Welcome to
the VICI Properties Second Quarter 2021 Earnings Conference Call. At this time, all participants are in listen only mode. Please note that this conference call is being recorded today, July 29, 2021. 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 Q2 2021 earnings release and 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, believe, expect, should, guidance, intend, Outlook, projects or 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 could impact Future operating results and financial condition. During the call, we will discuss certain 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 It's available on our website in our Q2 2021 earnings release and our supplemental information. Hosting the call today, We have Ed Petoniak, Chief Executive Officer John Payne, President and Chief Operating Officer David Kieske, Chief Financial Officer Dave Wasserman, Chief Accounting Officer and Danny Volloy, Vice President of Finance.
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.
Thanks, Samantha. Good morning, everybody, and thanks for joining us on outstanding growth that our 2nd quarter results represent and briefly address our exciting new financing partnership with Great Wolf Resorts. The first I want to address a topic we've talked a lot about at VICI since VICI's emergence in the fall of 2017 And that's the topic of real estate asset class institutionalization. At VICI, we've been saying since day 1 in October 2017, the gaming real estate deserves to be and we believe is proving to be The next great institutionalization story in American Commercial Real Estate. When we talk about real estate asset class institutionalization, We're talking about the process of institutional capital determining that an asset class is or isn't worthy of their investment, Worthy based on the quality and demand characteristics of the real estate, worthy based on the quality of the occupant's business and its credit.
This determination process requires learning and learning takes time and hard work. Most active asset management shops do not Have a lot of excess analytical capacity or excess time to dig deep on new asset sectors. And there's no question that it's active managers who pioneer investment in the listed equities of new real estate asset classes Where active managers go, index managers follow. Active institutional real estate investment Capital has had to do a lot of new learning over the last 10 years for real estate investment sectors and varied as cell towers, Data centers, final mile logistics, single family rental homes, manufactured housing, medical office and labs, and of course, gaming. In some of these asset classes, institutional investors have the advantage of already knowing the underlying tenants Either because the tenants already occupied other well established real estate asset classes or because the tenants included America's biggest investment owned companies.
In In the case of gaming real estate, many investors, especially dedicated REIT investors, were starting from square 1 In understanding gaming operators as tenants and ultimately as real estate leasing credits. For that reason, our first few years at BT were We're currently focused on helping investors, both dedicated REIT and generalist investors, understand our tenants' businesses, Their marketplaces, their economics, their balance sheets, their outlooks, their resilience and their overall creditworthiness. Very positive news, the gaming operators as real estate tenants have proven themselves to be highly resilient Place based leisure operators through the COVID-nineteen pandemic and beneficiaries of the secular tailwind that Sports betting represents with our operators fully validated as an institutional quality tenant As we believe they are, I want to turn the focus to the other key dimension of gaming real estate's institutionalization dynamic and that's the quality of our real estate assets as real estate, as physical constructions. And let's start with scale. Our assets are Big, really big.
Pro form a for our Venetian transaction, VICI owns 63,000,000 square feet I've built real estate and with 28 properties, our average property measures 2,300,000 square feet. Compare that to the largest conventional triple net REIT where the average owned store measures 17,000 square feet. So again, that's 2,300,000 square feet compared to 17,000 square feet. And why does scale matter? Because large scale tends to correlate to spatial complexity, multifunctionality, abundant reprogramming capacity and high To the nearest slab on grade built up box, our real estate isn't where in and out transactions happen.
Our real estate is where experiences happen within built environments that aren't built simply the least But built to last. These big buildings and the ample land parcels around them also create an opportunity for incremental capital investment For our tenants and potentially for us and that kind of incremental same store capital investment opportunity This is likely to be available in the typical smaller box owned by a triple net REIT. The only other asset classes that combine this kind of Scale with high quality finish and indispensability are Class A office and Class A Malls. But in the case of gaming real estate, Investors can own large scale and high quality indispensable assets in a triple net lease structure The benefits of transparency and cash flow predictability is the triple net structure inherently offers. Our big assets also produce big rent.
Our average annual rent per property pro form a The Venetian closing will be $55,000,000 In comparison, rent per store at the largest conventional triple net REIT It's $260,000 based on public filings. Again, dollars 55,000,000 versus 200 and By a long margin, we believe gaming real estate assets produce the highest rent per property Among triple net REITs, this concentration of value in large assets may mean concentration of risk, We believe this risk is offset by the high quality of these assets. We would rather have value Concentrated in high quality non commodity assets, then dispersed across conventional commodity Triple net boxes. Another essential institutional characteristic of gamer real estate is lease duration. VICI's weighted average lease duration right now is approximately 34 years, and the Venetian lease upon closing We'll effectively be 50 years in duration, including renewal options.
And in the case of VICI, these long leases include rent and pro form a for the Venetian closing, 95% of our rental will have CPI kickers. These key characteristics of VICI's Gaming Real Estate, scale, quality, indispensability, Long life, lease length and inflation mitigation make gaming real estate what we believe is superior investment We're all investors seeking total return. But these characteristics, we believe, are especially valuable For investors who must manage long dated liabilities, when you combine the long lived nature of our assets with our long dated leases, We offer a truly long dated income producing asset to offset those long dated liabilities. All of these investment characteristics of gaming real estate give us great confidence when it comes to expressing our fundamental belief The gaming real estate is the highest quality, largest scale real estate that can currently be owned within a triple net I'll repeat our belief. Gaming real estate is the highest quality, largest scale real estate They can currently be held within a triple net structure.
Consider the choice between Caesars Palace Las Vegas, A 9,000,000 square foot asset on 82 Acres on the Las Vegas Strip, the most dynamic experiential street in America For a discount store that sits on a fraction of an acre on a secondary road in a secondary market. You can decide which you prefer. And with that, I'll turn it over to John Hanks. John?
Thanks, Ed, and good morning, everyone. As many of you may recall, in March We'll add $250,000,000 of annualized rent, growing VICI's revenue base by nearly 20% And is expected to be immediately accretive to AFFO per share. We agreed to acquire this iconic world asset in the heart of the Las Vegas Strip at a 6.25% cap rate. And just a few weeks ago, another real estate acquisition was announced in Las With Blackstone agreeing to acquire City Centers Real Estate from MGM at a 5.5% cap rate, The City Center transaction illustrates what we have been foreshadowing since our company was created. That is When institutional capital realizes the discount between the incredible quality of gaming real estate and the undemanding valuation Relative to other real estate asset classes, the days of the 10% cap rate transactions are over.
Our acquisition of The Venetian Real Estate was announced at a very idiosyncratic time, during which the recovery trajectory in Las Vegas was unclear. We were highly optimistic as reflected in the 6.25% cap rate and prudently structured a transaction That worked for all parties while creating significant value for our shareholders. As those of you who follow the industry closely are undoubtedly aware, Visitation, occupancy and consumer spend has continued accelerating in Las Vegas And operating margin expansion has become apparent. Mid week demand has been supported by the early return of meetings and conventions And the outlook for the back half of twenty twenty one and twenty twenty two is very promising. Similar to regional markets, Las Vegas is benefiting from very robust consumer demand and a new more efficient operating model.
As I've said before, the gaming consumer did not find a replacement for the bricks and mortar experience through COVID, Not in the regional markets and not in Las Vegas. As you can imagine, underwriting transactions during this time can be challenging. Each market and asset has unique attributes. The EBITDAR you consider underwriting one day could be significantly behind real time performance Just a few weeks later. No doubt this makes underwriting and negotiating a potential deal a fun and creative challenge.
We're fortunate our team has the ability and experience to manage this complexity. We thrive on the challenge and we continue working relentlessly To execute compelling opportunities that deliver the utmost value for our shareholders. I now will turn the call over to David, who will discuss our recent investment
Liquidity can give a summary of our financial results and guidance, all of which is fully detailed in the press release we posted last night. During the quarter, we continued to expand our investments outside of gaming by entering into a mezzanine loan agreement with Great Wolf Resorts, The Blackstone Portfolio Company. On June 16, we agreed to provide $79,500,000 to partially fund the development of the Great Wolf Lodge, Maryland, an expansive 48 Acre Indoor Water Park Resort Located in Perryville, Maryland. The loan bears an interest rate of 8% and has an initial term of 3 years with 2 12 month extension options. We will fund our commitment using cash on our balance sheet and expect to fund our entire $79,500,000 commitment by mid 2022 in accordance with the construction draw schedule.
In addition, we will have the opportunity for a period up to 5 years To provide up to a total of $300,000,000 of mezzanine financing for the development and construction of Great Wolf's extensive and international indoor waterpark resort pipeline. We are thrilled to partner with Great Wolf, the leading indoor waterpark resort platform Institutional operator. During the quarter, we entered into a new $1,000,000,000 ATM agreement with The added flexibility to sell shares through forward sale agreements under the ATM. We've not sold any shares under the ATM in 2021. Our outstanding debt at quarter end was $6,900,000,000 with a weighted average interest rate of 4.01%.
The weighted average maturity of our debt is approximately 5.6 years and we have no debt maturing until 2024. As of June 30, our net debt to LTM EBITDA was approximately 5.0x. We currently have approximately $3,800,000,000 in liquidity comprised of 400 $7,500,000 in cash on hand, dollars 1,000,000,000 of availability under our revolving credit facility, which is undrawn. And in addition, we have access to approximately $527,600,000 in proceeds from the future settlement of the 26,900,000 shares under the June 20 forward and approximately $1,900,000,000 from the future settlement of the 69,000,000 shares under the March 2021 forward, which we intend to use to fund a portion of the Venetian acquisition, which John mentioned. Turning to financial results And just one minor point to note in the earnings release.
In the total revenue summary under 2nd quarter results, the 8 ks refers to a to a non cash leasing and financing adjustment of a negative $29,300,000 This should instead be a positive 29.3 Reported total revenues in this summary are otherwise correct. AFFO for the quarter was $256,100,000 or $0.46 per The impact of treasury accounting during the period of time the forward sale agreements are in place. During the Q2, the impact The treasury accounting on our diluted share count was approximately 17,400,000 shares. Our G and A was 7,600,000 for the quarter and as a percentage of total revenues 2%, which represents one of the lowest ratios in the triple net sector. Turning to guidance, we are reaffirming AFFO guidance for the full year 2021 both absolute dollars as well as on a per share basis, as many of you are aware, beginning in January 2020, we were required to implement the CECL accounting standard, which Due to its inherent unpredictability, leaves us unable to forecast net income and FFO with accuracy.
Accordingly, Our guidance is AFFO focused as we believe AFFO represents the best way of measuring the productivity of our equity investments And evaluating our financial performance and ability to pay dividends. We continue to expect AFFO for the year ending December 31, 2021 to be $10,000,000 $1,035,000,000 or between $1.82 $1.87 per diluted share. These per share estimates reflect the dilutive impact of the Pending 26,900,000 shares related to the June 2020 forward sale agreement, assuming settlement and the issuance of such Shares on December 17, 2021, the amended maturity date of the June 2020 forward as well as the dilutive effect The pending 69,000,000 shares related to the March 2021 forward sale agreement. As a reminder, our guidance does not include the impact on operating results from any pending or possible future acquisitions or dispositions, capital markets activity or other non recurring transaction. With that, operator, please open the line for questions.
Thank you. And your first question comes from the line of Greg McGinniss Scotiabank.
Hey, good morning. It was great to see a new industry enter the fold. But could you provide some context To the size of the addressable market for indoor waterpark resorts and resilience, we have those cash flows.
David? Hey, Greg, great to talk to you. I'm going to take that in reverse order. We've spent over 2 years studying the indoor waterpark resort sector And I've just come to be enamored with it and we're thrilled to partner with GrayWolf, who is the leader in the sector and has a phenomenal There are multiple revenue drivers in terms of the indoor water park component, the family entertainment center, the food and beverage. So as we've Talked about gaming, multiple levers within a box.
And it's not just a box. It's a very complex box. These are very expensive assets to build That have a very, very durable customer base and a durable customer experience, which we come to love. So high margin business and some of the gaming, they were shut down during COVID, but they've We opened, the customer has returned and the customer has returned in droves and they've opened under a new operating model with higher profitability and higher margins. In terms of addressable market, Great Wolf is the leader.
There's 19 Great Wolfs out there. This will be number 20. We hope We continue to grow the platform with Great Wolf, and this is a sector that we will continue to kind of study, look at and hopefully over time into real estate ownership if and when the opportunity arises.
Great. Thanks. And was this
a marketed opportunity? Or how are you
able to source the deal?
The team with Ed, John, myself, we've got great relationships. Our Chief Accounting Officer came from Blackstone, so we have good relationships A lot of operators in these as John has talked about, we've been out meeting with operators since day 1, both in and outside of gaming, and we've a relationship with the Great Wolf team and the Blackstone team and we're able to put together a very collaborative transaction that worked for both parties.
Great. Thanks. And then I guess final question, most simply, what's your appetite for additional deals in 2021?
John? Yes. I mean, look, we haven't changed our plan by continuing to do as David just said with the great Wolf Team and the Blackstone team and other operators in gaming and outside gaming continue to build relationships, understand What those companies are trying to do to grow? Is there a spot for us to help them grow as a partner for the long term? So I don't know what exactly is ahead of us, but we're continuing to be out there and build those relationships.
Thank you so much.
Thank you, Greg.
Your next question comes from the line of Daniel Adams with Loop Capital Markets.
Hi, good morning, everyone. Thanks for taking the questions. Whether it's Blackstone's real estate investment on the Strip or your deal with Apollo at The Venetian or even your recently announced financing deal with Blackstone Portfolio Company, Great Wolf. It seems increasingly that private equity is looking to partner with or compete directly With the gaming rates. So I guess looking ahead, do you continue to see Private Equity's involvement in gaming OpCo and or real estate assets
Yes, Daniel. Good to talk to you. I'll start out. We I think the actual starting point in answering Question, isn't narrowly the issue of how much private equity capital will come into gaming, whether the OpCo or the PropCo? I think it actually starts With how much capital there is globally hunting for yield in a world where Whatever it is today, 60% or more of sovereign yield is negative.
Capital, whether it's private equity Our direct pension fund investment capital needs to find yield. And In the case of the brilliant deal Blackstone did on City Center, buying a phenomenal piece of real estate at 5.5 Cap, we must recognize that's Not private equity per se. That is actually within their non trade agreement, we believe. But the larger point is that to echo what John In his prepared remarks, gaining real estate represents, we believe, the cheapest great real estate on the planet on a comparative basis. In a day and age when industrial and even office to this day are trading at cap rates with 3 and 4 handles, Gaming real estate, even at a 5 handle on a comparative basis, is a great value, especially For those, again, who are managing long dated liabilities, the leases are long.
They have escalation. In our case, they have CPI And the capital is concentrated in assets that are absolutely indispensable to the occupant, and the occupants are great credits As real estate tenants. And again, you're seeing more and more of this where you might have seen as an example That, the Cadillac Fairview, the direct investment arm of Ontario Teachers, one of the leading direct investment pension fund complexes in the world, Is going to allocate more and more capital to real estate because they have determined that real assets are where they're going to have to get yield to make up For the lack of it in Sovereign Yield Instruments.
That makes a ton
of sense. Thanks for that. And then I guess just with respect to the Great Wolf financing deal, Your second such financing transaction with a non gaming operator. I guess looking ahead, do you also see accretive asset acquisition opportunities diversifying its non gaming tenant and asset base over the next, call it, 1 to 2 years.
Thanks. David?
Yes. Thanks, Dan. Just in terms of the loan, I mean, we use The loan tool kit has a pathway to potential real estate ownership. So we do expect to expand continue to expand outside of gaming. But as we've been very It's not an either or.
The majority of our investments will be gaming, just as Ed talked about, the magnitude of the assets, the magnitude The cash flows, but we will look to continue to partner with great operators and own real estate with great operators to help them grow their
And Dan, if I can just add to that as well. Just as a few years ago, when we started VICI, you heard me on these calls talk about Continuing to work with gaming operators to educate them on how a REIT like ours could help them in their capital stack and how we could We're doing a lot of that in some of these non gaming sectors as well as they're getting introduced to our company and our form of financing. And we're spending a lot of time doing that and hopefully that will lead to some accretive and exciting opportunities for us in the 1 or 2 years as you mentioned.
That's helpful. Thanks, David. Thanks, John.
Your next
question comes from the line of Barry Jonas with Truist Securities.
Hey, guys. Good morning. With PE paying record cap rates for gaming assets And the potential for new entrants, I'm curious to get your perspective on to what extent your gaming expertise is an Vantage in discussions with operators.
John?
Well, it's definitely, There's no doubt having some expertise in this space is quite important. These are, as David talked about, the non gaming assets being complex. Our gaming, our tenants have very complex assets. And really over the past 18 months, the business has Changed dramatically. And so understanding how the business has changed and what is the long term outlook of the business is critically Important.
And then understanding how these companies are going to grow by meeting with the C suites is And there's no doubt that you've heard us talk about the importance of relationships. These are long term deals when we do these things. And so it is important to have those relationships and the understanding of the core business and how it's going to perform over the years to come. So I'd say that's a long way of saying, Barry, that it is important. We think it's an important part of the VICI's Our plans.
That's great, John. And then just a follow-up question. We've obviously seen Very strong cap rate compression in Las Vegas. Curious to get your thoughts on what we could see in the regionals, Maybe what level do you think is reasonable?
Yes. I'll start, Barry. What we will likely see in real estate is the dynamic that you tend to see in other asset classes as they institutionalize. As an example, when final mile logistics really started becoming a hotter category, You tended to see the greatest amount of bidding activity in what were then the epicenters of Final Mile, which was chiefly the inland empire of L. A.
And Northern New Jersey. And as assets got bid up there and as they got bought up in those two markets, you began to see capital then Seeking return and ownership of assets in other markets. So capital started going to places like Atlanta and Dallas and Chicago and Cleveland, I mean, there's an Amazon distribution center across from our distill asset outside of Cleveland and A whole lot of capital went into that. And what you will see likely in gaming is the Same, if you will, radiating effect from the current epicenter of gaining real estate investment, which Las Vegas, right? As the asset class continues to prove itself out and as opportunities perhaps Don't become as numerous in Las Vegas.
Capital will seek opportunities in other markets. And in regional gaming, they will find assets That are outstanding in their income producing and income resilience characteristics. So It's a matter of time, but that I believe is all it is, a matter of time if this is going to be like other institutionalized asset
Your next question comes from the line of Wes Golladay with Baird.
Hey, good morning, everyone. Just wanted to maybe follow-up on that Question, are you starting to see capital flow to the regional assets, whether it's
on the debt side or
the equity side? Is it still primarily concentrated in Vegas?
Well, I mean, we certainly know what we hear, David, right?
Yes, we know exactly, and Wes, good to talk to you. And we've mentioned this before that our phones didn't stop ringing during COVID, but Some of the calls that we got were new entrants looking at gaming and I think those new entrants are continuing to look at gaming both within Vegas and outside of Vegas Because and these are primarily private capital sources who have historically invested in leisure, hospitality, entertainment companies and They're almost through cash burn cycles. They're talking about cash burn, but they're looking at gaming realizing, wow, how do I get into that sector? How do I potentially Partner with somebody in that sector, how do I develop a platform in that sector? So I think you'll see more in the regional markets as time goes on here, just again, given the resiliency And quality of these cash flows.
Okay. And then looking on the debt side of the equation, what are your plans For the financing of The Venetian and where can you borrow at today?
Yes, Les, we've been very consistent. We as I mentioned in my remarks, we have about $2,400,000,000 of equity sitting in a forward. So that's and then we will go out to the debt markets later The fall of unsecured high yield markets to get the remaining $1,600,000,000 $1,700,000,000 of proceeds to fund our $4,000,000,000 commitment for The Venetian. And our 10 year paper or 10 year quotes we've gotten recently is sub 4%, kind of 3.5% to 4% range. Obviously, that bounces around a little bit with the markets, but we still Feel very confident of our underwriting and the accretion we'll achieve from that transaction.
Okay. And then one on the investment. When you look at investing in incremental incrementally into your assets, what type of annual spend can we see here over the next 2 or 3 years? Do you have any active plans right now?
Yes, Wes,
are you
Go ahead, John.
Yes. Just to say, Wes, I think you're asking about our current tenants and our current assets. Yes. Yes. It's the responsibility of our tenants to do that.
We obviously have some visibility to projects that they're going To big projects that they're going to put forth, we also have in our leases some obligations. It's The size of investment that they make into our assets,
but it
really is the obligation of the tenant or the operator to make those capital investments.
Right. But I think, Wes, if you're asking about what is the opportunity for us to invest incremental capital into our assets, we did just complete a project or I Jack, our operating partner in Cleveland, just completed a project at Thistle with the help of our capital, a New smoking patio that's proving to be an outstanding success, for which we will be getting incremental rent. And We are working with our operating partners to help them understand the way in which we can provide capital For expansion improvements, reprogramming, especially as they continue to see demand levels They're really just outstanding. I mean, Barry, a moment ago, mentioned how strong the operating results are. I just can't help looking for an excuse to mention the fact that when Sands announced, I guess it was last week, They reported 98% occupancy in the month of June.
No international travel, Not much convention business yet, 98% occupancy. And as you all know, they've got over 7,000 rooms. And at 98%, that means almost 7000 room nights a night sold each night in the month of June with, again, no international travel And very little citywide convention business yet, and yet that business is coming toward the back end of the year. So Our operators are certainly looking at scenarios where they're realizing there can be opportunities for Expanding their capacity in one way or another or reprogramming in one way or another to take What is just outstanding levels of demand.
Got it. And then one follow-up to that. You mentioned the smoking at the JAK, the Can you talk about how influential the ability to smoke is at facility? We have looked at the gaming data in Pennsylvania. It looks a little soft, but it looks like Partially explainable.
John? Yes. It's been interesting, Wes, This has been rolled out nationwide. There's been markets that started non smoking. Ohio, in particular, is a market that started out And still is non smoking.
But what you heard Ed mention is the operators have created these outdoor Facility that allows smoking. And I think it's just to meet the demand of particular customer segments that want to smoke while they gamble. There are other States and cities even that are passing non smoking, we'll just have to monitor if that ultimately affects the business long term. But what Ed was mentioning is Ohio is a state that actually is non smoking, but we helped Jack develop a smoking area that is outside.
Okay. Thanks, everyone.
Your next question comes from the line of Smedes Rose with Citi.
Hey, it's Michael Bilerman here this morning. I was wondering if you can take us through sort of discussions you've had on the Chelsea Piers and Great Wolf side, both of those were loans to start. Obviously, I think Balancing in terms of going in on the loan side versus going in on the fee and then doing a traditional sale leaseback, how should we think about Sort of your incremental expenditure in non gaming assets, should we to continue along the mortgage line with drawdowns in the future versus doing something more material In terms of investment?
Yes, Michael, it's a good question and good to hear from you. I've grown fond of the saying that Execution happens at the intersection of opportunity and strategy. And what you've seen from it At the time we did the deals, the opportunity to buy the real estate, either buy a leasehold interest, which would be possible, Potentially, it's Chelsea Piers or buy into the asset either in the stage of development or fully developed. So we're using the financing vehicle in the way David described as a way to have a seat at the table such that if There is an opportunity to become the real estate owner in the future. We have a ringside seat in order to do so.
And again, we will we're going to continue to till every field we can really come into contact with. And certainly, our first choice will always be to buy real estate, whether it be simple or buying long term leasehold interest, If it meets our investment criteria. But again, we're not going to be doctrinaire. We just could not be more excited. Chelsea Piers, as you well know, it's just up the street from you, is an incomparable asset.
And I'm not sure it's fully appreciated. It's not only New York's Foremost recreation asset, it's Manhattan's best film production studios. And you don't need me to tell you what the news this morning About Hudson Pacific and Blackstone partnering on the development of new studio space in LA, that is one really hot category right now and likely to stay so for the long term. So again, this is a So again, this is a bit of a long winded answer, but we're going to use every tool in the toolbox to get A ringside seat for opportunities to grow our portfolio accretively over the long term.
And how do you think about, obviously, on the
loan business, You get repaid and you don't have long term ownership of those cash flows, we would have to reinvest. Can you talk a little bit about the relationship Chelsea Piers, I don't think they drew down the other $15,000,000 And also on the Great Wolf side, obviously, that company was for sale. You probably spent some time looking at it To figure out some partnership, but how close are you to actually owning fee In doing the traditional deal in both of those cases, when should we expect potentially something to convert now that you've sort of been involved with both of those parties?
Yeah. I mean, against Chelsea Piers, we couldn't put a highly specific timetable on it. But what I will tell you is that, as we work with Chelsea Piers, One of the key things to keep in mind is that we'd like to partner with companies that are intent on growing And growing requires capital and that's where we believe we probably can get our best traction over time, Michael. If it was just one operator with one asset and that's all they ever wanted, our chances of doing something are what they are. But with operators who want to grow We will require capital to do so.
That's where we think opportunity is. I couldn't put a precise timetable on Chelsea's peers, but we are very excited about their growth Ambition. And in the case of Blackstone and Great Wolf, they've spelled out their growth ambitions. They're very extensive. And as David spoke of in his comments, we have the opportunity to keep funding them for quite a period of time and hopefully Be there with a very compelling offer if there's an opportunity to become the owner of the real estate.
Now can they just in terms of that relationship, you don't have any sort of right to like right to first offer on assets a right of first refusal if you decide to sell assets. And that loan is that I mean, I don't know how the drawdown works, but Could they sort of prepay you completely and walk to another type of lender? I guess, what type of clause do you have into That organization, I recognize you have a strong relationship with Boxstone as a partner on the gaming side. But just I'm just trying to understand how Hi, that revenue stream is that could lead to future deals.
Yes. I'll turn that part of the question over to David.
Yes. Thanks, Ed. Michael, good to talk to you. And as it relates to Great Wolf, we do have a similar ROFO in place With Great Wolf in the event they elect to sell, so similar as Ed talked about with Chelsea Piers, they may or may not elect to sell single assets. But what this does is gives us a seat at the table and we will get monthly reporting information.
We'll We have a very good dialogue with Murray and team who runs Great Wolf and very good dialogue with the Blackstone team that Yes, we'll ultimately look to monetize this. So being in the mix and being in that flow keeps us close to the opportunity to Capital, as Great Wolf put out in their press release, JPMorgan has a senior loan on this Perryville development. As you know or you can talk to colleagues and the rest of the Citigroup organization, construction financing is not a deep bucket of financing. So for us to be able provide the mezzanine component for this asset and a handful of many more. That's a very attractive piece of capital, especially when Grey Wolf is out So there is a 5 year term obviously on the mezzanine piece, but we don't have we don't believe it will be repaid quickly and it It will take 2 years to develop and then a little bit of time to stabilize.
So while it's not a 35 year lease, we do like the investment and we do like
Okay. Thanks for the color, guys.
Yes. One thing I just want to add, Michael, is that One thing that our embedded growth pipeline does give us the ability to do is invest time and energy In the developing of relationships that may not pay off for years, but Nonetheless, we want to do that. An example of that was when John Payne started calling on Rob Goldstein, the CEO of Las Vegas Sands a couple of years ago. With some of us going, yeah, okay, go ahead, John. We're not sure that's ever going to pay off.
And obviously, it has. And similarly, Whether it be in gaming or non gaming, our business model allows us to invest time into relationships That if we grow those relationships successfully, they represent our future growth in the years to come. And if we're investing time in a relationship here in 2021 that pays off in 2025, we feel we're actually doing our jobs right. But again, Our business model allows us to do that in a way that some of the REIT management teams may not enjoy.
And so how deep is that list? Is it 10 different types of Experiential investments in terms of asset categories? Or is it more limited to like 2 or 3? Where are you placing how many different types of bets are you placing across industry verticals Rather than within a vertical?
Yes. I think we're into double digits, Sean and David. I mean, we're in the categories day by day that frankly weren't even on our radar 2 years But as we evaluate them, we see the 4 things we most want, which is low cyclicality, no secular threat, Healthy supply demand balance and a durable end user experience. It's again proven in durability for decades going backwards and They have demographic tailwinds behind them for the next 10, 20 years that promise real growth opportunity to operators, Which will require capital, which we are so thrilled to provide.
Got it. Thanks, guys.
Thank you, Michael.
Your next question comes from the line of Stephen Grambling with Goldman Sachs.
Hey, thank you. I know that you provided The rent contribution from some of the outstanding transactions that you've discussed, but could you actually Maybe put a range around the AFFO per share post all these transactions that have kind
of been announced and are pending at this point.
David? It's David. Look, as I talked about, we reiterated our guidance of $1.82 to 1 point 8 John touched on the fact we'll get $250,000,000 of incremental rents. And we think with an additional $1,700,000,000 of debt in and around 4%, could probably you can get pretty close to the AFFO impact there.
Got it. And then I guess One other follow-up is just unrelated to that. Just as you've been looking at the strength of Las Vegas in the regional markets here, and I know you kind of talked Some of the remarks and the questions, but are you at this point starting to see either in bid processes A normalized run rate that is above that or even at the levels that we've been seeing?
Steven, it's John. It's a great question. I'll start by saying, boy, it's a lot of props To the operators in the gaming business right now, I mean, our tenants our public tenants have not announced their earnings, but you saw the earnings of Boyd and Red Rock and Monarch and Churchill And Sam's and others out there, and you do have to say, kudos to them for reinventing their business during this very tough I'm showing incredible operating margins. I'll answer the question by saying you really have to take it asset by asset, Stephen. You really During this unique time to get a real good number that you're comfortable with on the EBITDAR level.
And those are the type of things we'll do if there's
Your next question comes from the line of John DeCree with CBRE.
Good morning, everyone. Thanks for taking my question. Maybe one for John or David on the put call with Hoosier Park and Indiana Grand Racing. I think the window opens in about 6 Can you talk a little bit about your strategy and kind of managing the pipeline and what might convince you
That question, John Decree. I just wanted to point out for everyone's benefit, the name of the firm that you are now associated with, Union Gaming having becomes part of CBRE, I think is evidence of the fact that real estate, Gaming real estate is in the institutionalization process when a company of the stature in global commercial real estate of CBRE Besides, this is a game that needs to start playing it. So anyway, congratulations, Sean. And over to you, John Payne and David Kieske.
Thanks, Ed. I appreciate that. We're excited.
Yes. Congrats, John. And John, to your question about the 2 Indiana Tracks and Casinos in Indianapolis, our tenants have done a great job in taking those businesses over. You've probably been tracking the revenue levels There they've also committed to large capital projects to both of those assets as table games As started at those two assets, there wasn't table games before that. Those construction projects can Continue, the business will take a little bit of time to stabilize after they get the capital projects in place.
As you mentioned, The put call becomes active 6 months from now. So we'll continue to watch these assets, see them grow. Obviously, We're partners with Caesars, the operator. We'll continue to talk to Tom Reeg and Brett Juncker and understand what's going on there and then We'll see how it ultimately plays out with the first call on the timing.
Thanks, John. And maybe one for Ed on his topic today and one that's near and dear to us on the institutionalization of Casino Real Estate. One of the questions we've dealt with over the past Several years, Ed, as you have as well is, some of the holdouts on casino real estate, some of the operators who've been a little bit earlier, but as cap rates continue to compress, I think the opportunity just gets more and more compelling for operators to consider You as a financing source. So my question, Ed, is at this current trajectory, do you think That over time, the majority or vast majority of casino real estate will be owned away from operators, like some of the other real estate asset classes
It's a good maybe hard to answer question, John. I do think so much of the answer comes down to what would the recipient of the proceeds do with the proceeds, Right. And I think what you're seeing so far, John, is that the PropCo model, the participation of a REIT It's really valuable when an operator wants to grow and or when an owner of an asset wants to Exit entirely. You've not seen a whole lot of sale leasebacks undertaken for the sheer sake of financial engineering at this point, right? Which is probably healthy and sound.
I mean, this should be done when an operator has a compelling use for the proceeds, Whether to reinvest in their business, to grow their business or otherwise achieve liquidity or for partners who need that liquidity. There is no question, John, that the fullest value of an asset will be realized within OpCoPropCo model. It's really going to be up to the owners of the assets as to how they want to crystallize their value and when they And to be honest with you, selfishly, if this is a process that takes years to unfold, that's better. Because If it unfolds over many years to come, which I think is actually probably the likely bet, it produces a more sustained growth Pipeline for all of us in gaming real estate.
Great points. Thanks, Ed. Thanks, John.
Your next question comes from the line of John Massocca with Ladenburg.
Good morning. Hey, John.
So, it was notable that the Great Wolf asset you're providing the construction lending for was next to a casino property, albeit one you don't own. In your discussions with Great Wolf, was that proximity an important factor and why they chose that location? And I guess, With the read through for VICI is could you utilize the excess land in your regional casino portfolio to maybe Few more deals with Great Wolf and especially now that you have this kind of financing agreement or understanding in place. Just is that something that was kind of part of the conversation as you were kind of starting this financial relationship with Great Wolf?
David? Hey, John. It's good to talk to you. The proximity to the Perryville The Hollywood Casino was not part of the discussion. I think what it does is create a very such a creative Experiential Entertainment Center, which will be great both for the Great Wolf asset as well as Pam and GLPI, who owns that real But Great Wolf was able to secure the site.
It's right off at 95. It's and as you've seen with these Indoor waterpark resorts over time, they become starting to migrate closer to the core as this sector has become more institutionalized. If you go back So this is just a continuous institutionalization of the indoor waterpark sector. As it relates to our land, Yes. If there's an opportunity with one of our tenants to put into a water park on land that is next one of the casinos, absolutely, that's something we would explore and something that we would be happy to provide capital for.
Okay. But it sounds like Developmental wind right up I-ninety five is kind of a premium. And so the reason why it was a good place to put a casino there is also why it's a good place to put indoor water park. Exactly.
Yes. And John, if I were going to pontificate, which I may be a weakness for, I would say that the power center of the future It won't be retail. It will be experiential. And as John Payne could attest to, it's actually American Tribal gaming operators who are really the first in gaming to realize that they have the opportunity to create experiential power centers Around so many of the amazing assets that they've developed and are operating.
Okay. And then another kind
of bigger picture question. You talked before about the potential for the frontage space In front of Caesars Palace right there on the strip, given the announcement from Caesars earlier this month that they're kind of going to renovate the main entrance Does that impact your outlook for that space at all, the potential for development there? I mean, could it accelerate it? Could it maybe reduce it Given what Cision is trying to do with the main entrance, just any kind of outlook there?
We're very excited about what Tom Reeg and Brent and Anthony Crono announced about our marquee asset and Addressing the entrance and making it more welcoming, I think that's going to be a fantastic project. I think you're talking about the acreage that we own that's Part of the Las Vegas lease in front of Caesars Palace and I think that that is just a great piece of real estate that I know My partners at Caesars continue to look at what is the most appropriate development that goes there for the long term Las Vegas and brings that casino out to the Strip. And I know they're continuing to look at it. So Not sure there's a connection between the making the front entrance right now more accessible and the new development, but I do know that Over time, that's a great piece of real estate that could be developed into just some world class opportunity to attract more customers to that building.
Okay. Understood. And that's it for me. Thank you very much for taking my questions.
Your next question comes from the line of Jay Kornrich With SNBC.
Hey, thanks. Good morning. As gaming cap rate compression, specifically in Vegas, may make it harder to find accretive deals, Is this environment motivating you
to look further into non gaming investments?
Go ahead, John. Yeah. I don't think it's I
was going to stress earlier when we were talking a lot about the non gaming opportunities as we're clearly Spending time doing that. It's not an either word. David talked about this earlier and we've been talking about this for a couple of years is we've got capacity to do both. We see a nice runway in gaming. We're going to continue to build relationships in gaming, which should lead as it has our 1st three and a half years 2 accretive gaming deals, but we have the capacity now to look in other sectors and other opportunities that within our portfolio and that would work for our shareholders.
So it's important to know it's not an either or we have the ability to do both and we're going to continue to do both.
Okay. Thanks for that.
And then just regarding the remaining up to $300,000,000 of capital for the Great Wolf Resorts. Do you have any guidance on potential timing of how they would call that down?
Hey, Jay, it's David. We don't have any guidance either to ask Great Wolf, but we do know that they've got a very robust pipeline. And as I mentioned, their Customer continued to want to visit the water parks even and get back out and They've seen a very big resurgence in their bookings and their activity at their assets. So they're seeing a great opportunity to expand the platform here, and we're excited to partner with them on that.
Okay, great. That's it for me. Thanks so much.
Your next question comes from the line of Todd Thomas with KeyBanc.
Hi, good morning. This is Ravi Vaidyan on the line for Todd Thomas. You guys weather the pandemic well with perfect collections. Can you comment on the impact of the Delta variant in the Nevada announcement earlier this week while masks being required in public places. What impact does this have to casino traffic and activity?
John? It's a good question and we'll continue to monitor. I think when the casinos opened in Las Vegas and Had tremendous demand at the beginning when they opened, they did require mask for employees and for customers. And then it's been over the Past couple of months where masks have been removed. And as you said, Clark County is Saying that the masks need to come back for the operators, for the employees and the guests.
So we'll continue to monitor it as the entire United States As we saw when the casinos opened up, there still is tremendous amount of demand for Las Vegas And for the assets that we own, the real estate and for our operators. So just more to come, but they have gone through this before The end of 2020 and the beginning of 2021 and they're prepared and I'm sure there'll be another opportunity where masks will be removed, but
Thank you. That does conclude the Q and A portion. I will turn the call back over to Ed Petonec for closing remarks.
Yes. Thank you, operator, and thanks, everybody. We're excited about the Shareholder value. Again, thanks and good help to all. Bye for now.
Thank you. This does conclude today's conference call. You may now disconnect.