Keepin' It Real  

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Casino REITs: Vegas Is Back, Baby

  • One of the best-performing REIT sectors since the start of the pandemic, Casino REITs have proven to be surprisingly resilient despite the intense struggles faced by the broader leisure industry.

  • Sold-Out Vegas: Earnings reports from Casino REITs and operators painted a particularly bright picture for the tourism recovery. Caesars noted that "weekends in Vegas are sold-out for the foreseeable future."

  • Fueled by spotless rent collection and accretive acquisitions, these REITs reported strong momentum in early 2021 with AFFO growth averaging nearly 9% in Q1. VICI projects 12.5% growth this year.

  • Casino REITs own properties under a long-term net lease structure, leaving most of the operational risk to their tenants. This "bond-like" structure does result in elevated risks from inflation and interest rates.

  • With an average dividend yield above 5%, we view casino REITs as a more compelling - and perhaps "under the radar" - alternative to other high-yielding sectors facing stiffer secular headwinds.

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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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