VICI Properties Increases Borrowing Firepower To $3.5 Billion

Home » VICI Properties Increases Borrowing Firepower To $3.5 Billion

Posted on: February 9, 2022, 10:38h. 

Last updated on: February 9, 2022, 05:23h.

VICI Properties (NYSE:VICI), the largest casino landlord, is expanding its borrowing capacity in a significant fashion. The company now has access to a new, undrawn combined $3.5 billion unsecured credit facility and a term loan.

VICI Properties
Caesars Palace on the Las Vegas Strip, seen above. Owner VICI Properties is expanding its borrowing capacity in a big way. (Image: CNN)

The gaming real estate investment trust (REIT) made the announcement Tuesday after the close of US markets. It noted its new borrowing power consists of of a four-year, $2.5 billion senior unsecured revolving credit facility, and a three-year, $1 billion unsecured delayed draw term loan. There was broad interest from creditors in providing the real estate company with more borrowing capacity.

The Credit Facilities were substantially oversubscribed, with strong support from 17 new and incumbent financial institutions,” according to a statement issued by New York-based VICI.

J.P. Morgan Chase Bank, N.A., Wells Fargo Securities, LLC., BofA Securities, Inc. and Citibank, N.A. acted as joint lead arrangers on the credit facilities.

Why It’s Important for VICI

More borrowing ammunition is relevant for VICI because commercial real estate, including gaming, is a capital-intensive business.

For example, the company is acquiring rival MGM Growth Properties (NYSE:MGP) for $17.2 billion in equity. And last year, it agreed to pay $4 billion for the property assets of the Venetian, Palazzo and Venetian Expo in Las Vegas.

The new credit facilities could be used to help VICI purchase additional properties without having to issue more stock or corporate bonds. But the company hasn’t confirmed it will pursue more deals with the expanded borrowing capacity.

The new credit capabilities serve another purpose for the Caesars Palace owner. VICI “terminated its existing $1 billion undrawn secured revolving credit facility, and all liens securing the company’s existing credit facilities and related subsidiary guarantees were automatically released” and all of its borrowings are now unsecured.

“This new unsecured revolving credit facility and delayed draw term loan significantly bolsters our balance sheet capacity and enhances our financial flexibility as we maintain our commitment to keep leverage between 5.0x and 5.5x on a net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) basis,” said CFO David Kieske in the statement.

Credit Terms

VICI’s revolving credit facility matures on March 31, 2026 and can be extended for two successive six-month terms, while the delayed draw term loan matures on March 31, 2025 and can be extended for two consecutive 12-month terms.

VICI has the option to increase both the credit facility and the term loan by up to $1 billion. Interest rates on both sources of capital are determined by the REIT’s credit ratings.

Currently, VICI owns the property assets of 27 casinos and its tenants include Caesars Entertainment, Century Casinos, Penn National Gaming, and multiple tribal operators, among others.

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