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VICI · Value
Date: 2026-03-20 | Current Price: $27.25 | Valuation Analyst
Model 1: Graham's Intrinsic Value
Formula: sqrt(22.5 x EPS x BVPS)
| Input | Value |
|---|---|
| EPS (TTM) | $2.61 |
| BVPS | $26.01 |
| Graham's Number | sqrt(22.5 x 2.61 x 26.01) = sqrt(1,527.29) = $39.09 |
Implied Fair Value: $39.09 Current Price vs. Graham: $27.25 / $39.09 = 0.70x -- 30% margin of safety
Applicability to VICI: LOW-MODERATE (Weight: 10%)
Graham's formula was designed for asset-heavy industrials, not REITs. REIT earnings are distorted by depreciation (non-cash charges on properties that often appreciate), making EPS unreliable. BVPS for REITs understates true asset value since properties are carried at historical cost minus depreciation, not market value. The $39.09 figure is directionally interesting -- it confirms VICI isn't overvalued on a balance-sheet basis -- but it should not be a primary valuation anchor for a net-lease REIT. I include it for completeness only.
Model 2: Bogle's Expected Return
Formula: Expected Return = Dividend Yield + Earnings Growth +/- P/E Multiple Change (annualized)
For REITs, I substitute AFFO growth for earnings growth and P/AFFO for P/E.
5-Year Horizon
| Scenario | Div Yield | AFFO Growth | P/AFFO Now | Terminal P/AFFO | Multiple Change (annualized) | Expected Annual Return |
|---|---|---|---|---|---|---|
| Bear | 6.37% | 3.0% | 11.7x | 11.0x | -1.2% | 8.2% |
| Base | 6.37% | 4.0% | 11.7x | 13.0x | +2.1% | 12.5% |
| Bull | 6.37% | 5.0% | 11.7x | 15.0x | +5.1% | 16.5% |
Multiple change annualized: ((Terminal / Current)^(1/5) - 1)
10-Year Horizon
| Scenario | Div Yield | AFFO Growth | P/AFFO Now | Terminal P/AFFO | Multiple Change (annualized) | Expected Annual Return |
|---|---|---|---|---|---|---|
| Bear | 6.37% | 3.0% | 11.7x | 11.0x | -0.6% | 8.8% |
| Base | 6.37% | 4.0% | 11.7x | 13.0x | +1.1% | 11.5% |
| Bull | 6.37% | 5.0% | 11.7x | 15.0x | +2.5% | 13.9% |
Key Insight: Even in the bear case (no multiple expansion, sluggish growth), the 6.37% dividend yield floors your total return near 8-9% annually. The base case of 11-12.5% is compelling for an income-oriented REIT position. The dividend yield does a lot of heavy lifting here.
Applicability to VICI: MODERATE (Weight: 15%)
Bogle's model is useful for framing total return expectations over time. It handles REITs reasonably well when you use AFFO instead of EPS. The main uncertainty is the terminal multiple -- if rates stay elevated, 11x may persist; if rates normalize, reversion to 13-15x is realistic based on VICI's historical range.
Model 3: Dividend Yield Theory (DYT)
Principle: Compare the current dividend yield to the historical average. A yield significantly above average suggests undervaluation (price has fallen relative to dividends); below average suggests overvaluation.
| Metric | Value |
|---|---|
| Current Yield | 6.37% |
| 3-Year Average Yield | ~4.8-5.2% (estimated from VICI's post-IPO history at $28-32 range) |
| 5-Year Average Yield | ~4.6-5.0% (VICI traded $25-34, dividend was lower historically) |
| Yield Premium vs. 5yr Avg | ~1.4-1.8 percentage points above average |
DYT-Implied Fair Value Calculation:
If VICI's "normal" yield is ~5.0% and the current annual dividend is ~$1.75: - Fair Value at 5.0% yield = $1.75 / 0.050 = $35.00 - Fair Value at 4.8% yield = $1.75 / 0.048 = $36.46 - Fair Value at 5.5% yield (cautious, rates higher) = $1.75 / 0.055 = $31.82
DYT Range: $31.82 - $36.46 | Midpoint: ~$34.00
Signal: Current yield 6.37% is well above any reasonable historical average. This is a clear undervaluation signal per DYT.
Caveat: VICI has a short public history (IPO 2018). The historical average is influenced by the low-rate era of 2020-2021 when all REITs traded at compressed yields. A higher-for-longer rate environment may structurally shift the "normal" yield upward. I use the cautious end of the range ($31.82) as my DYT anchor.
Applicability to VICI: MODERATE-HIGH (Weight: 15%)
DYT works well for stable, predictable dividend payers -- which VICI is. The main limitation is the short yield history and the structural rate shift since 2022. Still, the signal is strong enough to be meaningful.
Model 4: Dividend Discount Model (DDM)
Formula: Fair Value = D1 / (r - g) where D1 = next year's expected dividend, r = discount rate, g = perpetual growth rate.
Assumptions: - Current annual dividend: $1.75/share - D1 (next year): grown by expected growth rate - Discount rate (r): 9.0% -- reflects REIT equity risk premium (risk-free ~4.3% + REIT spread ~4.7%, accounting for VICI's gaming tenant concentration risk)
| Scenario | Growth Rate (g) | D1 | Fair Value | vs. Current Price |
|---|---|---|---|---|
| Conservative | 4.0% | $1.82 | $1.82 / (0.09 - 0.04) = $36.40 | +34% upside |
| Base | 5.0% | $1.8375 | $1.8375 / (0.09 - 0.05) = $45.94 | +69% upside |
| Optimistic | 6.0% | $1.855 | $1.855 / (0.09 - 0.06) = $61.83 | +127% upside |
Sensitivity Table -- DDM Fair Value by Discount Rate and Growth Rate
| g = 3.5% | g = 4.0% | g = 4.5% | g = 5.0% | g = 5.5% | g = 6.0% | |
|---|---|---|---|---|---|---|
| r = 8.0% | $40.25 | $45.50 | $52.50 | $62.22 | $76.56 | $100.63 |
| r = 8.5% | $36.23 | $40.44 | $45.94 | $53.36 | $63.88 | $80.08 |
| r = 9.0% | $32.95 | $36.40 | $40.83 | $46.72 | $54.91 | $67.16 |
| r = 9.5% | $30.21 | $33.09 | $36.75 | $41.50 | $47.84 | $57.00 |
| r = 10.0% | $27.88 | $30.33 | $33.41 | $37.33 | $42.44 | $49.50 |
Note: Cells where g approaches r become unreliable (too sensitive). I bold the r=9%, g=4-5% range as most defensible.
Most Defensible DDM Range: $36.40 (conservative) to $45.94 (base)
Why 5% base-case growth is reasonable but aggressive: - Historical 3-year dividend CAGR: 8.0% -- but this included catch-up growth post-IPO and acquisition-driven jumps - AFFO growth guidance for 2026: 1.7-2.9% -- organic growth is slowing - CPI escalators cover 42% of rents now (90% over full lease life), providing ~1.5-2% organic growth - Acquisitions could add 1-2% growth, but at the cost of dilution (~1.2%/yr share growth) - Realistic sustainable dividend growth: 4-5%, leaning toward 4% to be conservative
I anchor to the conservative scenario ($36.40) given decelerating AFFO growth.
Applicability to VICI: HIGH (Weight: 30%)
DDM is the natural valuation model for REITs. VICI's 100% occupancy, 40-year WALT, and contractual rent escalators make cash flows highly predictable -- exactly the conditions where DDM excels. The main risk is the perpetual growth assumption; if growth stalls at 3%, fair value drops to ~$33. Still, the model strongly supports undervaluation at $27.25.
Model 5: AFFO-Based Valuation (REIT-Specific -- Primary Model)
This is the most appropriate model for REIT valuation. It's the REIT equivalent of P/E-based valuation for operating companies.
Multiple-Based Fair Value
2026E AFFO/share: $2.44 (midpoint of $2.42-$2.45 guidance)
| Scenario | Target P/AFFO | Rationale | Implied Fair Value |
|---|---|---|---|
| Bear | 11.0x | Rates stay elevated, Caesars overhang persists | $2.44 x 11.0 = $26.84 |
| Base | 13.0x | Modest multiple recovery as rate fears ease | $2.44 x 13.0 = $31.72 |
| Bull | 15.0x | Rates normalize, VICI re-rates toward O/NNN peers | $2.44 x 15.0 = $36.60 |
Peer Comparison
| Peer | P/AFFO | Tenant Diversity | WALT | Notes |
|---|---|---|---|---|
| Realty Income (O) | 15-17x | High (multi-sector) | ~9 yr | Premium for diversification |
| GLPI | 12-13x | Low (gaming) | ~30 yr | Closest comp |
| VICI | 11.7x | Low (gaming, Caesars 39%) | ~40 yr | Discount to GLPI despite longer WALT |
| NNN | 14-15x | Moderate | ~10 yr | Diversified net-lease |
| STORE (acquired) | 13-14x | High | ~14 yr | Was a diversification premium |
VICI trades at a meaningful discount to every net-lease peer. The discount is partially justified by: 1. Gaming tenant concentration (Caesars = 39% of rent) 2. Fertitta/Caesars leveraged buyout overhang 3. Shorter public track record vs. O or NNN
But VICI's 40-year WALT and 100% occupancy are best-in-class. Even GLPI, the closest gaming REIT comp, trades 1-2 multiple turns higher. A 12-13x multiple (matching GLPI) seems like a reasonable floor, implying $29-$32.
AFFO Growth + Discount Rate Model (10-Year DCF-Lite)
Assumptions: - Starting AFFO/share: $2.44 (2026E) - AFFO growth: 4%/year (conservative -- CPI escalators + modest acquisitions - dilution) - Terminal P/AFFO at Year 10: 13x - Discount rate: 9% - Dividends: 74% of AFFO, reinvested at 0% (income collected, not compounded)
| Year | AFFO/Share | Dividend/Share |
|---|---|---|
| 2026 | $2.44 | $1.81 |
| 2027 | $2.54 | $1.88 |
| 2028 | $2.64 | $1.95 |
| 2029 | $2.74 | $2.03 |
| 2030 | $2.85 | $2.11 |
| 2031 | $2.97 | $2.20 |
| 2032 | $3.08 | $2.28 |
| 2033 | $3.21 | $2.37 |
| 2034 | $3.34 | $2.47 |
| 2035 | $3.47 | $2.57 |
Terminal Value (Year 10): $3.47 x 13 = $45.11/share
Present Value Calculation (9% discount):
| Year | Cash Flow | Discount Factor | PV |
|---|---|---|---|
| 1 | $1.81 | 0.917 | $1.66 |
| 2 | $1.88 | 0.842 | $1.58 |
| 3 | $1.95 | 0.772 | $1.51 |
| 4 | $2.03 | 0.708 | $1.44 |
| 5 | $2.11 | 0.650 | $1.37 |
| 6 | $2.20 | 0.596 | $1.31 |
| 7 | $2.28 | 0.547 | $1.25 |
| 8 | $2.37 | 0.502 | $1.19 |
| 9 | $2.47 | 0.460 | $1.14 |
| 10 | $2.57 + $45.11 | 0.422 | $20.12 |
| Total PV | $32.57 |
AFFO DCF-Lite Fair Value: $32.57
Applicability to VICI: HIGHEST (Weight: 30%)
This is the gold standard for REIT valuation. AFFO strips out the depreciation distortion that makes P/E misleading for REITs. VICI's contractual cash flows, long WALT, and 100% occupancy make AFFO projections unusually reliable. The 13x terminal multiple is conservative vs. historical norms but realistic in a higher-rate environment.
Synthesis: Weighted Fair Value
| Model | Fair Value | Weight | Weighted Contribution |
|---|---|---|---|
| Graham's Number | $39.09 | 10% | $3.91 |
| Bogle's (implied from base 5yr) | ~$34* | 15% | $5.10 |
| DYT (cautious) | $31.82 - $36.46 | 15% | $5.12 |
| DDM (conservative) | $36.40 | 30% | $10.92 |
| AFFO DCF-Lite | $32.57 | 30% | $9.77 |
| Weighted Fair Value | 100% | $34.82 |
Bogle's implied price: for the base case to deliver 12.5% return, with 6.37% yield and 4% growth, the remaining ~2.1% comes from multiple expansion to ~13x, implying a 5yr target of ~$34.
Fair Value Range
| Low | Mid | High | |
|---|---|---|---|
| Fair Value | $31.00 | $34.00 | $38.00 |
| Upside from $27.25 | +13.8% | +24.8% | +39.4% |
- Low ($31): Rates stay elevated, Caesars overhang persists, AFFO growth ~3%, multiple stays at ~12x
- Mid ($34): Modest rate normalization, AFFO grows 4%, multiple recovers to 13x, Caesars fears ease
- High ($38): Rate cuts materialize, AFFO grows 5%, multiple re-rates to 14-15x, diversification progress
Margin of Safety at $27.25
| vs. Fair Value | Margin of Safety |
|---|---|
| vs. Low ($31) | 12.1% |
| vs. Mid ($34) | 19.9% |
| vs. High ($38) | 28.3% |
| vs. Weighted ($34.82) | 21.7% |
Total Return Potential (5-Year, Base Case)
| Component | Annual | 5-Year Cumulative |
|---|---|---|
| Dividend Yield | 6.37% | ~35.6% (growing dividends) |
| Price Appreciation (to $34) | ~4.5%/yr | ~24.8% |
| Total Return | ~10.9%/yr | ~60.4% |
In the bull case (price recovers to $38), total 5-year return approaches 80-90% (~13-14%/yr).
Final Assessment
Verdict: UNDERVALUED
VICI Properties is undervalued by approximately 20-25% relative to a conservatively estimated fair value of ~$34/share. Every model I ran -- even Graham's, which is poorly suited for REITs -- points to a price materially above current levels. The stock is trading at a discount to its closest gaming REIT peer (GLPI) despite having a longer WALT and comparable credit quality.
What's keeping the price down (and whether it's justified):
- Interest rate sensitivity -- REIT multiples compressed across the board. Partially justified, but the yield spread vs. 10-year Treasuries (~4.3%) is still ~200bps, which is historically attractive.
- Caesars concentration / Fertitta overhang -- 39% rent concentration is a real risk. Partially justified, worth ~1-2 turns of P/AFFO discount, but the market may be overpricing it.
- Decelerating AFFO growth -- Guidance of 1.7-2.9% for 2026 is underwhelming. Justified, but the dividend yield compensates. This is an income stock, not a growth stock.
- $1.75B debt maturity in H2 2026 -- Refinancing at higher rates. Temporary headwind, manageable given 4.3x interest coverage.
Key Risk to This Valuation:
If rates stay elevated (10yr >5%) for multiple years and AFFO growth stalls at <2%, fair value compresses to $28-30 and the current price is closer to fairly valued. The 6.37% yield provides a substantial income floor, but capital appreciation would be minimal.
Conservative Stance:
I anchor to the lower end of my range. $31-34 is the defensible fair value zone. At $27.25, VICI offers a margin of safety even against the cautious end, plus a 6.37% yield that grows. For an income-oriented investor, the risk/reward is favorable.