Good day, ladies and gentlemen. Thank you for standing by. Welcome to the VICI Properties 4th Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen only mode. Please note that this conference call is being recorded today, February 15, 2019.
I will now turn the call over to Samantha Gallagher, General Counsel with VICI Properties.
Thank you, operator, and good morning. Everyone should have access to the company's Q4 2018 earnings release and the supplemental information. The release and supplemental information can be found in the Investors section of the VICI Properties website at www.viciproperties.com. Some of our comments today will be forward looking statements within the meaning of the federal securities laws. Forward looking statements, which are usually identified by the use of words such as will, expect, should, guidance, intend, projects other similar phrases are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.
Therefore, you should exercise caution in interpreting and relying on them. I refer you to the company's SEC filings for a more detailed discussion of the risks that impact future operating results and financial condition. During the call, we will discuss non GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available on our Q4 2018 earnings release and our supplemental information.
Hosting the call today, we have Ed Sisoniak, Chief Executive Officer John Payne, President and Chief Operating Officer David Kietzke, Chief Financial Officer and Gabe Wasserman, Chief Accounting Officer. Ed and team will provide some opening remarks, and then we will open the call to questions. With that, I'll turn the call over to
Ed. Thank you, Samantha, and good morning, everyone. We're very excited to be here and appreciate you taking the time to join us for our Q4 year end 2018 earnings call. We released our 4th quarter results last evening, which caps off the end of our 1st full fiscal year. In a moment, John Payne and David Kieske will walk you through how active and productive the 1st 17 months for VICI have been.
It's been a tremendously exciting 17 months for us as a team. And what most excites us, every day we come to work, every time we meet a new potential shareholder or a new potential business partner, is the opportunity we've been given to develop and share the next really great institutionalization story in American commercial real estate. As part of every real estate institutionalization story is institutional capital coming to understand the nature, quality and durability of the cash flows in a real estate asset class that hasn't previously seen broad and deep institutional investment. Every day we are excited to tell Avicii story, a story based in 3 key drivers of value creation. 1, our ability to deliver portfolio income of the highest character and quality 2, a best in class and fully internalized governance and management structure and 3, one of the best internal and external growth profiles across the REIT sector.
Here's a bit more on each one of these three value drivers. Portfolio income, character and quality. Through our triple net lease structure, partnering with leading operators in Caesars and Penn, we deliver income durability throughout economic cycles at a value and magnitude we believe no other real estate sector is able to currently produce. And under our triple F structure where we have no property management, leasing or capital expenditure requirements, our reported AFFO is our true AFFO, giving our cash flows a degree of transparency and integrity, hard to find in any other real estate sector. Capability and governance.
We have established a board and a REIT management team with a deep bench of expertise in real estate, gaming and hospitality, bolstered by a governance framework explicitly designed to serve our 1 and only class of shareholder, the common equity shareholder. We are completely independent from our tenants with no overlapping directors or ownership in our company. Internal and external growth. Our results speak for themselves. We have executed over $8,000,000,000 worth of acquisitions and capital markets activity since our emergence on October 6, 2017.
I'll let John tell you more about our growth track record and prospects in a moment. And even with all this recent activity, our future growth pipeline remains robust as we of course still have 3 call option properties, which we can acquire at a 10% cap rate at any point prior to October 2022. We will continue to evaluate those 2. We will continue to evaluate those opportunities, but as John will now expand upon, the appetite for gaming transactions has not diminished. With that, I'll now turn the call over to John to further discuss our recent transactions and what we're seeing in the market going forward.
John?
Thanks, Ed, and good morning, everyone. Since our emergence, we've been extremely busy on the acquisition front as we've announced 5 acquisitions, which include 4 new properties and the consolidation of Caesars Palace Las Vegas with the acquisition of the Octavius Tower. These acquisitions combined for transaction value of approximately $2,700,000,000 across 4 markets, 2 of which are new markets for VICI, as well as approximately 330,000 square feet of gaming space and almost 4,000 hotel rooms and suites. Every one of our acquisitions has been complementary to our strategic goals. When we wanted to increase our presence on the Las Vegas Strip, we acquired Harrah's Las Vegas and sold Caesars 18 acres of our Las Vegas land holdings in exchange for a roofer on a new world class convention center, which is currently under development.
When we wanted to consolidate our ownership of Caesars Palace and further extend our footprint on the Las Vegas Strip, we acquired the 668 Room Octavius Tower adding $35,000,000 of annual cash rent. When we wanted to expand into a top regional market, we acquired Harris Philadelphia and added $21,000,000 in rent for a net purchase price of $82,500,000 in connection with amending our foundational leases to align VICI and Caesars strategic to create more long term income stability, initiate annual rent escalators in our non CPLV and Joliet leases and incentivize Caesars to further invest in the assets in our portfolio. When we wanted to increase our regional presence and diversify our tenant base Bossier City, adding $23,200,000 of rent to our portfolio. And when we wanted a high quality asset in one of the best regional gaming markets, we further expanded our partnership with Penn with the announced acquisition of the Greektown Casino Hotel located in Downtown Detroit's historical central business district, adding $55,000,000 in annual rent. Through these accretive acquisitions, we have closed or announced the addition of over $220,000,000 in annual cash rent, a 35% increase from our initial annual rent at Emergence, which was only 17 months ago, as Ed mentioned.
Each of these transactions accomplished a strategic goal we identified when we started VICI. What's more, all of the completed acquisitions were done accretively a leverage neutral basis for a very attractive cap rate. 2018 should give you a sense of what we hope to continue in 2019 and beyond. With a REIT team and deep hospitality industry connections, we will continue to put your capital to work as we grow our portfolio and continue progressing towards our goal. Those goals have not changed.
We intend to continue to work on diversifying our tenant base, expanding geographically in attractive urban and regional markets and growing our Las Vegas exposure, all while creating value for our shareholders. The number of transactions announced by us and our peers over the past couple of years have bolstered the confidence in the gaming REIT model. REITs have become increasingly involved in gaming M and A conversations as operators look to capitalize on the underlying value of their real estate. The market environment for gaming transactions continues to be active and we look forward to the momentum we have headed into the rest of 2019. With that, I'll turn the call over to David who will discuss our balance sheet and financial results.
David?
Thanks, John. Starting with our balance sheet, since our emergence, we have been highly focused on disciplined capital allocation to progress our strategic goals. We have transformed our balance sheet since emergence, accessing the debt and equity markets to finance accretive acquisitions, significantly reduce leverage and safeguard the company's balance sheet against future uncertainty. To summarize, we raised over 3 point $1,000,000,000 of equity through our $1,000,000,000 equity private placement in December 2017, our $1,400,000,000 IPO in February of 2018, which was 8 times oversubscribed and the upsized $725,000,000 follow on equity offering in November, which we are proud to say represented the largest primary first follow on offering ever done by our REIT. In 2018, VICI alone issued approximately 21% of all public REIT equity issued for the year.
We entered into a $750,000,000 equity distribution agreement or ATM agreement in December, giving us an efficient tool to access equity if and when needed. We significantly strengthened our balance sheet. We reduced our leverage from 8.4 times debt to EBITDA at emergence to 4.2 times net debt to EBITDA at year end by refinancing $1,000,000,000 of debt at lower interest rates and eliminating over $1,300,000,000 of debt. Our outstanding debt at year end was $4,100,000,000 with a weighted average interest rate of 4.97%. This includes the impact of the 2 interest rate swap transactions we entered into on January 3.
These effectively fixed the LIBOR portion on $500,000,000 under our term loan B facility at a weighted average interest rate of 2.38%. Our debt is now approximately 98% fixed, providing certainty to our future interest expense. The weighted average maturity of our debt is approximately 5 years and we have no maturities until 2022. We increased our annualized dividend in June by 9.5 percent to $1.15 per share after only 2 quarters of being a dividend paying REIT. We ended the year with approximately $1,100,000,000 of cash and short term investments and an unfunded $400,000,000 revolver providing us liquidity for future growth.
In terms of our financial results, yesterday we reported AFFO of $139,900,000 or $0.36 per share for the Q4, bringing the full year 2018 AFFO to $525,600,000 or $1.43 per share, in line with our 2018 guidance. Our earnings for the quarter reflect revenue of $226,000,000 which was comprised of 218 $500,000 from our Real Property business and $7,500,000 from our Golf business. Real Property business revenue was comprised $7,300,000 of income from direct financing leases, dollars 11,300,000 of income from operating leases and $19,900,000 of property taxes paid by our tenants. Our 4th quarter revenue includes $6,300,000 of non cash direct financing lease adjustments. As you may have noted, the $6,300,000 adjustment is substantially lower from prior quarters as a result of the lease modification, which were effective as of November 1, 2018.
On the expense side, our general and administrative costs were $4,300,000 for the quarter. This is lower than our previously stated run rate of approximately $6,000,000 per quarter as a result of a one time adjustment related to a true up of certain gross receipt and franchise taxes incurred at the state and local level. Going forward, we continue to expect our G and A to be between $6,000,000 $6,500,000 per quarter with slight fluctuations possibly occurring quarter to quarter. We'd like to draw your attention to our financial supplement located on the Investors section of our website under the menu heading Financials. We've added additional quarterly disclosure and continue to value any feedback you may have on the information presented.
To follow-up on the acquisition front that John discussed, November 14, we announced the $700,000,000 acquisition of Greektown in downtown Detroit. We will use a portion of the November equity offering proceeds to fund the Greektown transaction on a leverage neutral basis, which we continue to target closing during the Q2 of 2019. On December 26, we completed the acquisition of Harrah's Philadelphia for the net price of $82,500,000 including the $159,000,000 reduction to the gross price of $241,500,000 to reflect the aggregate net present value of the lease modification. This transaction was completed using cash on our balance sheet. With the closing of this transaction, the lease modifications took effect retroactive to November 1, 2018.
So I'd like to briefly go over the impact of the annual escalators on 2018 results and where the annual cash rents stand heading into 2019. The non PPLV and Joliet base rent of $465,000,000 was increased by 1.5% to an annual amount of $472,000,000 on November 1, providing us rent at the revised amount for the final 2 months of 2018. On December 26, the non CPLV and Joliet base rent was raised again by $21,000,000 to $493,000,000 to reflect the closing of Harris Philadelphia. We collected rent on the property for 6 days during 2018 and it will be subject to the annual escalator of 1.5% beginning on November 1, 2019. The CPLV base rent, excluding Octavius Tower, was increased by approximately 2.6 percent or $4,400,000 to an annual amount of 169 $400,000 on November 1, providing us with rent at the revised amount for the final 2 months of 2018.
Inclusive of Octavius Tower, which is not subject to an annual escalator, the annualized CPLV base rent is currently 204,400,000 dollars The Harrah's Las Vegas escalator was effective as of January 1, 2019, so there is no impact on our 2018 results. Our cash rent for 2019 is projected to be approximately $88,300,000 for HLB. Subsequent to year end, on January 2, the company closed the acquisition of Margaritaville for $261,100,000 adding approximately $23,200,000 in annual cash rent. The transaction was funded using cash on the balance sheet. Turning to guidance.
We expect 2019 AFFO per share to be between $1.47 $1.50 per share. As a reminder, our guidance does not include pending acquisitions that have been announced and not yet closed. As a result of the follow on offering, the outstanding share count at year end is approximately 404,700,000 shares and the basis for our guidance. Compared to our 2018 AFFO results, the approximate midpoint of our 2019 guidance assumes the following: a a $0.03 per share increase due to the impact of annual escalators on the CPLV, non CPLV Joliet and HLV leases, a $0.05 per share increase due to the full year impact of rent added to the non CPLV lease from the acquisition of Harris Philadelphia, a $0.05 per share increase due to the full year impact of rent added to the CPLV lease from the acquisition of Octavius Towers, which is not subject to the annual escalator, a $0.06 per share increase due to the acquisition of the Margaritaville Resort and Casino. This was partially offset by a $0.14 per share decrease due to the addition of 34,500,000 shares the total share count as a result of the November 2018 equity offering.
Finally, the reduction in the DFL adjustment for 2019 as a result of our lease modifications is reflected in the $0.02 per share adjustment from FFO to AFFO in the table in our press release. As a reminder, this is a non cash item which increases top line revenue for 2019 and is deducted to calculate AFFO. Just to reiterate, our guidance does not include the pending Greektown transaction, which we expect to close during Q2 of 2019. Greektown will add $55,600,000 of annual rent to our portfolio once the transaction closes and we expect to fund this on a leverage neutral basis. In closing, based on our 2018 performance, we continue to make tremendous progress as we execute on our strategy.
Heading into 2019, we believe that we are well positioned with significant liquidity to keep growing our portfolio and delivering shareholder value. Operator, please open the line for
questions. Your first question comes from the line of Smedes Rose with Citi. Your line is open.
Hi, thanks. To just understand your guidance a little better. I mean, you kind of walked through it there, but are there any other kind of below the line items that maybe people are not factoring in or maybe we're not factoring in because you're coming in below consensus forecast. So maybe on the taxes side or some other item that maybe we're underestimating?
Yes. I mean, Steve, it's a good question. Obviously, guidance or consensus is it's a mixed bag of results that are out there. Some analysts have additional acquisitions that are outside of Greektown in our numbers. So I think when you factor in Greektown and the additional AFFO, we will achieve by the annual rent of $55,600,000 and then again, we will fund that on a leverage neutral basis.
So an assumption on $350,000,000 of debt. I think that when you get an apples to apples comparison from our guidance of $1.47 to 1 $0.50 dollars adding in the Greektown transaction at some point in mid year, I think you get to the run rate that we expect to achieve. And if you take out the noise of the other analysts, I think that's an apples to apples comparison.
Okay, thanks. And we can follow-up with you maybe offline on that too. But the other thing I just wanted to ask you, Caesars remains very much in the press as potentially a sale candidate. I just wanted to ask you to kind of if you can kind of recap any implications for your leases with them if Caesars is sold or if Caesars is to be if it's broken up potentially into different pieces?
Yes, Smedes, I'll start and then John and Ed can chime in. Look, the leases and the call rights that we have, the call properties, the 3 call properties that Ed alluded to are obligations of the entity and transfer with the entity. So obviously, we only read what's in the press, but we're confident in Caesars and them as operators and to the obligations of that that we have with the rights that we have with Caesars would continue in the event of any potential transaction.
Okay. Thank you.
Your next question comes from the line of Barry Jonas with SunTrust. Your line is open.
Hey, guys. Good morning. Just a clarification on the Caesars question. Do you technically need to give consent to them in a change of control or a sale of individual assets?
No, we do not, Barry. This is Ed. Good morning. No, we do not.
Got it. Even the call option properties?
Well, again, as David emphasized, in a change of control, our right to continue to call the call properties continues.
Great, great. And then just generally high
And again,
all the obligations of the leases would transfer as well.
Got it. And then just, look, high level, just curious if you can comment on the level activity in the M and A pipeline, if things slowed at all or is the pace to remain pretty brisk? Thanks.
John?
I'll take that one, Barry. Now we continue to be quite busy. Someone mentioned to me another REIT mentioned they slowed down a little bit, but we're feeling quite good, continue to be busy on the road talking about potential deals as busy as we were in the latter part of 2018.
All right. Great to hear.
Thanks so much, guys.
Thanks, Barry.
Your next question comes from the line of Mike Pace with JPMorgan. Your line is open.
Hi, good morning. And David, thanks for the added disclosure on the DFL. And since it's non cash, I won't belabor on that anymore. But maybe just some color on the capital structure. I guess you put in place some additional swaps.
I think you have total swaps of $2,000,000,000 or so now. And I'm wondering what you think that implies or how we should read that in terms of you wanting or considering to chipping away at a $2,000,000,000 plus term loan maturity in the, I think, the 'twenty four timeframe. Does that imply that you don't do that prior to these swaps running off? And then how do you think about that large maturity out into the future as you sit here today? And then I have a few follow ups.
Sure. Thanks, Mike. Good to talk to you. Looking forward to seeing you in a few weeks. Look, in terms of the swap, it's a 2 year swap on $500,000,000 of the term loan.
We were opportunistic that could took advantage of very low point in the market to fix a portion of our debt for the next 2 years. Obviously, with the 2nd liens and the term loan and then ultimately the CMBS, as we've discussed, our strategy is to ultimately migrate to an unsecured borrower. And so there will be a sequencing of steps that will have to occur to put that in place over time. And I think the first will be the 2nd lien potentially next year and then with a 2 year swap that would potentially give us a portion of the term loan that we could address in 2021. So just kind of working down the capital stack over time is the objective here and obviously being very disciplined in how we access the markets and when we do that throughout the sequencing of our company.
And then while I have you on
the capital structure, you mentioned $350,000,000 of debt for Greektown. That's incremental debt. So we shouldn't assume that you're just going to use the cash that you raised from the equity offering. Is that right?
That's right. I mean we've modeled that and underwritten that internally at a leverage neutral basis. Look, we upsized the offering just given how strong the pipeline was while we were in the market and we feel really good about having excess liquidity on balance sheet today.
Okay. And then for any of you here, I guess to get back to a prior question, maybe I'll just use the word activist rumbling across the marketplace. But do you guys ever think about the size of deals that you could do from a capacity or even your own appetite standpoint? And in that context, can you just remind us what your leverage target is and your willingness to go above that if larger M and A opportunities do pop up?
Mike, this is Ed. And again, good to talk to you. I think the fact that we were able to execute on a $1,100,000,000 transaction within really what amounted to 6 weeks or 7 weeks after our emergence, speaks to the fact that when there are opportunities of magnitude, we will do all we can to seize those opportunities in a way that delivers our owners the kind of risk adjusted returns they deserve. And I think we've proven our access to capital, both on the equity side and the debt side. So again, we are willing to go after big opportunities, but we will always be highly disciplined in the way we do so.
And if I could just go back for a moment to your question about Greektown and us funding it leverage neutral, that is very much our plan right now. But if I could just take a moment to kind of talk about guiding principles in terms of how we approach risk management at VICI, obviously raising equity in excess of what we needed for Greektown. But the we were obviously raising equity in excess of what we needed for Greektown. But the feedback we got from our long term shareholders in November is that they believed in our guiding principle that we should always achieve funding certainty if we can do so a way that's accretive for the shareholder. And needless to say, when December unfolded the way it did, we were very glad that we had the funding certainty for Greektown that we did because as we all painfully remember, December felt like a microcosm of the financial crisis.
Thank goodness it was only a fire drill, not a fire that burned out of control for months, quarters and years at a time. But we went to bed every night knowing that we could fully pay for Greektown no matter what continue to unfold. So again, yes, we plan on Greektown being leverage neutral, but the approach we will always take is an approach where we are willing to sacrifice a certain amount of temporary, emphasis on temporary dilution in order to achieve long term funding certainty in order to generate long term accretion for our owners.
Great. Thank you.
Your next question comes from the line of Carlo Santarelli with Deutsche Bank. Your line is open.
Thank you. Hey, good morning everybody. So Ed, I think you just answered the majority of my question. But as I think about the balance sheet today and including some of the short term investments, you're obviously exiting the year pretty healthy from a cash perspective. And clearly, as you get into the Q1 here, we will see the Margaritaville transaction which is already closed and then obviously we'll see Greektown when that happens.
But as you think about kind of the cash balance that you guys are carrying through this year, in an ideal world, where do you what do you kind of see as the cash need for the business? And I guess asked differently, does it kind of signal or could we read into kind of the elevated cash that you're keeping with the fact that you're going to kind of split that $700,000,000 payment and maybe think that that dry powder could be for some other things that you're contemplating at present?
Very much so, Carlo. And our Board Chairman used the phrase in conversation a couple of weeks ago, I never heard, maybe you all have heard it before. But the phrase he used is that execution occurred at the crossroads of strategy and opportunity. Our strategy is obviously continue to grow the portfolio accretively for our owners. Our strategy emphasizes continuing to build and diversify our portfolio and our tenant base.
And we obviously love doing the kind of deals we've done in the last few months with Penn. So we will have that money available to do deals that come at that crossroads of strategy and opportunity out in the open market. If they were not to materialize and again we have we go into the year with a lot of confidence as John just said that we're going to be able to find deals out there that we can do accretively for our owners. We always do have the backup of the call properties. If we found ourselves in a situation where opportunities didn't materialize at the pace that one might wish and thus we're able to deploy the capital as you can well understand very accretively on a call
property.
Your next question comes from the line of Daniel Adam with Nomura Instinet. Your line is open.
Hey, guys. Good morning. Hey, Deb. Good morning. Most of my questions have been answered, but just one quick one, quick follow-up on Caesars.
To the extent a strategic buyer held non Clark County regional assets, would your ROFO with respect to the Caesars regional properties that they would potentially buy in the future, also hold on those assets in the event of a sale leaseback?
No, Dan, they would not.
They would not.
Yes. I think I would just add, Dan, as an element of color around that. For Caesars, for Penn, for anybody else we're able to do business within the future. We always want to be the answer to the question, how do I fund my opportunities, right? We want VICI to be a great answer to that question of how do I fund platform growth?
How do I fund development? How do I fund deleveraging? How do I fund the opportunities that are in front of me? And we want to be a permanent capital provider to great operators and we have great confidence in our relationship with Caesars that we can continue to be that solution provider as well as being a solution provider to other great operators out there.
Got it.
Your next question comes from the line of John Massocca with Ladenburg Thalmann. Your line is open.
Good morning. Good morning, John.
So kind of touching back on the acquisition environment again, can you maybe comment on the acquisition and transaction expenses you incurred in the quarter? Are those related deals that are kind of, let's say, completely dead? Or could that be something where negotiations are ongoing, but maybe they didn't close during the quarter? Just any color you could provide there would be helpful.
Yes. Hey, John, it's Gabe Walsingham here. Those are some expenses for some deals we're looking at and we didn't feel that they were capitalizable under GAAP, but we're still looking at them, but thought it was the appropriate time to expense them during the Q4.
Very helpful. Thank you. And then maybe kind of one more on portfolio outside of the original Caesars properties, how do you think about corporate guarantees versus assets without a corporate guarantee? And then maybe what's kind of the appropriate in your mind property level coverages with both types of transactions? Obviously, when
you have a corporate rent guarantee,
you don't have to fixate. Obviously, when you have a corporate rent guarantee, you don't have to fixate to the same degree on asset level coverage. But when we're doing single asset deals, we obviously, it is a value even in those single asset deals to have corporate guarantees that go beyond the asset. But that's when we really drill in on what is the current cash flow of the asset? What is the coverage going in?
What will the coverage be going forward based upon the synergies the operator is able to realize, so that we have confidence that the operator can be very successful and that the rent can thus become as lower percentage as possible of the revenue and the cash flow of the asset. John, do you want to John Payne, you want to add to that?
Yes, John. I'd only add that it also depends on we've been clear on this. We talk to public companies and large public companies and small, but there's in this space, there's quite a bit of private companies that we're out to. So it really just depends. There isn't just a formula of how to do a deal, but we're out there talking to everyone.
I think Ed described it incredibly well about how we think about it.
Makes sense. And then kind of lastly, I know you talked about potential debt with regards to Greektown. Sorry if I missed this, but you talked about where maybe pricing you think is in the market for that?
Yes. Look, John, I think we point to NGP had a very successful offering. We commend them on the reopening of the markets after the December malaise. They were 5.75%. We've got indications in and around that area.
So we feel good about where the markets are and they seem to be functioning after the shutdown essentially in December.
That's it for me. Thank you very much.
Thanks, John.
Your next question comes from the line of Stephen Grambling with Goldman Sachs. Your line is open.
Hey, thanks. I guess a quick follow-up to Carlo's question and to be clear, I guess, would you contemplate a systematic exercising of the call option properties as we get close to expiration? And how would a potential sale of Caesars, if it were to go down that path change your thought process on the options specifically, call option properties specifically?
John Payne, you want to take that?
Well, to your first one, I think your question is around would we take them down all at once. And we've been clear since we started that we don't see the path forward that there's an opportunity to acquire something externally that we have these options and we'd look at them
at
Stephen, was around if someone else was operating the call properties, would we think that differently? Is that your question?
So I guess on the first one, the first one, it was not if you would do them all at once, but would you come up with a systematic approach 1 a year each year so that there's not really surprises in the market?
Yes, I mean, I think that is our plan right now and that again, if we are forward looking and we don't think our pipeline is as strong as we believe it is today, we will begin to turn to those option properties and we know how accretive they'll be if we execute them. Where we are today? I think you're hearing us say we feel good about the depth of our portfolio in front of us, and we'll continue to evaluate when the right time is to execute those option properties. Ed, I don't know if you want to add to that?
Yes. No, you nailed it, John. I would just add, Stephen. I think in terms of how we think about our growth in a on a base case basis, it would be that kind of metronomic year by year takedown. That would be our base case game plan.
Just to go back to that execution being at the crossroads of strategy and opportunity, there could be situations that either could accelerate that or call for no pun intended call for taking down 2 at once. But we would we see those as a key means by which we deliver the kind of metronomic year by year growth in AFFO per share that certainly real estate investors, institutional investors expect and get delivered from the blue chip names in the triple net sector and elsewhere across our universe.
Great. Thanks. And then what markets are you most interested in as you look about or look for future opportunities growth? And is there a mismatch between where you want to grow versus where assets are available for sale?
John? No, not at all. I think that we continue to like our diversification where we've got exposure on Las Vegas Strip. We have exposure in regional markets. We have exposure in what we call urban regional markets.
Clearly, there's some opportunities in markets that we'd like to have greater exposure in. And there's some markets that we simply don't have real estate in, Las Vegas locals market being an example that we really like that market. So there's not a mismatch between what is potentially for sale and where we'd like to expand. All I would say is we will continue to remain diversified across our portfolio as we continue to grow it.
Maybe the last one is just as MGM is talking about shifting the ownership of MGP and potentially making a little bit more of an independent entity, have you seen any change in the competitive landscape for you
know, since we've been we're born
a true independent REIT,
and we've come at this as you know, since we've been we're born a true independent REIT, and we've come at any bid process that it's going to be a competitive process and we want to ensure that we get a fair deal for both the seller and for us. But we have not seen, based on what you said, an increase in the amount of competition for assets that are potentially for sale because we've always come out at that there was competition.
Have seller expectations changed as the sector has started to do additional deals?
No, I think sellers are realistic about what they can get and you get into negotiations and talks with them and ensure that you're going to get a fair deal both ways that it works for our company or for any REIT and it works for the seller and it works for the operator that you're partnering with. So I've not seen unrealistic expectations a year ago and I'm not seeing unrealistic expectations today.
That's great. Good luck this year guys.
Thanks, Stephen. Thank you.
Your next question comes from the line of John DeCree with Union Gaming. Your line is open.
Good morning, everyone. Thanks for all the color so far. And maybe a question for you or anyone who wanted to chime in kind of higher level thinking. We talked a lot about casino real estate, how strong and durable that income stream is. But what are your thoughts on kind of non gaming or resort, other leisure type of acquisition activities and if Caesars has been branding some resorts in select cities.
Is it something that you look at today or is there just enough to do on casino resort M and A front that it's not really something you're branching out at? And how do you think about some of the other opportunities?
Yes. John, good to talk to you. Well, we certainly are busy with gaining M and A right now and we obviously like the real estate investment economics of what we're looking at in gaming. But from day 1, we have positioned ourselves as an experiential REIT. And we look ahead at the next 10, 20 years with a high conviction As you look at both the generational A to A's, the baby boomers and millennials, As you look at both the generational age waves of baby boomers and millennials going into periods where there will be, especially for baby boomers, increased leisure time.
And so we have from day 1 been determined to make sure we are learning at a pace that enables us to be in a position whether it's many years from now or a few years from now to be able to make compelling investments in non gaming opportunities that meet our investment criteria. And frankly, our investment criteria will largely be framed by what we love about our investment in gaming real estate, which really starts with what we call experiential complexity. The thing we love about so many of our gaming assets is the operator offers a rich experience, a rich multidimensional experience that greatly intensifies their relationship with the end user and thus protects them and us from disruption and obsolescence. So we will look for that same experience of complexity. We'll look for demographic, graphic, cultural and regional tailwinds that ensure that that asset will have the kind of cash flows over a multi decade period that our owners deserve.
But again, that is not imminent at this time, but the learning has to be taking place if we're going to make good decisions in the years to come.
Thanks, Ed, for the color. And one follow-up on a, I guess, a more specific question on types of M and A. I think a slide I saw that you guys have put out maybe in January with your investor deck that kind of positioned kind of necessary return thresholds relative to growth. And I think somewhere in the middle was international gaming opportunities and we haven't had a chance to talk about that slide yet. So I thought now would be a good time.
Is there anything internationally that would make sense? Is that too challenging from how you position the business model? Or is that something that might perhaps come in somewhere between kind of North American gaming and some of those other kind of leisure and opportunities that you've just kind of spoke about?
Yes. I'll turn it over to John in a moment. We certainly haven't prioritized international gaming as a REIT. Any REIT that goes outside the U. S.
Borders has to have an investment strategy that has a very strong risk management component to it, so that you're managing risk on tax, you're managing risk on currency, you're managing risk on rule of law or property ownership rights.
So we certainly haven't prioritized it
at this time, but it's ownership rights. So we certainly haven't prioritized it at this time, but it's certainly in our learning file for going forward. John, if you want to add any color beyond that, John Payne?
No, I think you described it well. I think if an opportunity came our way, we would continue to study is that the right place to be? Are those the right assets? And is that the right operator to be with as we make a move to international, but I think Ed described it very well.
Thanks guys and congratulations on the 1st full year last year.
Thanks, John.
There are no further questions in queue at this time. I turn the conference back over to our presenters.
Thank you, operator. Thanks again all of you for your time today. At VICI, we are privileged to be invested in experiential real estate that is all about the shared experience, all about the desire of our guests to gather together in one place at one time to share memorable and sometimes momentous experiences. And here's what's great about shared place based experiences. They are something that e commerce has not figured out how to put in a box and ship to your house and real estate investors' recognition of this dynamic is still in its very early stages.
We look forward to providing an update on our continued progress in the spring when we report our Q1 results. Thank you all.