Why The VICI Properties CEO Defines REITs As 'The Thing Behind The Thing'

Real estate investment trusts serve as the infrastructure backbone to the commercial property sector, according to Edward Pitoniak, CEO of VICI Properties VICI — or, as Pitoniak dubbed it, “the thing behind the thing.”

“What you're talking about is a bedrock of infrastructure, of systems and of assets that support the commercial players in the sector that rise above it,” said Pitoniak in his keynote speech at Wednesday's Benzinga Reopening Stocks Summit.

“This is critical infrastructure, mission critical infrastructure without which the sector could not operate.”

Veni Vidi VICI: Pitoniak stated there was not “another consumer discretionary sector out of home that has come back more robustly than American gaming.”

And while praising the Las Vegas gaming environment for creating an “adult Disneyland,” he said Las Vegas’s establishments were not solely focused on slot machines and roulette wheels and voiced confidence the city’s lucrative convention and business conference activities will pick up again in 2022.

Pitoniak cited his company’s role within the U.S. gaming industry: the company’s assets average more than 2 million square feet, covering multiple Las Vegas and regional gaming venues. It's a key example of how a REIT can provide investors with a greater understanding on the viability of the sector, he said. 

“When you really start to dig deep into American casino gaming, you start to understand the full complexity of the operation and the full complexity of the economics,” he explained.

“And the thing I should probably emphasize here is learning. When you want to discover the thing behind the thing, you must engage in learning.

“And I would say, at a fundamental basis, that's what investment is,” he added. “Investment is learning, right? And to identify mispriced assets, to identify mispriced opportunities, you must engage in learning at a faster rate and to a greater depth than everybody else in the market.”

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The Road Ahead: Pitoniak cited his company’s $17.2-billion acquisition of MGM Growth Properties LLC MGP earlier this month as turning VICI into “the strip’s leading landlord.”

“We will own 10 properties along the Las Vegas Strip in entirety,” he said. “We will own nearly 700 acres along the Las Vegas Strip, we will own about 40,000 hotel rooms. If you're a big believer in Las Vegas as I am, this will give our investors and a comparable opportunity to own the thing behind the thing on the most economically productive street in America.”

Pitoniak also highlighted VICI’s plans to “find a way to do business with tribal operators who constitute an enormous part of American gaming” and to seek out foreign partnerships to establish a presence in the gaming industries in Australia, Canada and other countries. H

e also pointed to VICI’s role in the expansion of sports betting across the country through the Caesars and MGM sportsbook ventures as “probably the most exciting thing we have going on.”

“At the end of the day, is not very valuable to own that thing behind the thing if the frontal thing isn't a great sector to be invested in,” he said.

Photo: MGM Grand Las Vegas, courtesy of J. Donohoe/Flickr Creative Commons.