Caesars Entertainment Corp. properties, raised more money in an initial public offering of stock than it anticipated amid strong demand.

The Las Vegas-based real estate investment trust sold 60.5 million shares at $20 a piece, raising $1.21 billion, the company said it a statement late Wednesday. The company initially sought to sell 50 million shares between $19 and $21.

VICI also increased the over-allotment option to 9.1 million shares from 7.5 million. That will enable the company to raise an additional $181 million in the IPO.

“There is growing interest in gaming real estate as a real estate asset class worthy of institutional investment,” VICI Chief Executive Officer Ed Pitoniak said in an interview Thursday morning. “It is still a relatively new sector versus so many other well established REIT sectors. We are fortunate to be a point where that interest is growing strongly.”

On their first full day of trading, shares fell $1.11, or 5.05 percent, to close at $20.89. The company trades under the ticker VICI.

VICI was formed as part of the two-year long Caesars bankruptcy resolution. Caesars debt holders received shares of VICI when Caesars exited bankruptcy in October 2017.

The real estate company posted net income of $439 million for the first nine months of 2017 on $649 million in revenue. Adjusted earnings before interest, tax, depreciation and amortization was $544.6 million for the period.

VICI will target net leverage below 5 and 5.5 times its adjusted earnings, Pitoniak said. After the $181 million over-allotment, VICI’s net leverage will be slightly below 5 times.

New REIT Class

VICI is one of three publicly traded REITs focusing on the gaming industry. Gaming and Leisure Properties was spun off from Penn National Gaming in 2013 to create the first REIT focusing on the gaming industry.

MGM followed suit, creating MGM Growth Properties to hold some of its casino real estate. MGM Growth Properties held an initial public offering of stock in 2016, raising $1 billion.

REITs are companies that own income-producing real estate in a range of property sectors, such as commercial, residential, warehouses or a combination. They lease space and collect rents.

They must pay out at least 90 percent of their taxable income to shareholders and generally offer high dividend yields. Most REITs trade on major stock exchanges. Gaming and Leisure shares currently offer a 7 percent dividend yield while MGM Growth Properties offers 6 percent.

VICI leases its 20 casinos, including Caesars Palace and Harrahs, to Caesars to operate. The leases are for an initial 15 years with an option to extend them in incremental, five-year periods.

M&A Boom

The creation of gaming REITs has fundamentally altered casino valuations and accelerated industry takeovers, said Jefferies analyst David Katz. There have been more than 20 industry acquisitions over the past two years exceeding $15 billion.

Casinos can be bid on in tandem by the operating company and the property company, ”which can result in a higher price paid than that which makes sense from an owner-operator,” said Katz in a Jan. 18 industry report.

Gaming and Leisure, MGM Growth Properties and VICI will now all compete to purchase casinos from existing owners and lease them back.

VICI says its advantage is that Caesars has no ownership in the company and no influence on the board or management. MGM owns a controlling stake in MGM Growth Properties.

“Once that is clearly understood to anyone we are talking to, they can be confident that we are not and will not be a direct operating competitor of theirs,” said Pitoniak

In the days leading up to VICI’s IPO, MGM Growth Properties made an unsolicited offer to buy the company in an all-share exchange. VICI rejected the offer.

Contact Todd Prince at or 702-383-0386. Follow @toddprincetv on Twitter.

Bellagio, MGM Resorts International’s luxury hotel turns 20
The more than 3,000-room Bellagio hotel is situated on the site of the former Dunes Hotel. The Dunes was imploded in 1993, and construction of the Bellagio started in 1996. It cost $1.6 billion to build, making it the most expensive hotel in the world at the time. The Bellagio was former Wynn Resorts Ltd. Chairman and CEO Steve Wynn’s second major casino on the Strip after The Mirage. MGM Resorts International acquired the property from Steve Wynn in 2000. (Tara Mack/Las Vegas Review-Journal)
Facial recognition software at G2E – Todd Prince
Shing Tao, CEO of Las Vegas-based Remark Holdings, talks about his facial recognition product. (Todd Prince/Las Vegas Review-Journal)
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Bobby Baldwin to leave MGM
MGM Resorts International executive and professional poker player Bobby Baldwin is set to leave MGM.
Caesars has new armed emergency response teams
Caesars Entertainment Corp. has created armed emergency response teams. They are composed of former military and law enforcement officials. "These teams provide valuable additional security capabilities,” Caesars spokeswoman Jennifer Forkish said. Caesars is hiring Security Saturation Team supervisors, managers and officers, according to LinkedIn. The company did not say how many people it plans to hire for the units. (Las Vegas Review-Journal)
Las Vegas, airlines prepare for CES
CES in January is expected to attract more than 180,000 attendees. (Las Vegas Review-Journal)
AGS partners with Vegas Golden Knights
AGS is the nation’s second-largest manufacturer of Class II slot machines used primarily in tribal jurisdictions. It announced a marketing partnership with the Vegas Golden Knights NHL team. (Las Vegas Review-Journal)
Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
Nevada's venture capital money doesn't stay in state
Zach Miles, associate vice president for economic development for UNLV, said there’s venture money in Southern Nevada, “but trying to find the right groups to tap into for that money is different.” According to a 2017 report from the Kauffman Foundation, Las Vegas ranked number 34 out of 40 metropolitan areas for growth entrepreneurship, a metric of how much startups grow. With a lack of growing startups in Las Vegas, investment money is being sent outside of state borders. The southwest region of the U.S. received $386 million in funding in the second quarter, with about $25.2 million in Nevada. The San Francisco area alone received about $5.6 billion. (source: CB Insights)
Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
News Headlines
Add Event
Home Front Page Footer Listing
You May Like

You May Like