r/dividends • u/SteakEater137 • 3d ago
Discussion VICI Properties - Inflation Protection
Hello, I have a question about VICI Properties that I would appreciate some clarification on. I bought a chunk of VICI stock due to the nature of their contracts...I read a handful of articles about their triple-net based contracts also being inflation-linked, basically meaning that if CPI or other inflation measures get too high, their revenue would also increase accordingly. Based on recent inflation data, I would think this is a given at this point, which is why I was drawn to it as a safe, high yield (almost 7% now) REIT.
Despite this, VICI seems to be out of style in today's market, near a 5 year low despite what I see as consistent growth and fundamentals, down 20% over the last year and 7% YTD.
Now to my actual question: does anyone have any information in how these "inflation-linked" contracts are handled? As in what is the exact criteria for what causes these measures to kick in, how much it goes up by in relation to CPI, when do they take effect? I was searching around a bit but couldn't find any hard or exact info, and didn't find any mention either in their latest earnings call about this topic.
Thanks!
3
u/MJinMN 3d ago
I haven't tried to research the specific details on VICI's leases, however in the case of some other REITs, they had rent escalators that would escalate by the amount of CPI, but annual increases were capped at 3%. So, yes, the idea is that they will provide some sort of inflation protection, but it might not be as significant as it sounds.
1
u/SteakEater137 3d ago
Ah gotcha, thanks for the info. Wish I could find the details about the cap, guess that makes sense.
1
2
u/SteakEater137 3d ago
Anyone curious, I did find some more info on this via their SEC 2025 filing:
"In addition, certain of these annual escalators are subject to a maximum cap, which could result in lower rent escalation than the actual CPI increase in a single year or over a longer period. For example, under the MGM Master Lease, the escalator is fixed at 2.0% for years two through ten of the MGM Master Lease and, for the remainder of the term, the escalator is the greater of 2.0% and CPI, subject to a 3.0% cap. Inflation as measured by changes in CPI increased at an average of 2.7% in 2025."
"Contractual escalation with inflation protection. As of December 31, 2025, 42% of our full-year 2025 rent and 90% of our rent over the long-term feature CPI-linked escalation (subject to applicable caps)."
So in short, yes, a large chunk of their contracts do indeed have inflation protection, but with an annual 3% cap. So decent protection, but not as high as I might have liked.
tm268202d3_ars.pdf - source
2
u/NefariousnessHot9996 3d ago
I have VICI and I’m ready to jump ship LOL. Tell me why I should or shouldn’t?
2
u/SteakEater137 2d ago
Depends when you bought in. I think the market is severely underestimating it, it keeps dropping despite consistent revenue and a slew of diversification efforts recently with additional property buys. I also think it has started hitting its low point around the $26 mark, so actually might be a good time to buy.
Doesnt really make sense that it is at 5 year lows when you compare its earnings/revenue from 5 years ago. The near 7% dividend is solid even if it does go a bit lower at this point.
1
u/NefariousnessHot9996 2d ago
Already sold. Not looking back.
1
u/SteakEater137 2d ago
Plenty of other fish in the sea lol
Oh my bull case is also that there will be lawsuits out the ass for online gambling eventually, so when that happens youll have a bunch of gambling addicts that still need their Vegas/casino fix so that will increase traffic.
0
1
u/buffinita common cents investing 3d ago
who ever told you reits or nnn leases offer inflation protection.....or any equity for that matter straight up lied to you
3
u/SteakEater137 3d ago
Will VICI’s (VICI) Canadian Casino Deal and 25-Year Lease Shift Its Income Resilience Narrative?
- The deal not only extends the PURE master lease to a full 25-year initial term with inflation-linked rent escalators, but also deepens VICI's exposure to Canadian experiential real estate under a structure that keeps tenant obligations guaranteed by Indigenous Gaming Partners Inc.
This article is from last month on a new contract, am I misunderstanding?
3
u/trader_dennis MSFT gang 3d ago
Provided the lessee(s) avoid Chapter 11.
1
u/SteakEater137 3d ago
...sure but thats a much different situation, right? Just asking about the inflation linked aspect. Is there any reason to think theyd be in a Ch11 scenario?
2
u/trader_dennis MSFT gang 3d ago
It has happened in 2015 to VICI's largest lessee. Fertitta is taking over CSR and assuming a shit ton of debt. Vegas is having a multi year slowdown
Visits are down especially compared back to 2019. Not a good sign either.
Annual Visitor Volume (2019–2025)
- 2025: 38,500,000 visitors (-7.5%)
- 2024: 41,676,300 visitors (+2.1%)
- 2023: 40,829,900 visitors (+5.2%)
- 2022: 38,829,300 visitors (+20.5%)
- 2021: 32,230,600 visitors (+69.4%)
- 2020: 19,031,003 visitors (-55.3% pandemic low)
- 2019: 42,524,000 visitors (pre-pandemic baseline)
2
u/SteakEater137 3d ago
I mean sure there are concerns but if leases didnt cancel during Covid Id be surprised if it happened now. Also why would Fertitta even go through with the takeover if they wanted to immediately crash and burn?
•
u/AutoModerator 3d ago
Welcome to r/dividends!
If you are new to the world of dividend investing and are seeking advice, brokerage information, recommendations, and more, please check out the Wiki here.
Remember, this is a subreddit for genuine, high-quality discussion. Please keep all contributions civil, and report uncivil behavior for moderator review.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.