VICI Properties Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the VG Properties Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please note that this conference call is being recorded today, November 1, 2019. I will now turn the call over to Samantha Gallagher, General Counsel with VG Properties. Go ahead.

Thank you, Operator, and good morning. Everyone should have access to the company's third quarter 2019 earnings release and supplemental information. The release and supplemental information can be found in the investor section of the VG Properties website at www.vgproperties.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, expect, should, guidance, intends, projects, and 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 substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our third quarter 2019 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, and Gabe Wasserman, Chief Accounting Officer. 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.

Thank you, Samantha, and good morning, everyone. This third quarter of 2019 was another quarter in which VG continued to build for our shareholders an institutional quality real estate portfolio and an institutional quality balance sheet. In a moment, John Payne will tell you about our growth initiatives in quarter three and since the end of quarter three, and then David Kieske will tell you about our financial results and balance sheet initiatives. But first, I'd like to spend a few moments on recent developments in our marketplace and what they may mean for VG over time. I'm referring in particular to the news two weeks or so ago of Blackstone buying the real estate of Bellagio. When we launched Vici a little over two years ago, we were charged with and charged up about the opportunity to tell the equity and credit investing communities that gaming real estate possesses the characteristics that typify institutional grade real estate. These characteristics distill down to the real estate being mission critical and critically difficult to replace for tenants whose end user relationships and economics have endured and will endure for decades. And we said from the beginning, two years ago, that this time would come when more of America's commercial real estate investors would come to investigate and invest in America's gaming real estate. All along we've said that this growing recognition would be inevitable and it would be welcome given that real estate doesn't achieve its full value until this recognition takes place by institutional capital. Or to repeat the phrase we used on our quarter one 2019 earnings call, validation drives valuation. Blackstone's purchase of the Bellagio real estate is just that sort of validation, and thus it's, in all respects, a good thing for VG, for our shareholders, for our sector. Some have asked why it took so long. Others have asked how fast other institutional investors are likely to move. Well, it took time for Blackstone and will take time for others like Blackstone because learning takes time. Institutional real estate investors make educated investment decisions. Before they invest capital, they invest time. They take the time necessary to study an asset class's cyclical risk, its secular risk, its vulnerability to oversupply, and in B2C real estate, the credit quality and business model sustainability of the tenant. Blackstone obviously benefited from the learning they've obtained through their investment in Cosmopolitan, and no doubt they studied gaming rigorously before they made that Cosmo investment decision and reaffirmed their learning before making their Bellagio investment decision. Learning takes time and it takes diligence. An advantage accrues to those institutional real estate investors who learn about previously non-institutionalized asset classes at the highest velocity. If what they learn leads to positive views on the asset class, they can execute highly attractive investments before other market participants are ready to do so. At VG, we call this accelerated asset class learning process cognitive arbitrage. It's arbitrage born of doing the hard work of learning and then acting on that learning. Blackstone is not the first institutional real estate investor to figure out the value of Las Vegas Strip real estate, nor would they claim to be. The fact is that retail real estate equity investors have understood for years that the Las Vegas Strip is one of the most valuable real estate markets in America. Just ask David Simon of Simon Properties what kind of capital he has been willing and able to put into Las Vegas Strip real estate. And real estate credit investors have also long understood how valuable Las Vegas-stripped real estate is and have lent against it accordingly. With the recent refinancing of Las Vegas Sands' Grand Canal shops at an appraised 4.5% cap rate as evidence of that. But here's a key fact. There are still many institutional real estate investors who have not yet started or are just beginning the work of understanding the real estate investment characteristics of our sector. As they learn about our sector, the demand for and value of gaming real estate, including our assets, will grow. We've been asked if we are likely to see increased bidding competition for assets. We believe we will. Will this increase the risk that we may be outbid for assets? We believe it may. But if we get outbid for an asset, it means asset values are rising. And if the values of traded assets rise, history will tell you that the market is pretty effective at marking non-traded assets to market. unless a given portfolio suffers from specific idiosyncrasies, such as troubled tenants or troubled governance. Vici suffers from none of those troubles, so we believe that if asset values rise, our cost of capital should further improve correspondingly, enabling us to sustain our competitiveness for gaming assets and for non-gaming asset classes as well. Some of you understandably are asking what this Bellagio transaction means for regional gaming real estate. Simply put, we believe it means good things. The Bellagio trade over time will bring increased focus on and interest in the gaming real estate asset class as a class. Take high flow through logistics real estate as an example. an asset class that I spent time around thanks to my association with the great folks at RealTerm. When the real estate investment market began to appreciate the mission-critical nature of distribution real estate to the final miles of e-commerce, the initial focus was on markets proximate to the biggest urban cores, such as northern New Jersey and L.A.' 's Inland Empire. As understanding of the mission-critical nature of this real estate grew, the investment bullseye also grew to include other geographic regions, Take as an example the $177 million suburban Cleveland Amazon distribution center across the street from the thistledown Racino asset we announced the acquisition of earlier this week. Or take the deal ProLogis announced on Monday, buying at an estimated 4.5 cap a portfolio of logistics assets concentrated largely in the Mid-Atlantic and the Upper Midwest. We believe this same ripple-out dynamic will play out for regional gaming real estate as the real estate investment market comes to appreciate the mission-critical nature of regional gaming real estate to America's great regional operators, especially those for whom regional assets are key spokes in their national hub-and-spoke network. There will be differences in value between Las Vegas and regional gaming real estate, but these will be differences of degree, not kind. We've also been asked if our right of first refusals, or ROFers, on two determined Caesar's Own Las Vegas Strip assets are worth as much now that this Bellagio trade has occurred. Our answer is that we believe they are worth more now. Rights at first refusal simply aren't worth a lot in a marketplace where there aren't likely to be many offers. If there is indeed likely to be more institutional real estate investor interest in Las Vegas Strip real estate, and if Caesars decides to sell the entirety of one or two Las Vegas Strip assets, that is both Opco and Propco, These ropers give us an exclusive window of opportunity and with that an exclusive window of time to find an operator who can partner with us to acquire the asset. Caesars will and must make the best total value decision for their shareholders, but we believe these ropers should enable us to consummate a transaction with Caesars at a fair price and with quick execution without Caesars necessarily having to bear the cost and market risk of a prolonged marketing process. All in all, our excitement around Vici's value creation opportunity grows with every quarter, and John will now share with you our recent exciting developments. Over to you, John.