Rent Fetish in Germany: An Indictment of the Second-Highest-Taxing EU Country

A contribution from the series "Germany on its way to becoming an emerging market".

Hello folks!

as determined in the last survey, today we won't talk about stocks or markets in the direct sense, but will look at Germany's situation in the current political cosmos. Before we start, as always, my disclaimer:

Disclaimer: This is not investment advice. It is also not a solicitation to buy and/or sell financial products. I only describe my opinion here. You have your own responsibility towards your investments. So I also assume no liability.

Let's start with some very nasty numbers:

• 50,5%

• 1.6 million

• 40% -50%

• 5

What are these numbers all about? Is it the probability that Schalke 04 will stay in the top flight? Or that Bayern will win the championship after all?

Unfortunately, no - the figures very well encompass the tenant situation in Germany. In 2021, 50.5% of households lived in a tenant relationship and did not acquire property via their monthly installments. This makes Germany the EU leader in one discipline! No other country had such a high proportion of renters in the year under review. Above all the crisis-stricken Spain, which looks on various problems like youth unemployment etc., has under a quarter of the population as tenants. Our neighbor's neighbor is just 24.2%. Conversely, that means 75.8% live in an ownership relationship. France is also significantly lower than Germany at 35.35%. Only Austria is reasonably within reach with 45.8%. For a long time, nothing seems to happen (see (1)).

The 1.6 million are particularly relevant in this context, because in a country with such a high share of renters, a simple dynamic should take effect, which I explain below and should lead to lower living costs. Yet, in 2022, there were just under 16% of households that spent 40% to as much as 50% of their NET income on rent. This means that households are considered to be "overburdened" and the problem is now worsening on an annual basis. If it was still 2021 every eighth household, it is now almost every 6th household that slips into the financing problem. Comparing this with the current rent burden of 27.8%, we arrive at a delta of almost double that affected households have to spend on rent. In particular, new leases from 2019 onwards stand out negatively, incurring almost 2.7% more in costs (see (1), (2)).

Why is this important?

The concept of "rent" only works under the following conditions (cf. (3), (4), among others):

• The own income is not sufficient to pay off the financing from redemption and interest in a reasonable time frame.
• The own income is sufficient, however, the real estate market is "overheated" and there is no net rental return > 5% with focus real estate investment
• The payment from rent + utilities results in a much lower cost factor, so it is invested in alternative asset classes (stocks, bonds, REITs, gold, etc..)
• It is an old building property that requires high maintenance reserves

These examples show us why it is not possible for some households to live in their own 4 walls. Referring to (4), we recognize various cost parameters in the statements:

• Repayment and loan interest
• Acquisition costs and rent
• Rent and savings reserve of the tenant
• Investment return
• Maintenance

If we add these parameters together for the home buyer, we get the following equation:

Real estate purchase burden = loan repayment + interest repayment + maintenance costs.

So why do so many people hesitate, who would have to show "only" 5 annual salaries for an average apartment? This value is, for example, compared to the Czech Republic with 11 (!) annual salaries less than half as large and burdensome for long-term asset accumulation?

There is a simple answer to this: Because sub-factors such as loan repayments and, since a few months ago, interest repayments have become immensely more expensive. If we took 2010 as the standard measure for real estate prices with 100 index points, real estate would be at 196 index points in 2022 (see (5), (6)).

What does this mean?

In 2021, the average apartment had 92.1 sqm of living space. For the sake of simplicity, let's assume that other rooms such as the area under a staircase or rooms for common use are not considered here for the time being. Thus, the apartment would cost today (see (6), (7), (8)):

92.1 QM * 3,372€ average price Q4 2022 = 310,561.20€ (!)

What would this apartment have cost in 2010? It's quite easy, since index:

92.1 QM * 3,372€ average price Q4 2022 * (100 index points 2010 / 196 index points 2022) = 310,561.20€ * 0.51 =. 158.386,22€

Yes but wage increase and inflation?

The problem with this immense growth factor of almost 2 is that salaries have not kept pace. While the net average salary in 2010 was 1,638€ per month, in 2021 it is 2,172€ calculated without children in tax class 1. The related burden of the salary was 31.8% in 2010 and 32.2% in 2021 (see (11)). Accordingly, on average an increase in salary by:

534€ made possible. Calculated on the original salary of 1,638€ per month, these are:

32.6% more, which is opposed to the 96% more for the purchase of real estate.

So we quickly notice that the payment via average salary of real estate has increased by a factor of 96/33 = 2.9 to the detriment of the salary. This means that the loan repayment has increased by this factor. I summarize therefore for the loan repayment as follows:

• Near doubling of the price of existing real estate.
• No tax relief due to the taxes relevant for the salary
• No complete compensation of the real estate price development by salary increases
• Constancy in the tenant share greater than 50%

Yes, read correctly. Surprisingly, the breakdown by tenants and owners nevertheless remains remarkably constant (see (9)).

In addition to existing real estate, building your own property can also be an interesting way to start owning your own home. Contrary to the existing real estate, the adaptation of all rooms and areas according to one's own ideas is the greatest individual advantage here - no frills, no major deviations from one's own expectations due to temporally different ideas. Selected examples based on old buildings for this are (cf. among others (14)):

• high ceilings
• rotten stairs due to outdated material
• asbestos in the exterior walls
• Oil heating systems
• No insulation of the roof
• Simple glazing of windows

The very factor around asbestos is exemplary exciting for the divergence in the ideas addressed. Asbestos found its way into the construction of new properties from 1930 onwards and was highly valued, in particular, for its chemical resistance, tolerance of greater heat in the house itself and, despite this, its poor flammability. Thus, real estate investors who are interested in old buildings, may get acquainted with the past. In the past, asbestos was also used in car brake linings because of its robustness (see (14)).

Today this is judged quite differently. Personally, it reminds me of a shiny bling-bling solution that turned out to be less advantageous in retrospect. For I can also understand every strength as a weakness. Asbestos owes its mentioned robustness mainly to its structure - unsurprisingly. Everyone knows the yellow fiber-like blocks with a diameter of up to 2 micrometers. Few people, however, know that because of this fibrousness, asbestos can theoretically pose a great danger to people who are surrounded by it. It is quite easy to understand: since we are talking about 1/1000 millimeter of fibrous matter, inhalation of these fibers is possible - so what? Why important (cf. Ibid.)?

What goes in should come out at some point. This is difficult with asbestos - possibly the inhaled particles remain in the lungs, which can irritate the corresponding tissue in the long term. Asbestos thus acquired the unflattering fame of a disease named after it as early as 1936 - the Asbestosis.

Why is this important for investors?

If the decision is made not to build a house or to rent, disillusionment quickly sets in - even though prices on the real estate market are falling, they are still at a record level, as explained above. The inflation parallel remains high, so that many - straight young families - may struggle compulsorily with old building real estates. The issue of asbestos disposal then quickly becomes a significant cost driver.

Yes, but surely that's only important for your old 1930s apartments and houses?

No - the answer is no. Asbestos has only been banned since 1993. We are currently living in 2023 (at least in terms of the calendar year). As a result, as soon as homes from the 70s, 80s, and in some cases even as late as the 90s are reverted to, the specter of asbestos wanders. Often just that is with not being present an exposé or the inspection of old building real estates without brokers etc. a danger. Not every possibly aged owner has a financial interest to have an expert confirm the presence of asbestos in the house, which a) costs money and b) possibly negatively affects the value of the property. This is because the removal of asbestos is always associated with professional disposal. Asbestos knows thereby many forms such as sewage pipes, the named insulations and also Eternitplatten. A rough 0815 thumb value are thereby approx. 30 € minimum up to 45€ per QM (see (15), (16)).

Means: Either the price for the property must therefore fall OR an expert must dispose of this professionally. This can very quickly become quite expensive and on a par with the ancillary purchase costs that are due for this property. A simple example will show where the costs come from. We use cost drivers - costs in € (see (15), (16), (17)):

Transport of the MA & equipment to the old building property

-depending on the distance 50€-150€

Rent and erection of the scaffolding,

(so that the MA get to the roof e.g.)

-depending on the scaffolding approx. 1.000€ - 1.200€

Removal of the asbestos plates via Manpower

-roof area 150 QM * 35€/QM (we assume 150 QM for this)

Disposal of approx. 12 tons of hazardous waste

-150€ cost lump sum * 12 tons

Drainage of the roof

-1.000€

Re-attachment of the insulation

-approx. 10.000€ (depending on div. factors)

Installation of slates

-60€ per QM * 150 QM roof area

Personnel costs

-4-5 days workload with approx. 3 VZ MA

You can see quite quickly why especially old building properties may not be worthwhile. In this simple example with large fluctuation interval we are at ADDITIONAL costs of:

Minimum: 28.100€ + 4 days personnel costs

Maximum: 28.400€ + 5 days personnel costs

Thus very often the dream of the old building real estate shatters for young families, which do not want to tie this additional cost factor plus a possible disadvantage with the resale because of age of the real estate to the leg.

What does the state do?

E.g. heat pumps demand, promotion sums via "climatic-friendly new building" announce, which will be already empty in June this yearly and with the purchase additional expenses tidy zulangen (Cf. (17), (18)).

The ancillary costs ALWAYS consist of the following components, among others (cf. (19), (20):

• Costs for the notary
• Costs for registration in the land register
• Real estate transfer tax

Yes, there are other parameters, but just these three are incurred. The land transfer tax is the one that the government is most likely to be able to adjust. Currently, there are large ranges to be seen here. I'll give you some examples:

• Bavaria with 3.5% land transfer tax
• Hamburg with 4.5% land transfer tax
• Thuringia with 6.5% real estate transfer tax

Notary and land registry fees are reasonably similar throughout Germany at approximately 2%. The optional, but frequently occurring brokerage fees are at a maximum of 3.57%. As a result, there is quite a wide range via the aforementioned federal states of:

• Bavaria at 9.07% total ancillary purchase costs
• Hamburg with 10,07% total purchase additional costs
• Thuringia at 12.07% total additional purchase costs

Of course we know that especially in many Bavarian areas (cough Munich cough) the prices are currently very high. Nevertheless, a difference of 12.07% - 9.07% = 3% can make a lot of difference for a standard property of 310,561.20€. In comparison, that would be approx:

310.561,20€ * 12,07% = 37.484,74€

Respectively

310.561,20 * 9,07% = 28.167,90€

So a delta of: 9.316,84€

Especially for families with low income this amount can mean an enormous relief.

If this was too much practical real estate discussion for you, please have a look at my new real estate video about the REITS Realty Income, Gladstone Commercial and the Longfor Group from Hong Kong! Created from a community wish - make a wish :D

https://youtu.be/dI5S-QArzv8

How do you see it? Are you team owners or team tenants? I know this is a sensitive topic. Often the factions are Tenant4Life and the PropertyHoodbros are difficult to get on top of each other. I just ask you to remain respectful in the comments - as always just :)

Thanks and see you next time! I look forward to your constructive feedback! :)

Your Bass-T

Sources

(1) https://www.destatis.de/Europa/DE/Thema/Bevoelkerung-Arbeit-Soziales/Soziales-Lebensbedingungen/Mieteranteil.html

(2) https://www.haufe.de/immobilien/entwicklung-vermarktung/marktanalysen/wohnkostenbelastung-in-deutschland-miete-versus-einkommen_84324_521164.html

(3) https://www.businessinsider.de/wirtschaft/immobilien-paradox-warum-deutschland-ein-land-der-mieter-ist-2019-7/

(4) https://zendepot.de/kaufen-oder-mieten/

(5) https://www.finanztip.de/baufinanzierung/mieten-oder-kaufen/

(6) https://de.statista.com/statistik/daten/studie/244262/umfrage/immobilienpreisindex-fuer-eigenheime-in-deutschland/

(7) https://www.umweltbundesamt.de/daten/private-haushalte-konsum/wohnen/wohnflaeche

(8) https://de.statista.com/statistik/daten/studie/554954/umfrage/kaufpreise-fuer-eigentumswohnungen-aller-baujahre-in-deutschland/

(9) https://de.statista.com/statistik/daten/studie/237719/umfrage/verteilung-der-haushalte-in-deutschland-nach-miete-und-eigentum/

(10) https://de.statista.com/statistik/daten/studie/39044/umfrage/monatlicher-verdienst-in-deutschland-seit-2000/

(11) https://www.sozialpolitik-aktuell.de/files/sozialpolitik-aktuell/_Politikfelder/Finanzierung/Datensammlung/PDF-Dateien/tabII7.pdf

(12) https://www.interhyp.de/ratgeber/was-muss-ich-wissen/zinsen/zins-charts/

(13) https://www.finanztip.de/baufinanzierung/hypothekenzinsen/

(14) https://www.umweltbundesamt.de/themen/gesundheit/umwelteinfluesse-auf-den-menschen/chemische-stoffe/asbest

(15) https://wohnglueck.de/artikel/asbest-entsorgen-73149

(16) https://www.listando.de/p/was-kostet-eine-asbestbeseitigung/

(17) https://www.borchers-asbestkiller.de/haeufige-fragen

(18) https://www.co2online.de/modernisieren-und-bauen/waermepumpe/

(19) https://www.morgenpost.de/wirtschaft/article237984801/klimafreundlicher-neubau-geld-foerderung-wird-knapp-kfn.html

(20) https://ratgeber.immowelt.de/a/nebenkosten-beim-hauskauf-oder-hausbau.html#c41785

#immobilien
#immobilie
#reit
#sanierung
#hauskauf
#dividends
#gladstone
#realtyincome
#longforgroup

Since it hit me again today and I had again countless postings on my clearing accounts ( 96😂)

It is in the year 2022

And you are happy about your investment in one or more Reit(s). Dividends are diligently trickling into your clearing account every month. You are the king of dividends.

A few months later. Shock STORNO on the clearing account. All dividends gone! What happened? The clearing account in the minus -> panic? No.

Why are dividends cancelled?

The negative dividend posting is related to the so-called reclassification. In simple terms, a recalculation of the dividend takes place because it is not announced until the beginning of the following fiscal year how the dividends paid are divided for tax purposes. (Since this information is not available until the following year, the recalculation or reclassification does not take place until then.

So the company has to reallocate the money from dividends and capital returns, so to speak, after the close of the fiscal year. (For Canadian and US companies, this usually takes place annually).

The correction of the dividends is done as a "delta correction" and has no influence on the annual tax certificate of the previous year. Although dividends from the previous year may be affected by the measure. This may result in a tax disadvantage depending on the use of the personal allowance.

When will the corrected dividends be credited?

Normally, a few days after the cancellation, the dividend is paid again in a recalculated amount. This can result in several postings, as each payment made is corrected individually. In the example with me today within a few hours.

Where can I find information on tax recalculation?

On the websites of the companies you can usually find information about the recalculation in the Investor Relations section or under Dividends. Just have a look at the IR page of the riding of your choice.

Dividend cancellation and tax allowance

Regarding the personal tax allowance, there may be disadvantages. For example, if the tax-free allowance was used in the previous year, but has already been used up in the following year, the regular taxes will apply. (The tax-free amount used in the previous year could therefore be reduced retroactively).

Depending on the constellation, it is therefore possible that this chargeback means that part of the tax allowance was not used retroactively in the previous year and the tax allowance for the current year is used up, even though the payment was actually made in the previous year. What does @DerSteuerberater about this?

Do I have to take action?

As a rule, you do not need to take any further action. The broker takes care that everything is tax compliant.

PS thanks to Lisa

Source:

https://aktiengram.de/stornierte-dividenden-bei-reits/?fbclid=PAAabFruoFpHv2X6NzyEaFM73ObF0ZyT4w08Z7OBoRfR9_JFUGxRQLbUW4C8I

You don't have to know everything but only where it is written.

Have a nice weekend ✅

#dividende
#reit
$GOOD
$O
$MPW

Investing in Casinos & Las Vegas

1. Introduction

Today I would like to turn my attention to a very special REIT: VICI Properties. This REIT invests mainly in casinos and owns a number of highly lucrative casinos on the world famous "Strip" in Las Vegas. In addition, the REIT owns a number of other casinos spread across the U.S. and even four first-class golf courses. Doesn't seem particularly interesting at first glance? That's what I thought at first, until I took a close look at the company, its figures, its business model and its outlook. I spent a lot of time researching and collecting the relevant information. Almost as much time I invested again to write this article. DisclaimerYesterday I invested a first tranche in VICI and plan to invest further tranches.

2. VICI Properties fields of activity/business model

VICI Properties Inc. is a U.S.-based REIT specializing in casinos, hotels and golf courses. Its current real estate portfolio consists of 43 casinos with approximately 11 million square feet of space, 58,700 hotel rooms and approximately 450 restaurants, bars and nightclubs. Among the best-known properties are the famous "Caesar's Palace" casinos (see Hangover), "MGM Grand," "the Mirage" and "the Venetian" in Las Vegas. Also away from Las Vegas, VICI owns further casinos in Atlantic City ("Las Vegas of the East Coast") and other locations in the USA. Furthermore, VICI Properties owns four "Championship Golf Courses", i.e. golf courses on which international championships are held. [1]

The business model is simple: VICI Properties owns the buildings and the land and leases them by means of so-called "Triple Net Lease" (NNN). This lease model is particularly lucrative, because in addition to the normal lease payments, the tenant also agrees to pay all costs of the leased property, including taxes, insurance and maintenance costs [5]. Accordingly, the NNN rental model generates a predictable and low-risk cash flow, because any maintenance costs are explicitly borne by the landlord and not the owner of the real estate. It is also important to note that VICI acts only as a landlord and has no operational risks. The biggest risk is that the casino operators themselves might experience difficulties and that there might be a loss of rent. There is a detailed elaboration on this in the "Risks" section below.

3. history

VICI Properties was established as a REIT in 2017 as part of the bankruptcy restructuring of "Caesars Entertainment Operating Company". At that time, VICI already owned 19 casinos (including the world-famous Caesars Palace) and 4 golf facilities and leased them through NNN [6]. At that time, annual rent was $630 million. Since 2018, a series of acquisitions followed, including the purchase of "Harrah's Las Vegas" for 1.1 billion USD.

In 2022, two major acquisitions took place: in February 2022, "the Venetian" and its associated complex in Las Vegas were purchased for USD 4 billion, and in April 2022, its major competitor "MGM Growth Properties" was purchased for USD 17.2 billion. The MGM Growth Properties acquisition alone added 13 new properties to VICI's portfolio, making VICI the largest land and property owner on the Las Vegas Strip in one fell swoop. [6]

VICI Properties was then added to the S&P 500 in June 2022. [7]

4. figures

We now deal with the bare numbers. Due to the relatively recent history, only figures from 2018 are available [2],[3]:

Sales:

2018: $897 million || 2019: $894 million (-0.33% YoY*) || 2020: $1225 million (+37.0% YoY) || 2021: $1509 million (+23.2% YoY) || 2022 (partial forecast): $2530 million (+65.9% YoY)

FFO/Share (Funds from Operations / Share):

The key figure FFO/share (funds from operations per share) is a better indicator for REITs than EPS, i.e. earnings per share. In simple terms, FFO/share shows how much cash flow was generated from operations per share.

2018: $1.57 || 2019: $1.25 (-20.4% YoY) || 2020: $1.75 (+25.6% YoY) || 2021: $1.76 (+0.6% YoY) || 2022 (partial forecast): $1.72 (-2.2% YoY)

Dividend/Share (paid quarterly):

2018: $0.9975 (payout ratio 63.5%) || 2019: $1.17 (+17.3% YoY, payout ratio 93.6%) || 2020: $1.255 (+7.3% YoY, payout ratio 71.7%) || 2021: $1.38 (+10% YoY, payout ratio 78.4%) || 2022: $1.48 (+7.2% YoY, payout ratio 86.0%)

*YoY = Year over Year, i.e. annual change

Revenue growth (with the exception of 2019) since 2018 has been impressive and of course driven by the acquisitions made. In 5 years alone, revenue has grown by about 180%. That's almost a tripling of revenue in 5 years and an average revenue growth of about 23% per year.

FFO/share shows a growth of just under 10% since 2018 which at first glance doesn't look that impressive with a revenue growth of 180%. This is largely due to the large acquisitions made during this period. Indeed, a peculiarity of REITs is that acquisitions are often also made by issuing new shares (i.e. dilution), so that the number of outstanding shares tends to increase for REITs. This is not peculiar to VICI and is the case with almost all REITs. More important to note, however, is that VICI continued to earn well, especially during the tough Corona years of 2020/2021 with lockdowns and restrictions, which yes, hit casinos, hotels and restaurants particularly hard. During this period 100% of rents were paid on time in cash [9]. This is a major advantage of VICI: they do not act as casino operators themselves, but simply rent out the buildings.

One might think that the billion-dollar takeover would have a very negative impact on VICI's debt and that this could become a major problem in times of rising interest rates. However, a look at the balance sheet reveals that while VICI has USD 13.7 billion in liabilities - this is offset by a net asset value (i.e. the value of tangible and intangible assets) of around 37 billion, so that the liabilities are covered almost three times by the net asset value. Looking at the balance sheet, it is also noticeable that the interest on the liabilities has been secured at least until 2024, with a large part of the liabilities falling on the years after 2027.

Despite the huge acquisitions, a good dividend is paid. This is very well covered by FFO: on average about 75% of FFO is paid out. Dividend growth over the last 5 years has been 49.4% or an average of 8.2% per year.

5 Comparison to other REITs

Whether VICI is a good investment depends mainly on whether there are comparable alternatives - i.e. whether there are other REITs that are comparable. All data for comparison was taken from [2].

Various ratios are now compared with those of other REITs. Here I compare VICI with the popular/solvent REITs: Realty Income $O (retail), STAG Industrial $STAG (logistics), W.P. Carey $WPC (diverse), STORE Capital $STOR (retail) and Simon Properties Group $SPG (entertainment). Important in the selection was mainly the popularity/awareness and covering different industries to get a direct comparison of different industries with the casino/entertainment industry in which VICI operates. In addition, I also use the median value of all REITs as a comparison to get a general idea of how an "average" REIT performs in certain metrics. Dividend yield, dividend growth, price-to-book ratio and debt-to-equity ratio are compared. Dividend yield is a good snapshot of current profitability and dividend growth is a good indicator of how the company is performing. The price-to-book ratio is a possible indicator of undervaluation and the debt/equity ratio is an indicator of the company's debt.

Dividend Yield:

VICI: 4.21% || Realty: 3.95% || STAG: 4.45% || W.P. Carey: 4.88% || STORE: 5.30% || Simon Properties: 7.49% || Sector median: 4.06%

Of course, the dividend yield is only meaningful to a limited extent, as it is always a snapshot and the dividend yield is of course always calculated based on past dividend payments and the current share price. Nevertheless, a good first impression, because VICI is above the sector median.

Dividend growth (average of the last 5 years):

VICI: 8.2% || Realty: 3.82% || STAG: 0.83% || W.P. Carey: 1.24% || STORE: 5.83% || Simon Properties: 3.50% || Sector median: 1.77%.

Here you can see that the dividends of VICI grow relatively strongly. Only STORE Capital can keep up in the last 5 years. Comparing the 8.2% average dividend growth with the sector median, it is also clear that this is an excellent growth.

Price-to-book ratio:

VICI: 1.51 || Realty: 1.72 || STAG: 1.73 || W.P. Carey: 2.18 || STORE: 1.51 || Simon Properties: 10.79 || Sector median: 1.73

The price-to-book ratio (P/B ratio) determines how much higher the current price is compared to the book value, roughly speaking equity minus debt, of the company. In the case of REITs, of course, equity consists primarily of the value of the properties and the available cash. Consequently, a low price-to-book value may indicate a comparatively favorable share price. Here we see that VICI, together with STORE Capital, has the lowest P/B ratio. Realty and STAG are just above it and are in the range of the sector median.

Liabilities/equity:

VICI: 0.658 || Realty: 0.642 || STAG: 0.715 || W.P. Carey: 0.885 || STORE: 0.868 || Simon Properties: 5.983 || Sector median: 0.907

The ratio of liabilities to equity shows how high the liabilities are compared to the available equity. A low ratio therefore shows that the value of the portfolio is comparatively large compared to the existing liabilities. The ratio is also independent of the current share price. Here, Realty is at the top together with VICI. Roughly speaking, $1 of equity is matched by only about $0.65 of liabilities. The sector median of 0.907$ liabilities per 1$ equity shows that this is a very good value.

Summary:

In all categories, VICI is able to keep up with the popular and well-known REITs and even come out on top in many categories. This is a possible indicator that VICI is a quality REIT. The comparison with the sector median is also interesting: in every category, VICI is better off than the sector median, and in some cases very clearly.

6. moats

We would now like to give an overview of so-called moats of VICI. Moats are factors that protect a company's business model so strongly that potential competition cannot simply destroy the business model.

We start first with VICI's unique locations. As mentioned in the History section, VICI is the largest building and land owner on the Las Vegas Strip through its acquisition of MGM Growth Properties. Buildings on the Las Vegas Strip are in hot demand and potential competition cannot simply build a new casino on the Las Vegas Strip. VICI's portfolio includes world-renowned casinos with arguably the world's best location for gaming, which cannot be easily copied. Moreover, it is very difficult for new investors to acquire casinos due to the strict regulations and complicated policies behind gambling. So the competition has an enormously hard time getting a foot in the door.

Another moat is the crisis-proof nature of the business model. It's hard to believe, but gambling is a very crisis-proof business. During the last severe economic crisis of 2008 to 2010, the number of tourist visits to Las Vegas only dropped from about 39 million annually to 36 million annually, a decline of only 7.7% [11]. If we now consider that 87% of all tourists go to a casino and gamble at least once during their visit, it shows how crisis-proof pure gambling is [12]. The occupancy rate of hotels is stable at 90% and 16 of the 20 largest hotels in the world are located in Las Vegas [12]. But more and more tourists are not only interested in pure gambling but also in experiences like good food, shows, big events and sightseeing.

This ties in seamlessly with another moat of VICI: the business model is very difficult to destroy by digitalization or BigTech. CEO Edward Pitoniak explicitly talks about how Las Vegas does not sell product but experiences [13]. Most visitors to Las Vegas are not there just for the gambling, but for an overall experience. 38% of all Americans have been to Las Vegas at least once [12]. Unlike retail, the casino experience in Las Vegas or other comparable gambling capitals is very difficult to destroy through digitization. Similarly, the experience of travel cannot be digitized.

Another important point is that this is a completely new REIT category. It has been almost impossible to invest broadly in gaming and the "Las Vegas experience" until now. However, VICI Properties already bundles 43 casinos, 450 restaurant, bars and nightclub into one package that is very easy to invest in. This is particularly interesting for institutional investors, as it brings another type of risk diversification.

7. risks

Risks are, of course, on the one hand the focus on the USA and in particular on the Las Vegas location. Although there are also several casinos in Atlantic City, Indianapolis and Detroit in the portfolio, the main revenues are generated in Las Vegas. In addition, the golf courses contribute only an insignificant portion of the company's revenues. Consequently, an investment in VICI is a kind of bet on the future of Las Vegas as an experience and casino location.

Of course, the Corona situation is also a risk factor for VICI. Possible lockdowns and travel restrictions from abroad could massively reduce the number of tourists in Las Vegas. However, a look at the numbers also shows that previous lockdowns and travel restrictions have succeeded in keeping 100% of all rents of the rented properties on time (see the "Numbers" section). So even during the Corona crisis, decent money was earned and there was no decline in rental income. Of course, this is also due to the business model, as VICI does not operate the casinos but only acts as a landlord. A comparison with the REIT Simon Properties, which also specializes in the entertainment industry with a focus on cinemas, theaters and restaurants, shows that in 2020 the latter recorded a decline in revenue of 18%, while VICI achieved revenue growth of 37%. In addition, Simon Properties posted a loss in 2020 and 2021, while VICI posted stable profits and and was able to make acquisitions without high debt.

8. outlook

CEO Edward Pitoniak's long-term goal is for VICI to deliver 12% returns per year to its investors [14] (dividend and capital gains).

A look at the historical data shows: In 2018, the stock started at $20 per share. At the end of 2021, the stock stood at USD 30.11 per share. That makes a price gain over 4 years of 10.11 USD per share. Add to that the dividends of 4.8025 USD. In total, therefore, a return of 14.91 USD was achieved. This corresponds to a return of 74.55% in 4 years or an average of 14.94% per year. This means that the targeted 12% return per year is plausible, but of course serves not as a forecast for future returns.

In 2022, a price gain of 4.26 USD per share and a dividend payment of 0.72 USD per share could be achieved until today (03 August). This results in a return of +16.6% for 2022 year to date. For comparison, the S&P 500 is -14.71% year to date, the NASDAQ 100 is -21.82% and the DAX is -15.9%. Since going public in 2017, VICI has outperformed both the S&P 500, NASDAQ 100 and DAX. While the DAX is up 9.68% during this period, the S&P 500 is up 65.18%. The NASDAQ 100 stands at +94.42% over the same period, while VICI put in a performance of 163.92% [15].

The dividend forecast for 2023 is $1.56 per share, and that's on FFO of $2.15 per share. This would result in dividend growth of 8.3%, FFO growth of 22.2%, and an FFO payout ratio of 72.6%.

VICI thus performed (significantly) better than the major indices S&P 500, NASDAQ 100 and the DAX in its still short history. The forecasts for the current and coming year show a continuation of this trend in purely economic and balance sheet terms. Whether this will also be reflected in the share price remains to be seen and is certainly in the famous crystal ball.

Personally, I think the chances are not too bad that the targeted annual return of 12% can be achieved in the long term. The combination of fast growing dividends and good share price development through clever and at the same time reasonable acquisitions is hard to top in my opinion.

#reit
#dividende
#buyandhold
#analyse
#vici

9. sources

[1] VICI Properties Homepage: https://viciproperties.com/

[2] Seeking Alpha: https://seekingalpha.com/symbol/VICI

[3] Yahoo Finance:

https://de.finance.yahoo.com/quote/VICI/financials?p=VICI

[4] CNBC: https://www.cnbc.com/2021/08/04/vici-properties-buys-mgm-growth-properties-for-17point2-billion.html

[5] Investopedia: https://www.investopedia.com/terms/t/triple-net-lease-nnn.asp

[6] Wikipedia: https://en.wikipedia.org/wiki/Vici_Properties

[7] Casino.org: https://www.casino.org/news/vici-properties-gets-nod-to-join-the-sp-500-index/

[8] Focus: https://praxistipps.focus.de/ffo-funds-from-operations-definition-des-wirtschaftsbegriffs_125115

[9] Seeking Alpha: https://seekingalpha.com/news/3597218-vici-properties-collects-100-percent-of-rent-in-q2-july

[10] VICI Properties Earnings Q2 2022: https://s1.q4cdn.com/751481880/files/doc_financials/2022/q2/VICI-Q2-2022-Form-10-Q.pdf

[11] Las Vegas Blog: https://www.las-vegas-blog.de/wie-viele-touristen-besuchen-jedes-jahr-las-vegas/

[12] Isa Guide: https://www.isa-guide.de/isa-casinos/las-vegas/allgemeine-infos/las-vegas-in-zahlen

[13] YouTube: https://www.youtube.com/watch?v=54pbg1W-zOg

[14] Wide Moat Research: https://www.widemoatresearch.com/vici-properties-ceo-ed-pitoniak/

[15] Seeking Alpha:

https://seekingalpha.com/symbol/VICI/charting?compare=VICI,SP500,COMP.IND,DAX:IND&interval=5Y&metric=totalReturn

📈 REIT Depot Update January '23 📈

Hello everyone 🙋‍♂️. With this post I want to give you a little update on my REITs.

➡️ In total, the REITs in my portfolio have a market value of ~44,815 EUR (as of 07.01.23) and therefore a weighting of 14.64% in the total portfolio 👍.

➡️ Largest value is still $O
with ~8,239 EUR, smallest the $ONL with approx. 806 EUR.

➡️ In the last few months I have with from $SKT separated and took positions with $SRC, $UMH as well as $STAG opened.

➡️ On the following pages you will find a (sub)sector overview, the future planned weighting and some notes.

➡️ With -19%, my REITs have performed worse in 2022 than, for example, the S&P 500. Of course, the interest rate increases have had a negative impact on prices, since, among other things, it is automatically assumed that refinancing costs will rise. That may also be the case for one or the other REIT. But in general, REITs with solid financing that have taken advantage of the low-interest-rate phase to obtain long-term financing have the best prospects. And it is precisely such REITs that are very attractive in terms of valuation.

➡️ Therefore, I intend to increase my REIT share to up to 25% in 2023 and focus primarily on apartment REITS, but also on those from the office and industrial sectors. The first candidates are already on the list.

#reit
#immobilien
#dividende
#depot

RESULT OF THE VOTE

7 votes for Walmart/Nuclear vs. 7 votes for India/Daimler

Will India make it this time?🇮🇳 Or will it be Walmart after all?🇺🇸

You decide :) Vote until tomorrow!

Perhaps exciting for the dividend hunters here on Getquin the video of the company from package 4: GLADSTONE COMMERCIAL

https://youtu.be/QuQEqdvkGvo

No investment advice.

#dividende
#dividenden
#gladstone
#reit
#usa

2️⃣5️⃣ BASIC POINTS

INDIA WINS THE VOTE🇮🇳🇮🇳🇮🇳

7x Indien🇮🇳 vs. 4x Walmart🛒. The community has spoken!

With that, the next topic will be the introduction of Indien🇮🇳

Also feel free to check out my new GLADSTONE LAND video 😃 $LAND

https://youtu.be/UbKe6TRCj2I

Your Bass-T

#reit
#dividende
#dividendenaktie
#dividendencheck

🎰 $VICI 🎰 Leading REIT in the gaming and entertainment sector

• Average term of rental agreements 41.7 years (as at Q3/23)
• 100% - occupancy rate of the facilities
• 100% - rental income (no rent losses, even during corona)
• Rental agreements linked to CPI data, -> in an inflationary environment, rents can be increased over the entire rental period

#longterm
#moat
#reit
#vici
#dividend
#langfristig
#burggraben
#dividende

I think about it in the new year with #realtyincome and #welltower two REITs into my portfolio. I find both very stable and especially with #welltower the orientation is future-proof. But would like to hear your opinion 😁

#reit
#dividends#discussion

Initial purchase. Feel free to take a look at my detailed analysis on this, which was just posted in parallel. #reit
#vici