Casino landlord Vici talks with tenants on rent options amid outbreak
Friday 1st May 2020
With casino operators across the country closed and unable to reopen -- or bring in revenue -- for an uncertain amount of time, one gaming landlord said it's willing to be flexible with its tenants' leases.
Executives of gaming real estate investment trust Vici Properties Inc. said Friday morning that the company is in "continuous dialogue" with its tenants on rent and their eventual ramp-up plans.
President and COO John Payne said tenants are beginning to ask about partial rent release or deferral of rent or other lease modifications. He said Vici would prefer some sort of asset or liquidity exchange as opposed to outright deferral of rent payments.
"These are temporary issues, there needs to be temporary solutions, and those temporary solutions have to have value-for-value trade," Payne said. "The clarity on when the assets are going to open is not great. .... It's important for us to see how this will all play out."
The company has 28 assets with five tenants, including Caesars and Penn National Gaming. While the gaming industry's performance has been hit hard by the global pandemic, Payne said the gaming REIT is optimistic in the industry's future.
"January and February of this year were among the best months many properties have experienced in decades, and we believe customers are eager to return to our facilities, especially at the local level, upon reopening," he said. "We believe the importance of our assets will only increase in the months and years ahead, given the mission-critical nature of the assets to the operator, the revenue collected by the states from gaming tax and the total jobs the casinos create."
The Caesars Entertainment Corp.-affiliated investment trust also touched on the pending merger between Eldorado Resorts and Caesars, set to close in the first half of this year, with CEO Ed Pitoniak saying they "absolutely" want the deal to close.
"We think it's the best outcome for Caesars, it's the best outcome for Vici," he said. "As these gaming assets reopen and as they recover, each single asset is going to have to be intensely in touch with its own marketplace ... that's very much the strategy that (Eldorado CEO) Tom Reeg has talked about since day one for the new company, but it's even more critical now."
The REIT reported first-quarter results Thursday, including $255 million in revenue in the quarter -- a 19 percent increase compared with last year.