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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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.