VICI Properties Rises on Experiential Assets Despite FFO Dip

VICI Properties (NYSE: VICI) has emerged as a bellwether for experiential real estate, even as its reported Funds from Operations (FFO) dipped in Q1 2025. While headlines may focus on the 9% drop in FFO per share, the story behind the numbers reveals a company strategically positioned to capitalize on the enduring demand for gaming, hospitality, and entertainment assets. Let’s unpack the data and assess whether VICI’s shift toward adjusted metrics like AFFO signals a stronger path forward.

The FFO Decline: Accounting Headwinds, Not Operational Weakness

VICI’s Q1 FFO per share fell to $0.51, a 9% drop from $0.57 in 2024. However, this decline was not due to underperformance of its experiential assets. Instead, it stemmed from an $80 million increase in the Current Expected Credit Loss (CECL) allowance, a non-cash adjustment tied to heightened credit risk provisioning for loans and leases. This accounting metric, which reduces net income, directly impacts FFO calculations but does not reflect the operational health of VICI’s properties.

AFFO Guidance: A Bright Spot for Investors

While FFO took a hit, Adjusted Funds from Operations (AFFO) rose 5.6% year-over-year to $616 million, or $0.58 per share—a 4.3% increase per share. AFFO excludes non-cash items like CECL adjustments and focuses on recurring cash flows, making it a more reliable indicator of VICI’s core performance. Management raised full-year 2025 AFFO guidance to $2.33–$2.36 per diluted share, reflecting confidence in its portfolio of 93 experiential assets, including 54 gaming properties and 39 hospitality/entertainment venues.

Why Experiential Assets Are VICI’s Engine

VICI’s portfolio spans 127 million square feet, anchored by iconic destinations like Caesars Palace Las Vegas, the Venetian Resort, and MGM Grand. These properties generate steady cash flows through long-term leases with operators like MGM Resorts and Caesars Entertainment. The Q1 results underscore this resilience:
- Revenue grew 3.4% to $984 million, driven by strong demand in gaming and hospitality.
- Dividends remained stable at $0.4325 per share, funded by the cash-generating power of its experiential assets.

Strategic Moves to Fuel Long-Term Growth

VICI isn’t resting on its laurels. Recent moves highlight its commitment to expanding its experiential footprint:
1. North Fork Mono Casino & Resort: A $510 million investment in a tribal casino near Madera, California, managed by Red Rock Resorts. This project adds 2,400 slot machines and 40 table games, capitalizing on the booming gaming sector in tribal lands.
2. One Beverly Hills Development: A $300 million mezzanine loan for a luxury mixed-use project in Beverly Hills, partnered with Cain International and Eldridge Industries.
3. Balance sheet strength: Liquidity stands at $3.2 billion, including a $2.5 billion revolving credit facility and a $1.3 billion senior notes offering refinancing debt.

Risks and Considerations

• CECL Volatility: The CECL allowance could swing again if tenant performance weakens or macroeconomic conditions sour.
• Regulatory Challenges: Gaming licenses and tribal land agreements require careful navigation.
• Interest Rate Sensitivity: VICI’s debt-heavy model (LTV of 48% at Q1) could face pressure if rates rise.

Conclusion: VICI’s Experiential Edge

VICI Properties isn’t just surviving—it’s thriving in the experiential economy. While the FFO dip was a temporary accounting blip, the 5.6% AFFO growth and raised guidance to $2.36 per share signal a company well-positioned to capitalize on its core strengths. With $3.2 billion in liquidity, strategic partnerships, and a portfolio of irreplaceable assets, VICI is primed to outperform peers in gaming and hospitality.

Investors should note: VICI isn’t revising FFO guidance because it’s focused on metrics that matter—AFFO, liquidity, and experiential growth. For those willing to look past short-term noise, VICI offers a compelling play on the $46 billion U.S. gaming market and the enduring appeal of experiential real estate.

In short, VICI’s future is bright—if you’re willing to bet on experiences, not just balance sheets.