Q4 2023 VICI Properties Inc Earnings Call
Participants
David Andrew Kieske; Executive VP, CFO & Treasurer; VICI Properties Inc.
Edward Baltazar Pitoniak; CEO & Director; VICI Properties Inc.
John W. R. Payne; President & COO; VICI Properties Inc.
Samantha Sacks Gallagher; Executive VP, General Counsel & Secretary; VICI Properties Inc.
Anthony Paolone; Senior Analyst; JPMorgan Chase & Co, Research Division
Barry Jonathan Jonas; Gaming Analyst ; Truist Securities, Inc., Research Division
Caitlin Burrows; Research Analyst; Goldman Sachs Group, Inc., Research Division
Chris Darling; Senior Analyst of Lodging; Green Street Advisors, LLC, Research Division
Daniel Edward Guglielmo; Research Analyst; Capital One Securities, Inc., Research Division
Greg Michael McGinniss; Analyst; Scotiabank Global Banking and Markets, Research Division
James Hall Kammert; Research Analyst; Evercore ISI Institutional Equities, Research Division
Jay Bradley Kornreich; Analyst; Wedbush Securities Inc., Research Division
John G. DeCree; Director and Head of North America Equity & High Yield Research; CBRE Securities, LLC, Research Division
Nicholas Gregory Joseph; Director & Senior Analyst; Citigroup Inc., Research Division
Ravi Vijay Vaidya; VP; Mizuho Securities USA LLC, Research Division
Wesley Keith Golladay; Senior Research Analyst; Robert W. Baird & Co. Incorporated, Research Division
Presentation
Operator
Good day, ladies and gentlemen. Thank you for standing by. Welcome to the VICI Properties Fourth Quarter and Full Year 2023 Earnings Conference Call. (Operator Instructions) Please note that this conference call is being recorded today, February 23, 2024. I will now turn the call over to Samantha Gallagher, General Counsel with VICI Properties.
Samantha Sacks Gallagher
Thank you, operator, and good morning. Everyone should have access to the company's fourth quarter and full year 2023 earnings release and supplemental information. The release and supplemental information can be found in the Investors section of the VICI Properties website at www.viciproperties.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, believe, expect, should, guidance, intends, outlook, projects or 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 on our website in our fourth quarter and full year 2023 earnings release, our supplemental information and our filings with the SEC.
For additional information with respect to non-GAAP measures of certain tenants and or counterparties discussed on this call, please refer to the respective company's public filings with the SEC. Hosting the call today, we have Ed Pitoniak, Chief Executive Officer; John Payne, President and Chief Operating Officer; David Kieske, Chief Financial Officer; Gabe Wasserman, Chief Accounting Officer; and Louie McCluskey, Senior Vice President of Capital Markets. Ed and team will provide some opening remarks, and then we'll open the call to questions.
With that, I'll turn the call over to Ed.
Edward Baltazar Pitoniak
Thank you, Samantha, and good morning, everyone. I'll start this morning with a few words about 2023 VICI accomplishments and the way forward. John Payne will share our 2024 growth approach, and David Kieske will discuss our 2023 financial results and our 2024 guidance.
Last night, we announced final 2023 AFFO per share of $2.15, representing year-over-year per share growth of 11.8%. VICI's 2023 AFFO growth will likely make VICI one of the 2023 income growth leaders among the 29 S&P 500 REITs that report AFFO per share. There are 30 S&P 500 REITs overall, representing approximately 90% of the U.S. REIT equity market capitalization at year-end.
VICI's 2023 growth is largely the result of work we did in 2022, forging new relationships and new investments in both gaming and [non-gaming] both property acquisitions and property credit investments. I'm proud of our 2023 AFFO per share growth but I'm also proud of what the VICI team did in 2023 to continue to produce growth for 2024 and beyond. Our investment activities in 2023 produced growth in our portfolio quality, geographic diversity, tenant diversity and income.
Indeed, when it comes to 2024 income growth, as David will discuss in a moment regarding our 2024 guidance, we expect our projected 2024 AFFO per share growth should put VICI well into the top half of the S&P 500 REIT 2024 AFFO per share growth table.
It wasn't easy to produce future growth in 2023. It was tough to navigate in 2023. Most days in 2023 and frankly, most days in 2024 so far, remind me of my days living and working in Whistler, British Columbia, where a very challenging coastal mountain environment could result in days so foggy and whited out that we describe such days as skiing inside a milk bottle. But even amidst this low visibility, the VICI team kept pioneering in 2023. We invested in new geographies, including 3 new countries and through our Bowlero acquisition in U.S. noncommercial gaming states such as Texas, California and North Carolina.
We invested in new categories such as family recreation and youth sports. We expanded our partnerships with pilgrimage brands like Cabot and Canyon Ranch. We acquired the primary leasehold interest in New York's incomparable Chelsea Piers through our position as the leading owner of real estate on the Las Vegas Strip. We continue to work with our Las Vegas partners to capitalize on Las Vegas' leadership position in global entertainment and hospitality. I strongly believe VICI's investment in Las Vegas is one of the most compelling investments in the current global commercial real estate investing landscape, period, full stop.
As we set out in our earnings release last night, in 2023, we announced and closed $1.8 billion of capital acquisitions and investments within the year. Note that these figures do not include the $2.8 billion closing of our Mandalay Bay MGM Grand joint venture in early January 2023, which we announced in early December 2022, including our assumption of the remaining $1.5 billion of CMBS debt.
A fundamental importance our 2023 investing in gaming and nongaming was accretive. Our announced 2023 capital investments were made at a blended initial unlevered investment yield of 7.7%. Our 2023 investing was also balance sheet enhancing. We funded this $1.8 billion of investment with approximately $1.6 billion of cash and equity and only about $200 million of incremental debt. achieving an equity to debt funding ratio on that investment activity of 8:1, demonstrating our commitment to our long-range net leverage target of 5.0 to 5.5x net debt to adjusted EBITDA.
As we look ahead within 2024, despite the continued cloudy macroeconomic conditions and outlook we begin 2024 with approximately $1.2 billion of cash and forward equity resources to deploy into continuing accretive growth. Needless to say, the macro environment of constrained capital conditions, we believe our capital resources can and will be attractive to gaming and experiential operators who want to grow and/or need liquidity.
Finally, in 2024, we will continue to build a portfolio of quality. You've heard me say before that I believe VICI is the pioneer in bringing Class A real estate to net lease. By Class A, we mean real estate of great scale, great quality and high mission criticality. And VICI enables investors to own Class A real estate within the strong economic transparency and integrity of the net lease model. What we can, must and will do is continue to enable existing and potential VICI investors to understand fully the scale, quality and mission criticality of our Class A real estate.
To that end, we are proud to announce that we're launching today the VICI Properties photo book, a digital coffee table style book that brings to life the magnificence of the real estate owned by VICI. You can view this book online at our website, www.viciproperties.com. And I thank Hayes Honea of our team for her great work in producing and publishing this book. I strongly encourage you to give this book a good viewing. If you're a VICI shareholder, I believe the book will give you great pride in what you own.
And with that, I'll now turn the call over to John.
John W. R. Payne
Thanks, Ed. Good morning to everyone. In 2023, VICI was able to navigate a volatile broader market backdrop, particularly for REITs and consistently deployed capital in accretive manners throughout the year. Over the course of 2023, we deployed $1.8 billion at a blended yield of approximately 7.7% across investments that expanded our geographic reach domestically and internationally, broadened our investable universe across gaming, hospitality and family entertainment and deepened our ability to invest creatively through property-related credit investments.
Our ability to transact successfully last year was due in part to the multiyear effort I've mentioned before on our earnings calls. Every day at VICI, our team shows up for work and focuses on developing and maintaining relationships with best-in-class growth-oriented operators. While some REITs describe themselves simply as a landlord and position themselves to extract value from their tenants. We view ourselves as a long-term capital partner collaborating with our tenants to create value.
This philosophy of serving as a capital partner and prioritizing relationships with operators who pursue growth energetically serves as our compass as we assess and underwrite opportunities in the current environment. An environment that is characterized by low visibility and fluctuating cost of capital. To that end, many of you have heard me speak over the years about our focus on growth. And it's also important to understand that there have been numerous situations in which we elect to not pursue opportunities.
VICI is in the very fortunate position to have created significant shareholder value over the years. For example, we've grown our AFFO per share at an 8.5% CAGR from 2018 through 2023, while our dividend has grown at a comparable high single-digit rate, and we do not believe we need to pursue growth purely for the sake of growing.
For those of you who may be newer to our story, I would like to touch on a few elements of our growth pillars that have allowed us to successfully complete $36 billion of accretive transaction volume in a little over 6 years. Number one, we work collaboratively with operating partners investing in growth opportunities and funding high ROI capital projects in order to achieve mutually beneficial outcomes. Number two, as the only S&P 500 REIT predominantly invested in the gaming industry, given 90% of our rent roll is derived from gaming investments, our team travels far and wide, visiting properties, studying new markets, assessing the landscape and meeting with operators across regional, Las Vegas and even international locations.
Number three, we are supplementing our gaming investments with opportunities in experiential sectors that we believe are positioned to benefit from secular tailwinds. We focus on sourcing transactions with operators who position themselves for growth, including through roll-up in an industry, much as you saw with our Cabot and Bowlero transactions announced in October of last year. And finally, number four, we constantly keep our eyes open for opportunities where VICI can get better by getting bigger as demonstrated through the acquisition of MGM Growth Properties in 2022, which significantly expanded our footprint in Las Vegas, added Class A market-leading regional assets to our portfolio, improved our balance sheet to investment-grade and has positioned us for a long-term partnership with MGM Resorts, a world-class gaming, hospitality and leisure operator.
As we dive further into 2024, we hold firm with the criteria that has driven much of our track record to date while executing across our strategic pillars. In particular, we are adhering to prudent underwriting standards, ensuring your capital is appropriately compensated as we assess risk and pursue opportunities across different properties, markets and asset classes.
And as I said earlier, we maintain a preference for growth-focused operators with our entire team evaluating a partner's track record and importantly, their use of proceeds, which typically explains intentions behind pursuing the transaction. We ultimately believe the right partnerships lead to the right opportunities, which feeds the flywheel of value creation through collaboration.
We believe our commitment to developing and deepening relationship with great operators of all shapes and sizes, combined with our strong balance sheet and liquidity position will afford us the ability to continue to executing accretive deals during time when other REITs may be stuck "skiing inside a milk bottle."
Now I'll turn the call over to David, who will discuss our financial results and guidance. David?
David Andrew Kieske
Thank you, John. It's great to speak with everyone today, and we appreciate your time. I want to start with our balance sheet. 2023 exemplifies the continued discipline we have maintained of our 6-plus years of existence by ensuring that we allocate capital accretively, have a balance sheet and liquidity profile designed to weather all cycles and provide the safety and protection our equity and credit partners deserve.
During the year, we raised over $1.6 billion in forward equity. In January of 2023, we raised approximately $1 billion in gross forward equity proceeds at a $33 price per share. Those proceeds were used throughout the year to accretively fund our transactions. We utilized our ATM program throughout 2023, raising $643 million in gross forward proceeds. That amount includes $390 million, which was raised in Q4 through the sale of 13.2 million shares via the forward and remains outstanding today.
And subsequent to year-end, in Q1 2024, we sold 9.7 million shares raising $306 million in gross proceeds under our ATM via the forward. This brings our total outstanding forward equity to just under $700 million, bolstering our overall liquidity. Currently, we have approximately $3.5 billion in total liquidity comprised of $523 million in cash, cash equivalents and short-term investments as of December 31, 2023, $696 million of proceeds under our outstanding forwards and $2.3 billion of availability under the revolving credit facility.
In addition, our revolving credit facility has an accordion option, allowing us to request additional lender commitments of up to $1 billion. As we begin 2024, we believe we are extremely well positioned to navigate the current environment and do not need to raise any incremental capital as we sit here today.
In terms of leverage, our total debt is currently $17.1 billion. Our net debt to fourth quarter adjusted EBITDA annualized for a full year of activity from our recent acquisitions and excluding the impact of unsettled forward equity is approximately 5.5x within our target leverage range.
We have a weighted average interest rate of 4.35%, taking into account our hedge portfolio that we utilized in connection with our April 2022 inaugural investment-grade offering and a weighted average of 5.9 years to maturity. As of December 31, we've entered into a series of forward starting interest rate swap agreements ahead of our May 1 $1.05 billion bond maturity, which has an aggregate notional amount of $500 million. This portfolio has an effective treasury rate of 4.04%.
Just touching on the income statement, AFFO per share was $0.55 for the quarter, an increase of 8.8% compared to $0.51 for the quarter ended December 31, 2022. For the full year 2023, AFFO per share was $2.15, an increase of 11.8% compared to $1.93 for the full year 2022 and as Ed mentioned, making VICI one of the leaders across the S&P 500 REITs.
Our results once again highlight our highly efficient triple-net model given the increase in adjusted EBITDA as a proportion of the corresponding increase in revenue and our margins continue to run strong in the high 90% range when eliminating noncash items. Our G&A was $15.3 million for the quarter and as a percentage of total revenues was only 1.6%. This continues to be one of the lowest ratios in not only the triple-net sector but across all REITs.
Turning to our guidance. And as you saw in our release last night, we are initiating AFFO guidance for 2024 in both absolute dollars as well as on a per share basis. AFFO for the year ending December 31, 2024, is expected to be between $2.32 billion and $2.355 billion or between $2.22 per share and $2.25 per share. Based on the midpoint of our '24 guidance, VICI expects to deliver year-over-year AFFO per share growth of 4%, a very attractive starting point as we begin 2024.
And just as a reminder, our guidance does not include the impact on operating results from any announced but unclosed transactions, interest income from any loans that do not yet have final draw structures, possible future acquisitions or dispositions, capital markets activity, or other nonrecurring transaction or items. And as we've mentioned previously, we recorded noncash CECL allowance on a quarterly basis, which due to its inherent unpredictability leaves us unable to forecast net income and FFO with accuracy. Accordingly, our guidance is AFFO focused, as we believe AFFO represents the best way of measuring the productivity of our equity investments and evaluating our financial performance and ability to pay dividends.
With that, operator, please open the line for questions.
Question and Answer Session
Operator
(Operator Instructions) The first question comes from Anthony Paolone with JPMorgan.
Anthony Paolone
I guess my first question is just whether or not you could put some dimensions around your deal pipeline right now, either whether it's skewed somewhere geographically, size and maybe yields?
Edward Baltazar Pitoniak
I'll start, Tony, and good to speak with you, and then John and David can kick in. I would say that in the spirit of our opening remarks, we're obviously sober, as you've heard from other REITs in recent weeks like [Agri] and Realty Income. We're sober about the marketplace. We're sober about the capital markets, and we're pretty sober about what kind of activity may be available to us. And yet having said that, John and the team continue to work the trap lines in such a way that we have a number of conversations going on, both in gaming and nongaming that have us very excited and John can talk about that in a moment.
The other point I want to emphasize, Tony, is that the magnitude of what we own brings with it opportunities you wouldn't necessarily find in other REITs, given the nature of the property they own. Especially when we look at Las Vegas, where we've got, I think, John, 40-odd thousand hotel rooms. If you look just at an asset like the Venetian, which including parking is 17 million square feet, given what's going on there, given the impact of the Sphere, the opportunity of Patrick and Nicole and team to continue to asset manage, maximize the productivity of that asset is so, so strong.
I mean it's the magnitude of building, and again, this goes back to my opening remarks that we are going to continue to help the investment marketplace to understand the magnitude of the building such that there are 300,000 square feet inside the 17 million square feet that have never gone past the concrete stage, concrete floors, concrete walls, concrete ceiling, 300,000 unfinished square feet. And with the job that the team at Venetian is doing, to maximize that asset, especially taking advantage of the Sphere. That represents incremental investment opportunity or growth opportunity for us that you wouldn't likely find in most other REITs generally and certainly not in triple-net lease REITs generally, which tend to have assets of 10,000 square feet, not 17 million square feet.
But John, you want to add to this?
John W. R. Payne
Tony, you can hear from Ed's comments, he spent some time in Las Vegas recently, which I have as well. You asked a question about what sectors and I also think what locations. We obviously have been spending a lot of time in Las Vegas. We're very proud of our partners' success there, and it looks like '24 is going to be a great year as well. And as you heard from my remarks, we continue to look at different target sectors, whether in wellness and indoor water parks, pilgrimage, golf, family entertainment center, we made our first investment in youth sports which we like the mixed use of youth sports.
So I continue to spend my time with my team and really the whole company looking at a variety of these and checking the boxes of which ones could make for long-term investments. And there are some sectors that we don't talk about that we've kind of checked off the list that says this is not right for our capital at this time. But we shouldn't confuse that the casino business continues to be a real focus of our company and one that we just can't be more proud of the operators and what they've done in '23 and what we see in '24.
Anthony Paolone
Okay. And then just I have one kind of detailed follow-up maybe for David, because I was asked this a couple of times overnight. Just in your guidance, like how do you -- just remind us how you're treating like the forward equity and the guidance share count like what goes in there or not?
David Andrew Kieske
Yes. Tony, there's no implied use of proceeds or drawdown. There's a little bit of impact from treasury stock dilution in the ultimate share count, but that's the only impact.
Edward Baltazar Pitoniak
Another way of putting it, Tony, is we're not assuming any credit or horsepower from the funding, and we're taking actually a marginal penalty by virtue of having it on our -- technically, we don't have it in our balance sheet, but given the treasury stock method.
Operator
We now turn to Barry Jonas with Truist Securities.
Barry Jonathan Jonas
Guys, wanted to start with the Caesars Center call option. Can you maybe just walk through different considerations as you're thinking about exercising it and specifically timing of that?
Edward Baltazar Pitoniak
Well, clearly, Barry, we want to be as opportunistic as we can be within our timing, given the nature -- the inherent nature of a call option. And obviously, that timing will be predicated on what our cost of funding is. And I don't think it would come as any surprise to anybody that we certainly would not choose to exercise our call option if in doing so, we were creating dilution, which we don't ever want to do. And so going back to the theme of skiing inside a milk bottle, the visibility through 2024, given its current state is such that it's hard to predict with any kind of exactitude exactly when the right time would be.
Barry Jonathan Jonas
Got it. Got it. And then, Ed, maybe just more a higher level question. You've done deals with tribes, native American tribes on commercial land before. But I was hoping you could talk more about the puts and takes with doing some type of deal structure in tribal land. There's clear risks there, but it's something banks and debt investors have been able to overcome and I think it's a sizable market with clear financing needs.
Edward Baltazar Pitoniak
Yes. I'll start, and I'll turn it over to John, Barry. I read the notes from that recent session you had, which were really interesting to read. And I know one of the participants in your session sounded rather, I won't say bullish, but seemed to say that there may be means to do it. I will tell you with complete candor, we haven't exactly figured out how that would work yet, John, right?
John W. R. Payne
But Barry, you touched on -- we've been really excited to build relationships with 3 tribes in the commercial -- in the commercial sector. And it's something that we can continue to talk with them and other travel partners that we've gotten to know to see could there be an opportunity to help them grow on their nation's land, but we have primarily been focused with our partners on the commercial sector, and we'll continue to study that opportunity because as Ed said, we saw the study -- the report that came out as well.
Operator
Our next question comes from Caitlin Burrows with Goldman Sachs.
Caitlin Burrows
I guess you guys have made it clear that a significant part of your business could be repeat business. So can you talk about maybe the pipeline and if we should see some repeat business in 2024 and/or continue to see new operator partners pop up?
John W. R. Payne
Yes, Caitlin. Very good question you asked. No question that we continue to meet with our 13 partners currently in gaming and nongaming and talk about how our capital can help them grow over the coming years. And as Ed alluded to, the boxes that are in, I shouldn't even call them boxes in Las Vegas. The amazing resorts we owned with partners in Las Vegas could provide with a lot of opportunity in the relatively near future and in the coming years as those partners look to grow, whether that's in hotel rooms, new restaurants, new attractions.
Ed mentioned, obviously, the Sphere where that sits on our land, we weren't involved in the building or they're not necessarily our direct tenant. But we see that as a pillar of growth for our company over the coming years, not only in Las Vegas, but in our regional assets because there are large regional assets, whether that's the MGM assets in National Harbor or in Detroit, there are opportunities to grow as well.
And then I think your second part of the question is, are we looking to continue to expand our tenant roster? And the answer is absolutely me, my team, Ed, David, Sam, anyone else in the company is out forging new relationships to see if there's new sectors or new companies that we can use our capital to help them grow. So I wouldn't be surprised if you see some new operators or new tenants in our roster over the coming year.
Edward Baltazar Pitoniak
And Caitlin, let me just add on to that a little bit. Obviously, there have been questions understandably as to why don't you just -- why don't you just do gaming and only gaming. And as we have emphasized on many, many occasions, we are still for all the time remaining going to be intensely focused on gaming, given what a great business it is within which we own real estate. But one of the real benefits of investing in other experiential categories is, well, first of all, comes with the fact that it's just fundamentally great real estate occupied by operators who offer very rich and profitable experiences to their end customers.
So that's the fundamental reason to invest in other experiential. It's fundamentally good real estate.
The second dimension to that is that it gives us a test to grow when growth may not be available for gaming? And related to that, and this goes back to your initial question, Caitlin, one of the advantages we see in experiential operators like a Cabot, like a Canyon Ranch like a Bowlero like a Great Wolf, is they have network growth opportunities that are not as readily available to our gaming operators. The nature of growth in new stores and gaming is such that it is always subject to very strict regulatory control.
For a Cabot, as an example, on the other hand, they have a global growth opportunity that can be seized with great energy and does not suffer the restrictions or the slowing down of cadence that tends to apply to gaming operators attempting to grow their network other than through M&A.
Caitlin Burrows
Got it. No, that makes a lot of sense. And then maybe just back to the pipeline a bit. You guys were active with both sale leasebacks and lending over the past 12 or so months despite a quiet CRE transaction market. And I know you mentioned how you're sober to the current situation, but you guys continue to invest in '23. So I was wondering if you could give some more detail on the pipeline today, maybe size, mix and how that makes you think more specifically, maybe like the first half of 24 activity could end up being or what that could be like?
David Andrew Kieske
Caitlin, it's David. Great to hear from you. Thanks for joining us today. The nature of our capital is relationship capital and that's where we've been active both as you just mentioned, on the loan side as well as the sale-leaseback side. And it's, as John talked about in his comments, solving our partners' objectives and being a source of growth capital. And sometimes that growth capital comes in the door day 1, like you saw with our Homefield opportunity where they're building facility and going to construct at a very, very, very attractive experiential both sports and hotel assets which will lead to a sale leaseback.
So it's -- we're always out talking about ways that we can help our partners grow and to kind of put it in a percentage basket of x amount of loans and x amount of sale leasebacks. That's just not how we look at it or how we kind of parse our pipeline. It's about finding the great partners that we've talked about on this call.
Operator
We now turn to Haendel St. Juste with Mizuho.
Ravi Vijay Vaidya
This is Ravi Vaidya in the line for Haendel. I hope you all are doing well. I just noticed that the mezz lending and construction financing is becoming a larger proportion of our capital deployment strategy. How should we think about the sizing of that relative to your broader acquisition pipeline? And how are you underwriting those return requirements and how that's changed over the last 6 to 12 months?
David Andrew Kieske
Ravi, it's David. Good to hear from you. I caught your question, it's how we think about kind of the spread on those mezz loans, especially around development. Look, we always -- there's a couple of ways that we look at it. And it's a little bit more art than science at the end of the day, but what's the cost of the senior -- is our senior lender ahead of us. Are we achieving the right risk-adjusted spread to the senior. Obviously, what's the duration of our capital, what's the funding cadence of our capital. Then ultimately, what most -- every lender looks at, what's the equity sponsor and how much equity is in the transaction and ensuring that we are protected from a credit standpoint at the end of the day, feel good about the project.
Edward Baltazar Pitoniak
And then to go back to the first part of your question, it will always be a minor percentage of our assets under management. And we will use it to forge relationships. We have an example, obviously, right in front of us of using lending to establish a relationship with Chelsea Piers that led to the acquisition or the primary leasehold interest in December. So we will use it both as a strategic tool to develop relationships and a strategic tool to create a steadier cadence to our capital allocation. We're very proud of the fact we got capital out the door every single month in 2023.
And I can tell you, in our early years, there were whole quarters that went by where we did not get capital out the door given what was true back then, which was that the nature of our capital allocation was big and lumpy tied to big lumpy gaming acquisitions. So it is a tool that can generate growth and return on a very steady basis. It is a strategic tool to forge relationships. And again, given some of the spreads we've been able to achieve in recent years, it is very lucrative, very accretive in driving earnings growth. And again, we're about creating earnings growth that others may not be able to achieve if they're not as energetic and pioneering as we have been, both in terms of how we grow the business in terms of asset classes and through the use of our balance sheet.
Ravi Vijay Vaidya
Got it. That's very helpful. Just one more here. Can you please discuss the opportunity with the Indiana assets? In your view, how attractive is the [77 Call] in the current market? And how would you theoretically fund something like that?
Edward Baltazar Pitoniak
Yes. Well, as I said in response to Barry, obviously, [77] is not as attractive as when it was struck a few years back when the call agreement was struck a few years back. And it will be a call opportunity we will be excited about executing if it's an accretive opportunity, and it is not an accretive opportunity. It's in fact, there would be a dilutive opportunity at 77 , we would not do it.
Operator
Our next question comes from Chris Darling with Green Street.
Chris Darling
Just going back to the Caesars call options, again, let's just for argument's sake, assume that you do exercise those options. I'm just curious, how would you think about the deal structure from a rent standpoint? So I'm wondering, would you possibly structure tighter rent coverage on a stand-alone basis if it made sense within kind of the larger master lease?
Edward Baltazar Pitoniak
Well, yes, Chris. So the rent coverage by virtue of the current call agreement is set but we -- it is a subject of discussion and one we have and would like to continue to explore with Caesars, such that on an overall basis, they and we are at rent coverages that everybody feels really good about for decades to come.
Chris Darling
All right. Fair enough. One more for you, just touching on the Homefield agreement. Just hoping you can elaborate on the scope of the project, potential future expansion. So I'm wondering what the total estimated investment is for the current development, how the team is thinking about scaling to additional locations over time? And just trying to wrap my arms around what the scope of investment might look like for VICI over time.
John W. R. Payne
Yes, Chris, it's John. When we made the announcement a few months ago, we talked about spending a couple of years studying the youth sports business. And we learned a lot in that process. We've also found an amazing partner in Homefield. We announced our first opportunity with them in the Kansas City area and they're building not only the youth sports facility but connected to a Margaritaville resorts. That's one of the things that I think you'll continue to see is if we place other investments into the youth sports spaces, having numerous cash registers, not just having the fields to rent or the stadiums to rent, but also having connected to 1 operator who controls the restaurants who controls the hotel rooms and controls the sports fields.
So this is a $110 million-ish initial investment with Homefield. We've not announced any further development, not only on that site, which does have opportunity to expand over time, but also other sites around the Midwest or the United States. But as with any partner that we've talked about, whether that's with casino partners or with Cabot or Canyon Ranch and now Homefield, we hope that it's not just our only investment with them, and we purposely took so much time to study the business to find the right partner to grow.
Operator
We now turn to Greg McGinniss with Scotiabank.
Greg Michael McGinniss
So as we continue to invest in nongaming assets, how should investors get comfortable with more opaque kind of financials there? And what sort of premium are you receiving from an investment yield standpoint as it compares to a potential gaming investment?
Edward Baltazar Pitoniak
Yes. So you are right, Greg, if we're if we're partnering with an experiential operator that's not public, the tenant financials are not crystal clear in the same way, they're not crystal clear across a whole lot of net lease portfolios. And at the end of the day, we obviously have to exercise our fiduciary responsibility to the greatest degree possible in ensuring that the fundamental business is very, very supportive of the rent and the way in which our operating partners manage their balance sheets and liquidity is also a strength that ensures that they won't be in positions where they're unable to meet the rent.
We've got a very rigorous underwriting practice. We obviously can take advantage of history in many of the categories, experiential categories that we're investing in. And again, at the end of the day, it's up to us to make sure that they are of a strength that's going to enable them to weather whatever should come their way. But I will also emphasize that our key criteria, our first and forth criteria in evaluating all investments gaming and experiential widely is that the businesses be of lower-than-average cyclicality versus consumer discretionary at large, which we think is another risk mitigant when it comes to ensuring that they can cover the rent through thick and thin.
Greg Michael McGinniss
Just to follow up on that. In the cases where you're providing construction loans -- there's not kind of in-place cash flows to be underwriting or evaluating, what's the process look like there when you're trying to get comfortable in terms of lending that money and the ability to recollect in the case that maybe cash flows don't hit quite the targets that were expected?
Edward Baltazar Pitoniak
Well, last dollar exposure is obviously one of the key criteria and ensuring that our last dollar exposure is at a level whereby if we did end up owning the asset, that the operating economics are such that at the last dollar exposure level that we would be lending at, we're still in good shape.
John W. R. Payne
Yes, Greg, and then it comes down to, as I mentioned, quality of the sponsor, the kind of equity. So overall, loan to cost, loan to value and then the protections that are obviously ultimately documented in our agreements. But a lot of the sectors like our sale-leaseback investments, we study the sectors. Indoor water parks, we studied for 18-odd months led by certain members of our team and went deep into that sector before we did anything. And so it's gaining conviction whether it be through direct real estate ownership or the lending platform that we have of who the operator is, the durability of the sector and then the ultimate protections that we can put in place.
Greg Michael McGinniss
Okay. And just a final one from me. I'd like to preface this question by acknowledging the great work that John and his team has done so far. And we know that you've added some great members to the investment team as well. But given your sector low G&A, how do you balance that shareholder-friendly expense line versus investing in a larger acquisitions team that could maybe help source and underwrite more investment opportunities?
Edward Baltazar Pitoniak
No, it's a very strategic question, Greg. And it's a question we regularly wrestle with. I would say one of the ways in which we deal with, if you will, the underinvestment risk in G&A is by, I think, having forged some of the strongest partnership relationships of anybody out there. From day 1, we have treated our advisers as best as we possibly can. This means the investment banks, the other parties, the real estate advisory firms such that we are always the first they call when they think there's a compelling opportunity. They are a force multiplier for us. And we have great respect for them. We engage with them intensely. We reward them when they do great work for us.
And in the event we end up saving on G&A, which in an inflationary period has really 2 benefits. Overall, low G&A to begin with and less inflationary impact on our G&A load. If it ever gets to the point where we feel we're shortchanging shareholders by running too thin, we will certainly add resources in the way we've obviously added resources here in the last couple of years.
Operator
Our next question comes from Nick Joseph with Citi.
Nicholas Gregory Joseph
I wanted to get your kind of commentary or thoughts on performance thus far (inaudible). It seems like mainstream media has been favorable on it, but there's also good local articles on some management changes there. Just wondering how performance is there?
John W. R. Payne
Nick, I won't necessarily talk about the financial performance, but what I will make a comment about is what a beautiful asset that was built by the team there, the Koch Industries, the Fontainebleau team, the operating team there that I haven't met anyone that walks through the place and says, "Oh, this is a miss." I think most people walk through the place and say, "Wow, what an amazing place." And I think for those of us who have spent time operating in Las Vegas over the years, it takes time. It takes time to build up a database and it takes time, but they sure do have a facility that I think everyone is proud of and we sure are proud of.
Edward Baltazar Pitoniak
And Nick, you've given me the opportunity to vent a little bit about how utterly weary I am around the negativity of so much of the media coverage, which regularly gets proven to be way overly negative. Oh my God, The Sphere is going to be a disaster. I was in the U.K. earlier this week. I was struck by how many people wanted to talk about The Sphere because they've either already been or they're determined to go. And again, media coverage around that? Oh my God. "oh, F1 is going to be a disaster." Well, guess what, it wasn't. The drivers love it. The teams loved it. It was an amazing weekend of business for our operating partners. So Super Bowl. again, just a phenomenal event for Las Vegas and for the NFL.
So I absolutely agree with you. Some of the press coverage has been quite negative. But we know the people involved. We know how hard they're working. We know how challenging what it is that they've set forth for themselves to open an unaffiliated property on the strip. And yet again, that asset is utterly magnificent and they're doing the right things to bring business to it over time. And with the backing of Koch, you can be sure that the backing is strong enough that they have the patience but more over the firepower to make this work in due course.
Nicholas Gregory Joseph
That's very helpful. And then just -- I know we've talked a lot on the pipeline and investment opportunities, kind of the more sober environment out there. But if I just think about kind of the stickiness of cap rates, I mean, where are you seeing the most at least pricing power expansion where probably makes a little more sense in today's environment versus I would imagine some others where it's a bit stickier?
Edward Baltazar Pitoniak
Are you talking about cap rate variability across various experiential asset classes?
Nicholas Gregory Joseph
Exactly.
Edward Baltazar Pitoniak
Yes. I don't know, John and David, I don't know that we've seen a tremendous amount of variability across asset classes. We're obviously not seeing a tremendous amount of trading and yet you obviously saw with our unlevered 7.7% yield for the $1.8 billion we put out the door in 2023 that we have obviously been able to acquire income at higher yields. I would have a tough time generalizing, but David and John, I don't know if you want to add.
David Andrew Kieske
Yes. I would -- think you covered it well, but Nick, I mean, it's no different than any other asset class that you're -- in terms of the broader net lease. You just -- you bid out spreads and buyers, obviously willing -- or sorry, sellers' willingness to transact around -- in a backdrop where there's the volatility and variability that we've talked about. And so there's opportunity out there, but it's a difference in the broader CRE market. It's somewhat of a bit of a quieter environment and just an air of caution -- cautious on both sides until we're going to figure out where the tenure is going, where the broader economy is going.
Operator
We now turn to Jim Kammert with Evercore ISI.
James Hall Kammert
Obviously, VICI is going to remain very much a gaming-focused investing in operating company. But you mentioned that you've vetted thoroughly some sort of other verticals, didn't pan out, which is all logical. But could you quantify do you think that your total addressable market or investment opportunity set for new potential verticals continue to expand, just tying to figure out if you're overall catch basin is sort of winnowing or widening?
John W. R. Payne
Yes, it is definitely widening. As there are a few that were saying, hey, we ultimately -- not right for us today. There's other opportunities that come about that we study and learn who the operators are, we learn where their locations are, we spend time with them. So no question, the funnel is getting wider.
Edward Baltazar Pitoniak
Yes. And I'll give you an example of that, Jim. When you really begin to know a category, as David has spoken of. As you get to know the -- if you will, the water experience category, which we first invested in through Great Wolf, what's really been remarkable over the last few years is the way in which really creative innovative operators are taking water experiences and continuing to innovate around them, not simply for kids losing their minds and spending their parents' money at Great Wolf, but also water experiences that are more focused on an adult crowd. And that's really exciting to witness because of the growth opportunities it represents within the category and across multiple geographies.
James Hall Kammert
Great. And one small item. It's been in the press that there is some tax dispute underway at MGM National Harbor. It's obviously an important asset for VICI. But would that -- have any details around that? And would it have any implications for you as a landlord?
Edward Baltazar Pitoniak
Yes, that would be a tenant matter, so we wouldn't comment on that.
Operator
Our next question comes from Wes Golladay with Baird.
Wesley Keith Golladay
Just looking at the order book we've been out to everyone, more specifically looking at the Mirage in Las Vegas. Is there anything that's going to go on over the next year on this asset? And if so, what would be the scope and time to build?
John W. R. Payne
Yes. Wes, it's John. It's nice to talk to you. And probably a question for the -- our great partner Hard Rock on timing. But I think they've, as you've probably been following the story, they acquired the operations of the Mirage a little over a year ago from MGM that has been operating, but have also been out getting approvals and designing the opportunity to change the facility from the Mirage to the Hard Rock Las Vegas. As it pertains to timing and budget and construction and that it's probably something that they'll lead that charge. But we, of course, as the owner of the property are excited to watch that asset, get repositioned over time. It's obviously an amazing asset for a long period of time. But I think everyone would think of a Hard Rock Las Vegas would do great on that site.
Wesley Keith Golladay
And then maybe just 1 on the financing front. You do have the $1 billion churn this year. You have the $500 million of swaps. Are you looking at doing an unsecured to take those out? Or maybe a mix of term loans and unsecured, how are you thinking about that?
David Andrew Kieske
Yes, Wes, it's David. We will focus on continuing to access the unsecured market and extend our maturity tenure and increase the overall size of our investment-grade basket, those are legacy MGP high-yield notes. So moving those to unsecured investment grade notes benefits our overall credit complex for the long run.
Operator
Our next question comes from Dan Guglielmo with Capital One Securities.
Daniel Edward Guglielmo
Just thinking about the credit opportunities in experiential. You all have been on the journey for some time now and thinking about the opportunity in the process for closing on the partnerships. What type of competition is in the other [rooms] these days? And high level, how has that changed over the last few years?
Edward Baltazar Pitoniak
And Daniel, you're talking about how is the competitive landscape of lending evolved over the last few years?
Daniel Edward Guglielmo
Yes, like the fund, yes.
Edward Baltazar Pitoniak
Yes. Well, obviously, we're looking at a period over the last couple of years in which conventional bank financing has definitely diminished as a source of funding for experiential place makers and operators. And at the same time, obviously, you've seen the upsurge of private credit, of which we are part. And I would say that in many cases, we are being invited into the funding opportunity because of our track record in experiential. And the endorsement that our underwriting process brings to a project that we choose to be involved in. We obviously look at them really rigorously. And we, again, I would say we get invited in a lot to processes as opposed to having to scour the landscape and throw our hats in the ring.
Daniel Edward Guglielmo
Great. And then you all have such tremendous growth with some pretty big deals over the last few years. And thinking about kind of similar risk-adjusted opportunities, are there areas that you see kind of, I would say, like big hitter opportunities or transactions out there, not just thinking next year, but maybe down -- like the line 5 years from that horizon?
John W. R. Payne
Dan, nice to talk to you this morning. I'll just go back to our assets in Las Vegas, and I don't know how you're describing big hitter, but if there are opportunities for us to continue to invest in assets that we already own and help the operator grow with accretive new projects. I'll consider that being big, big hitting because I'm not sure there's a better place in the world to invest in right now than Las Vegas. Obviously, we've got a portfolio there. but there are some amazing assets Ed referred to, the Venetian that has a lot of footprint to continue to be developed.
Edward Baltazar Pitoniak
And I think, John, we can add in, obviously, the MGM property in Yonkers should they be granted a full gaming license. That will obviously -- that's a property we already own, Daniel, that would obviously represent a significant incremental investment opportunity, but contingent, of course, on how the license award process plays out.
Operator
We now turn to Jay Kornreich with Wedbush Securities.
Jay Bradley Kornreich
As you look to expand the nongaming segment, should we continue to expect loans on the relatively smaller side for you as a way to step into longer-term relationships? Or would you be willing to take kind of a larger bite into either the real estate or debt and then new asset types in a much bigger way, say, over $1 billion?
Edward Baltazar Pitoniak
Boy, that would be a pretty big number, Jay. But the check sizes you're referring to they may look small in relation to our overall scale. But I would tell you, in returns, they're pretty big checks. These are not small assets and they're certainly not small in economic productivity. And so if we can do $50 million to $100 million and up loans on assets that we either have a direct path to ownership on or a potential path to ownership on, you add those up and you can get to $1 billion in aggregate. But obviously, by not having it all in one single investment, we are obviously spreading out our risk and amplifying our opportunities to develop new relationships.
Jay Bradley Kornreich
Okay. I appreciate that. And then just a quick follow-up on, I guess, the leverage. You're now at 5.5x, which is in your 5 to 5.5x range. So should we expect new transactions to be funded I guess, with incrementally more debt capital at this point? Or do you intend to continue to over-equitize new deals and now get that leverage further down?
David Andrew Kieske
Jay, it's David. We will continue to migrate our leverage down. We're obviously within our target range just we kept everybody post MGP, we take leverage up to 5x. And worked very hard to get that back down to 5.5x at the end of last year, so that will continue to drift downwards both from an over-equitization of transactions, and then depending on the size, leverage-neutral transactions.
Operator
Our next question comes from John DeCree with CBRE.
John G. DeCree
Look, for almost an hour here and I think only 1 mention of F1. So Ed, to kind of go back to your sports triangle, in Las Vegas and you guys have some land, the F1 Paddock. And you talked about this every once in a while, but curious your thoughts on professional sports stadiums, that type of investment and maybe specifically in the context of Las Vegas, given all the development around professional sports that we're seeing there and your land and partners?
Edward Baltazar Pitoniak
Yes. I would say, John, it's professional sports, it's obviously the emergence of the Sphere. It's the overall growth of Las Vegas and we obviously have the vacant land. But probably even more valuable is the land we already own. You referred to the triangle formed by A Stadium, T-Mobile and Allegiant. We own everything inside that triangle, MGM operates everything inside that angle. If you think about where the A Stadium is going to go, we own 3 of those 4 corners; in MGM Grand, Excalibur and New York, New York.
I know MGM is very excited about the repositioning opportunities at those 4 corners, and it applies to so many of the other assets that we own up and down the strip as well as you say, that vacant land. I just can't, again, emphasize enough how incredibly valuable it is to have the position we have in Las Vegas because Las Vegas is reaching a global critical mass that really no other place on earth right now rivals, not Orlando, not Macau, the way things have evolved there. Las Vegas is a category of one, and we are very happy to be the leading owner of real estate in a place that is a global category of one.
John G. DeCree
Maybe just one, lot of people are asking me, is the photo book going to be available in hard copy?
Edward Baltazar Pitoniak
We actually have printed a few. And if anybody really, really wants one, they should give me a call at their earliest convenience.
John G. DeCree
Fantastic.
Edward Baltazar Pitoniak
Elliot, I think we're probably about wrapped up, right?
Operator
Yes. This concludes our Q&A. I'll now hand back to Edward Pitoniak CEO for final remarks.
Edward Baltazar Pitoniak
Thank you, Elliot, and thanks, everyone, for your time today. And please, please do go at www.viciproperties.com under our portfolio heading to view our brand new VICI Properties Photobook. It's a magnificent book about your magnificent properties. Bye for now.
Operator
Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.
