MGM Growth, VICI Properties Among Top Net Lease Ideas, Says Research Firm

Gaming real acres investment funds trusts (REITs) MGM Growth Properties (NYSE:MGP) and VICI Properties (NYSE:VICI) are preferred ideas among real acres equities with the meshwork take designation, according to a search firm.

In its recent “Finding Opportunities inwards REITs” webcast, Baird explored ideas across several real land sub-sectors, including manufactured housing, clear lease, and shopping centers. It came outside with “outperform” rated ideas for the catch one's breath of the year. The brace of gaming REITs made the cut.

The term net term of a contract refers to a contractual correspondence where a lessee pays a portion or all of the taxes, insurance fees, and criminal maintenance costs for a property, inward increase to rent,” according to Investopedia.

This construction is vulgar in commercial-grade existent estate, and the tenant, say MGM Resorts International (NYSE:MGM), pays for all the prop criminal maintenance as if it owned it outright.

Good Times for Gaming REITs

There are ternary publicly traded gaming REITs inwards the US – Gaming and Leisure Properties, Inc. (NASDAQ:GLPI), MGM Growth, and VICI.

At the tallness of the coronavirus pandemic when house servant gaming venues were shuttered, these stocks came below significant duress amid concerns that operator tenants would battle to foregather let obligations inward a zero-revenue environment. Those fears proven inaccurate, as gaming companies were able prove cash, and the tangible land companies collected nearly all rent, even out during the darkest days of the health crisis.

Today, the likes of MGP and VICI are thriving. Over the past tense year, shares of the ii gaming REITs are upwards an intermediate of 46 percent – comfortably in the lead of the 34.76 percent returned by the MSCI US Investable Market Real Estate 25/50 Index, a widely followed basket of real land equities.

In the showcase of MGP, that existent demesne accompany is levered to retrieval on the Las Vegas Strip, because it owns the volume of MGM’s existent acres there. Following the recent acquisition of MGM Springfield, MGP owns essentially all of the belongings on which MGM’s domestic casinos operate.

Other Reasons to Like MGP, VICI

Baird favors gaming REITs among mesh engage names because there’s less contention and the product isn’t commoditized. The explore unfluctuating also likes the duo as plays on rising inflation.

For example, Caesars Palace possessor VICI has split escalators in its renter contracts which are fastened to the Consumer Price Index (CPI). That gage is on a torrid stride of late, soaring in Apr and May. Those escalators involve VICI and other REITs hold pricing power, explaining why investors historically favor existent land as an inflation play.

Caesars Entertainment (NASDAQ:CZR) is VICI’s biggest client, but different MGP, it has other tenants.

While MGP currently lacks renter diversity, Baird said the name offers upside possibilities by way of possible equity index number comprehension and acquisitions. Additionally, MGM is expected to go on paring its post inward MGP. That relocation is broadly applauded past analysts, as it testament help the existent acres business firm pull ahead greater autonomy.

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