Ed, thank you so much for taking time out of your busy schedule to spend a few minutes with us. We've had this on the books for at least a quarter now, and you said, 'Stay tuned, there's so much to talk about. I promise you, let's push this out until the middle of March.' And sure enough, you definitely delivered on that. I can't wait to get into One Beverly Hills, the sphere, and all the great stuff you guys are doing, especially because we talked about this. I mean, we go back several years now, how you've transitioned away from being a pure-play gaming REIT. You're not a casino REIT anymore, as you like to say, you're an experiential offering. So I can't wait to go into this with you. We'll hop into a couple of slides. For the audience, Vici's core mission statement: creating the highest quality and most productive experiential real estate portfolio by partnering with the highest quality experiential placemakers and operators. It's such a great story for those that don't know: 93 assets across the country, maybe soon the globe, 54 gaming properties, 30 other experiential properties, 127 million square feet, 60,000 plus hotel rooms, 500 restaurant bars, nightclubs, and sports books. They put $1.1 billion to work last year at an 8.1% yield. And by the way, if you need a reservation at one of the hot spots in Las Vegas, I'm sure our friend Ed can point you in the right direction. For those that don't know, here's a handful of the list of properties and partners. A little biased, I love Chelsea Piers, it's such a great cool location. If you've never been out there, definitely go check out Chelsea Piers, but Canyon Ranch, Great Wolf, Lucky Strike, which used to be Bolero. I call you the grandfather of the Las Vegas Strip. But what's interesting is you talk about, and I took a slide from your investor presentation, you talk about the evolution. So I wanted you maybe to start out: can you talk a little bit about this slide here, walk through your evolution from your IPO almost 10 years ago at this point to where we're at today?
Yeah, well first of all, David, great to be with you and thank you for doing this with me. It actually hasn't been quite 10 years, it's seven years. We IPOd in February of 2018. I first got associated with what we now call Vici very early on in 2017. And I do love looking at this chart because it really encapsulates our story better than you could on any other single slide. We started in 2017 as a consequence of a credit settlement between Caesars, which had gone through an LBO in 2007 led by Apollo and TPG, a credit settlement between Caesars and its creditors. And that agreement really pivoted on the creditors agreeing to create a REIT out of the property that had been conveyed from Caesars to the creditors as a way of satisfying the credit. The moment I got involved, I was just so excited by the quality of this real estate, the magnitude of it, basically an economically bigger operator in terms of envisioning and delivering experiences. So I got started by really figuring out how do we tell the next-grade institutionalization story to American REIT investors, both equity and credit. And we emerged in the fall of '17. We immediately did a deal on Harrah's Las Vegas and we were immediately able to demonstrate that we were buying an incredible magnitude of NOI out of a single property — $87 million — and we were doing so at a 7.7% cap rate. And one of the ways we really got the attention of the dedicated REIT community was by creating a bubble chart that showed the number of single-asset American commercial real estate trades that had taken place since 2015 of $70 million of NOI or higher, again from a single asset. There were 12 trades at that point, eight of which were New York office, one was medical office in Boston, one was Crystals shopping mall in Las Vegas, and most all of those trades of these assets of $70 million of NOI or higher were trading at three and four handle cap rates. And here we were showing that we were buying this asset on a net lease basis with $87 million of NOI at a 7.7% cap rate. It was all part and parcel of really engaging the institutional community and getting the support from both the equity and the credit communities that have enabled us to fund the growth that you see taking place on this chart between 2017 and 2024.
This is great. I mean, I'm a big believer of a picture tells a thousand words, a thousand stories. And we have several slides here that just jump off the page. Looking at this evolution, I love this slide when you look at your tenant makeup and you jump... yeah, you see hotel, hotel, hotel, hotel, but then boom, you see Lucky Strike, and I know that's been a partnership of yours going back several years now. We'll get into it more. But talk about... looking at sure, let's break it down. People get concerned about the volatility in the markets because of long-term leases that are in place, and obviously many of your properties have a one-night lease, so you've got the shortest lease term that's in place. Obviously looking at your tenants and their operators and the end tenants, but talk about the base, looking at how long a ground lease is, let's say with MGM or some of these other properties that you have. What can you tell investors and folks about this long-term lease term that you have in place with clients?
Yeah, and I should point out that when we began in 2017 and IPOd in 2018, we had one and only one tenant — that was Caesars. 100% of the rent roll was Caesars. And we knew we had both the opportunity and the necessity to diversify our rent roll. One point I want to clarify is that in all of our properties, we own the improvements as well. In nearly all the properties, we own the land. There's actually a couple of situations where we are on long-term ground leases ourselves but then own the improvements on that land, so we are a fully vertical, if you will, landlord. And again, it really came down to recognizing the opportunity we had to expand into both the gaming category and the wider experiential sector. But so much of what we've done obviously has been focused on gaming, and you are right, David, you are right to point out that our operators operate on one-night leases while we operate on a weighted average lease term of 40 years. That one-night lease term obviously brings volatility with it for our operators, but one of the things I think we really strive to emphasize about gaming operators is their resiliency through all cycles. During the Great Financial Crisis, regional same-store gaming only declined about 3 to 4%. That was a period when other categories like retail and food service were down anywhere from 9 to 11%. S&P 500 revenues overall were down 18%. Regional gaming proved its resilience then. Vegas held up better than most people ever thought it would, especially in light of all the new supply that happened to come along right in time for the GFC. And Vegas occupancy during the GFC troughed at 86%. The resiliency of this business for operators gives us a whole lot of confidence in their ability to continue to pay rent through all cycles, and that was certainly dramatized during COVID when we collected 100% of our rent in cash and on time.
And I believe it made you the top-performing REIT during COVID, if I recall as well. So we talk about diversifying away from being a casino REIT, and you highlight in your presentation, I mean look at this, you're basically coast to coast with your portfolio now. A little biased being here in Dallas and what's going on with the Mavericks and your competitors at Sands, potentially maybe we're finally going to be getting a casino here in Texas, who knows. Obviously huge opportunity. But you look at these properties that you have coast to coast, and I wanted to maybe kind of go through the fact that you guys highlight this high-quality real estate you own with multiple revenue streams. And again, we highlight all the different things that you're in. Of course, one of my favorites we'll get into is sphere. You know, the landlord to the sphere and everything. But I think it's really interesting because again, this is one of my favorite pictures. Why I call you the Godfather of the Strip: you look at all the properties that you own, as you mentioned, land ownership and everything. A lot of it flows through you guys. But then obviously as things have transitioned again, you've got all these new partners here. So why don't we jump ahead and look at... I apologize, I messed things up. But we could talk about some of these operators that you're with, like Canyon Ranch, a cabin? We're going to spend a minute talking about Kane and what's going on there. But what spurred the... remind me, was Great Wolf the first one breaking out of lodging, or was it Canyon Ranch? I remember Canyon Ranch was several years ago now. So what was it that domino effect of, 'Oh, this is too good to pass up, we've got to work with Canyon Ranch, we've got to work with Great Wolf or Kabine or some of these other guys'?
Yeah, so before I do that, I just want to point out that we would not consider Las Vegas Sands a competitor; we would consider them a past and a potential future partner. We obviously partnered with them on the massive Venetian transaction — they as seller, we as buyer. And 'Come on down to Dallas' then? Come on down to Dallas in that. And we stay in touch with the LVS folks and hope that we can help them grow as they address their growth opportunities potentially in New York and in Texas and potentially beyond. We committed ourselves from day one to being an experiential real estate investment trust, not purely a casino real estate investment trust. And that really grew out of our belief, our conviction in the secular trend of consumers increasingly preferring experiences over things — the spending of discretionary income and time on experiences rather than things. So we began from day one working to identify categories that would meet our key investment criteria. When it comes to making investments, those start with lower than average cyclicality versus consumer discretionary at large, an absence of secular threat. We really want to stay away from categories that are subject to real estate obsolescence because of technological change — i.e., real estate that's no longer necessary because whatever took place in the real estate can now be sent in a box through a wire or wavelength directly to the end consumer. We want proven durability, usually measured over decades. We really are careful about investing behind fads. We really want to know that the end-user experience has been proving its durability over decades. We want favorable supply-demand balance, and we want what we call economic dynamism — we want an operator P&L that really responds to management intensity and innovation. So from the beginning, we identified certain categories we believed had all these characteristics. And two of the categories were indoor water park resorts and complex — highly complex — fitness and wellness facilities like Chelsea Piers. And we basically did our Chelsea Piers and Great Wolf deals almost overlapping in 2020. Those marked our first allocations of capital into non-gaming real estate, and we've continued to grow since then into other categories and with other partners in the way we'll talk about here in a moment.
I remember visiting with you at NYU Schack several years ago, and you said something that's kind of stuck with me. I may have messed up the words a little bit, so I don't want to put words in your mouth, but you said something to the effect of: 'We've captured mom and dad. What can we do to offer to capture mom and dad to bring the kids to one of our properties? How can we extend it out to attract the families to come to our properties? Because we know that the gambling aspect may only take up a couple of hours of their day, but there's all these other hours in the day that they're going to be with the kids and the family. What can we provide? What other offerings are out there that we can attract the whole family for that full day?' I haven't forgotten that. I was like yesterday having this conversation with you.
Yeah, I don't know if I was talking about that so much as to diversifying the gaming experience so that it is more family welcoming. That definitely takes place at some degree. In fact, the recent data is showing an increase in visitation of families to Las Vegas, and that does have to do with the diversification of demand drivers that you now have in Las Vegas, whether it be the music residencies, the sports teams relocating to Las Vegas, the shopping, what have you. But I think our greater focus would have been on investing in sectors that can benefit from either family activities or youth activities that we believe have strong secular trends. For example, youth sports is a secular trend we believe has a long way to go, and thus the sort of investment and partnership we've made with both Chelsea Piers and with our HomeField Partners in Kansas.
And then one slide that I hadn't shown yet, but obviously as you talk about growing this portfolio and this evolution, look what it's done to your company — your growth, your return, your dividend payout has just continued to rise. I mean, this is a great story here, it just jumps off the page. So let's hop into it. Well, I guess it comes up here in a little bit. Let's talk about broad industry trends that you're seeing. Obviously, people can go back and see your comments from several weeks ago in the earnings call. In '24, if I recall, you said there weren't so many compelling opportunities that were jumping out at you guys, that we're looking at. Have things changed a little bit here in the new year? Again, not to show your hand too much, but is the environment a little bit different today?
I would say it's marginally more positive. It's been, ever since interest rates started rising in 2022, it's been generally speaking a transaction market where it's been hard to get things done. Especially given that a lot of would-be sellers are anchored to what their assets might have been worth in 2021, and you have to remind them it's not 2021 anymore. Unless they have a really compelling reason or need to sell, there hasn't been a whole lot of transaction activity. There has been a fair amount of development activity, which we've capitalized on through the use of our Vici Experiential Credit Solutions line of business. But I would say it's feeling somewhat better, but boy is it volatile. On a day-by-day basis, the volatility of the US 10-year makes it very hard for anybody in the capital allocation business to have a lot of conviction and clarity around what money is going to cost one, two, three months from now. I mean, if we just look at the past couple days, we were looking at the US 10-year trading back up almost all the way to 4.35, traded almost all the way down to 4.15 today, and now I think it's back up to 4.24 or whatever it is. These kinds of intraday moves are not... well, they didn't used to be normal. We only had three days in 2018 where the US 10-year moved in a day 10 basis points or more. We had 48 in 2022, almost 40 in 2023, we had probably close to 30 in 2024, and I bet we've had at least 10 so far this year. That volatility does not appear to be going away anytime soon. And thus, what it really emphasizes is taking great care in making your capital commitments and making sure you don't turn out to be on the wrong side of a wack equation two months from now because you made a bet that it would stay the way it is today.
I think it just proves how important a strong management team is. You keep the blinders on, you're focused, you have a target range, you don't break away from your foundation, I guess you would call it. So we briefly touched upon this. I guess you're not seeing endless opportunities to deploy capital, but is the new administration... have things changed maybe with the new administration? How about the tariffs? Are you guys impacted by tariffs and what's going on out there right now?
Not directly, because again, we're a net lease landlord, so we don't buy a whole lot of stuff other than real estate. We're not buying furniture, fixtures, and equipment the way our operators do or the way a lot of landlords in other categories would. So no, not a whole lot of tariff impact. Again, I would say because the environment has stayed volatile, I wouldn't say it's fundamentally changed a whole lot. And again, while I would absolutely say there are not endless opportunities to place capital, we are seeing very interesting opportunities like the kind we saw obviously we won Beverly Hills, and you just heeded it up. So you spent a lot of time talking about One Beverly Hills. I saw the relationship obviously mentioned with Kane in London. You met one of the partners at Guggenheim who's a Dodgers owner — if you recall, I've got some ties to the Dodgers with my stepfather-in-law, so to hear these stories it hits very close to home for me. Was it the conversation? Was it like-minded interest? Because looking at a lot of the stuff that you guys have participated in, One Beverly Hills kind of fits in the scope, but I think if you had said to us two years ago we have this on our radar, people would be like, 'Wait, what?' But now it obviously makes sense because you're a capital provider. You're not going to be the entertainment provider, you're a capital provider. And by the way, what can you tell us about the Aman hotel brand? Because I wasn't familiar with it until you guys highlighted this massive deal. So walk us through this and why not other potential mixed-use developments that are on the table across the country right now.
Yeah, well I think when you look at the attributes of One Beverly Hills and why that as opposed to potentially other mixed-use development projects, it obviously all starts with location. This is one of the most compelling real estate locations in America. We talk about the Las Vegas Strip as the most economically productive street in America, if not the world, and I absolutely believe that it is. And we love having the 10 locations we have on the Strip. I believe, if I remember the numbers right, we own 1.7 miles of frontage on the Las Vegas Strip, and there's four total miles of frontage on the Las Vegas Strip. It is really important and value-enhancing to own or otherwise invest in real estate that is in truly compelling locations. The location of One Beverly Hills is a dream location. It's at the triangle formed by the intersection of Wilshire and Santa Monica in Beverly Hills. The apex of the triangle is the legendary Beverly Hilton, and as it widens out, it abuts LA Country Club, one of the most exclusive private clubs in America. You can look at this land and go, 'Wait, how was this ever available? How was this not developed decades ago in such a way that you could never develop it today?' And yet the Kane team got this tied up, they got it entitled, they got it permitted, and they've created a vision that will make this one of the most compelling luxury destinations in the world. It will have a newly renovated Beverly Hilton, it will have an Aman Hotel, an Aman Club, and two Aman branded residential towers, and a luxury retail and restaurant garden. In terms of helping you understand who and what Aman is, Aman actually started in Thailand, and from the beginning was positioned as one of the most ultra-luxurious and private hospitality experiences you could have in the world. They became famous in the US, at least among certain people, for the development of a property in Southern Utah called Amangiri. And I would encourage everybody to Google them and just look through the portfolio, because they're pretty much one-of-a-kind properties in one-of-a-kind locations. Their pricing power is really not nearly equal and certainly not exceeded by any other player out there in the global luxury hospitality space. I remember we were meeting with folks at the Citi Real Estate Conference back here at the very beginning of March; we decided to just figure out, okay, what would it cost you to stay at the Aman in New York at the intersection of 57th and 5th, what would it cost you to stay there this coming weekend? And the cheapest room available on that Friday night was $11,100.
Wow, wow. And don't anybody ever call me looking for a deal on an Aman room, because they... I wouldn't even dare ask for one because they don't need to give deals. So again, this is a tremendously exciting project. If you're a Bloomberg reader, there is actually a big story on Aman today at bloomberg.com. I encourage everyone to read that because it really talks about the global growth opportunity for Aman, which I hope over time we could be part of, especially given Kane's investment in the Aman brand. You've obviously done a lot of wheeling and dealing sitting in the chair that you've sat in over the course of the years. If you had to gauge as far as excitement, giddiness, whatever you want to call it, does this one have you pretty giddy compared to some of the other deals that you've done, or is this just another great deal that fits in the course of everything else you've done? Just, watch, we're going to show you.
Yeah, well it's way up there. I mean, obviously I look back and I'm still giddy about the deal we were able to do with our Apollo partners on buying the Venetian. Still giddy about becoming a partner to MGM through our acquisition of MGP. And I would say yeah, this is up there, both on the merits of the capital allocation to One Beverly Hills and probably even more so the opportunity to begin what we believe to be a very long-term and growing partnership with Kane and Aldridge, who are incredibly dynamic investors across the experiential spectrum. And we're going to get into that a little bit more.
So we talked briefly about some of these relationships, but can we see more international growth? I allude to the comment that was brought up on the call about Chelsea, with some of these other venues across the globe. And you got asked the question on the call separately: do you see yourself transitioning more to international? I know there's London. I don't really consider Canada international, but Asia, Australia... Do you see that on? If you had to look in your crystal ball many years down the road, could you see you guys being a true global player?
Yeah, I will just say, David, I'm actually on a flight to Vancouver tonight, to a province I lived in for 16 years. And if you... I don't know of a much better way to make Canadians angry, and we've done a great job as a nation, to say Canada is not really international. We consider it to be international at any rate. We will pursue international growth when it's truly compelling. There are certainly certain REITs whom we respect tremendously, most notably Prologis, that have expanded internationally very productively and very creatively. We want to make sure we take care in any investment we make anywhere, but especially internationally, to know that it is truly going to be a good investment for the long term. That we've protected ourselves against currency risk, we've protected ourselves as best we can against tax leakage, that we're in countries with a rule of law and economic health. The investment could be a great one for the long term.
That's great. It'll be so fun to watch as this evolves. So obviously, there's one big peer competitor in gaming. You guys have a different focus, but maybe again, it's not to knock the peers, but can you highlight some of the differences? Do you think... I mean, I don't see them going more of the experiential stuff that you guys are doing. Can you maybe talk about you versus your peers?
Yeah, I would say that you can do very well by making a bet on both us and GPI. We are really striving to be a total return investment. We want our investors to benefit not only from the income we distribute to them but from enduring value appreciation in the properties. And we feel we give our investors the best shot at enduring value improvement in the properties we already own by giving them exposure to an incomparable location like the Las Vegas Strip and through the ownership of incomparable assets like the Venetian, like Caesars Palace, like MGM Grand, like Mandalay Bay, and the other assets we own along the Strip. So our exposure to the Las Vegas Strip, which constitutes almost half of our rent roll, and our willingness, ability, and excitement in investing in non-gaming categories, we think gives us a growth opportunity and a total return opportunity that is truly compelling and differentiated. And that was borne out in terms of the guidance we were able to give for 2025 when we announced our guidance in our February earnings call. We guided to 2025 growth in AFFO per share at 3.3% at the midpoint. GPI guided I believe to 1.4% growth in AFFO per share at the midpoint. And we're about three times bigger, but we were able to post growth that wasn't quite three times the rate. So I think it's our ability to identify growth opportunities outside the gaming spectrum or within the gaming spectrum that are somewhat unique to us.
All right, let's look ahead. What do you think Vegas looks like 25 years from now? Obviously, it changes every single year. If you recall, when Planet 13 was built a few years ago, with... um, I'm drawing a blank on the name of the exhibit that's so cool to go check out there. I'll look it up because it's going to bug me, I've been there. But like, what do you think? How do you see that evolving over the next 25 years?
I think the evolution will be driven by the leaders of cultural innovation and transformation. Vegas has become probably the leading experiential development lab in the world. There's a reason the first and still only sphere in the world is in Las Vegas. There's a reason Las Vegas is really the only place in the world where you have residencies like you have in Las Vegas. Adele hasn't done a residency anywhere else. Lady Gaga doesn't really do residencies anywhere else like she does in Las Vegas, nor Bruno Mars, nor Usher. That cultural energy is the energy out of which the innovation and the transformation will grow. And I have no business, no qualifications to predict what it will look like, but I do know that transformation will grow out of the richest experiential petri dish that exists in the world today. And so much is dependent upon infrastructure that exists nowhere else in the world today. That infrastructure started with the roads into Las Vegas, the airport that serves Las Vegas, everything that goes into enabling... I don't know what, there are 140,000 hotel rooms on the Strip. 140,000 hotel rooms to function properly every night of the year. Our biggest Vegas assets do occupancy year-round occupancy in the 90 plus percent range. There's nowhere else in the world that does that. Like you said, 140,000 rooms in a two-mile, less than two-mile block, it's tight.
First off, it was Meow Wolf, I meant to look up. It was Meow Wolf, which is a huge draw. You obviously talk about sphere. Unbiased, thank you. Love sphere. It's the best place. If you haven't gone to see a concert or go see the film, highly recommend you go check out any show there. And you talk about the residencies like the Eagles doing a long residency there. It's probably just a matter of time until the Rolling Stones are going to do something there. But sphere has come out and said they're going to develop in Abu Dhabi. That's where the next sphere is going to be. I mean, I guess you can't really say anything, but would we be shocked to see you guys potentially owning the land in Abu Dhabi on which that sphere sits? Based on the partnership that you've got in place with Venetian and those guys, or should we just pass on that question?
Not exactly sure, because to be clear, sphere was developed on its own and operated by Madison Square Garden. Well, standalone now, it's technically sphere, it's its own ticker. They effectively sublet from the Venetian, and then the Venetian leases from us. So we don't actually have a direct relationship with sphere. But I do believe they'll be successful in Dubai because the UAE is one of the places in the world that's achieving the same incomparable critical mass that Las Vegas is, with the difference being gaming and a whole lot of other things that can take place in Las Vegas are only just beginning to take place in the UAE.
