Casino REITs: The House Always Wins
Updated: Sep 10, 2020
Ready to roll the dice? Casino REITs aren't the gamble that may appear on the surface. Despite the ongoing coronavirus pandemic, casino REITs have actually outperformed the broader REIT sector.
Double down: Casino REITs have nearly doubled from their lows in late March when the sector was off by as much as 60% amid fears of significant operator distress.
Despite the temporary closure of many gaming properties across the country, rent collection has been spotless since the start of the pandemic and dividends have been essentially untouched.
Critically, casino REITs operate under a long-term, triple-net lease structure, leaving most of the financial and operational risk - both on the upside and the downside - to their tenants.
Risks remain, however, as these long-term leases are only as safe as the tenant's ability to pay. The pandemic has stretched some major operators to the brink.