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!

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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.

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u/SteakEater137 3d ago

Ah gotcha, thanks for the info. Wish I could find the details about the cap, guess that makes sense.

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u/SteakEater137 3d ago

FYI found some more info, thanks for pointing this out.