VICI Properties Inc

NYSE:VICI

Earnings Call Transcript 2017-Q4

[Operator]

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the VICI Properties Fourth Quarter 2017 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, March 9, 2018. I will now turn the call over to Jacques Cornet with ICR.

[Jacques Cornet, executive]

Thank you, operator, and good morning. Everyone should have access to the company's fourth quarter 2017 earnings release. The release can be found in the Investors section of the VICI Properties website at www.viciproperties.com.

Some of management's comments today will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements, which are usually identified by their use of words such as will, expect, should 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, management will discuss 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. The reconciliation of these measures to the most directly comparable GAAP measure is available in our fourth quarter 2017 earnings release.

Hosting the call today, we have Ed Pitoniak, Chief Executive Officer; John Payne, President and Chief Operating Officer; David Kieske, Chief Financial Officer; and Ken Kuick, Chief Accounting Officer of the company. Management 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 Pitoniak, executive]

Thank you, Jacques, and good morning, everyone. Welcome to our first earnings call as a publicly traded company. Before we start, I'd like to express my appreciation to our owners for their support. We appreciate the conviction that our foundational investors have demonstrated in VICI through their participation in our $1.5 billion debt-for-equity swap, our $1 billion equity private placement in December and in our IPO. We also greatly value those who become new VICI owners through the $1.4 billion IPO or through the trading of shares since then. All told, VICI has benefited from $3.9 billion of equity formation in our first 154 days as a REIT.

This equity raising is the key evidence of the conviction our owners have that VICI can and will be the next Great American REIT. As mentioned, today is day 154 since our emergence on October 6, 2017, and yes, we are still so new that we count the number of days we have been in existence. During this short period, we have wasted no time in executing on our mission to be America's most dynamic leisure and hospitality experiential real estate company, and this dynamism is evidenced in the eventful few months since VICI came to life. We are extremely proud of what we have accomplished in that short span of time.

In our first 77 days, we completed our first acquisition when we purchased the Harrah's Las Vegas real estate at a 7.7% cap rate on in-place NOI of $87 million. We raised $1 billion in equity in a private placement. We refinanced $2.6 billion of debt, improving our interest cost from LIBOR plus 350 to LIBOR plus 225 and ultimately, LIBOR plus 200 post-IPO. Then subsequent to year end, we went on the road and met with many of you while executing the fourth largest REIT IPO ever, which led to our first trade on the NYSE on February 1. Through all of this, we reduced leverage from 8.4x net debt-to-EBITDA post emergence to net debt of 5.0x following our successful IPO.

As we look forward, we're very excited about our position in the market and building on our 4 key pillars of value: portfolio, tenant, capital stewardship and our governance and independence. The quality, integrity and durability of our real estate cash flows is firmly underpinned by our market-leading portfolio of gaming real estate assets. We are anchored, of course, by the iconic Caesar's Palace and including Harrah's Las Vegas and 18 other leading regional gaming assets, our properties are well located across 9 states and 11 MSAs.

We have long-term lease agreements with the high-quality tenant resulting in a highly predictable base of rental income on which to build our future. Our tenant, Caesars, is a preeminent nationwide operator in the gaming industry and their 3.6x corporate level rent coverage and marketing-leading loyalty program provides stability and durability to our business.

We're relentlessly focused on lowering our cost of capital and risk profile by reducing our debt, converting interest owed to lenders into AFFO belonging to you, our owners, and ensuring our balance sheet has ample dry powder to fund growth through all cycles. All of which is reinforced with an institutional-class corporate governance structure that has no tenant ownership of the REIT or board overlap.

By aligning these 4 pillars, we believe we will continue to thrive and benefit from the secular growth trends in gaming and the broader experiential real estate sector. What excites us the most are the tailwinds we are experiencing from the 2 great generational age waves that have been and moreover, will continue to significantly impact the use and value of not only gaming assets, but the broader American leisure and hospitality real estate landscape over the foreseeable future.

The first generation we'll talk about is obviously the baby boom generation, the greatest number of which are either side of the age of 60, and over the next 2 decades, will have the greatest amount of leisure time in their lives. How will they spend that leisure time? Where will they spend their leisure time? And how do we, as an experiential leisure and hospitality REIT, best capitalize on their emerging preferences for scaled place-based leisure and hospitality?

The millennial generation, at the same time, has created what we call destination blank, as in destination bachelorette, destination bachelor, destination wedding, destination birthday, destination let's simply get together somewhere we will all enjoy. As millennials transition into and through their family formation phase, how and where will they travel, with or without their children and what are the implications for our investment strategy and practices as a scaled place-based leisure and hospitality REIT?

This type of need to gather across all age groups and spend time together in places with incredible experiences such as the assets we own and Caesars operates is something that we believe will only continue to increase. And from what we can tell, e-commerce merchants have not figured out how to deliver this gathering experience to your home in a box. With that, I'd like to turn the call over to John Payne, our President and COO, to talk about our growth opportunities. John?

[John W. Payne, executive]

Thanks, Ed. For those of you that we've met, it's nice to speak with you again, and for those of you that we've not met, we look forward to meeting you soon.

Just a little bit of my background. I spent 22 years at Caesars either building or running all the assets we own in the VICI portfolio. So to say that I'm truly proud of and attached to this portfolio is simply an understatement, and we're excited to have such a great geographically diversified portfolio located across the United States.

I wanted to just spend a few minutes on our growth outlook. It's important to understand that our approach to doing transactions is predicated on doing what we say are fair deals. It's important to us that both the opco's owners and the VICI owners feel good about the deals that we execute. We see ourselves as long-term solution providers, whether that be with Caesars as we demonstrated in our first 77 days, or with other third-party operators, many of whom I've had the privilege to work with over the years.

Now I'm not in front of you saying that I have a deal to announce tomorrow. What I would say is we are approaching the transaction market through a long-term relationship lens. So unlike others, we may do a small deal that leads to a bigger relationship with a new operator in the future. We will also look to continue to diversify the geography of our portfolio.

In terms of opportunities with Caesars, we are strategically set up with a pipeline of growth opportunities that feature 3 call option properties: Harrah's Atlantic City, Harrah's Laughlin and Harrah's New Orleans. Simply put, we have the right to buy the real estate of these properties at a 10% cap rate with a set rent coverage, and we can do so with just a 60-day notice to Caesars at any time within 5 years of our spinoff.

We are asked regularly how we think about the timing of the call option properties, and the answer is that we will be strategic in our planning and know that these assets are in our back pocket at any point over the next 5 years, allowing us to deliver to you consistent year-in and year-out growth.

In addition to the call properties, we have a right of first refusal agreement with Caesars on any future gaming acquisitions outside Clark County, Nevada, which also include the Centaur asset, a put-call option related to the planned convention center adjacent to Harrah's Las Vegas as well as potential for further partnerships similar to the deal we executed with Harrah's Las Vegas.

With that, I will turn the call over to David who will discuss our financial results.

[David Kieske, executive]

Thanks, John. Our results for the quarter are straightforward and set out in the press release. I want to point out a couple of items.

Given that the company was formed from the completed spinoff from Caesars during the fourth quarter, keep in mind that the reported results reflect the period beginning October 6 to December 31, which works out to 87 days, just a few days shy of the full calendar quarter.

From a rental revenue perspective, recognize that we entered into our formation leases on October 6. The initial year of annual rent under the CPLV Lease is $165 million and the net to VICI under the non-CPLV Lease and the Joliet Leases is $465 million. With the acquisition of Harrah's Las Vegas on December 22, we entered into a new lease for which the initial year annual rent is $87.4 million. As such, we only recorded 10 days of rental revenue under this lease during the quarter.

On the cost side for the 87 days, our general and administrative costs were $9.9 million. This amount contains several onetime items related to the company's emergence and standing up of the VICI REIT and is not representative of a steady-state run rate G&A. Included in the fourth quarter G&A, we recorded approximately $2.3 million in onetime expenses related to sign-on bonuses and noncash stock grants and severance. We also incurred consulting, advisory, legal and licensing costs related to the startup nature of our business. Some of these costs will continue through the first half of the year as we continue to build out the team and move towards a more steady-state run rate.

In addition, on the income statement, you'll note $9 million related to acquisition and transaction expenses. This was associated with the closing of HLV. Also, the loss from extinguishment of debt of $38.5 million was primarily related to the $400 million repurchase of CPLV mezzanine loans, both of which closed on December 22.

As detailed in our non-GAAP reconciliation in our earnings release, our adjusted funds from operations excludes these items and was $84.1 million for the quarter or $0.37 per share based on approximately 228 million weighted average shares outstanding at quarter end. Our weighted average share count for this period reflects the issuance of 54 million shares on December 22 in a private placement and obviously does not include the 69 million shares associated with the IPO in February.

Turning to our balance sheet, we ended the year with about $184 million of cash, which excludes restricted cash. Our outstanding debt at year-end was $4.8 billion with a weighted average interest rate of 4.64% and a weighted average maturity of approximately 6 years. We have no debt maturing until 2022. The year-end debt balance reflects our $2.6 billion refinancing in which we entered into a $400 million revolving credit facility and a $2.2 billion senior secured term loan that both had initial interest rate of LIBOR plus 225. Effective February 5, with the completion of our IPO, the interest rate on the term loan and the revolver was reduced 25 basis points to LIBOR plus 200. Recognize, however, that the fourth quarter interest expense only reflects the impact of this refinancing for 10 days. In addition, we are pleased to tell you that yesterday S&P raised our corporate credit rating to BB.

Subsequent to year-end, as Ed mentioned, February 1 was our first day of trading on the NYSE. The proceeds from the offering were used to repay debt and for general working capital. Post IPO, we have $4.1 billion of outstanding debt and $400 million of availability under our revolving credit facility. Additionally, with the net IPO proceeds, we've put approximately $600 million of cash on the balance sheet, which gives us over $1 billion of dry powder between the cash and unfunded revolver to execute on our growth strategy.

With respect to our policy related to earnings guidance, our board continues to work to formulate a policy that is in line with our operating philosophies. We expect to be in a position to communicate our go forward policy when we report our first quarter 2018 results.

Now turning to our dividend policy. As we disclosed in our prospectus, we continue to expect to pay an annual dividend of $1.05 per share. We are working with our board to determine first record of payment dates and we'll be in a position to disclose something to you on that front soon.

And thank you for joining us this morning. We appreciate your interest in VICI Properties. We'd be happy to answer any questions that you might have and are always available to you. Operator, if you would please open the line for questions?

[Operator]

[Operator Instructions] Your first question comes from Shaun Kelley with Bank of America.

[Shaun Kelley, analyst]

So look, I know these calls are always difficult, so welcome to the public markets. But it's always challenging to talk too much about the M&A environment and pipeline, but can you just give us, to the extent possible, what's your kind of current read on partners that may be out there, opportunities to kind of transact in the gaming landscape? And just what kind of -- and specifically, maybe to ask 1 deal since it's in the headlines, any thoughts you might have on the announced transaction for Sands Bethlehem?

[Edward Pitoniak, executive]

Sure. I'll start off, Shaun. This is Ed. Good to talk to you. And then John will give you more detail and color. I think with now 3 gaming REITs in the space, I think the sector is being validated and moreover, being understood by a lot of market participants in a way that hasn't happened up until now. And I think there's increasing appreciation for the way in which a gaming REIT likely VICI can be a permanent capital source for operators who want to continue to grow their businesses. And we see that interest resulting in discussions. Again, these would be early and preliminary discussions on understanding each other better throughout the relationships that John has had and continues to grow in our sector. And with that, I'll turn it over to John.

[John W. Payne, executive]

Yes, Shaun, thanks for the question. And a little bit for us as being a new company, we're out trying to talk to every operator that's out there and introduce them to VICI and who we are and how we think about deals. So obviously, we're relatively new, and we're spending a lot of time in the field. It is an active space right now. You obviously referenced the deal that was announced by the Poarch Creek tribe with Sands Bethlehem that I've -- again, you're in the space, you understand that's been out there for quite a while. It seemed like a good deal for both sides and we'll have to see how that plays out. But we are spending a large amount of our time ensuring that operators understand who we are and how we can be partners with them in the future.

[Shaun Kelley, analyst]

And one more, if I could. Just your general thoughts on, like, could you ever partner with a tribal entity like that to be a financing partner or source in that kind of transaction where, I guess, they would have the license? It's not -- that's not a structure that we've traditionally seen, but we do see the tribes more active in -- both in that transaction and obviously moving around in Atlantic City, some, too.

[John W. Payne, executive]

Yes, I think that if the buyer didn't want to have a whole code takedown and wanted to have a structure on a commercial casino that was in an opco propco, there's no reason at all why we couldn't be involved in that. Or in this case, if ultimately the tribe decides to monetize their assets of the asset they just purchased, there's no reason why VICI wouldn't have interest in that. So it is another avenue for partnership that we continue to build our relationships with others and to introduce them to us. Obviously, we're the third in the space and we need to make sure people understand how we think about deals.

[Edward Pitoniak, executive]

And I would just add, Shaun, that obviously if the property is on fee simple non-tribal land, there'd really be nothing technically that would prohibit us from doing such a deal with each other's benefit.

[Operator]

Your next question comes from the line of Mike Pace with JPMorgan.

[Michael Pace, analyst]

I know you touched a little bit on this in the prepared remarks, but I'm wondering as it relates to the timing of the Caesar call options, I think you talked about it in terms of looking at that strategically, I'm curious what you mean by that and why, given the 10x cap rates that you could buy those at and where your stock trades, why you wouldn't do that sooner rather than later?

[Edward Pitoniak, executive]

Yes, look, we will -- as we did say in the opening remarks, Mike, we will -- we very much value having these available to us over the next 5 years. And we're very, very mindful of the amount of accretion that should accrue to our owners the moment we take them down. What we will always do though is look at all opportunities in front of us to create value for the shareholder at a portfolio of opportunities. And if we've got opportunities to acquire properties accretively in the near to midterm that will not be around for 5 years in the way that the call properties will be, we would probably prioritize on those and move on those first. But always, again, remaining mindful of the accretion it will accrue to our owners through the exercise of them and not wait unduly and let long periods of dry spell go or any kind of dilutive holding of cash in the balance sheet if those opportunities are still out there. If -- sorry, if the call properties are still available to us.

[Michael Pace, analyst]

Got it. And then a balance sheet question. I'm just doing some math as you're throwing up numbers. Just the pro forma cash balance post IPO, call it, $800 million, can you confirm that? And then where would you like to run the balance sheet and leverage profile as M&A opportunities present themselves over time?

[David Kieske, executive]

Mike, nice to speak to you again. You're right on the cash. Post IPO, we're just north of $600 million, and with $184 million at year-end, so we're right at $800 million in totality today. We would like to run the balance sheet in kind of 5x to 5.5x total leverage. And so we sit in sub-5 today. That -- obviously, with all that cash, you'd expect it to increase. But our goal over the long term is in that low-5s range.

[Michael Pace, analyst]

And just one more. As it relates to as you guys were heading into the IPO process, I guess MGP tossed out an offer for the company. So -- and I'm curious just your thoughts on why the board thought that the IPO and standalone business was the better path forward for stakeholders?

[Edward Pitoniak, executive]

Yes, thanks, Mike. Yes, we obviously -- the board, management and all of our advisers obviously considered the proposal very carefully and evaluated it in relation to all the other options we have available to create shareholder value. And at the end of the day, we believe, and continue to believe, that pursuing the IPO path, which we were highly committed to at that point and frankly, highly invested in, was the best path forward at that time to fully establish the company's independence and sovereignty and give everyone a clear picture of what the market truly believes VICI is worth. And obviously, the success of our IPO, we think, validates that strategy. We will always, always, in every point along the way, evaluate any and all opportunities we have to create the greatest amount of shareholder value for VICI's owners. But again, at that time, we believe it was, and still continue to believe, it was the best path forward.

[Operator]

Your next question comes from the line of Thomas Allen with Morgan Stanley.

[Thomas Allen, analyst]

Just first, kind of a housekeeping numbers question. On G&A, you mentioned that there was $2 million of sign-on expenses in the fourth quarter. But can you just help us think -- and then you said there were onetime legal and licensing costs. Could you quantify that? And then you said there'd be some higher cost into 1H '18, can you help us think how to quantify that, too?

[David Kieske, executive]

Yes, Tom, this is David. I mean, the G&A we've incurred has many onetime items, systems, licensing, the team, the board, internal policies and procedures, the Form 10. So happy to work with you offline in going through some of that detail, but there's a lot of startup costs associated with this -- the company and the business that we don't expect to incur over the long term. But as we continue to build out the team and get this company to where it needs to be, there will be some additional costs that we are going to incur here probably in the first half of the year.

[Thomas Allen, analyst]

I guess we had G&A running at $24 million for 2018. Is that like the right long-term run rate? And should it be higher than that in the -- a couple of million bucks a quarter higher than that in the first half?

[David Kieske, executive]

Yes, $24 million is a good long-term run rate and that's where this company will operate at. But yes, there would probably be a couple of million in the first quarter, too, as we continue -- really, primarily around recruiting and legal, licensing, as all the board has to be licensed for gaming, the team has to be licensed for gaming, so there's some costs -- some setup costs associated with that.

[Edward Pitoniak, executive]

One of the lessons -- Tom, this is Ed, one of the lessons I had taken from this as someone who comes out of real estate into the gaming sector is how much time and moreover, expense is associated with establishing a company within the gaming space. And one of the lessons I take from it is, again, how barriered a business this is. This is not a business any real estate owner can simply hang a shingle on and say that they are in given the licensing requirements, even on a REIT. And those will, as David says, continue to be a cost item for us in the very early part of 2018.

[Thomas Allen, analyst]

I'm sure you loved them calling up your high school and asking for your transcripts in order to get a license. And so final question. Recognizing that your rent is well covered, but you obviously own some properties in Atlantic City, how are you thinking about the new supply coming into that market? And because -- both just from past experience as well as in terms of your rent coverage?

[John W. Payne, executive]

Yes, Tom, this is John Payne. Obviously, there's -- the Hard Rock is going to open up their facility. I think they're shooting for the summer. And I won't predict, and you can ask others about what's going to happen with the old Revel and when does that happen -- when does that open or not. Obviously, Atlantic City has gone through quite a bit of change. We feel good about the positioning of the 2 properties that we have at -- in center field or center Boardwalk, if you want to put that. Obviously, in a market like this that adds new supply, there usually is an impact to the current businesses, and we think they'll have -- the current businesses will have some impact. But we've got a great operator that's been through this before. They operate 2 assets that we own the real estate on and we think they'll do an excellent job of their plans to continue to build loyalty with their customers. And then the final piece will be, because Atlantic City has not had new supply in the market, adding new supply that will be a little bit different, because I think the Hard Rock's going to build a world-class facility with a lot of entertainment, that could bring back some customers that have left that market. And with the 2 assets that are next to the Hard Rock, that we own the real estate on that Caesars manage, there should be some foot traffic that ends up being positive to the Caesars properties, in particular, during the summer. So that would be my thoughts on Atlantic City.

[Operator]

[Operator Instructions] Your next question comes from the line of David Hargreaves with Stifel Financial.

[David Hargreaves, analyst]

This is kind of related. In thinking about the call properties and the mechanics of how that would work, I'm assuming that the price that you pay would be based on the EBITDA at the time? Or was that at the time the deal was struck? And -- so what I'm getting at is, if you think there's a possibility that there could be a decline in the EBITDA of those properties, the fact that you're waiting is a reflection of your expectation of how those properties are going to do? Or am I being too imaginative?

[David Kieske, executive]

No, you're right, David. This is David Kieske. The valuation is based on the LTM performance whenever we call the -- we put the call into Caesars. So -- but, as Ed said, it's really a function of we think about those in our back pocket. And so we don't sit here and trying to time the market with those -- the performance. Because, remember, the 10% cap plus is a [ 167 ] coverage. So we want to buy as much rent as we can. But it's really just a function of everything else that we have and making sure that we deliver kind of consistent year-in and year-out growth to our shareholders.

[David Hargreaves, analyst]

And now, so you have some golf courses in your portfolio, and I'm wondering if you could sort of rank sort of where golf courses are in terms of priority from different asset classes that you'd like to own. And I guess what I'm kind of getting at with this question, and I'll just ask it, ClubCorp has got a vehicle built into its notes that would allow them to do sale-leaseback type transactions, and there's obviously some related Apollo ownership there. Wondering how to think about that. Do you want to get bigger in golf courses? Is that an asset class that's a priority for you? And should we be thinking that maybe that relationship could grow into something there? Anything you could offer would be appreciated.

[Edward Pitoniak, executive]

Yes, David, this is Ed Pitoniak. Just to be clear, we do not obviously have a direct relationship with Apollo, given that Apollo owns, as far as we know, nothing of VICI. Apollo, obviously, is a very significant owner of Caesars. We're very proud of the 4 golf courses we own, and we're going to run them very well. We're going to take very good care of our people, who, in turn, will take very good care of our guests. When it comes to expanding into golf or frankly, any other adjacent leisure and hospitality sector outside of gaming, we will evaluate any and all sectors, including golf, in terms of the degree to which we feel that sector has secular tailwinds behind it based on demographics, cultural trends, economic trends and other factors. And it would be premature at this point to say we've begun evaluating those sectors for those characteristics.

[David Hargreaves, analyst]

Okay, so it's early. And I didn't mean to imply that you guys have a direct relationship, but I imagine you all kind of know each other. So thanks for that comment.

[Edward Pitoniak, executive]

Thanks, David.

[Operator]

Your next question comes from the line of Stephen Grambling with Goldman Sachs.

[Stephen Grambling, analyst]

You mentioned diversifying the portfolio and being willing to take on smaller deals kind of for the hope of larger deals down the line. Is there a minimum threshold you would consider, particularly when considering adding a property outside of the existing master lease?

[John W. Payne, executive]

Not at this time. This is John speaking. Again, we are spending a lot of -- well, I'm spending the majority of my time out meeting with operators so they can understand the VICI story. We have not put a minimum amount of EBITDAR that we would acquire at a time, but we'd be clear if we bought a smaller property why we think that's important, not only for the current deal that would need to be accretive, but that it's with a partner that ultimately could lead us to a greater partnership, whether that's in a year or 2 or 3 years. So we have not put a, for example, a $40 million or a $50 million of EBITDAR out there. We just think that, as a new company, that limits us to the conversations that we possibly could have.

[Edward Pitoniak, executive]

I think the other thing I'd add, Stephen, is that given the nature of our business as a triple-net lease REIT, if we were to acquire property with a smaller amount of rent, we can acquire that rent without having to add to our overhead. The addition of that property to the portfolio would not create incremental asset management, property management, leasing or CapEx project management costs because we generally have no costs in any of those areas as a triple-net REIT.

[Stephen Grambling, analyst]

Understood. And so then maybe a change in the line of questioning here, but how does the recent increase in rates impact your priorities for the call options? Is there kind of a minimum threshold where if rates move, you would prioritize the call option properties? And can you just remind us what percentage of your debt is fixed versus floating?

[David Kieske, executive]

Stephen, it's David. Right now, we're about 50-50 fixed-floating, and we're going to work -- we're evaluating options right now on how to kind of match fund obviously our leases with that interest rate volatility so I'd expect something here in the Q2 probably on terming out some of that debt, so to speak. We don't look at the call properties with risk around the rising rates. I mean, we think, as we continue to execute on our business and lower our cost of capital, those should be even more accretive going forward over time. But -- and again, it's sort of the back pocket opportunity to bring those in to our shareholder base over the -- they are there for 5 years regardless and other things in the market come and go.

[Edward Pitoniak, executive]

The other thing I'd add, Stephen, is that if we do see rising rates, it would appear, at this point, to be likely going hand in hand with an overall strengthening of the economy. And when obviously you looked at today's jobs report, as we continue to look at pretty strong wage growth, especially between the coasts where we sort of have so many assets, if we were looking at rising rates on the one hand, we're probably also looking at rising revenue growth and profitability for these assets as they and their operator, Caesars, is able to take advantage of or capitalize on that economic growth, that wage growth and that discretionary consumer spending.

[Operator]

There are no further questions in the queue at this time. I will turn the call back over to Mr. Ed Pitoniak.

[Edward Pitoniak, executive]

Thank you, Scott. In closing, I'd like to reemphasize the 4 key strategic pillars of our business. Pillar #1, we love the magnitude, irreplaceability, durability and barriered nature of our real estate portfolio. It's the most economically majestic leisure and hospitality real estate I've had the privilege of working with in my leisure and hospitality career.

Pillar #2, we are honored to partner with Caesars and their foundational tenant. Their market-leading loyalty program and network effect, their operating excellence and their strong economics and balance sheet underwrite the quality and durability of our foundational real estate cash flows.

Pillar #3, we benefit greatly from our equity capital coming from the smartest real estate and gaming investors I've ever worked with. They have given us a balance sheet that is strong and low risk, and everything we do in the future will sustain this strength and low-risk profile.

Pillar #4, our governance and independence ensure we work for one, and only one class of owner, the common shareholder. And that independence and sovereignty of the common shareholder will lead to both superior returns and moreover, a superior growth profile.

Thanks again for your time today. We look forward to providing an update on our continued progress when we report our first quarter results. Thanks, everyone. And Scott, that ends the call.

[Operator]

This concludes today's conference call. You may now disconnect.