VICI Properties Inc. Announces Third Quarter 2018 Results

– Reports Third Quarter Net Income of $0.35 per Diluted Share –

NEW YORK–(BUSINESS WIRE)–VICI Properties Inc. (NYSE: VICI) (“VICI Properties” or the “Company”),
an experiential real estate investment trust, today reported results for
the quarter ended September 30, 2018.

Third Quarter 2018 Financial Results Summary

• Revenues were $232.7 million and included $227.3 million of real
  property revenues.
• Net income attributable to common stockholders was $129.9 million, or
  $0.35 per diluted share.
• NAREIT-defined Funds From Operations (“FFO”) attributable to common
  stockholders was $129.9 million, or $0.35 per diluted share.
• Adjusted Funds From Operations (“AFFO”) attributable to common
  stockholders was $132.2 million, or $0.36 per diluted share.

Third Quarter 2018 Acquisitions and Portfolio Activity

• The Company completed the previously announced transaction with
  Caesars Entertainment Corporation (NASDAQ: CZR) (“Caesars”) to
  acquire, and lease back the Octavius Tower at Caesars Palace
  (“Octavius Tower”) for $507.5 million. The lease provides for annual
  rent of $35.0 million and has an initial term that expires on October
  31, 2032, with four five-year renewal options.
• The Company entered into a definitive agreement with Caesars to
  acquire the real estate of Harrah’s Philadelphia for $241.5 million,
  which the Company expects to close in the fourth quarter of 2018. The
  lease will have an initial total annual rent of $23.2 million and an
  initial term of 15 years, with four five-year renewal options.
• The Company and Caesars agreed to amend the lease agreement for
  Caesars Palace Las Vegas (the “CPLV Lease”), and the lease agreements
  for the existing regional property portfolio (the “Non-CPLV Lease”),
  and the facilities in Joliet, Illinois (the “Joliet Lease” and,
  together with the CPLV Lease and the Non-CPLV Lease, the “Leases”) to
  realign certain of the lease terms (collectively, the “Lease
  Modifications”) and add a 1.5% annual escalator to the Non-CPLV Lease
  commencing in lease year two. The purchase price for Harrah’s
  Philadelphia will be reduced by $159.0 million to reflect the
  aggregate net present value of the Lease Modifications, resulting in
  net cash consideration of $82.5 million.
• In connection with the closing of the purchase of the Harrah’s
  Philadelphia property, the Non-CPLV Lease and the CPLV Lease will be
  amended to include the Harrah’s Philadelphia property and Octavius
  Tower, respectively, each of which will be leased back to Caesars.

Edward Pitoniak, Chief Executive Officer of VICI Properties, said, “The
third quarter of 2018 marked another step in building VICI into a
top-tier REIT. With the Octavius Tower transaction closing in July, we
now own all of Caesars Palace Las Vegas and collect $200 million of
yearly rent, before any annual lease escalators. With our triple net
model, this $200 million of rent results in $200 million of net
operating income (“NOI”) and as best as we can tell this makes Caesars
Palace one of the highest NOI producing real estate assets owned by a
REIT in America. We continue to execute our business strategy, relying
on our blue-chip capability and governance to build stable portfolio
income through all cycles and our sector’s best internal and external
growth pipeline.”

Financial Results – Quarter Ended September 30, 2018

• Revenue for the quarter ended September 30, 2018 was $232.7 million
  and included $227.3 million from the real property business and $5.4
  million from the golf course business. Real property business revenue
  of $227.3 million was comprised of (i) $189.9 million of income from
  direct financing leases; (ii) $12.2 million of income from operating
  leases; and (iii) $25.1 million of property taxes paid by the
  Company’s tenants on the leased properties. Golf course business
  revenue of $5.4 million included $2.5 million pursuant to the Golf
  Course Use Agreement with Caesars.
• General and administrative expenses during the quarter ended
  September 30, 2018 were $5.7 million.
• Interest expense during the quarter ended September 30, 2018 was $54.1
  million, based on a weighted-average interest rate of 4.92%.
• Non-cash loss on impairment for the quarter ended September 30, 2018
  was $12.3 million related to certain vacant, non-operating land
  parcels. All of the land parcels are located outside of Las Vegas and
  none of the land parcels are a component of the operations of our
  regional property portfolio.
• Net income attributable to common stockholders was $129.9 million, or
  $0.35 per diluted share, for the quarter ended September 30, 2018.
• FFO attributable to common stockholders was $129.9 million, or $0.35
  per diluted share, for the quarter ended September 30, 2018.
• AFFO attributable to common stockholders was $132.2 million, or $0.36
  per diluted share, for the quarter ended September 30, 2018.
• Excluding the impact of the non-recurring, non-cash loss on
  impairment, net income attributable to common stockholders and FFO was
  $142.2 million, or $0.38 per diluted share, for the quarter ended
  September 30, 2018.

Balance Sheet and Capital Markets Activity

As of September 30, 2018, the Company had $4.1 billion in total debt,
$145.2 million in cash and cash equivalents and $320.7 million of
short-term investments. The Company’s outstanding indebtedness as of
September 30, 2018 was as follows:

($ in millions)					September 30, 2018
Revolving Credit Facility					$	—
Term Loan B Facility					2,100.0
CPLV CMBS Debt					1,550.0
Second Lien Notes					498.5
Total debt outstanding, face value					$	4,148.5
Cash and cash equivalents					$	145.2
Short-term investments					$	320.7

Dividends

On September 17, 2018, the Company declared a cash dividend of $0.2875
per share of common stock for the period from July 1, 2018 to September
30, 2018, based on an annual distribution rate of $1.15 per share. This
dividend represents a 9.5% increase from the prior quarterly dividend.
The dividend was paid on October 11, 2018 to stockholders of record as
of the close of business on September 28, 2018.

2018 Guidance

The Company is updating its estimated net income per share guidance to
reflect the non-cash loss on impairment which occurred in the current
quarter and is reaffirming its AFFO per share guidance, for the full
year 2018. The Company estimates that net income attributable to common
stockholders will be between $1.44 and $1.45 per diluted share and that
AFFO per share will continue to be between $1.43 and $1.44 per diluted
share, for the year ending December 31, 2018. The following is a summary
of the assumptions that the Company used in arriving at its guidance:

For the Year Ending December 31, 2018:				Low		High
Estimated net income attributable to common stockholders per diluted share				$1.44		$1.45
Estimated real estate depreciation per diluted share				—		—
Estimated Funds From Operations (FFO) per diluted share				$1.44		$1.45
Estimated direct financing lease adjustments per diluted share				(0.14)		(0.14)
Estimated loss on extinguishment of debt, acquisition and transaction costs, non-cash stock based compensation, amortization of debt issuance costs and OID, other depreciation, capital expenditures and impairment charges per diluted share				0.13		0.13
Estimated Adjusted Funds From Operations (AFFO) per diluted share				$1.43		$1.44

The estimates set forth above reflect management’s view of current and
future market conditions, including assumptions with respect to the
earnings impact of the events referenced in this release and otherwise
to be referenced during the conference call referred to below. These
estimates do not include the impact on operating results from possible
future acquisitions or dispositions, capital markets activity, or other
non-recurring transactions. The estimates set forth above may be subject
to fluctuations as a result of several factors and there can be no
assurance that the Company’s actual results will not differ materially
from the estimates set forth above.

Conference Call and Webcast

The Company will host a conference call and audio webcast on Friday,
November 2, 2018 at 10:00 a.m. Eastern Time (ET).

The conference call can be accessed by dialing 833-227-5837 (domestic)
or 647-689-4064 (international). An audio replay of the conference call
will be available from 1:00 p.m. ET on November 2, 2018 until midnight
ET on November 9, 2018 and can be accessed by dialing 800-585-8367
(domestic) or 416-621-4642 (international) and entering the passcode
8479945.

A live audio webcast of the conference call will be available through
the “Investors” section of the Company’s website, www.viciproperties.com,
on November 2, 2018, beginning at 10:00 a.m. ET. A replay of the webcast
will be available shortly after the call on the Company’s website and
will continue for one year.

About VICI Properties

VICI Properties is an experiential real estate investment trust that
owns one of the largest portfolios of market-leading gaming, hospitality
and entertainment destinations, including the world-renowned Caesars
Palace. VICI Properties’ national, geographically diverse portfolio
consists of 20 gaming facilities comprising over 36 million square feet
and features approximately 14,500 hotel rooms and more than 150
restaurants, bars and nightclubs. Its properties are net leased to
leading brands such as Caesars, Horseshoe, Harrah’s and Bally’s, which
prioritize customer loyalty and value through great service, superior
products and constant innovation. VICI Properties also owns four
championship golf courses and 34 acres of undeveloped land adjacent to
the Las Vegas Strip. VICI Properties’ strategy is to create the nation’s
highest quality and most productive experiential real estate portfolio.
For additional information, please visit www.viciproperties.com.

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of the federal securities laws. You can identify these
statements by our use of the words “assumes,” “believes,” “estimates,”
“expects,” “guidance,” “intends,” “plans,” “projects,” and similar
expressions that do not relate to historical matters. All statements
other than statements of historical fact are forward-looking statements.
You should exercise caution in interpreting and relying on
forward-looking statements because they involve known and unknown risks,
uncertainties, and other factors which are, in some cases, beyond the
Company’s control and could materially affect actual results,
performance, or achievements. Important risk factors that may affect the
Company’s business, results of operations and financial position are
detailed from time to time in the Company’s filings with the Securities
and Exchange Commission. Actual operating results may differ materially
from what is expressed or forecast in this press release. Among those
risks, uncertainties and other factors are risks that the acquisition of
the Harrah’s Philadelphia property and the Margaritaville Resort Casino
(collectively, the “Pending Acquisitions”) may not be consummated on the
terms or timeframe described herein, or at all; the ability of the
parties to satisfy the conditions set forth in the definitive
transaction documents, including the ability to receive, or delays in
obtaining, regulatory approvals and the consents required to consummate
the Pending Acquisitions (including, with respect to Harrah’s
Philadelphia, required lender and holder consents); the risk that
Caesars may exercise its call right to reacquire the Octavius Tower
property in the event that the Harrah’s Philadelphia purchase agreement
is terminated; the terms on which the Company finances the Pending
Acquisitions, including the source of funds used to finance such
transaction; disruptions to the real property and operations of the
Pending Acquisitions during the pendency of the closings; risks that the
Company may not achieve the benefits contemplated by the Pending
Acquisitions (including any expected accretion or the amount of any
future rent payments); and risks that not all potential risks and
liabilities have been identified in the Company’s due diligence. The
Company does not undertake any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events, or otherwise, except as may be required by applicable law.

Non-GAAP Financial Measures

This press release presents Funds From Operations (“FFO”), FFO per
diluted share, Adjusted Funds From Operations (“AFFO”), AFFO per diluted
share and Adjusted EBITDA, which are not required by, or presented in
accordance with, generally accepted accounting principles in the United
States (“GAAP”). These are non-GAAP financial measures and should not be
construed as alternatives to net income or as an indicator of operating
performance (as determined in accordance with GAAP). We believe FFO, FFO
per diluted share, AFFO, AFFO per diluted share and Adjusted EBITDA
provide a meaningful perspective of the underlying operating performance
of our business.

FFO is a non-GAAP financial measure that is considered a supplemental
measure for the real estate industry and a supplement to GAAP measures.
Consistent with the definition used by The National Association of Real
Estate Investment Trusts (“NAREIT”), we define FFO as net income (or
loss) (computed in accordance with GAAP) excluding gains (or losses)
from sales of property plus real estate depreciation.

AFFO is a non-GAAP financial measure that we use as a supplemental
operating measure to evaluate our performance. We calculate AFFO by
adding or subtracting from FFO direct financing lease adjustments,
transaction costs incurred in connection with the acquisition of real
estate investments, non-cash stock-based compensation expense,
amortization of debt issuance costs and original issue discount, other
non-cash interest expense, non-real estate depreciation (which is
comprised of the depreciation related to our golf course operations),
capital expenditures (which are comprised of additions to property,
plant and equipment related to our golf course operations), impairment
charges, amortization of capitalized leasing costs and gains (or losses)
on debt extinguishment.

We define Adjusted EBITDA as net income as adjusted for gains (or
losses) from sales of property, real estate depreciation, direct
financing lease adjustments, transaction costs incurred in connection
with the acquisition of real estate investments, non-cash stock-based
compensation expense, amortization of debt issuance costs and original
issue discount, other non-cash interest expense, non-real estate
depreciation (which is comprised of the depreciation related to our golf
course operations), capital expenditures (which are comprised of
additions to property, plant and equipment related to our golf course
operations), impairment charges, amortization of capitalized leasing
costs, gains (or losses) on debt extinguishment, interest expense, net
and income tax expense.

These non-GAAP financial measures: (i) do not represent cash flow from
operations as defined by GAAP; (ii) should not be considered as an
alternative to net income as a measure of operating performance or to
cash flows from operating, investing and financing activities; and (iii)
are not alternatives to cash flow as a measure of liquidity. In
addition, these measures should not be viewed as measures of liquidity,
nor do they measure our ability to fund all of our cash needs, including
our ability to make cash distributions to our stockholders, to fund
capital improvements, or to make interest payments on our indebtedness.
Investors are also cautioned that FFO, FFO per share, AFFO, AFFO per
share and Adjusted EBIDTA, as presented, may not be comparable to
similarly titled measures reported by other real estate companies,
including REITs due to the fact that not all real estate companies use
the same definitions. Our presentation of these measures does not
replace the presentation of our financial results in accordance with
GAAP.

Reconciliations of net income to FFO, FFO per diluted share, AFFO, AFFO
per diluted share and Adjusted EBITDA are included in this release.

VICI Properties Inc. Consolidated Balance Sheets (Unaudited) (In thousands, except share and per share data)
				September 30, 2018				December 31, 2017
Assets
Real estate portfolio:
Investments in direct financing leases, net				$	8,815,557			$	8,268,643
Investments in operating leases				1,075,691				1,110,400
Land				95,789				73,600
Property and equipment used in operations, net				72,287				74,300
Cash and cash equivalents				145,223				183,646
Restricted cash				58				13,760
Short-term investments				320,676				—
Other assets				43,220				15,363
Total assets				$	10,568,501			$	9,739,712
Liabilities
Debt, net				$	4,121,153			$	4,785,756
Accrued interest				23,672				21,595
Deferred financing liability				73,600				73,600
Deferred revenue				701				68,117
Dividends payable				106,356				—
Other liabilities				31,742				10,562
Deferred income taxes				4,004				3,718
Total liabilities				4,361,228				4,963,348
Stockholders’ equity
Common stock, $0.01 par value, 700,000,000 shares authorized and 370,228,468 and 300,278,938 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively				3,702				3,003
Additional paid-in capital				5,953,726				4,645,824
Accumulated other comprehensive income				5,465				—
Retained earnings				160,915				42,662
Total VICI stockholders’ equity				6,123,808				4,691,489
Non-controlling interests				83,465				84,875
Total stockholders’ equity				6,207,273				4,776,364
Total liabilities and stockholders’ equity				$	10,568,501			$	9,739,712

VICI Properties Inc. Consolidated Statement of Operations and Comprehensive Income (Unaudited) (In thousands, except share and per share data)
				Three Months Ended September 30, 2018				Nine Months Ended September 30, 2018
Revenues
Income from direct financing leases				$	189,938			$	554,293
Income from operating leases				12,209				36,627
Tenant reimbursement of property taxes				25,147				61,322
Golf operations				5,393				19,696
Revenues				232,687				671,938
Operating expenses
General and administrative				5,678				20,145
Depreciation				929				2,757
Property taxes				25,423				61,598
Golf operations				4,223				12,832
Loss on impairment				12,334				12,334
Total operating expenses				48,587				109,666
Operating income				184,100				562,272
Interest expense				(54,051		)		(158,365		)
Interest income				2,027				7,504
Loss from extinguishment of debt				—				(23,040		)
Income before income taxes				132,076				388,371
Income tax expense				(52		)		(884		)
Net income				$	132,024			$	387,487
Less: Net income attributable to non-controlling interests				(2,112		)		(6,409		)
Net income attributable to common stockholders				$	129,912			$	381,078
Net income per common share
Basic				$	0.35			$	1.06
Diluted				$	0.35			$	1.06
Weighted average number of common shares outstanding
Basic				369,935,055				360,997,358
Diluted				370,127,185				361,042,203

VICI Properties Inc. Reconciliation of Net Income to FFO, FFO per Share, AFFO, AFFO per Share and Adjusted EBITDA (In thousands, except share and per share data)
				Three Months Ended September 30, 2018				Nine Months Ended September 30, 2018
Net income attributable to common stockholders				$	129,912			$	381,078
Real estate depreciation				—				—
FFO				129,912				381,078
Direct financing lease adjustments attributable to common stockholders				(12,876		)		(38,652		)
Loss on extinguishment of debt				—				23,040
Loss on impairment				12,334				12,334
Non-cash stock-based compensation				623				1,482
Amortization of debt issuance costs and original issue discount				1,495				4,477
Other depreciation				926				2,752
Capital expenditures				(187		)		(744		)
AFFO				132,227				385,767
Interest expense, net				50,529				146,385
Income tax expense				52				884
Adjusted EBITDA				$	182,808			$	533,036
Net income per common share
Basic and diluted				$	0.35			$	1.06
FFO per common share
Basic and diluted				$	0.35			$	1.06
AFFO per common share
Basic and diluted				$	0.36			$	1.07
Weighted average number of common shares outstanding
Basic				369,935,055				360,997,358
Diluted				370,127,185				361,042,203

Contacts

VICI Properties Inc.
Investors:
646-949-4631
Investors@viciproperties.com
Or
ICR
Jacques
Cornet
Jacques.Cornet@icrinc.com
Media:
646-949-4631
PR@viciproperties.com
Or
ICR
Phil
Denning, 646-277-1258
Phil.Denning@icrinc.com
Or
Jason
Chudoba, 646-277-1249
Jason.Chudoba@icrinc.com