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  • Alex Pettee, CFA

Casino REITs: Hold'Em As Others Fold

  • The lone property sector in positive-territory this year, Casino REITs have benefited from their attractive “inflation-hedging” lease structure, the rebound in Las Vegas travel demand, and broader institutional investor acceptance.

  • Casino REITs remain a favorite for investors seeking inflation-hedged assets. VICI boasts inflation-linked escalators on 96% of leases while GLPI benefits from indirect inflation hedges linked to tenant performance.

  • Casino REITs have been thrust into the spotlight as apparent beneficiaries of outflows at Blackstone’s non-traded REIT platform BREIT, spawning a $5.5B acquisition of two Vegas casinos by VICI.

  • Balance sheet “firepower” and access to longer-term capital have become a significant competitive advantage for public REITs. VICI and GLPI appear particularly well-positioned to play offense while more-highly-levered private peers seek an exit.

  • Operational execution is critical, of course, and the potential for a deeper-than-anticipated economic slowdown is an evident risk, but the impressive track record in capital deployment from these REITs justifies our willingness to “pay up” at these moderately elevated multiples.

 

REIT Rankings: Casinos

Within the Hoya Capital Casino REIT Index, we track the two casino REITs: VICI Properties (VICI) - which owns a dominant share of the Las Vegas casino market following its acquisition of former REIT MGM Properties earlier this year - and Gaming and Leisure Properties (GLPI) - which owns a portfolio of regional casinos.


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Disclosure: Hoya Capital Real Estate advises two Exchange-Traded Funds listed on the NYSE. In addition to any long positions listed below, Hoya Capital is long all components in the Hoya Capital Housing 100 Index and in the Hoya Capital High Dividend Yield Index. Index definitions and a complete list of holdings are available on our website.

Hoya Capital Research & Index Innovations (“Hoya Capital”) is an affiliate of Hoya Capital Real Estate, a registered investment advisory firm based in Rowayton, Connecticut that provides investment advisory services to ETFs, individuals, and institutions. Hoya Capital Research & Index Innovations provides non-advisory services including market commentary, research, and index administration focused on publicly traded securities in the real estate industry.


This published commentary is for informational and educational purposes only. Nothing on this site nor any commentary published by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. This commentary is impersonal and should not be considered a recommendation that any particular security, portfolio of securities, or investment strategy is suitable for any specific individual, nor should it be viewed as a solicitation or offer for any advisory service offered by Hoya Capital Real Estate. Please consult with your investment, tax, or legal adviser regarding your individual circumstances before investing.


The views and opinions in all published commentary are as of the date of publication and are subject to change without notice. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Any market data quoted represents past performance, which is no guarantee of future results. There is no guarantee that any historical trend illustrated herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that any outlook made in this commentary will be realized.


Readers should understand that investing involves risk and loss of principal is possible. Investments in real estate companies and/or housing industry companies involve unique risks, as do investments in ETFs. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes.


Hoya Capital Real Estate and Hoya Capital Research & Index Innovations have no business relationship with any company discussed or mentioned and never receives compensation from any company discussed or mentioned. Hoya Capital Real Estate, its affiliates, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and additional important disclosures is available at www.HoyaCapital.com.

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