Item 1. Financial Statements

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Item 1. Financial Statements

VICI PROPERTIES INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except share and per share data)


	September 30, 2023		December 31, 2022
Assets
Real estate portfolio:
Investments in leases - sales-type, net	$	22,889,984	$	17,172,325

Investments in leases - financing receivables, net	17,337,665		16,740,770
Investments in loans and securities, net	973,217		685,793
Investment in unconsolidated affiliate	—		1,460,775
Land	150,727		153,560
Cash and cash equivalents	510,884		208,933

Short-term investments	—		217,342
Other assets	969,672		936,328
Total assets	$	42,832,149	$	37,575,826

Liabilities
Debt, net	$	16,692,728	$	13,739,675
Accrued expenses and deferred revenue	222,430		213,388
Dividends and distributions payable	426,861		380,178
Other liabilities	954,448		952,472
Total liabilities	18,296,467		15,285,713

Commitments and contingent liabilities (Note 10)

Stockholders’ equity
Common stock, $0.01 par value, 1,350,000,000 shares authorized and 1,016,827,883 and 963,096,563 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	10,168		9,631
Preferred stock, $0.01 par value, 50,000,000 shares authorized and no shares outstanding at September 30, 2023 and December 31, 2022	—		—
Additional paid-in capital	23,316,140		21,645,499
Accumulated other comprehensive income	186,241		185,353
Retained earnings	652,402		93,154
Total VICI stockholders’ equity	24,164,951		21,933,637
Non-controlling interests	370,731		356,476
Total stockholders’ equity	24,535,682		22,290,113
Total liabilities and stockholders’ equity	$	42,832,149	$	37,575,826

Note: As of September 30, 2023 and December 31, 2022, our Investments in leases - sales-type, Investments in leases - financing receivables, Investments in loans and securities, and Other assets (sales-type sub-leases) are net of allowance for credit losses of $755.4 million, $707.0 million, $22.8 million and $19.3 million, respectively, and $570.4 million, $726.7 million, $6.9 million and $19.8 million, respectively. Refer to Note 5 - Allowance for Credit Losses for further details.

See accompanying Notes to Consolidated Financial Statements.

VICI PROPERTIES INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

(In thousands, except share and per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues
Income from sales-type leases	$	500,212	$	376,048	$	1,473,961	$	1,077,952

Income from lease financing receivables, loans and securities	378,502		350,945		1,122,703		685,544
Other income	18,179		17,862		55,043		41,811
Golf revenues	7,425		6,688		28,416		25,484
Total revenues	904,318		751,543		2,680,123		1,830,791

Operating expenses
General and administrative	14,422		12,063		44,347		33,311
Depreciation	1,011		816		2,712		2,371
Other expenses	18,179		17,862		55,043		41,811
Golf expenses	6,332		5,186		18,874		16,330
Change in allowance for credit losses	95,997		232,763		166,119		865,459
Transaction and acquisition expenses	3,566		1,947		3,385		19,366
Total operating expenses	139,507		270,637		290,480		978,648

Income from unconsolidated affiliate	—		22,719		1,280		37,853
Interest expense	(204,927)		(169,354)		(612,881)		(370,624)
Interest income	7,341		3,024		16,194		3,897

Other (losses) gains	(1,122)		—		4,295		—
Income before income taxes	566,103		337,295		1,798,531		523,269
Income tax expense	(644)		(417)		(3,630)		(1,844)
Net income	565,459		336,878		1,794,901		521,425
Less: Net income attributable to non-controlling interests	(9,130)		(5,973)		(29,130)		(7,843)
Net income attributable to common stockholders	$	556,329	$	330,905	$	1,765,771	$	513,582

Net income per common share
Basic	$	0.55	$	0.34	$	1.75	$	0.61
Diluted	$	0.55	$	0.34	$	1.75	$	0.60

Weighted average number of shares of common stock outstanding
Basic	1,012,986,784		962,573,646		1,007,110,068		848,839,357
Diluted	1,013,589,640		964,134,340		1,008,437,452		850,823,037

Other comprehensive income
Net income	$	565,459	$	336,878	$	1,794,901	$	521,425
Reclassification of derivative gain to Interest expense	(6,037)		(6,037)		(18,111)		(10,196)
Unrealized gain on cash flow hedges	20,109		—		20,289		200,550
Foreign currency translation adjustments	(1,348)		—		(1,280)		—
Comprehensive income	578,183		330,841		1,795,799		711,779
Comprehensive income attributable to non-controlling interest	(9,283)		(5,897)		(29,140)		(7,715)
Comprehensive income attributable to common stockholders	$	568,900	$	324,944	$	1,766,659	$	704,064

See accompanying Notes to Consolidated Financial Statements.

VICI PROPERTIES INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(In thousands, except share and per share data)


	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Retained Earnings (Deficit)		Total VICI Stockholders’ Equity		Non-controlling Interests		Total Stockholders’ Equity
Balance as of December 31, 2021	$	6,289	$	11,755,069	$	884	$	346,026	$	12,108,268	$	78,906	$	12,187,174
Net income	—		—		—		240,383		240,383		2,305		242,688
Issuance of common stock, net	1,190		3,216,907		—		—		3,218,097		—		3,218,097
Dividends and distributions declared ($0.3600 per common share)	—		—		—		(270,600)		(270,600)		(2,103)		(272,703)
Stock-based compensation, net of forfeitures	5		(86)		—		—		(81)		—		(81)
Unrealized gain on cash flow hedges	—		—		108,611		—		108,611		—		108,611
Balance as of March 31, 2022	7,484		14,971,890		109,495		315,809		15,404,678		79,108		15,483,786
Net loss	—		—		—		(57,706)		(57,706)		(435)		(58,141)
Issuance of common stock, net	2,147		6,570,084		—		—		6,572,231		—		6,572,231
Issuance of VICI OP Units	—		—		—		—		—		374,769		374,769
Reallocation of equity	—		99,029		(52)		—		98,977		(94,573)		4,404
Dividends and distributions declared ($0.3600 per common share)	—		—		—		(346,713)		(346,713)		(6,465)		(353,178)
Stock-based compensation, net of forfeitures	—		3,195		—		—		3,195		41		3,236
Reclassification of derivative gain to Interest expense	—		—		(4,107)		—		(4,107)		(52)		(4,159)
Unrealized gain on cash flow hedges	—		—		91,939		—		91,939		—		91,939
Balance as of June 30, 2022	9,631		21,644,198		197,275		(88,610)		21,762,494		352,393		22,114,887
Net income	—		—		—		330,905		330,905		5,973		336,878

Reallocation of equity	—		(5,702)		—		—		(5,702)		1,298		(4,404)

Dividends and distributions declared ($0.3900 per common share)	—		—		—		(375,606)		(375,606)		(6,914)		(382,520)
Stock-based compensation, net of forfeitures	—		3,449		—		—		3,449		44		3,493
Reclassification of derivative gain to Interest expense	—		—		(5,961)		—		(5,961)		(76)		(6,037)

Balance as of September 30, 2022	$	9,631	$	21,641,945	$	191,314	$	(133,311)	$	21,709,579	$	352,718	$	22,062,297

VICI PROPERTIES INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(UNAUDITED)

(In thousands, except share and per share data)


	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Retained Earnings (Deficit)		Total VICI Stockholders’ Equity		Non-controlling Interests		Total Stockholders’ Equity
Balance as of December 31, 2022	$	9,631	$	21,645,499	$	185,353	$	93,154	$	21,933,637	$	356,476	$	22,290,113
Net income	—		—		—		518,740		518,740		9,121		527,861
Issuance of common stock, net	406		1,271,066		—		—		1,271,472		—		1,271,472
Reallocation of equity	—		(4,936)		—		—		(4,936)		4,936		—
Dividends and distributions declared ($0.3900 per common share)	—		—		—		(391,640)		(391,640)		(7,048)		(398,688)
Stock-based compensation, net of forfeitures	5		(1,120)		—		—		(1,115)		(14)		(1,129)
Reclassification of derivative gain to Interest expense	—		—		(5,964)		—		(5,964)		(73)		(6,037)
Unrealized loss on cash flow hedges	—		—		(7,304)		—		(7,304)		(89)		(7,393)
Foreign currency translation adjustments	—		—		(1,644)		—		(1,644)		(20)		(1,664)
Balance as of March 31, 2023	10,042		22,910,509		170,441		220,254		23,311,246		363,289		23,674,535
Net income	—		—		—		690,702		690,702		10,879		701,581
Issuance of common stock, net	32		101,435		—		—		101,467		—		101,467
Reallocation of equity	—		(651)		—		—		(651)		651		—
Dividends and distributions declared ($0.3900 per common share)	—		—		—		(392,897)		(392,897)		(7,048)		(399,945)
Stock-based compensation, net of forfeitures	—		3,620		—		—		3,620		49		3,669
Reclassification of derivative gain to Interest expense	—		—		(5,964)		—		(5,964)		(73)		(6,037)
Unrealized gain on cash flow hedges	—		—		7,482		—		7,482		91		7,573
Foreign currency translation adjustments	—		—		1,711		—		1,711		21		1,732
Balance as of June 30, 2023	10,074		23,014,913		173,670		518,059		23,716,716		367,859		24,084,575
Net income	—		—		—		556,329		556,329		9,130		565,459
Issuance of common stock, net	94		298,159		—		—		298,253		—		298,253
Reallocation of equity	—		(897)		—		—		(897)		897		—
Dividends and distributions declared ($0.4150 per common share)	—		—		—		(421,986)		(421,986)		(7,354)		(429,340)
Stock-based compensation, net of forfeitures	—		3,965		—		—		3,965		46		4,011
Reclassification of derivative gain to Interest expense	—		—		(5,965)		—		(5,965)		(72)		(6,037)
Unrealized gain on cash flow hedges	—		—		19,870		—		19,870		239		20,109
Foreign currency translation adjustments	—		—		(1,334)		—		(1,334)		(14)		(1,348)
Balance as of September 30, 2023	$	10,168	$	23,316,140	$	186,241	$	652,402	$	24,164,951	$	370,731	$	24,535,682

See accompanying Notes to Consolidated Financial Statements.

VICI PROPERTIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities
Net income	$	1,794,901	$	521,425
Adjustments to reconcile net income to cash flows provided by operating activities:
Non-cash leasing and financing adjustments	(383,688)		(230,522)
Stock-based compensation	11,517		9,359
Non-cash transaction costs	—		8,816
Depreciation	2,712		2,371
Other (gains) losses	(4,295)		—
Amortization of debt issuance costs and original issue discount	35,415		28,099
Change in allowance for credit losses	166,119		865,459
Income from unconsolidated affiliate	(1,280)		(37,853)
Distributions from unconsolidated affiliate	3,273		40,437
Net proceeds from settlement of derivatives	—		201,433
Change in operating assets and liabilities:
Other assets	134		(4,052)
Accrued expenses and deferred revenue	(14,230)		50,676
Other liabilities	(6,061)		(171)
Net cash provided by operating activities	1,604,517		1,455,477

Cash flows from investing activities
Net cash paid in connection with MGP Transactions	—		(4,574,536)
Net cash paid in connection with the MGM Grand/Mandalay Bay JV Interest Acquisition	(1,266,905)		—
Investments in leases - sales-type	(231,215)		(4,012,845)
Investments in leases - financing receivables	(365,827)		—
Investments in loans and securities	(702,112)		(87,166)

Principal repayments of loans and receipts of deferred fees	400,250		1,130
Capitalized transaction costs	(759)		(6,801)
Investments in short-term investments	—		(207,722)
Maturities of short-term investments	217,342		—
Proceeds from sale of real estate	6,235		—
Acquisition of property and equipment	(1,894)		(1,158)
Net cash used in investing activities	(1,944,885)		(8,889,098)

VICI PROPERTIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)


Cash flows from financing activities
Proceeds from offering of common stock, net	1,672,417		3,219,101
Proceeds from April 2022 Notes offering	—		5,000,000
Proceeds from Revolving Credit Facility	408,204		600,000
Repayment of Revolving Credit Facility	(250,000)		(600,000)
Debt issuance costs	—		(146,176)
Repurchase of stock for tax withholding	(4,966)		(6,118)
Distributions to non-controlling interests	(21,450)		(10,711)
Dividends paid	(1,161,764)		(843,706)
Net cash provided by financing activities	642,441		7,212,390

Effect of exchange rate changes on cash, cash equivalents and restricted cash	(122)		—

Net increase (decrease) in cash, cash equivalents and restricted cash	301,951		(221,231)
Cash, cash equivalents and restricted cash, beginning of period	208,933		739,614
Cash, cash equivalents and restricted cash, end of period	$	510,884	$	518,383

Supplemental cash flow information:
Cash paid for interest	$	563,935	$	290,119
Cash paid for income taxes	$	4,896	$	2,306
Supplemental non-cash investing and financing activity:
Dividends and distributions declared, not paid	$	427,060	$	380,377
Debt issuance costs payable	$	—	$	13
Deferred transaction costs payable	$	4,418	$	1,479

Non-cash change in Investments in leases - financing receivables	$	206,771	$	120,709
Obtaining right-of-use assets in exchange for lease liabilities	$	22,968	$	541,676

See accompanying Notes to Consolidated Financial Statements.

VICI PROPERTIES L.P.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except unit and per unit data)


	September 30, 2023		December 31, 2022
Assets
Real estate portfolio:
Investments in leases - sales-type, net	$	22,889,984	$	17,172,325

Investments in leases - financing receivables, net	17,337,665		16,740,770
Investments in loans and securities, net	973,217		685,793
Investment in unconsolidated affiliate	—		1,460,775
Land	150,727		153,560
Cash and cash equivalents	461,024		142,600

Short-term investments	—		217,342
Other assets	890,442		856,605
Total assets	$	42,703,059	$	37,429,770

Liabilities
Debt, net	$	16,692,728	$	13,739,675
Accrued expenses and deferred revenue	218,099		206,643
Distributions payable	427,461		380,581
Other liabilities	939,873		937,655
Total liabilities	18,278,161		15,264,554

Commitments and contingent liabilities (Note 10)

Partners’ Capital
Partners’ capital, 1,029,059,256 and 975,327,936 operating partnership units issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	24,158,382		21,900,511
Accumulated other comprehensive income	186,099		185,201
Total VICI LP’s capital	24,344,481		22,085,712
Non-controlling interest	80,417		79,504
Total capital attributable to partners	24,424,898		22,165,216
Total liabilities and partners’ capital	$	42,703,059	$	37,429,770

VICI PROPERTIES L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

(In thousands, except unit and per unit data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues
Income from sales-type leases	$	500,212	$	376,048	$	1,473,961	$	1,077,952

Income from lease financing receivables, loans and securities	378,502		350,945		1,122,703		685,544
Other income	18,179		17,862		55,043		41,811
Total revenues	896,893		744,855		2,651,707		1,805,307

Operating expenses
General and administrative	14,422		12,055		44,347		33,303
Depreciation	177		31		270		90
Other expenses	18,179		17,862		55,043		41,811
Change in allowance for credit losses	95,997		232,763		166,119		865,459
Transaction and acquisition expenses	3,566		1,947		3,385		19,366
Total operating expenses	132,341		264,658		269,164		960,029

Income from unconsolidated affiliate	—		22,719		1,280		37,853
Interest expense	(204,927)		(169,354)		(612,881)		(370,624)
Interest income	6,685		2,735		14,399		3,378
Other (losses) gains	(1,122)		—		4,295		—
Income before income taxes	565,188		336,297		1,789,636		515,885
Income tax expense	(417)		(245)		(1,981)		(328)
Net income	564,771		336,052		1,787,655		515,557
Less: Net income attributable to non-controlling interest	(2,421)		(1,781)		(7,747)		(5,973)
Net income attributable to partners	$	562,350	$	334,271	$	1,779,908	$	509,584

Net income per Partnership unit
Basic	$	0.55	$	0.34	$	1.75	$	0.60
Diluted	$	0.55	$	0.34	$	1.74	$	0.59

Weighted average number of Partnership units outstanding
Basic	1,025,218,157		974,805,019		1,019,341,441		855,783,910
Diluted	1,025,821,013		976,365,713		1,020,668,825		857,767,590

Other comprehensive income
Net income attributable to partners	$	562,350	$	334,271	$	1,779,908	$	509,584
Reclassification of derivative gain to Interest expense	(6,037)		(6,037)		(18,111)		(10,196)
Unrealized gain on cash flow hedges	20,109		—		20,289		200,550
Foreign currency translation adjustments	(1,348)		—		(1,280)		—
Comprehensive income attributable to partners	$	575,074	$	328,234	$	1,780,806	$	699,938

See accompanying Notes to Consolidated Financial Statements.

VICI PROPERTIES L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(UNAUDITED)

(In thousands, except unit and per unit data)


	Partners’ Capital		Accumulated Other Comprehensive Income		Non-Controlling Interest		Total
Balance as of December 31, 2021	$	12,010,698	$	884	$	78,906	$	12,090,488
Net income	238,348		—		2,305		240,653
Contributions from Parent	3,229,165		—		—		3,229,165
Distributions to Parent	(281,990)		—		—		(281,990)
Distributions to non-controlling interest	—		—		(2,103)		(2,103)
Stock-based compensation, net of forfeitures	2,602		—		—		2,602
Unrealized gain on cash flow hedges	—		108,611		—		108,611
Balance as of March 31, 2022	15,198,823		109,495		79,108		15,387,426
Net loss	(63,035)		—		1,887		(61,148)
Contributions from parent	6,949,119		—		—		6,949,119
Distributions to parent	(375,626)		—		—		(375,626)
Distributions to non-controlling interest	—		—		(2,062)		(2,062)
Stock-based compensation, net of forfeitures	3,236		—		—		3,236
Reclassification of derivative gain to Interest expense	—		(4,159)		—		(4,159)
Unrealized gain on cash flow hedges	—		91,939		—		91,939
Balance as of June 30, 2022	21,712,517		197,275		78,933		21,988,725
Net income	334,271		—		1,781		336,052
Contributions from parent	142		—		—		142
Distributions to parent	(381,204)		—		—		(381,204)
Distributions to non-controlling interest	—		—		(2,144)		(2,144)
Stock-based compensation, net of forfeitures	3,493		—		—		3,493
Reclassification of derivative gain to Interest expense			(6,037)				(6,037)

Balance as of September 30, 2022	$	21,669,219	$	191,238	$	78,570	$	21,939,027

VICI PROPERTIES L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(UNAUDITED)

(In thousands, except unit and per unit data)


	Partners’ Capital		Accumulated Other Comprehensive Income		Non-Controlling Interest		Total
Balance as of December 31, 2022	$	21,900,511	$	185,201	$	79,504	$	22,165,216
Net income	522,076		—		2,839		524,915
Contributions from Parent	1,303,243		—		—		1,303,243
Distributions to Parent	(408,519)		—		—		(408,519)
Distributions to non-controlling interest	—		—		(2,278)		(2,278)
Stock-based compensation, net of forfeitures	(1,129)		—		—		(1,129)
Reclassification of derivative gain to Interest expense	—		(6,037)		—		(6,037)
Unrealized loss on cash flow hedges	—		(7,393)		—		(7,393)
Foreign currency translation adjustments	—		(1,664)		—		(1,664)
Balance as of March 31, 2023	23,316,182		170,107		80,065		23,566,354
Net income	695,482		—		2,487		697,969
Contributions from parent	103,053		—		—		103,053
Distributions to parent	(397,810)		—		—		(397,810)
Distributions to non-controlling interest	—		—		(2,278)		(2,278)
Stock-based compensation, net of forfeitures	3,669		—		—		3,669
Reclassification of derivative gain to Interest expense	—		(6,037)		—		(6,037)
Unrealized gain on cash flow hedges	—		7,573		—		7,573
Foreign currency translation adjustments	—		1,732		—		1,732
Balance as of June 30, 2023	23,720,576		173,375		80,274		23,974,225
Net income	562,350		—		2,421		564,771
Contributions from parent	298,718		—		—		298,718
Distributions to parent	(427,273)		—		—		(427,273)
Distributions to non-controlling interest	—		—		(2,278)		(2,278)
Stock-based compensation, net of forfeitures	4,011		—		—		4,011
Reclassification of derivative gain to Interest expense	—		(6,037)		—		(6,037)
Unrealized gain on cash flow hedges	—		20,109		—		20,109
Foreign currency translation adjustments	—		(1,348)		—		(1,348)
Balance as of September 30, 2023	$	24,158,382	$	186,099	$	80,417	$	24,424,898

See accompanying Notes to Consolidated Financial Statements.

VICI PROPERTIES L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities
Net income	$	1,787,655	$	515,557
Adjustments to reconcile net income to cash flows provided by operating activities:
Non-cash leasing and financing adjustments	(383,688)		(230,522)
Stock-based compensation	11,517		9,272
Depreciation	270		90
Other (gains) losses	(4,295)		—
Amortization of debt issuance costs and original issue discount	35,415		28,099
Change in allowance for credit losses	166,119		865,459
Income from unconsolidated affiliate	(1,280)		(37,853)
Distributions from unconsolidated affiliate	3,273		40,437
Net proceeds from settlement of derivatives	—		201,433

Change in operating assets and liabilities:
Other assets	3,574		(2,182)
Accrued expenses and deferred revenue	(25,655)		46,508
Other liabilities	(5,818)		(331)
Net cash provided by operating activities	1,587,087		1,435,967

Cash flows from investing activities
Net cash paid in connection with MGP Transactions	—		(4,574,536)
Net cash paid in connection with the MGM Grand/Mandalay Bay JV Interest Acquisition	(1,266,905)		—
Investments in leases - sales-type	(231,215)		(4,012,845)
Investments in leases - financing receivables	(365,827)		—
Investments in loans and securities	(702,112)		(87,166)
Principal repayments of loans and receipts of deferred fees	400,250		1,130
Capitalized transaction costs	(759)		(6,801)
Investments in short-term investments	—		(207,722)
Maturities of short-term investments	217,342		—
Proceeds from sale of real estate	6,235		—
Acquisition of property and equipment	(1,894)		(65)
Net cash used in investing activities	(1,944,885)		(8,888,005)

VICI PROPERTIES L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)


Cash flows from financing activities
Contributions from Parent	1,696,417		3,219,202
Distributions to Parent	(1,166,477)		(864,902)
Proceeds from April 2022 Notes offering	—		5,000,000
Proceeds from Revolving Credit Facility	408,204		600,000

Repayment of Revolving Credit Facility	(250,000)		(600,000)
Debt issuance costs	—		(146,176)
Repurchase of stock for tax withholding	(4,966)		—
Distributions to non-controlling interest	(6,834)		(6,309)
Net cash provided by financing activities	676,344		7,201,815

Effect of exchange rate changes on cash, cash equivalents and restricted cash	(122)		—

Net increase (decrease) in cash, cash equivalents and restricted cash	318,424		(250,223)
Cash, cash equivalents and restricted cash, beginning of period	142,600		705,566
Cash, cash equivalents and restricted cash, end of period	$	461,024	$	455,343

Supplemental cash flow information:
Cash paid for interest	$	563,935	$	290,119
Cash paid for income taxes	$	1,598	$	996
Supplemental non-cash investing and financing activity:
Distributions payable	$	427,060	$	380,377
Debt issuance costs payable	$	—	$	13
Deferred transaction costs payable	$	4,418	$	1,479
Non-cash change in Investments in leases - financing receivables	$	206,771	$	120,709
Obtaining right-of-use assets in exchange for lease liabilities	$	22,968	$	541,676

See accompanying Notes to Consolidated Financial Statements.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In these notes, the words the “Company,” “VICI,” “we,” “our,” and “us” refer to VICI Properties Inc. and its subsidiaries, including VICI LP, on a consolidated basis, unless otherwise stated or the context requires otherwise.

We refer to (i) our Condensed Consolidated Financial Statements as our “Financial Statements,” (ii) our Consolidated Balance Sheets as our “Balance Sheet,” (iii) our Consolidated Statements of Operations and Comprehensive Income as our “Statement of Operations,” and (iv) our Consolidated Statement of Cash Flows as our “Statement of Cash Flows.” References to numbered “Notes” refer to the Notes to our Consolidated Financial Statements.

“Apollo” refers to Apollo Global Management, Inc., a Delaware corporation, and, as the context requires, certain of its subsidiaries and affiliates.

“April 2022 Notes” refer collectively to (i) the $500.0 million aggregate principal amount of 4.375% senior unsecured notes due 2025, (ii) the $1,250.0 million aggregate principal amount of 4.750% senior unsecured notes due 2028, (iii) the $1,000.0 million aggregate principal amount of 4.950% senior unsecured notes due 2030, (iv) the $1,500.0 million aggregate principal amount of 5.125% senior unsecured notes due 2032, and (v) the $750.0 million aggregate principal amount of 5.625% senior unsecured notes due 2052, in each case issued by VICI LP in April 2022.

“Caesars” refers to Caesars Entertainment, Inc., a Delaware corporation and, as the context requires, its subsidiaries.

“Caesars Las Vegas Master Lease” refers to the lease agreement for Caesars Palace Las Vegas and the Harrah’s Las Vegas facilities, as amended from time to time.

“Caesars Leases” refer collectively to the Caesars Las Vegas Master Lease, the Caesars Regional Master Lease and the Joliet Lease, in each case, unless the context otherwise requires.

“Caesars Regional Master Lease” refers to the lease agreement for the regional properties (other than the facility in Joliet, Illinois) leased to Caesars, as amended from time to time.

“Century Canadian Portfolio” refers to the real estate assets of (i) Century Casino & Hotel Edmonton located in Edmonton, Alberta, (ii) Century Casino St. Albert located in Edmonton, Alberta, (iii) Century Mile Racetrack and Casino located in Edmonton, Alberta and (iv) Century Downs Racetrack and Casino located in Calgary, Alberta.

“Century Casinos” refers to Century Casinos, Inc., a Delaware corporation, and, as the context requires, its subsidiaries.

“Century Master Lease” refers to the lease agreement for the (i) Mountaineer Casino, Racetrack & Resort located in New Cumberland, West Virginia, (ii) Century Casino Caruthersville located in Caruthersville, Missouri, (iii) Century Casino Cape Girardeau located in Cape Girardeau, Missouri, (iv) Rocky Gap Casino Resort located in Flintstone, Maryland and (v) the Century Canadian Portfolio, as amended from time to time.

“CNB” refers to Cherokee Nation Businesses, L.L.C., and, as the context requires, its subsidiaries.

“Co-Issuer” refers to VICI Note Co. Inc., a Delaware corporation, and co-issuer of the November 2019 Notes, February 2020 Notes and Exchange Notes.

“Credit Agreement” refers to the Credit Agreement, dated as of February 8, 2022, by and among VICI LP, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, as amended from time to time.

“Delayed Draw Term Loan” refers to the three-year unsecured delayed draw term loan facility of VICI LP provided under the Credit Agreement entered into in February 2022, which expired undrawn in accordance with its terms on February 8, 2023.

“EBCI” refers to the Eastern Band of Cherokee Indians, a federally recognized Tribe located in western North Carolina, and, as the context requires, its subsidiary and affiliate entities.

“Exchange Notes” refer collectively to (i) the $1,024.2 million aggregate principal amount of 5.625% senior unsecured notes due 2024, (ii) the $799.4 million aggregate principal amount of 4.625% senior unsecured notes due 2025, (iii) the $480.5 million aggregate principal amount of 4.500% senior unsecured notes due 2026, (iv) the $729.5 million aggregate principal amount of 5.750% senior unsecured notes due 2027, (v) the $349.3 million aggregate principal amount of 4.500% senior unsecured notes due 2028, and (vi) the $727.1 million aggregate principal amount of 3.875% senior unsecured notes due 2029, in each case issued by VICI LP and Co-Issuer, in April 2022 pursuant to the Exchange Offers and Consent Solicitations (as defined herein).

“February 2020 Notes” refer collectively to (i) the $750.0 million aggregate principal amount of 3.500% senior unsecured notes due 2025, (ii) the $750.0 million aggregate principal amount of 3.750% senior unsecured notes due 2027, and (iii) the

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

$1.0 billion aggregate principal amount of 4.125% senior unsecured notes due 2030, in each case issued by VICI LP and Co-Issuer in February 2020.

“Forum Convention Center Mortgage Loan” refers to a $400.0 million mortgage loan agreement entered into on September 18, 2020 with Caesars for a term of five years and secured by, among other things, the Caesars Forum Convention Center in Las Vegas, which was repaid in full on May 1, 2023. In connection therewith, the Company’s call right under the put-call agreement relating to the Caesars Forum Convention Center was extended from December 31, 2026 to December 31, 2028.

“Foundation Gaming” refers to Foundation Gaming & Entertainment, LLC and, as the context requires, its subsidiaries.

“Foundation Master Lease” refers to the lease agreement for the Fitz Casino & Hotel, located in Tunica, Mississippi, and the WaterView Casino & Hotel, located in Vicksburg, Mississippi, as amended from time to time.

“Gold Strike Lease” refers to the lease agreement with CNB for the Gold Strike Casino Resort, located in Tunica, Mississippi (“Gold Strike”), as amended from time to time.

“Greektown Lease” refers to the lease agreement for the Greektown Casino-Hotel, located in Detroit, Michigan, as amended from time to time.

“Hard Rock” means Hard Rock International, and, as the context requires, its subsidiary and affiliate entities.

“Hard Rock Cincinnati Lease” refers to the lease agreement for the Hard Rock Cincinnati Casino, located in Cincinnati, Ohio, as amended from time to time.

“JACK Entertainment” refers to JACK Ohio LLC, and, as the context requires, its subsidiary and affiliate entities.

“JACK Master Lease” refers to the lease agreement for the JACK Cleveland Casino located in Cleveland, Ohio, and the JACK Thistledown Racino facility located in North Randall, Ohio, as amended from time to time.

“Joliet Lease” refers to the lease agreement for the facility in Joliet, Illinois, as amended from time to time.

“Lease Agreements” refer collectively to our leases with our respective tenants, unless the context otherwise requires.

“Margaritaville Lease” refers to the lease agreement for Margaritaville Resort Casino, located in Bossier City, Louisiana, as amended from time to time.

“MGM” refers to MGM Resorts International, a Delaware corporation, and, as the context requires, its subsidiaries.

“MGM Grand/Mandalay Bay JV” refers to a joint venture that holds the real estate assets of MGM Grand Las Vegas and Mandalay Bay, in which we hold a 100% ownership stake following our acquisition of the remaining 49.9% ownership stake from our former joint venture partner on January 9, 2023, as further described herein.

“MGM Grand/Mandalay Bay Lease” refers to the lease agreement for MGM Grand Las Vegas and Mandalay Bay, as amended from time to time.

“MGM Leases” refer collectively to the MGM Master Lease and the MGM Grand/Mandalay Bay Lease, in each case, unless the context otherwise requires.

“MGM Master Lease” refers to the lease agreement for the properties leased to MGM, excluding those leased under the MGM Grand/Mandalay Bay Lease, as amended from time to time.

“MGP” refers to MGM Growth Properties LLC, a Delaware limited liability company, which was acquired by the Company on April 29, 2022, and, as the context requires, its subsidiaries.

“MGP Master Transaction Agreement” refers to that certain Master Transaction Agreement between the Company, MGP, MGP OP, VICI LP, REIT Merger Sub, VICI OP, and MGM entered into on August 4, 2021.

“MGP OP” refers to MGM Growth Properties Operating Partnership LP, a Delaware limited partnership, which was acquired by the Company on April 29, 2022, and, as the context requires, its subsidiaries.

“MGP OP Notes” refer collectively to the notes issued by MGP OP and MGP Finance Co-Issuer, Inc. (“MGP Co-Issuer” and, together with MGP OP, the “MGP Issuers”), consisting of (i) the 5.625% senior notes due 2024 issued pursuant to the indenture, dated as of April 20, 2016, (ii) the 4.625% senior notes due 2025 issued pursuant to the indenture, dated as of June 5, 2020, (iii) the 4.500% senior notes due 2026 issued pursuant to the indenture, dated as of August 12, 2016, (iv) the 5.750% senior notes due 2027 issued pursuant to the indenture, dated as of January 25, 2019, (v) the 4.500% senior notes due 2028 issued pursuant to the indenture, dated as of September 21, 2017, and (vi) the 3.875% senior notes due 2029 issued pursuant to

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

the indenture, dated as of November 19, 2020, in each case, as amended or supplemented as of the date hereof, among the MGP Issuers and U.S. Bank National Association, as trustee (the “MGP Trustee”).

“MGP Transactions” refer collectively to a series of transactions pursuant to the MGP Master Transaction Agreement in connection with our acquisition of MGP on April 29, 2022, as contemplated by the MGP Master Transaction Agreement, including the tax protection agreement with MGM and the MGM Master Lease.

“Mirage Lease” refers to the lease agreement with Hard Rock for the Mirage, located in Las Vegas, Nevada, as amended from time to time.

“November 2019 Notes” refer collectively to (i) the $1.25 billion aggregate principal amount of 4.250% senior unsecured notes due 2026, and (ii) the $1.0 billion aggregate principal amount of 4.625% senior unsecured notes due 2029, in each case issued by the VICI Issuers in November 2019.

“Partner Property Growth Fund” refers to certain arrangements with certain tenants relating to our funding of “same-store” capital improvements, including redevelopment, new construction projects and other property improvements, in exchange for increased rent pursuant to the terms of our existing Lease Agreements with such tenants.

“PENN Entertainment” refers to PENN Entertainment, Inc., a Pennsylvania corporation, and, as the context requires, its subsidiaries.

“PENN Entertainment Leases” refer collectively to the Margaritaville Lease and the Greektown Lease, unless the context otherwise requires.

“PURE Canadian Gaming” refers to PURE Canadian Gaming, Corp., an Alberta corporation, and, as the context requires, its subsidiaries.

“PURE Master Lease” refers to the lease agreement for the (i) PURE Casino Edmonton located in Edmonton, Alberta, (ii) PURE Casino Yellowhead located in Edmonton, Alberta, (iii) PURE Casino Calgary located in Calgary, Alberta and (iv) PURE Casino Lethbridge located in Lethbridge, Alberta (collectively, the “PURE Portfolio”), as amended from time to time.

“Revolving Credit Facility” refers to the four-year unsecured revolving credit facility of VICI LP provided under the Credit Agreement entered into in February 2022, as amended from time to time.

“Seminole Hard Rock” refers to Seminole Hard Rock Entertainment, Inc.

“Senior Unsecured Notes” refer collectively to the November 2019 Notes, the February 2020 Notes, the April 2022 Notes, the Exchange Notes and the MGP OP Notes.

“Southern Indiana Lease” refers to the lease agreement with EBCI for the Caesars Southern Indiana Casino and Hotel, located in Elizabeth, Indiana (“Caesars Southern Indiana”), as amended from time to time.

“Venetian Acquisition” refers to our acquisition of the Venetian Resort, with Apollo, which closed on February 23, 2022.

“Venetian Lease” refers to the lease agreement for the Venetian Resort Las Vegas and Venetian Convention & Expo Center, located in Las Vegas, Nevada (the “Venetian Resort”), as amended from time to time.

“Venetian Tenant” refers to an affiliate of certain funds managed by affiliates of Apollo.

“VICI Golf” refers to VICI Golf LLC, a Delaware limited liability company that is the owner of our golf business.

“VICI Issuers” refer to VICI LP and VICI Note Co. Inc., a Delaware corporation.

“VICI LP” refers to VICI Properties L.P., a Delaware limited partnership and a wholly owned subsidiary of VICI OP.

“VICI OP” refers to VICI Properties OP LLC, a Delaware limited liability company and a consolidated subsidiary of VICI, which serves as our operating partnership.

“VICI OP Units” refer to limited liability company interests in VICI OP.

“VICI PropCo” refers to VICI Properties 1 LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of VICI.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Note 1 — Business and Organization

Business

We are primarily engaged in the business of owning and acquiring gaming, hospitality and entertainment destinations, subject to long-term triple-net leases. As of September 30, 2023, our geographically diverse real estate portfolio consisted of 54 gaming facilities in the United States and Canada, including Caesars Palace Las Vegas, MGM Grand and the Venetian Resort. Our properties are leased to, and our tenants are, subsidiaries of, or entities managed by, Apollo, Caesars, Century Casinos, CNB, EBCI, Foundation Gaming, JACK Entertainment, MGM, PENN Entertainment, PURE Canadian Gaming and Seminole Hard Rock, with Caesars and MGM being our largest tenants. VICI also owns four championship golf courses which are managed by CDN Golf Management Inc., and are located near certain of our properties. Subsequent to quarter-end, we also acquired the land and real estate assets of 38 bowling entertainment centers across the United States from Bowlero Corp. (“Bowlero”) in a sale leaseback transaction and entered into a long-term triple-net master lease with Bowlero with respect to such assets.

VICI, the parent company, is a Maryland corporation and internally managed real estate investment trust (“REIT”) for U.S. federal income tax purposes. Our real property business, which represents the substantial majority of our assets, is conducted through VICI OP and indirectly through VICI LP and our golf course business, VICI Golf, is conducted through a direct wholly owned taxable REIT subsidiary (“TRS”) of VICI. As a REIT, we generally will not be subject to U.S. federal income taxes on our taxable income to the extent that we annually distribute all of our net taxable income to stockholders and maintain our qualification as a REIT.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial Statements, including the notes thereto, are unaudited and condense or exclude some of the disclosures and information normally required in audited financial statements.

We believe the disclosures made are adequate to prevent the information presented from being misleading. However, the accompanying unaudited Financial Statements and related notes should be read in conjunction with our audited financial statements and notes thereto included in our most recent Annual Report on Form 10-K, as updated from time to time in our other filings with the SEC.

All adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Certain prior period amounts have been reclassified to conform to the current period presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from these estimates.

Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Principles of Consolidation

The accompanying consolidated financial statements include our accounts and the accounts of VICI LP, and the subsidiaries in which we or VICI LP has a controlling interest. All intercompany account balances and transactions have been eliminated in consolidation. We consolidate all subsidiaries in which we have a controlling financial interest and variable interest entities for which we or one of our consolidated subsidiaries is the primary beneficiary.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Non-controlling Interests

We present non-controlling interests and classify such interests as a component of consolidated stockholders’ equity or partners’ capital, separate from VICI stockholders’ equity and VICI LP partners’ capital. As of September 30, 2023, VICI’s non-controlling interests represent an approximate 1.2% third-party ownership of VICI OP in the form of VICI OP Units and a 20% third-party ownership of Harrah’s Joliet LandCo LLC, the entity that owns the Harrah’s Joliet facility and is the lessor under the related Joliet Lease. As VICI OP is a parent entity of VICI LP, VICI LP’s only non-controlling interest is that of third-party ownership of Harrah’s Joliet LandCo LLC.

Cash, Cash Equivalents and Restricted Cash

Cash consists of cash-on-hand and cash-in-bank. Any investments with an original maturity of three months or less from the date of purchase are considered cash equivalents and are carried at cost, which approximates fair value. As of September 30, 2023 and December 31, 2022, we did not have any restricted cash.

Short-Term Investments

Investments with an original maturity of greater than three months and less than one year from the date of purchase are considered short-term investments and are stated at fair value.

We may invest our excess cash in short-term investment grade commercial paper as well as discount notes issued by government-sponsored enterprises including the Federal Home Loan Mortgage Corporation and certain of the Federal Home Loan Banks. These investments generally have original maturities between 91 and 180 days and are accounted for as available for sale securities. Interest on our short-term investments is recognized as interest income in our Statement of Operations. We had $217.3 million of short-term investments as of December 31, 2022. We did not have any short-term investments as of September 30, 2023.

Purchase Price Accounting

We assess all of our property acquisitions under ASC 805 - Business Combinations (“ASC 805”) to determine if such acquisitions should be accounted for as a business combination or an asset acquisition. Under ASC 805, an acquisition does not qualify as a business combination when (i) substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets, (ii) the acquisition does not include a substantive process in the form of an acquired workforce, or (iii) an acquired contract that cannot be replaced without significant cost, effort or delay. Generally, and to date, all of our acquisitions have been determined to be asset acquisitions and, in accordance with ASC 805-50, all applicable transaction costs are capitalized as part of the purchase price of the acquisition.

We allocate the purchase price to the identifiable assets acquired and liabilities assumed, as applicable, using their relative fair value. Generally, with the exception of the MGP Transactions and the MGM Grand/Mandalay Bay JV Interest Acquisition (each as further described in Note 3 - Real Estate Transactions), our acquisitions consist of properties without existing leases or debt and, accordingly, the assets acquired are comprised of land, building and site improvements. Further, since all the components of our leases are classified as sales-type leases or financing receivables, as further described below, the assets acquired are transferred into the net investment in lease or financing receivable, as applicable.

Investments in Leases - Sales-type, Net

We account for our investments in leases under ASC 842 “Leases” (“ASC 842”). Upon lease inception or lease modification, we assess lease classification to determine whether the lease should be classified as a direct financing, sales-type or operating lease. As required by ASC 842, we separately assess the land and building components of the property to determine the classification of each component. If the lease component is determined to be a direct financing or sales-type lease, we record a net investment in the lease, which is equal to the sum of the lease receivable and the unguaranteed residual asset, discounted at the rate implicit in the lease. Any difference between the fair value of the asset and the net investment in the lease is considered selling profit or loss and is either recognized upon execution of the lease or deferred and recognized over the life of the lease, depending on the classification of the lease. Since we purchase properties and simultaneously enter into new leases directly with the tenants, the net investment in the lease is generally equal to the purchase price of the asset, and, due to the long-term nature of our leases, the land and building components of an investment generally have the same lease classification.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

We have determined that the land and building components of all of the Caesars Leases (excluding the Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City component (the “Harrah’s Call Properties”) of the Caesars Regional Master Lease), Century Master Lease (excluding the Century Canadian Portfolio component), Hard Rock Cincinnati Lease, MGM Grand/Mandalay Bay Lease, PENN Entertainment Leases, Southern Indiana Lease and Venetian Lease meet the definition of a sales-type lease under ASC 842.

Investments in Leases - Financing Receivables, Net

In accordance with ASC 842, for transactions in which we enter into a contract to acquire an asset and lease it back to the seller under a lease classified as a sales-type lease (i.e., a sale leaseback transaction), control of the asset is not considered to have transferred to us. As a result, we do not recognize the net investment in the lease but instead recognize a financial asset in accordance with ASC 310 “Receivables” (“ASC 310”); however, the accounting for the financing receivable under ASC 310 is materially consistent with the accounting for our investments in leases - sales-type under ASC 842.

We determined that the land and building components of the Foundation Master Lease, Harrah’s Call Properties components of the Caesars Regional Master Lease, Gold Strike Lease, JACK Master Lease, MGM Master Lease, Mirage Lease, PURE Master Lease and the Century Canadian Portfolio component of the Century Master Lease meet the definition of a sales-type lease and, since we purchased and leased the assets back to the sellers under sale leaseback transactions, control is not considered to have transferred to us under GAAP. Accordingly, such leases are accounted for as Investments in leases - financing receivables on our Balance Sheet, net of allowance for credit losses, in accordance with ASC 310.

Lease Term

We assess the noncancelable lease term under ASC 842, which includes any reasonably assured renewal periods. All of our Lease Agreements provide for an initial term, with multiple tenant renewal options. We have individually assessed all of our Lease Agreements and concluded that the lease term includes all of the periods covered by extension options as it is reasonably certain our tenants will renew the Lease Agreements. We believe our tenants are economically compelled to renew the Lease Agreements due to the importance of our real estate to the operation of their business, the significant capital they have invested and are required to invest in our properties under the terms of the Lease Agreements and the lack of suitable replacement assets.

Income from Leases and Lease Financing Receivables

We recognize the related income from our sales-type leases and lease financing receivables on an effective interest basis at a constant rate of return over the terms of the applicable leases. As a result, the cash payments accounted for under sales-type leases and lease financing receivables will not equal income from our Lease Agreements. Rather, a portion of the cash rent we receive is recorded as Income from sales-type leases or Income from lease financing receivables and loans, as applicable, in our Statement of Operations and a portion is recorded as a change to Investments in leases - sales-type, net or Investments in leases - financing receivables, net, as applicable.

Initial direct costs incurred in connection with entering into investments classified as sales-type leases are included in the balance of the net investment in lease. Such amounts will be recognized as a reduction to Income from investments in leases over the life of the lease using the effective interest method. Costs that would have been incurred regardless of whether the lease was signed, such as legal fees and certain other third-party fees, are expensed as incurred to Transaction and acquisition expenses in our Statement of Operations.

Loan origination fees and costs incurred in connection with entering into investments classified as lease financing receivables are included in the balance of the net investment and such amounts will be recognized as a reduction to Income from investments in loans and lease financing receivables over the life of the lease using the effective interest method.

Investments in Loans and Securities, net

Investments in loans are held-for-investment and are carried at historical cost, inclusive of unamortized loan origination costs and fees and allowances for credit losses. Income is recognized on an effective interest basis at a constant rate of return over the life of the related loan.

We classify our investments in securities on the date of acquisition of the investment as either trading, available-for-sale or held-to-maturity. We classify our debt securities as held-to-maturity, as we have the intent and ability to hold this security until maturity, the accounting of which is materially consistent with that of our Investments in loans.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Allowance for Credit Losses

ASC 326 “Financial Instruments-Credit Losses” (“ASC 326”) requires that we measure and record current expected credit losses (“CECL”) for the majority of our investments, the scope of which includes our Investments in leases - sales-type, Investments in leases - financing receivables and Investments in loans and securities.

We have elected to use a discounted cash flow model to estimate the allowance for credit losses, or CECL allowance for our Investments in leases - sales-type, Investments in leases - financing receivables and certain of our loans and securities, which comprise the substantial majority of our CECL allowance. This model requires us to develop cash flows which project estimated credit losses over the life of the lease, loan or security and discount these cash flows at the asset’s effective interest rate. We then record a CECL allowance equal to the difference between the amortized cost basis of the asset and the present value of the expected credit loss cash flows.

Expected losses within our cash flows are determined by estimating the probability of default (“PD”) and loss given default (“LGD”) of our tenants and borrowers and their parent guarantors, as applicable, over the life of each individual lease or financial asset. We have engaged a nationally recognized data analytics firm to assist us with estimating both the PD and LGD of our tenants and borrowers and their parent guarantors, as applicable. The PD and LGD are estimated during a reasonable and supportable period for which we believe we are able to estimate future economic conditions (the “R&S Period”) and a long-term period for which we revert to long-term historical averages (the “Long-Term Period”). The PD and LGD estimates for the R&S Period are developed using the current financial condition of the tenant or borrower and parent guarantor, as applicable, and applied to a projection of economic conditions over a two-year term. The PD and LGD for the Long-Term Period are estimated using the average historical default rates and historical loss rates, respectively, of public companies over approximately the past 40 years that have similar credit profiles or characteristics to our tenants, borrowers and their parent guarantors, as applicable. We are unable to use our historical data to estimate losses as we have no loss history to date.

The CECL allowance is recorded as a reduction to our net Investments in leases - sales-type, Investments in leases - financing receivables, Investments in loans and securities and Sales-type sub-leases (included in Other assets) on our Balance Sheet. We are required to update our CECL allowance on a quarterly basis with the resulting change being recorded in the Statement of Operations for the relevant period. Finally, each time we make a new investment in an asset subject to ASC 326, we are required to record an initial CECL allowance for such asset, which will result in a non-cash charge to the Statement of Operations for the relevant period.

We are required to estimate a CECL allowance related to contractual commitments to extend credit, such as future funding commitments under a revolving credit facility, delayed draw term loan, construction loan or through commitments made to our tenants to fund the development and construction of improvements at our properties through the Partner Property Growth Fund. We estimate the amount that we will fund for each contractual commitment based on (i) discussions with our borrowers and tenants, (ii) our borrowers’ and tenants’ business plans and financial condition and (iii) other relevant factors. Based on these considerations, we apply a CECL allowance to the estimated amount of credit we expect to extend. The CECL allowance for unfunded commitments is calculated using the same methodology as the allowance for all of our other investments subject to the CECL model. The CECL allowance related to these future commitments is recorded as a component of Other liabilities on our Balance Sheet.

Charge-offs are deducted from the allowance in the period in which they are deemed uncollectible. Recoveries previously written off are recorded when received. There were no charge-offs or recoveries for the three and nine months ended September 30, 2023 and 2022.

Refer to Note 5 - Allowance for Credit Losses for further information.

Foreign Currency Translation and Remeasurement

Our investments in the PURE Portfolio and Century Canadian Portfolio (as defined in Note 3 - Real Estate Transactions) are denominated in Canadian Dollars (“CAD” or “C$”), and accordingly, we translate the financial statements of the subsidiaries that own the PURE Portfolio and Century Canadian Portfolio into U.S. Dollars (“USD” or “US$”) when we consolidate their financial results and position. Generally, assets and liabilities are translated at the exchange rate in effect at the date of the Balance Sheet and the resulting translation adjustments are included in Accumulated other comprehensive income in the Balance Sheets. Certain balance sheet items, primarily equity and capital-related accounts, are reflected at the historical exchange rate. Income Statement accounts are translated using the average exchange rate for the period.

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We and certain of our consolidated subsidiaries have intercompany and third-party debt that is denominated CAD, which is not our and our consolidated subsidiaries functional currency of USD. When the debt and related operating receivables and/or payables are remeasured to the functional currency of the entity, a gain or loss can result. The resulting adjustment is reflected in Other (losses) gains, net in the Statement of Operations.

Other Income and Other Expenses

Other income primarily represents sub-lease income related to certain ground and use leases. Under the Lease Agreements, the tenants are required to pay all costs associated with such ground and use leases and provides for their direct payment to the landlord. This income and the related expense are recorded on a gross basis in our Statement of Operations as required under GAAP as we are the primary obligor under these certain ground and use leases.

Fair Value Measurements

We measure the fair value of financial instruments based on assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, a fair value hierarchy distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. In accordance with the fair value hierarchy, Level 1 assets/liabilities are valued based on quoted prices for identical instruments in active markets, Level 2 assets/liabilities are valued based on quoted prices in active markets for similar instruments, on quoted prices in less active or inactive markets or on other “observable” market inputs, and Level 3 assets/liabilities are valued based significantly on “unobservable” market inputs.

Refer to Note 9 - Fair Value for further information.

Derivative Financial Instruments

We record our derivative financial instruments as either Other assets or Other liabilities on our Balance Sheet at fair value.

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges. We formally document our hedge relationships and designation at the contract’s inception. This documentation includes the identification of the hedging instruments and the hedged items, its risk management objectives, strategy for undertaking the hedge transaction and our evaluation of the effectiveness of its hedged transaction.

On a quarterly basis, we also assess whether the derivative we designated in each hedging relationship is expected to be, and has been, highly effective in offsetting changes in the value or cash flows of the hedged transactions. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued and the changes in fair value of the instrument are included in Net income prospectively. If the hedge relationship is terminated, then the value of the derivative previously recorded in Accumulated other comprehensive income (loss) is recognized in earnings when the hedged transactions affect earnings. Changes in the fair value of our derivative instruments that qualify as hedges are reported as a component of Accumulated other comprehensive income (loss) in our Balance Sheet with a corresponding change in Unrealized gain (loss) in cash flows hedges within Other comprehensive income on our Statement of Operations.

We use derivative instruments to mitigate the effects of interest rate volatility, whether from variable rate debt or future forecasted transactions, which could unfavorably impact our future earnings and forecasted cash flows. We do not use derivative instruments for speculative or trading purposes.

Concentrations of Credit Risk

Caesars and MGM are the guarantors of all the lease payment obligations of the tenants under the applicable leases of the properties that they each respectively lease from us. Revenue from the Caesars Leases represented 37% of our lease revenues for each of the three and nine months ended September 30, 2023 and 39% and 49% of our lease revenues for the three and nine months ended September 30, 2022, respectively. Revenue from the MGM Leases represented 39% of our lease revenues for each of the three and nine months ended September 30, 2023 and 43% and 30% of our lease revenues for the three and nine months ended September 30, 2022, respectively. Additionally, our properties on the Las Vegas Strip generated approximately

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49% of our lease revenues for each of the three and nine months ended September 30, 2023, and 47% and 45% of our lease revenues for the three and nine months ended September 30, 2022, respectively. Other than having two tenants from which we derive and will continue to derive a substantial portion of our revenue and our concentration in the Las Vegas market, we do not believe there are any other significant concentrations of credit risk.

Note 3 — Real Estate Transactions

2023 Activity

Property Acquisitions

Bowlero Transaction

Subsequent to quarter-end, on October 19, 2023, we entered the family entertainment sector by acquiring the real estate assets of 38 bowling entertainment centers (the “Bowlero Portfolio”) from Bowlero in a sale-leaseback transaction for an aggregate purchase price of $432.9 million (the “Bowlero Transaction”). We financed the Bowlero Transaction through a combination of units in a newly formed VICI subsidiary issued to Bowlero, cash on hand, and a portion of proceeds from the settlement of the remaining shares under the January 2023 Forward Sale Agreements (as defined in Note 11 - Stockholders ’ Equity). Simultaneous with the closing of the Bowlero Transaction, we entered into a triple-net master lease agreement with Bowlero (the “Bowlero Master Lease”). The Bowlero Master Lease has an initial total annual rent of $31.6 million and an initial term of 25 years, with six 5-year tenant renewal options. Rent under the Bowlero Master Lease will escalate at the greater of 2.0% or CPI (subject to a 2.5% ceiling). The tenant’s obligations under the lease are guaranteed by Bowlero. Additionally, the Bowlero Master Lease contains a right of first offer provision under which, for a term of eight years, we have the right to acquire the real estate assets of any current or future Bowlero properties in the event that Bowlero elects to enter into a sale-leaseback transaction.

Century Canadian Portfolio Transaction

On September 6, 2023, we closed on the previously announced acquisition of the Century Canadian Portfolio from Century Casinos for an aggregate purchase price of C$221.7 million (approximately US$162.5 million based on the exchange rate at the time of the acquisition) (the “Century Canadian Portfolio Transaction”). We financed the Century Canadian Portfolio Transaction with a combination of cash on hand, proceeds from the partial settlement of forward equity sale agreements and a C$75.0 million (approximately US$55.0 million based on the exchange rate at the time of the acquisition) draw under our Revolving Credit Facility. Simultaneous with the closing of the transaction, the Century Canadian Portfolio was added to the Century Master Lease and annual rent increased by C$17.3 million (approximately US$12.7 million based on the exchange rate at the time of the acquisition). Additionally, the term of the Century Master Lease was extended such that, upon closing of the transaction, the lease has a full 15-year initial base lease term, with three 5-year tenant renewal options. Century Casinos previously exercised one 5-year tenant renewal option. The tenants’ obligations under the Century Master Lease continue to be guaranteed by Century Casinos.

We determined that the Century Canadian Portfolio component of the Century Master Lease meets the definition of a separate contract under ASC 842. In accordance with this guidance, we are required to separately assess the lease classification apart from the other assets in the Century Master Lease. Accordingly, we determined that the Century Canadian Portfolio Transaction should be accounted for as an asset acquisition under ASC 805-50 and further, that the land and building components of the Century Canadian Portfolio under the Century Master Lease meet the definition of a sales-type lease. Since we purchased and leased the assets back to the seller under a sale leaseback transaction, control is not considered to have transferred to us under GAAP. Accordingly, the Century Canadian Portfolio under the Century Master Lease is accounted for as Investments in leases – financing receivables on our Balance Sheet, net of an initial allowance for estimated credit losses in the amount of $16.9 million.

Rocky Gap Casino Transaction

On July 25, 2023, we closed on the previously announced acquisition of the leasehold interest in the land and buildings associated with Rocky Gap Casino Resort, located in Flintstone, Maryland (“Rocky Gap Casino”) with Century Casinos, from Golden Entertainment, Inc. for an aggregate purchase price of $260.0 million (the “Rocky Gap Casino Transaction”). Pursuant to the transaction agreements, we acquired the leasehold interest in the land and buildings associated with the Rocky Gap Casino for approximately $203.9 million and Century Casinos acquired the operating assets of the property for approximately

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$56.1 million. Simultaneous with the closing of the transaction, the Century Master Lease was amended to include Rocky Gap Casino, and annual rent under the Century Master Lease increased by $15.5 million. Additionally, the term of the Century Master Lease was extended such that, upon closing of the transaction, the lease has a full 15-year initial base lease term remaining. Century Casinos previously exercised one 5-year tenant renewal option and three additional 5-year tenant renewal options are remaining. The tenants’ obligations under the Century Master Lease continue to be guaranteed by Century Casinos.

We determined that the Rocky Gap Casino component of the Century Master Lease meets the definition of a separate contract under ASC 842. In accordance with this guidance, we are required to separately assess the lease classification apart from the other assets in the Century Maser Lease. We determined that the Rocky Gap Casino Transaction should be accounted for as an asset acquisition under ASC 805-50 and further, that the land and building components of Rocky Gap Casino under the Century Master Lease meet the definition of a sales-type lease and accordingly is accounted for as Investments in leases – sales-type on our Balance Sheet, net of an initial allowance for estimated credit losses in the amount of $15.0 million.

MGM Grand/Mandalay Bay JV Interest Acquisition

On January 9, 2023, we closed on the previously announced acquisition of the remaining 49.9% interest in the MGM Grand/Mandalay Bay JV from Blackstone Real Estate Income Trust, Inc. (“BREIT”) for cash consideration of $1,261.9 million (the “MGM Grand/Mandalay Bay JV Interest Acquisition”). We also assumed BREIT’s $1,497.0 million pro rata share of an aggregate $3.0 billion of property-level debt, which matures in 2032 and bears interest at a fixed rate of 3.558% per annum through March 2030. The cash consideration was funded through a combination of cash on hand and proceeds from the settlement of certain forward sale agreements. The MGM Grand/Mandalay Bay Lease currently has an annual rent of $309.9 million, all of which we are entitled to following the closing of the MGM Grand/Mandalay Bay JV Interest Acquisition. The MGM Grand/Mandalay Bay Lease has a remaining initial lease term of approximately 27 years (expiring in 2050), with two ten-year tenant renewal options. Rent under the MGM Grand/Mandalay Bay Lease escalates annually at 2.0% through 2035 (year 15 of the initial lease term) and thereafter at the greater of 2.0% or the Consumer Price Index (“CPI”) (subject to a 3.0% ceiling). As of December 31, 2022, the MGM Grand/Mandalay Bay JV was accounted for as an equity method investment under the voting interest model within Investment in unconsolidated affiliate on our Balance Sheets.

Simultaneously with closing of the MGM Grand/Mandalay Bay JV Interest Acquisition, as a result of acquiring full ownership, we consolidated the joint venture and determined that the consolidation should be accounted for as an asset acquisition under ASC 805-50. In application of the asset acquisition guidance, we retained the prior cost basis of our 50.1% interest, which we previously acquired in connection with the MGP Transaction, and combined such basis to the purchase price of the MGM Grand/Mandalay Bay JV Interest Acquisition.

The following is a summary of our net assets acquired upon consolidation of the MGM Grand/Mandalay Bay JV:


(In thousands)	Amount
Carrying value of prior 50.1% interest acquired in connection with the MGP Transactions	$	1,458,782
Consideration paid for MGM Grand/Mandalay Bay JV Interest Acquisition	1,261,882
Transaction costs	14,630
Total net assets acquired	$	2,735,294

Under ASC 805-50, we allocated the net assets acquired by major categories of assets acquired and liabilities assumed using relative fair value. The following is a summary of the allocated relative fair values of the assets acquired and liabilities assumed in the consolidation of the MGM Grand/Mandalay Bay JV:


(In thousands)	Amount
Investments in leases – sales-type	$	5,494,351
Cash and cash equivalents (1)	9,607
Debt, net (2)	(2,747,877)
Accrued expenses and deferred revenue (1)	(20,787)
Total net assets acquired	$	2,735,294

(1) Amount represents their current carrying value, which is equal to fair value.

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(2) Amount represents the fair value of the $3.0 billion principal amount of CMBS debt as of January 9, 2023, which was estimated as a $252.1 million discount to principal value. The fair value of the debt was estimated by modeling the contractual cash flows and discounting them back to the present value using an estimated market yield. Additionally, we considered current market rates and conditions by evaluating similar borrowing agreements with comparable loan-to-value ratios and credit profiles. The inputs used in determining the fair value measurement are considered Level 3 of the fair value hierarchy.

Concurrent with the closing of the MGM Grand/Mandalay Bay JV Interest Acquisition and consolidation of the MGM Grand/Mandalay Bay Lease, we assessed the lease classification of the MGM Grand/Mandalay Bay Lease and determined that it met the definition of a sales-type lease. Accordingly, the relative fair value of the MGM Grand/Mandalay Bay Lease of $5.5 billion was recorded as an Investment in leases – sales-type on our Balance Sheet, net of an initial allowance for estimated credit losses in the amount of $210.0 million.

PURE Canadian Gaming Transaction

On January 6, 2023, we acquired the real estate assets of PURE Casino Edmonton, PURE Casino Yellowhead, PURE Casino Calgary, and PURE Casino Lethbridge, all of which are located in Alberta, Canada, from PURE Canadian Gaming for an aggregate purchase price in cash of approximately C$271.9 million (approximately US$200.8 million based on the exchange rate at the time of the acquisition) (the “PURE Canadian Gaming Transaction”). We financed the PURE Canadian Gaming Transaction with a combination of cash on hand and a C$140.0 million (approximately US$103.4 million based on the exchange rate at the time of the acquisition) draw under our Revolving Credit Facility. Simultaneous with the acquisition, we entered into the PURE Master Lease. The PURE Master Lease has an initial total annual rent of approximately C$21.8 million (approximately US$16.1 million based on the exchange rate at the time of the acquisition), an initial term of 25 years, with four 5-year tenant renewal options, escalation of 1.25% per annum in lease years two and three (and thereafter at the greater of 1.5% and the Canadian Consumer Price Index, capped at 2.5%) and minimum capital expenditure requirements of 1.0% of annual net revenue (excluding gaming equipment). The tenant’s obligations under the PURE Master Lease are guaranteed by the parent entity of PURE Canadian Gaming. We determined that the PURE Canadian Gaming Transaction should be accounted for as an asset acquisition under ASC 805-50 and further, that the land and building components of the PURE Master Lease meet the definition of a sales-type lease. Since we purchased and leased the assets back to the seller under a sale leaseback transaction, control is not considered to have transferred to us under GAAP. Accordingly, the PURE Master Lease is accounted for as Investments in leases – financing receivables on our Balance Sheet, net of an initial allowance for estimated credit losses in the amount of $19.6 million.

Leasing

Gold Strike Severance Lease

On February 15, 2023, in connection with the closing of MGM’s sale of the operations of Gold Strike, we entered into the Gold Strike Lease with CNB related to the land and real estate assets of Gold Strike, and entered into an amendment to the MGM Master Lease in order to account for MGM’s divestiture of the operations of Gold Strike and to reduce the annual base rent by $40.0 million. The Gold Strike Lease has initial annual base rent of $40.0 million with other economic terms substantially similar to the MGM Master Lease, including a base term of 25 years with three 10-year tenant renewal options, escalation of 2.0% per annum (with escalation of the greater of 2.0% and CPI, capped at 3.0%, beginning in lease year 11) and minimum capital expenditure requirements of 1.0% of annual net revenue. The tenant’s obligations under the Gold Strike Lease are guaranteed by CNB.

Loan, Security and Preferred Equity Investments

Canyon Ranch Transactions

On August 22, 2023, we closed on the previously announced $140.1 million mortgage loan to a subsidiary of Canyon Ranch, a leading provider of holistic, integrative health and wellness guest experiences (“Canyon Ranch”), secured by Canyon Ranch Tucson, located in Tucson, Arizona (“Canyon Ranch Tucson”), and Canyon Ranch Lenox, located in Lenox, Massachusetts (“Canyon Ranch Lenox”). Proceeds of the loan were used by Canyon Ranch to refinance its existing CMBS debt secured by Canyon Ranch Tucson and Canyon Ranch Lenox. The loan has an initial term of two years with three one-year extensions, exercisable at Canyon Ranch’s option, subject to satisfying certain customary extension conditions.

On July 26, 2023, we committed up to $150.0 million in a preferred equity investment into the controlling entity of Canyon Ranch. The preferred equity has a term of 10 years and may be redeemed by Canyon Ranch at any time, subject to a redemption premium in the first three years. In connection with this investment, we entered into (i) a call right agreement whereby we will have the option to call the real estate assets of each of Canyon Ranch Tucson and Canyon Ranch Lenox subject to certain

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conditions, and (ii) a right of first financing agreement pursuant to which we will have the right, but not the obligation, to serve as the real estate capital financing partner for Canyon Ranch with respect to the acquisition, build-out and redevelopment of future wellness resorts. If the call right(s) are exercised, Canyon Ranch would continue to operate the applicable wellness resort(s) subject to a long-term triple net master lease with the Company. We assessed the Canyon Ranch preferred equity investment and determined that such investment is accounted for as a loan, and accordingly, is recorded in Investments in loans and securities on our Balance Sheet.

Hard Rock Ottawa Secured Notes

On March 28, 2023, we purchased $85.0 million of senior secured notes issued by H.R. Ottawa, L.P. (“Hard Rock Ottawa Notes”), which owns and operates the Hard Rock Ottawa Casino. H.R. Ottawa, L.P. intends to use the proceeds of the Hard Rock Ottawa Notes to fund a portion of (i) the redevelopment and rebrand of the existing Rideau Carleton Raceway Casino, located in Ottawa, Canada, (ii) the development of an integrated “Hard Rock” branded hotel with approximately 150 rooms, and (iii) the repayment of existing debt. The Hard Rock Ottawa Notes are denominated and issued in USD.

Significant 2022 Transactions

MGP Transactions

On April 29, 2022, we closed on the previously announced MGP Transactions governed by the MGP Master Transaction Agreement, pursuant to which we acquired MGP for total consideration of $11.6 billion, plus the assumption of approximately $5.7 billion principal amount of debt, inclusive of a 50.1% share of the MGM Grand/Mandalay Bay JV CMBS debt, at the time. Upon closing, the MGP Transactions added $1,012.2 million of annualized rent to our portfolio from 15 Class A entertainment casino resort properties spread across nine regions and comprising 36,000 hotel rooms, 3.6 million square feet of meeting and convention space and hundreds of food, beverage and entertainment venues. Under the terms of the MGP Master Transaction Agreement, each outstanding MGP Class A common share was converted into 1.366 (the “Exchange Ratio”) shares of VICI common stock. The fixed Exchange Ratio represented an agreed upon price of $43.00 per share of MGP Class A common shares based on VICI’s trailing 5-day volume weighted average price of $31.47 as of July 30, 2021. MGM received $43.00 per unit in cash for the redemption of the majority of its MGP OP units that it held for total cash consideration of approximately $4.404 billion and also acquired approximately 12.2 million units in VICI OP. The MGP Class B share that was held by MGM was cancelled and ceased to exist simultaneous with closing.

The number of MGP Class A common shares converted to shares of VICI common stock was determined as follows:


MGP Class A common shares outstanding as of April 29, 2022			156,757,773
Exchange Ratio			1.366
VICI common stock issued (1)			214,131,064
VICI common stock issued for MGP stock-based compensation awards			421,468
Total VICI common stock issued			214,552,532

(1) Amount excludes the cash paid in lieu of approximately 54 fractional MGP Class A common shares.

Simultaneous with the closing of the MGP Transactions on April 29, 2022, we entered into the MGM Master Lease. The MGM Master Lease has an initial term of 25 years, with three 10-year tenant renewal options and had an initial total annual rent of $860.0 million. Rent under the MGM Master Lease escalates at a rate of 2.0% per annum for the first 10 years and thereafter at the greater of 2.0% per annum or the increase in CPI, subject to a 3.0% cap. The total annual rent under the MGM Master Lease was reduced by $90.0 million upon the close of MGM’s sale of the operations of the Mirage to Hard Rock and entrance into the Mirage Lease on December 19, 2022, and further reduced by $40.0 million upon the close of MGM’s sale of the operations of Gold Strike on February 15, 2023. Additionally, we retained a 50.1% ownership stake in the MGM Grand/Mandalay Bay JV, which owns the real estate assets of MGM Grand Las Vegas and Mandalay Bay. At the time of acquisition, the MGM Grand/Mandalay Bay Lease provided for total annual base rent of approximately $303.8 million, and had an initial term of thirty years with two 10-year tenant renewal options. Rent under the MGM Grand/Mandalay Bay Lease escalates at a rate of 2.0% per annum for the first 15 years and thereafter at the greater of 2.0% per annum or CPI, subject to a 3.0% cap. On January 9, 2023, we closed on the MGM Grand/Mandalay Bay JV Interest Acquisition and accordingly own 100% of the interest in the MGM Grand/Mandalay Bay JV, including the full $3.0 billion of CMBS debt held by the joint venture.

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We assessed the MGP Transactions in accordance with ASC 805, and determined that the acquisition of MGP did not meet the definition of a business as substantially all the assets were concentrated in a group of similarly identifiable acquired assets, and did not include a substantive process in the form of an acquired workforce. Accordingly, the MGP Transactions were accounted for as an asset acquisition under ASC 805-50 and we determined the consideration transferred under the MGP Transactions was $11.6 billion, comprised of the following:


(In thousands)	Amount
REIT Merger Consideration (1)	$	6,568,480
Redemption payment to MGM	4,404,000
VICI OP Units retained by MGM (2)	374,769
Repayment of MGP revolving credit facility (3)	90,000
Transactions costs (4)	119,741
Total consideration transferred	$	11,556,990
Assumption of MGP OP Notes and Exchange Notes, at principal value	4,200,000
Assumption of our proportionate share of the MGM Grand/Mandalay Bay JV CMBS debt, at principal value	1,503,000
Total purchase price	$	17,259,990

(1) Amount represents the dollar value of 214,375,990 shares of VICI common stock, multiplied by the VICI stock price at the time of closing of $30.64 per share, which were issued in exchange for the MGP Class A common shares outstanding immediately prior to the REIT Merger and certain of the MGP stock-based compensation awards, converted to shares of VICI common stock.

(2) Amount represents 12,231,373 VICI OP Units retained by MGM as non-controlling interest in VICI OP, multiplied by the VICI stock price at the time of closing of $30.64 per share.

(3) Represents the total amount outstanding under MGP’s revolving credit facility as of April 29, 2022. In connection with the MGP Transactions, such amount was repaid in full and the related credit agreement was terminated.

(4) In accordance with ASC 805-50, all direct and incremental costs related to the MGP Transactions, primarily related to success-based fees and third-party advisory fees, were included in the consideration transferred.

Under ASC 805-50, we allocated the purchase price by major categories of assets acquired and liabilities assumed using relative fair value. The following is a summary of the allocated relative fair values of the assets acquired and liabilities assumed in the MGP Transactions valued as of April 29, 2022:


(In thousands)	Amount
Investments in leases – financing receivables (1) (2)	$	14,245,868
Investment in unconsolidated affiliate (2) (3)	1,465,814
Cash and cash equivalents (4)	25,387
Other assets (4)	338,212
Debt, net (5)	(4,106,082)
Accrued expenses and deferred revenue (4)	(79,482)
Other liabilities (4)	(332,727)
Total net assets acquired	$	11,556,990

(1) We valued the real estate portfolio at relative fair value using rent multiples taking into consideration a variety of factors, including (i) asset quality and location, (ii) property and lease-level operating performance and (iii) supply and demand dynamics of each property’s respective market. The multiples used ranged from 15.0x – 18.5x with a weighted average rent multiple of 16.7x, as determined using relative fair value.

(2) The fair value of these assets is based on significant “unobservable” market inputs and, as such, these fair value measurements are considered Level 3 of the fair value hierarchy.

(3) We value the Investment in unconsolidated affiliate at relative fair based on our percentage ownership of the net assets of the MGM Grand/Mandalay Bay JV.

(4) Amounts represent their current carrying value which is equal to fair value. The Other assets and Other liabilities amounts include the gross presentation of certain MGP ground leases which we assumed in connection with the MGP Transactions.

(5) Amount represents the fair value of debt as of April 29, 2022, which was estimated as a $93.9 million discount to the notional value. The fair value of our debt instruments was estimated using quoted prices for identical or similar liabilities in markets that are not active and, as such, these fair value measurements are considered Level 2 of the fair value hierarchy.

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Concurrent with the closing of the MGP Transactions and entry into the MGM Master Lease, we assessed the lease classification of the MGM Master Lease and determined that it met the definition of a sales-type lease. Further, since MGM controlled and consolidated MGP prior to the MGP Transactions, the lease was assessed under the sale-leaseback guidance and determined to be a failed sale-leaseback under which the lease is accounted for as a financing receivable under ASC 310.

In relation to the MGM Grand/Mandalay Bay JV, we determined that such investment should be accounted for as an equity method investment and, accordingly, recorded the relative fair value as an Investment in unconsolidated affiliate on our Balance Sheet. The requirement to record our investment in the MGM Grand/Mandalay Bay JV at relative fair value under ASC 805 resulted in a difference in our acquired basis from that of the underlying records, or historical cost basis, of the MGM Grand/Mandalay Bay JV. Accordingly, we compared our proportionate share of the historical cost basis of the MGM Grand/Mandalay Bay JV as of April 29, 2022 to our proportionate share of the relative fair value, the difference of which was amortized through Income from unconsolidated affiliate over the life of the related asset or liability. On January 9, 2023, we acquired the remaining 49.9% interest in the MGM Grand/Mandalay Bay JV from BREIT and consolidated the operations of the joint venture. Refer to “MGM Grand/Mandalay Bay JV Interest Acquisition” above for further details.

Note 4 — Real Estate Portfolio

As of September 30, 2023, our real estate portfolio consisted of the following:

Investments in leases – sales-type, representing our investment in 26 casino assets leased on a triple-net basis to our tenants, Apollo, Caesars, Century Casinos, EBCI, Hard Rock, MGM and PENN Entertainment under ten separate lease agreements;
Investments in leases – financing receivables, representing our investment in 28 casino assets leased on a triple-net basis to our tenants, Caesars, CNB, Century Casinos, Foundation Gaming, Hard Rock, JACK Entertainment, MGM and PURE Canadian Gaming under eight separate lease agreements;
Investments in loans and securities, representing our investments in twelve senior secured and mezzanine loans, preferred equity and the Hard Rock Ottawa Notes; and
Land, representing our investment in certain underdeveloped or undeveloped land adjacent to the Las Vegas strip and non-operating, vacant land parcels.

The following is a summary of the balances of our real estate portfolio as of September 30, 2023 and December 31, 2022:


(In thousands)	September 30, 2023		December 31, 2022






Investments in leases – sales-type, net (1)	$	22,889,984	$	17,172,325

Investments in leases – financing receivables, net (1)	17,337,665		16,740,770
Total investments in leases, net	40,227,649		33,913,095
Investments in loans and securities, net	973,217		685,793
Investment in unconsolidated affiliate (2)	—		1,460,775
Land	150,727		153,560
Total real estate portfolio	$	41,351,593	$	36,213,223

(1) At lease inception (or upon modification), we determine the estimated residual values of the leased property (not guaranteed) under the respective Lease Agreements, which has a material impact on the determination of the rate implicit in the lease and the lease classification. As of September 30, 2023 and December 31, 2022, the estimated residual values of the leased properties under our Lease Agreements were $15.7 billion and $11.5 billion, respectively.

(2) Represents our 50.1% investment in the MGM Grand/Mandalay Bay JV prior to the MGM Grand/Mandalay Bay JV Interest Acquisition on January 9, 2023, which was accounted for as an equity method investment.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Investments in Leases

The following table details the components of our income from sales-type leases and lease financing receivables:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2023		2022		2023		2022
Income from sales-type leases – fixed rent	$	478,419	$	371,541	$	1,410,692	$	1,064,463
Income from sales-type leases – contingent rent (1)	21,793		4,506		63,269		13,489

Income from lease financing receivables – fixed rent	356,206		339,544		1,062,508		653,908
Income from lease financing receivables – contingent rent (1)	2,511		—		7,532		—
Total lease revenue	858,929		715,591		2,544,001		1,731,860
Non-cash adjustment (2)	(131,351)		(108,556)		(383,735)		(230,516)
Total contractual lease revenue	$	727,578	$	607,035	$	2,160,266	$	1,501,344

(1) At lease inception (or upon modification), we determine the minimum lease payments under ASC 842, which exclude amounts determined to be contingent rent. Contingent rent is generally amounts in excess of specified floors or the variable rent portion of our leases. The minimum lease payments are recognized on an effective interest basis at a constant rate of return over the life of the lease and the contingent rent portion of the lease payments are recognized as earned, both in accordance with ASC 842. As of September 30, 2023, we have recognized contingent rent from our PENN Entertainment Leases in relation to the variable rent portion of the respective leases and from the Caesars Las Vegas Master Lease, Caesars Regional Master Lease, Joliet Lease, Century Master Lease, and Venetian Lease in relation to the CPI portion of the annual escalator.

(2) Amounts represent the non-cash adjustment to the minimum lease payments from sales-type leases and lease financing receivables in order to recognize income on an effective interest basis at a constant rate of return over the term of the leases.

At September 30, 2023, minimum lease payments owed to us for each of the five succeeding years under sales-type leases and our leases accounted for as financing receivables, are as follows:


	Minimum Lease Payments (1) (2)
	Investments in Leases
(In thousands)	Sales-Type		Financing Receivables		Total
2023 (remaining)	$	416,216	$	290,407	$	706,623
2024	1,682,826		1,176,742		2,859,568
2025	1,712,651		1,198,470		2,911,121
2026	1,738,942		1,220,782		2,959,724
2027	1,766,012		1,243,586		3,009,598
2028	1,794,287		1,267,086		3,061,373
Thereafter	77,503,679		87,666,277		165,169,956
Total	$	86,614,613	$	94,063,350	$	180,677,963

Weighted Average Lease Term (2)	38.2 years		49.7 years		43.2 years

(1) Minimum lease payments do not include contingent rent, as discussed above, that may be received under the Lease Agreements.

(2) The minimum lease payments and weighted average remaining lease term assumes the exercise of all tenant renewal options, consistent with our conclusions under ASC 842 and ASC 310.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Lease Provisions

As of September 30, 2023, we owned 54 properties leased under 16 separate Lease Agreements, certain of which are master lease agreements governing multiple properties and certain of which are for single assets. Our Lease Agreements are generally long-term in nature with initial terms ranging from 15 to 30 years and are structured with several tenant renewal options extending the term of the lease for another 5 to 30 years. All of our Lease Agreements provide for annual base rent escalations, which range from 1% in the earlier years to the greater of 2% or CPI in later years, with certain of our leases providing for a cap with respect to the maximum CPI-based increase. Additionally, certain of our Lease Agreements provide for a variable rent component in which a portion of the annual rent, generally 20%, is subject to adjustment based on the revenues of the underlying asset in specified periods.

The following is a summary of the material lease provisions of our Caesars Leases and MGM Leases, our two most significant tenants:


($ In thousands)	MGM Master Lease	Caesars Regional Master Lease and Joliet Lease	Caesars Las Vegas Master Lease	MGM Grand/ Mandalay Bay Lease
Lease Provision
Initial term	25 years	18 years	18 years	30 years
Initial term maturity	4/30/2047	7/31/2035	7/31/2035	2/28/2050
Renewal terms	Three, ten-year terms	Four, five-year terms	Four, five-year terms	Two, ten-year terms
Current lease year	5/1/23-4/30/24 (Lease Year 2)	11/1/22 – 10/31/23 (Lease Year 6)	11/1/22 – 10/31/23 (Lease Year 6)	3/1/23 – 2/29/24 (Lease Year 4)
Current annual rent	$744,600	$703,678 (1)	$454,478	$309,873
Annual escalator (2)	Lease years 2-10 – 2% Lease years 11-end of term - >2% / change in CPI (capped at 3%)	Lease years 2-5 – 1.5% Lease years 6-end of term – CPI subject to 2.0% floor	> 2% / change in CPI	Lease years 2-15 – 2% Lease years 16-end of term - >2% / change in CPI (capped at 3%)
Variable rent adjustment (3)	None	Year 8: 70% base rent / 30% variable rent Years 11 & 16: 80% base rent / 20% variable rent	Years 8, 11 & 16: 80% base rent / 20% variable rent	None
Variable rent adjustment calculation	None	4% of revenue increase/decrease: Year 8: Avg. of years 5-7 less avg. of years 0-2 Year 11: Avg. of years 8-10 less avg. of years 5-7 Year 16: Avg. of years 13-15 less avg. of years 8-10	4% of revenue increase/decrease: Year 8: Avg. of years 5-7 less avg. of years 0-2 Year 11: Avg. of years 8-10 less avg. of years 5-7 Year 16: Avg. of years 13-15 less avg. of years 8-10	None

(1) Current annual rent with respect to the Joliet Lease is presented prior to accounting for the non-controlling interest, or rent payable, to the 20% third-party ownership of Harrah’s Joliet LandCo LLC. After adjusting for the 20% non-controlling interest, combined current annual rent under the Caesars Regional Master Lease and Joliet Lease is $694.6 million.

(2) Any amounts representing rents in excess of the CPI floors specified above are considered contingent rent in accordance with GAAP.

(3) Variable rent is not subject to the annual escalator.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Capital Expenditure Requirements

We manage our residual asset risk through protective covenants in our Lease Agreements, which require the tenant to, among other things, hold specific insurance coverage, engage in ongoing maintenance of the property and invest in capital improvements. With respect to the capital improvements, the Lease Agreements specify certain minimum amounts that our tenants must spend on capital expenditures that constitute installation, restoration and repair or other improvements of items with respect to the leased properties. The following table summarizes the capital expenditure requirements of our tenants under their respective Lease Agreements:


Provision	Caesars Regional Master Lease and Joliet Lease	Caesars Las Vegas Master Lease	MGM Grand/ Mandalay Bay Lease	Venetian Lease	All Other Leases (1)
Yearly minimum expenditure	1% of net revenues (2)	1% of net revenues (2)	3.5% of net revenues based on 5-year rolling test, 1.5% monthly reserves	2% of net revenues based on rolling three-year basis	1% of net revenues
Rolling three-year minimum (3)	$286 million	$84 million	N/A	N/A	N/A

(1) Represents the tenants under our other Lease Agreements not specifically outlined in the table, as specified in the respective Lease Agreements.

(2) The Caesars Leases require a $107.5 million floor on annual capital expenditures for Caesars Palace Las Vegas, Joliet and the Regional Master Lease properties in the aggregate. Additionally, annual building & improvement capital improvements must be equal to or greater than 1% of prior year net revenues.

(3) Certain tenants under the Caesars Leases, as applicable, are required to spend $380.3 million on capital expenditures (excluding gaming equipment) over a rolling three-year period, with $286.0 million allocated to the regional assets, $84.0 million allocated to Caesars Palace Las Vegas and the remaining balance of $10.3 million to facilities (other than the Harrah’s Las Vegas Facility) covered by any Caesars Lease in such proportion as such tenants may elect. Additionally, the tenants under the Regional Master Lease and Joliet Lease are required to expend a minimum of $531.9 million on capital expenditures (including gaming equipment) across certain of its affiliates and other assets, together with the $380.3 million requirement.

Investments in Loans and Securities

The following is a summary of our investments in loans and securities as of September 30, 2023 and December 31, 2022:


September 30, 2023
Investment Type	Principal Balance		Carrying Value (1)		Future Funding Commitments (2)		Weighted Average Interest Rate (3)		Weighted Average Term (4)
Senior Secured Notes (5)	$	85,000	$	76,348	$	—	11.0	%	7.5 years
Senior Secured Loans (6)	333,793		329,431		582,262		7.1	%	5.2 years
Mezzanine Loans and Preferred Equity	579,471		567,438		186,037		9.5	%	4.9 years





Total	$	998,264	$	973,217	$	768,299	8.8	%	5.2 years


December 31, 2022
Investment Type	Principal Balance		Carrying Value (1)		Future Funding Commitments (2)		Weighted Average Interest Rate (3)		Weighted Average Term (4)
Senior Secured Loans	$	495,901	$	492,895	$	584,049	7.8	%	3.2 years
Mezzanine Loans	196,597		192,898		514,882		9.1	%	4.3 years



Total	$	692,498	$	685,793	$	1,098,931	8.2	%	3.5 years

(1) Carrying value includes unamortized loan origination costs and are net of allowance for credit losses.

(2) Our future funding commitments are subject to our borrowers’ compliance with the financial covenants and other applicable provisions of each respective loan agreement.

(3) The weighted average interest rate is based on current outstanding principal balance and SOFR, as applicable for floating rate loans, as of September 30, 2023.

(4) Assumes all extension options are exercised; however, our loans may be repaid, subject to certain conditions, prior to such date.

(5) Represents our investment in the Hard Rock Ottawa Notes, which are accounted for as held-to-maturity securities.

(6) On May 1, 2023, the Forum Convention Center Mortgage Loan, representing $400.0 million in principal balance of our senior secured loans, was repaid in full.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Note 5 — Allowance for Credit Losses

Under ASC 326, we are required to estimate and record non-cash credit losses related to our historical and any future investments in sales-type leases, lease financing receivables, loans and securities classified as held-to-maturity.

During the three months ended September 30, 2023, we recognized a $96.0 million increase in our allowance for credit losses primarily driven by (i) the initial CECL allowances in relation to (a) the Century Canadian Portfolio Transaction and related classification of the Century Canadian Portfolio component of the Century Master Lease as a lease financing receivable, (b) the Rocky Gap Casino Transaction and related classification of the Rocky Gap Casino component of the Century Master Lease as a sales-type lease, and (c) the origination of the Canyon Ranch preferred equity investment and Canyon Ranch Tucson and Canyon Ranch Lenox mortgage loan, and (ii) an increase in the reasonable and supportable period, or R&S Period, probability of default, or PD, of our tenants and their parent guarantors as a result of their market performance during the current quarter.

During the nine months ended September 30, 2023, we recognized a $166.1 million increase in our allowance for credit losses primarily driven by (i) initial CECL allowances in relation to (a) the consolidation of the MGM Grand/Mandalay Bay JV in connection with the MGM Grand/Mandalay Bay JV Interest Acquisition and related classification of the MGM Grand/Mandalay Bay Lease as a sales-type lease, (b) the PURE Canadian Gaming Transaction and related classification of the PURE Master Lease as a lease financing receivable, (c) the purchase of the Hard Rock Ottawa Notes and (d) the initial allowances for the three months ended September 30, 2023 as described in the above paragraph, and (ii) an increase in the Long-Term Period PD as a result of a standard annual update made to the Long-Term PD default study we utilize to estimate our CECL allowance. This increase was partially offset by an overall decrease in the R&S Period PD of our tenants and their parent guarantors as a result of their market performance during the nine-month period.

During the three months ended September 30, 2022, we recognized a $232.8 million increase in our allowance for credit losses primarily driven by (i) changes in the macroeconomic model used to scenario condition our R&S Period PD due to uncertain and potentially negative future market conditions, (ii) an increase in the R&S Period PD of our tenants and their parent guarantors as a result of market volatility during the current quarter, (iii) an increase in the R&S Period PD and loss given default, or LGD, as a result of standard annual updates that were made to the inputs and assumptions in the model that we utilize to estimate our CECL allowance, and (iv) the initial CECL allowance on the future funding commitments from the origination of the Great Wolf Gulf Coast Texas loan and the Great Wolf South Florida loan.

During the nine months ended September 30, 2022, we recognized a $865.5 million increase in our allowance for credit losses primarily driven by initial CECL allowances on our acquisition activity during such period in the amount of $523.2 million, representing 60.5% of the total allowance for the nine months ended September 30, 2022. The initial CECL allowances were in relation to (i) the closing of the MGP Transactions on April 29, 2022, which included the (a) classification of the MGM Master Lease as a lease financing receivable and (b) the sales-type sub-lease agreements we assumed in connection with the closing of the MGP Transactions, (ii) the closing of the Venetian Acquisition on February 23, 2022, which included (a) the classification of the Venetian Lease as a sales-type lease, (b) the estimated future funding commitments under the Partner Property Growth Fund Agreement with the Venetian and (c) the sales-type sub-lease agreements we assumed in connection with the closing of the Venetian Acquisition, and (iii) the future funding commitments from the origination of the BigShots Loan, the Cabot Citrus Farms loan, the Great Wolf South Florida loan and the Great Wolf Gulf Coast Texas Loan. Additional increases were attributable to the increase for the three months ended September 30, 2022 as described above. These increases were partially offset by a decrease in the Long-Term Period PD as a result of standard annual updates that were made to the Long-Term Period PD default study we utilize to estimate our CECL allowance.

As of September 30, 2023 and December 31, 2022, and since our formation on October 6, 2017, all of our Lease Agreements and loan and security investments are current in payment of their obligations to us and no investments are on non-accrual status.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

The following tables detail the allowance for credit losses as of September 30, 2023 and December 31, 2022:


	September 30, 2023
($ In thousands)	Amortized Cost		Allowance (1)		Net Investment		Allowance as a % of Amortized Cost
Investments in leases – sales-type	$	23,645,385	$	(755,401)	$	22,889,984	3.19	%
Investments in leases – financing receivables	18,044,641		(706,976)		17,337,665		3.92	%
Investments in loans and securities	996,064		(22,847)		973,217		2.29	%
Other assets – sales-type sub-leases	806,178		(19,283)		786,895		2.39	%
Totals	$	43,492,268	$	(1,504,507)	$	41,987,761	3.46	%


	December 31, 2022
($ In thousands)	Amortized Cost		Allowance (1)		Net Investment		Allowance as a % of Amortized Cost
Investments in leases – sales-type	$	17,742,712	$	(570,387)	$	17,172,325	3.21	%
Investments in leases – financing receivables	17,467,477		(726,707)		16,740,770		4.16	%
Investments in loans and securities	692,658		(6,865)		685,793		0.99	%
Other assets – sales-type sub-leases	784,259		(19,750)		764,509		2.52	%
Totals	$	36,687,106	$	(1,323,709)	$	35,363,397	3.61	%

(1) The total allowance excludes the CECL allowance for unfunded commitments of our senior secured and mezzanine loans and for unfunded commitments of our Partner Property Growth Fund. As of September 30, 2023 and December 31, 2022, such allowance is $30.1 million and $45.1 million, respectively, and is recorded in Other liabilities.

The following chart reflects the roll-forward of the allowance for credit losses on our real estate portfolio for the nine months ended September 30, 2023 and 2022:


	Nine Months Ended September 30,
(In thousands)	2023		2022
Beginning Balance December 31,	$	1,368,819	$	534,326

Initial allowance from current period investments	271,642		523,235
Current period change in credit allowance	(105,865)		342,224
Charge-offs	—		—
Recoveries	—		—
Ending Balance September 30,	$	1,534,596	$	1,399,785

Credit Quality Indicators

We assess the credit quality of our investments through the credit ratings of the senior secured debt of the guarantors of our leases, as we believe that our Lease Agreements have a similar credit profile to a senior secured debt instrument. The credit quality indicators are reviewed by us on a quarterly basis as of quarter-end. In instances where the guarantor of one of our Lease Agreements does not have senior secured debt with a credit rating, we use either a comparable proxy company or the overall corporate credit rating, as applicable. We also use this credit rating to determine the Long-Term Period PD when estimating credit losses for each investment.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

The following tables detail the amortized cost basis of our investments by the credit quality indicator we assigned to each lease or loan guarantor as of September 30, 2023 and 2022:


	September 30, 2023
(In thousands)	Ba2		Ba3		B1		B2		B3		N/A (2)		Total
Investments in leases – sales-type and financing receivable, Investments in loans and securities and Other assets (1)	$	4,299,350	$	32,877,396	$	3,227,870	$	880,347	$	1,293,816	$	913,489	$	43,492,268


	September 30, 2022
(In thousands)	Ba2		Ba3		B1		B2		B3		N/A (2)		Total
Investments in leases – sales-type and financing receivable, Investments in loans and securities and Other assets (1)	$	4,230,599	$	15,624,832	$	14,975,981	$	874,054	$	280,075	$	185,790	$	36,171,331

*(1)*Excludes the CECL allowance for unfunded commitments recorded in Other liabilities as such commitments are not currently reflected on our Balance Sheet, rather the CECL allowance is based on our current best estimate of future funding commitments.

*(2)*We estimate the CECL allowance for our senior secured and mezzanine loans and preferred equity investment using a traditional commercial real estate model based on standardized credit metrics to estimate potential losses.

Note 6 — Other Assets and Other Liabilities

Other Assets

The following table details the components of our other assets as of September 30, 2023 and December 31, 2022:


(In thousands)	September 30, 2023		December 31, 2022
Sales-type sub-leases, net (1)	$	786,895	$	764,509
Property and equipment used in operations, net	66,391		67,209
Right of use assets and sub-lease right of use assets	40,052		45,008
Forward-starting interest rate swaps	20,289		—
Debt financing costs	12,147		18,646
Deferred acquisition costs	11,491		12,834
Tenant receivables	10,710		5,498
Interest receivable	8,783		6,911
Other receivables	8,074		6,474
Prepaid expenses	3,685		7,348
Other	1,155		1,891
Total other assets	$	969,672	$	936,328

(1) As of September 30, 2023 and December 31, 2022, sales-type sub-leases are net of $19.3 million and $19.8 million of allowance for credit losses, respectively. Refer to Note 5 – Allowance for Credit Losses for further details.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Property and equipment used in operations, included within other assets, is primarily attributable to the land, building and improvements of our golf operations and consists of the following as of September 30, 2023 and December 31, 2022:


(In thousands)	September 30, 2023		December 31, 2022
Land and land improvements	$	60,380	$	60,332
Buildings and improvements	15,698		15,125
Furniture and equipment	10,836		9,563
Total property and equipment used in operations	86,914		85,020
Less: accumulated depreciation	(20,523)		(17,811)
Total property and equipment used in operations, net	$	66,391	$	67,209


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2023		2022		2023		2022
Depreciation expense	$	1,011	$	816	$	2,712	$	2,371

Other Liabilities

The following table details the components of our other liabilities as of September 30, 2023 and December 31, 2022:


(In thousands)	September 30, 2023		December 31, 2022
Finance sub-lease liabilities	$	806,178	$	784,259
Deferred financing liabilities	73,600		73,600
Lease liabilities and sub-lease liabilities	40,052		45,039
CECL allowance for unfunded commitments	30,089		45,110
Deferred income taxes	4,279		4,339

Other	250		125
Total other liabilities	$	954,448	$	952,472

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Note 7— Debt

The following tables detail our debt obligations as of September 30, 2023 and December 31, 2022:


($ In thousands)	September 30, 2023
Description of Debt	Maturity	Interest Rate	Principal Amount		Carrying Value (1)
Revolving Credit Facility
USD Borrowings (2)	2026	SOFR + 1.05%	$	—	$	—
CAD Borrowings (2) (3)	2026	CDOR + 1.05%	158,348		158,348
MGM Grand/Mandalay Bay CMBS Debt (4)	2032	3.558%	3,000,000		2,767,065
November 2019 Notes (5)
2026 Maturity	2026	4.250%	1,250,000		1,240,965
2029 Maturity	2029	4.625%	1,000,000		990,131
February 2020 Notes (5)
2025 Maturity	2025	3.500%	750,000		746,778
2027 Maturity	2027	3.750%	750,000		744,343
2030 Maturity	2030	4.125%	1,000,000		989,745
April 2022 Notes (5)
2025 Maturity	2025	4.375%	500,000		497,476
2028 Maturity	2028	4.516% (6)	1,250,000		1,238,965
2030 Maturity	2030	4.541% (6)	1,000,000		988,915
2032 Maturity	2032	3.980% (6)	1,500,000		1,482,327
2052 Maturity	2052	5.625%	750,000		735,730
Exchange Notes (5)
2024 Maturity	2024	5.625%	1,024,169		1,026,378
2025 Maturity	2025	4.625%	799,368		788,424
2026 Maturity	2026	4.500%	480,524		466,546
2027 Maturity	2027	5.750%	729,466		736,832
2028 Maturity	2028	4.500%	349,325		338,417
2029 Maturity	2029	3.875%	727,114		668,311
MGP OP Notes (5)
2024 Maturity	2024	5.625%	25,831		25,862
2025 Maturity	2025	4.625%	632		620
2026 Maturity	2026	4.500%	19,476		18,729
2027 Maturity	2027	5.750%	20,534		20,523
2028 Maturity	2028	4.500%	675		644
2029 Maturity	2029	3.875%	22,886		20,654
Total Debt		4.349% (7)	$	17,108,348	$	16,692,728

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)


($ In thousands)	December 31, 2022
Description of Debt	Maturity	Interest Rate	Principal Amount		Carrying Value (1)
Revolving Credit Facility (2)	2026	SOFR + 1.05%	$	—	$	—
Delayed Draw Term Loan (8)	2025	SOFR + 1.20%	—		—
November 2019 Notes (5)
2026 Maturity	2026	4.250%	1,250,000		1,238,825
2029 Maturity	2029	4.625%	1,000,000		988,931
February 2020 Notes (5)
2025 Maturity	2025	3.500%	750,000		745,020
2027 Maturity	2027	3.750%	750,000		743,086
2030 Maturity	2030	4.125%	1,000,000		988,626
April 2022 Notes (5)
2025 Maturity	2025	4.375%	500,000		496,314
2028 Maturity	2028	4.516% (6)	1,250,000		1,237,082
2030 Maturity	2030	4.541% (6)	1,000,000		987,618
2032 Maturity	2032	3.980% (6)	1,500,000		1,480,799
2052 Maturity	2052	5.625%	750,000		735,360
Exchange Notes (5)
2024 Maturity	2024	5.625%	1,024,169		1,029,226
2025 Maturity	2025	4.625%	799,368		783,659
2026 Maturity	2026	4.500%	480,524		463,018
2027 Maturity	2027	5.750%	729,466		738,499
2028 Maturity	2028	4.500%	349,325		336,545
2029 Maturity	2029	3.875%	727,114		660,489
MGP OP Notes (5)
2024 Maturity	2024	5.625%	25,831		25,901
2025 Maturity	2025	4.625%	632		615
2026 Maturity	2026	4.500%	19,476		18,542
2027 Maturity	2027	5.750%	20,534		20,520
2028 Maturity	2028	4.500%	675		639
2029 Maturity	2029	3.875%	22,886		20,361
Total Debt		4.496% (7)	$	13,950,000	$	13,739,675

*(1)*Carrying value is net of unamortized original issue discount and unamortized debt issuance costs incurred in conjunction with debt.

*(2)*Interest on any outstanding balance is payable monthly. Borrowings under the Revolving Credit Facility bear interest at a rate based on a credit rating-based pricing grid with a range of 0.775% to 1.325% margin plus SOFR (or CDOR, as applicable) with an additional 0.10% adjustment for SOFR loans, as applicable. Additionally, the commitment fees under the Revolving Credit Facility are calculated on a credit rating-based pricing grid with a range of 0.15% to 0.375%, depending on our credit ratings. For the three and nine months ended September 30, 2023, the commitment fee for the Revolving Credit Facility was 0.250%.

*(3)*On January 3, 2023, we drew on the Revolving Credit Facility in the amount of C$140.0 million to fund a portion of the purchase price of the PURE Canadian Gaming Transaction. On August 31, 2023, we drew on the Revolving Credit Facility in the amount of C$75.0 million to fund a portion of the purchase price of the Century Canadian Portfolio Transaction. The balance above is inclusive of foreign currency remeasurement.

*(4)*Interest is payable monthly.

*(5)*Interest is payable semi-annually.

*(6)*Interest rates represent the contractual interest rates adjusted to account for the impact of the forward-starting interest rate swaps and treasury locks (as further described in Note 8 – Derivatives**). The contractual interest rates on the April 2022 Notes maturing 2028, 2030 and 2032 are 4.750%, 4.950% and 5.125%, respectively.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

*(7)*The interest rate represents the weighted average interest rates of the Senior Unsecured Notes adjusted to account for the impact of the forward-starting interest rate swaps and treasury locks (as further described in Note 8 – Derivatives**), as applicable. The contractual weighted average interest rate as of September 30, 2023, which excludes the impact of the forward-starting interest rate swaps and treasury locks, is 4.49%.

*(8)*The Delayed Draw Term Loan was available to be drawn up to 12 months following the effective date of February 8, 2022. On February 8, 2023, the Delayed Draw Term Loan facility expired undrawn in accordance with its terms.

The following table is a schedule of future minimum principal payments of our debt obligations as of September 30, 2023:


(In thousands)	Future Minimum Principal Payments
2023 (remaining)	$	—
2024	1,050,000
2025	2,050,000
2026	1,908,348
2027	1,500,000
2028	1,600,000
Thereafter	9,000,000
Total minimum principal payments	$	17,108,348

Senior Unsecured Notes

Exchange Notes

On September 13, 2021, we announced that the VICI Issuers commenced (i) private exchange offers to certain eligible holders (collectively, the “Exchange Offers”) for any and all of each series of the MGP OP Notes for up to an aggregate principal amount of $4.2 billion of new notes issued by the VICI Issuers and (ii) consent solicitations with respect to each series of MGP OP Notes (collectively, the “Consent Solicitations”) to adopt certain proposed amendments to each of the indentures governing the MGP OP Notes (collectively, the “MGP OP Notes Indentures”), which, among other things, eliminated or modified certain of the covenants, restrictions, provisions and events of default in each of the MGP OP Notes Indentures. Upon settlement of the Exchange Offers and Consent Solicitations on April 29, 2022, supplemental indentures to each of the MGP OP Notes Indentures that effected the proposed amendments became operative.

On April 29, 2022, the VICI Issuers issued $1,024.2 million in aggregate principal amount of 5.625% Senior Notes due May 1, 2024, $799.4 million in aggregate principal amount of 4.625% Senior Notes due June 15, 2025, $480.5 million in aggregate principal amount of 4.500% Senior Notes due September 1, 2026, $729.5 million in aggregate principal amount of 5.750% Senior Notes due February 1, 2027, $349.3 million in aggregate principal amount of 4.500% Senior Notes due January 15, 2028 and $727.1 million in aggregate principal amount of 3.875% Senior Notes due February 15, 2029 in exchange for the validly tendered and not validly withdrawn MGP OP Notes, originally issued by the MGP Issuers, pursuant to the settlement of the Exchange Offers and Consent Solicitations in connection with the closing of the MGP Transactions. The Exchange Notes were issued with the same interest rate, maturity date and redemption terms as the corresponding series of MGP OP Notes, in each case under a supplemental indenture dated as of April 29, 2022, between the VICI Issuers and UMB Bank, National Association, as trustee (the “Trustee”).

The Exchange Notes due 2025, 2026, 2027, 2028, and 2029 are redeemable at our option, in whole or in part, at any time on or after February 1, 2024, March 15, 2025, June 1, 2026, November 1, 2026, October 15, 2027 and November 15, 2028, respectively, at the redemption prices set forth in the respective indenture governing such Exchange Notes. We may redeem some or all of such notes prior to such respective dates at a price equal to 100% of the principal amount thereof plus a “make-whole” premium.

MGP OP Notes

Following the issuance of the Exchange Notes pursuant to the settlement of the Exchange Offers and Consent Solicitations, $25.8 million in aggregate principal amount of MGP OP Notes due 2024, $0.6 million in aggregate principal amount of MGP OP Notes due 2025, $19.5 million in aggregate principal amount of MGP OP Notes due 2026, $20.5 million in aggregate principal amount of MGP OP Notes due 2027, $0.7 million in aggregate principal amount of MGP OP Notes due 2028 and $22.9 million in aggregate principal amount of MGP OP Notes due 2029 remain outstanding.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Each series of the MGP OP Notes is redeemable at our option, in whole or in part, at any time on or after the same dates as set forth above with respect to the corresponding maturity series of the Exchange Notes. We may redeem some or all of such notes prior to such respective dates at a price equal to 100% of the principal amount thereof plus a “make-whole” premium.

April 2022 Notes

On April 29, 2022, VICI LP, our wholly owned subsidiary, issued (i) $500.0 million in aggregate principal amount of 4.375% Senior Notes due 2025, which mature on May 15, 2025, (ii) $1,250.0 million in aggregate principal amount of 4.750% Senior Notes due 2028, which mature on February 15, 2028, (iii) $1,000.0 million in aggregate principal amount of 4.950% Senior Notes due 2030, which mature on February 15, 2030, (iv) $1,500.0 million in aggregate principal amount of 5.125% Senior Notes due 2032, which mature on May 15, 2032, and (v) $750.0 million in aggregate principal amount of 5.625% Senior Notes due 2052, which mature on May 15, 2052, (collectively, the “April 2022 Notes”) in each case under a supplemental indenture dated as of April 29, 2022, between VICI LP and the Trustee. We used the net proceeds of the offering to (i) fund the consideration for the redemption of a majority of the VICI OP Units received by MGM in the Partnership Merger for $4,404.0 million in cash in connection with the closing of the MGP Transactions on April 29, 2022, and (ii) pay down the outstanding $600.0 million balance on our Revolving Credit Facility.

Prior to their maturity date, in the case of the April 2022 Notes due 2025, and January 15, 2028 (one month prior to the maturity date of the April 2022 Notes due 2028), December 15, 2029 (two months prior to the maturity date of the April 2022 Notes due 2030), February 15, 2032 (three months prior to the maturity date of the April 2022 Notes due 2032) and November 15, 2051 (six months prior to the maturity date of the April 2022 Notes due 2052), respectively, in the case of the April 2022 Notes due 2028, 2030, 2032 and 2052, we may redeem the April 2022 Notes at our option, in whole or in part, at any time and from time to time, at a price equal to 100% of the principal amount thereof plus a “make-whole” premium. On or after January 15, 2028, December 15, 2029, February 15, 2032 and November 15, 2051, respectively, we may redeem the April 2022 Notes due 2028, 2030, 2032 and 2052 at a redemption price equal to 100% of the principal amount of such Notes to be redeemed, plus accrued and unpaid interest thereon to the redemption date.

February 2020 Notes

On February 5, 2020, the VICI Issuers issued (i) $750.0 million in aggregate principal amount of 3.500% Senior Notes due 2025, which mature on February 15, 2025, (ii) $750.0 million in aggregate principal amount of 3.750% Senior Notes due 2027, which mature on February 15, 2027, and (iii) $1,000.0 million in aggregate principal amount of 4.125% Senior Notes due 2030, which mature on August 15, 2030 (collectively, the “February 2020 Notes”), under separate indentures, each dated as of February 5, 2020, among the VICI Issuers, the subsidiary guarantors party thereto and the Trustee.

The February 2020 Notes due 2025, 2027 and 2030 are redeemable at our option, in whole or in part, at any time on or after February 15, 2022, February 15, 2023, and February 15, 2025, respectively, at the redemption prices set forth in the respective indenture. We may redeem some or all of the February 2020 Notes due 2025, 2027 and 2030 prior to such respective dates at a price equal to 100% of the principal amount thereof plus a “make-whole” premium. Prior to February 15, 2022, with respect to the February 2020 Notes due 2025, and February 15, 2023, with respect to the February 2020 Notes due 2027 and 2030, we may redeem up to 40% of the aggregate principal amount of the February 2020 Notes due 2025, 2027 and 2030 using the proceeds of certain equity offerings at the redemption price set forth in the respective indenture.

November 2019 Notes

On November 26, 2019, the VICI Issuers issued (i) $1,250.0 million in aggregate principal amount of 4.250% Senior Notes due 2026, which mature on December 1, 2026, and (ii) $1,000.0 million in aggregate principal amount of 4.625% Senior Notes due 2029, which mature on December 1, 2029 (collectively, the “November 2019 Notes”), under separate indentures, each dated as of November 26, 2019, among the VICI Issuers, the subsidiary guarantors party thereto and the Trustee.

The November 2019 Notes due 2026 and 2029 are redeemable at our option, in whole or in part, at any time on or after December 1, 2022 and December 1, 2024, respectively, at the redemption prices set forth in the respective indenture. We may redeem some or all of the November 2019 Notes due 2026 or 2029 prior to such respective dates at a price equal to 100% of the principal amount thereof plus a “make-whole” premium. Prior to December 1, 2022, we may redeem up to 40% of the aggregate principal amount of the November 2019 Notes due 2026 or 2029 using the proceeds of certain equity offerings at the redemption price set forth in the respective indenture.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Guarantee and Financial Covenants

None of the Senior Unsecured Notes are guaranteed by any subsidiaries of VICI LP. The Exchange Notes, the MGP OP Notes and the April 2022 Notes benefit from a pledge of the limited partnership interests of VICI LP directly owned by VICI OP (the “Limited Equity Pledge”). The Limited Equity Pledge has also been granted in favor of (i) the administrative agent and the lenders under the Credit Agreement and (ii) the trustee under the indentures governing, and the holders of, the November 2019 Notes and the February 2020 Notes.

Pursuant to the terms of the respective indentures, in the event that the November 2019 Notes, February 2020 Notes and Exchange Notes (i) are rated investment grade by at least two of S&P, Moody’s and Fitch and (ii) no default or event of default has occurred and is continuing under the respective indentures, VICI LP and its restricted subsidiaries will no longer be subject to certain of the restrictive covenants under such indentures. On April 18, 2022, the November 2019 Notes, February 2020 Notes and Exchange Notes were rated investment grade by each of S&P and Fitch and VICI LP notified the Trustee of such Suspension Date (as defined in the indentures). Accordingly, VICI LP and its restricted subsidiaries are no longer subject to certain of the restrictive covenants under such indentures, but are subject to a maintenance covenant requiring VICI LP and its restricted subsidiaries to maintain a certain total unencumbered assets to unsecured debt ratio. In the event that the November 2019 Notes, February 2020 Notes and Exchange Notes are no longer rated investment grade by at least two of S&P, Moody’s and Fitch, then VICI LP and its restricted subsidiaries will again be subject to all of the covenants of the respective indentures, as applicable, but will no longer be subject to the maintenance covenant.

The indenture governing the April 2022 Notes contains certain covenants that limit the ability of VICI LP and its subsidiaries to incur secured and unsecured indebtedness and VICI LP to consummate a merger, consolidation or sale of all or substantially all of its assets. In addition, VICI LP is required to maintain total unencumbered assets of at least 150% of total unsecured indebtedness. These covenants are subject to a number of important exceptions and qualifications.

Unsecured Credit Facilities

On February 8, 2022, VICI LP entered into the Credit Agreement providing for (i) the Revolving Credit Facility in the amount of $2.5 billion scheduled to mature on March 31, 2026 and (ii) the Delayed Draw Term Loan in the amount of $1.0 billion scheduled to mature on March 31, 2025. The Delayed Draw Term Loan was available to be drawn for up to 12 months following the effective date and, accordingly, expired undrawn in accordance with its terms on February 8, 2023.

The Revolving Credit Facility includes two six-month maturity extension options the exercise of which is subject to customary conditions and the payment of an extension fee of 0.0625% on the extended commitments. Additionally, the Revolving Credit Facility includes the option to increase the revolving loan commitments by up to $1.0 billion to the extent that any one or more lenders (from the syndicate or otherwise) agree to provide such additional credit extensions. On July 15, 2022, the Credit Agreement was amended pursuant to a First Amendment among VICI LP and the lenders party to the Credit Agreement, in order to permit borrowings under the Revolving Credit Facility in certain foreign currencies in an aggregate principal amount of up to the equivalent of $1.25 billion.

Borrowings under the Revolving Credit Facility will bear interest, at VICI LP’s option, at a rate based on SOFR (or CDOR for Canadian dollars) (including a credit spread adjustment for SOFR) plus a margin ranging from 0.775% to 1.325% or a base rate (or Canadian prime rate for Canadian dollars) plus a margin ranging from 0.00% to 0.325%, in each case, with the actual margin determined according to VICI LP’s debt ratings. The base rate for USD is the highest of (i) the prime rate of interest last quoted by the Wall Street Journal in the U.S. then in effect, (ii) the NYFRB rate from time to time plus 0.5% and (iii) the SOFR rate for a one-month interest period plus 1.0%, subject in each case to a floor of 1.0%. The Canadian prime rate is the highest of (i) the PRIMCAN Index rate and (ii) the average rate for thirty day Canadian Dollar bankers’ acceptance quoted by Reuters plus 1.0%, subject in each case to a floor of 1.0%. In addition, the Revolving Credit Facility requires the payment of a facility fee ranging from 0.15% to 0.375% (depending on VICI LP’s debt rating) of total revolving commitments.

Pursuant to the terms of the Credit Agreement, VICI LP is subject to, among other things, customary covenants and the maintenance of various financial covenants. The Credit Agreement is consistent with certain tax-related requirements related to security for the Company’s debt.

On January 3, 2023, we drew on the Revolving Credit Facility in the amount of C$140.0 million (approximately US$103.4 million based on the exchange rate at the time of the acquisition) to fund a portion of the purchase price of the PURE Canadian Gaming Transaction. On August 31, 2023, we drew on the Revolving Credit Facility in the amount of C$75.0 million

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

(approximately US$55.0 million based on the exchange rate at the time of the acquisition) to fund a portion of the purchase price of the Century Canadian Portfolio Transaction.

MGM Grand/Mandalay Bay CMBS Debt

On January 9, 2023, as a result of the MGM Grand/Mandalay Bay JV Interest Acquisition, we consolidated the assets and liabilities of the MGM Grand/Mandalay Bay JV, which includes the $3.0 billion in principal amount of outstanding CMBS debt (the “MGM Grand/ Mandalay Bay CMBS Debt”). The MGM Grand/Mandalay Bay CMBS Debt was originally incurred on February 14, 2020 pursuant to a loan agreement (as amended from time to time, the “MGM Grand/Mandalay Bay CMBS Loan Agreement”), and is secured primarily by mortgages on certain affiliates of the MGM Grand/Mandalay Bay JV’s fee interest in the real estate assets related to the MGM Grand Las Vegas and the Mandalay Bay Resort and Casino. The MGM Grand/Mandalay Bay CMBS Debt matures in March 2032 and bears interest at 3.558% per annum until March 2030 at which time the rate can change in accordance with the terms of the MGM Grand Mandalay Bay CMBS Loan Agreement until maturity. The MGM Grand/Mandalay Bay CMBS Loan Agreement contains certain customary affirmative and negative covenants and events of default, including, among other things, restrictions on the ability of the MGM Grand/Mandalay Bay JV and certain of its affiliates to incur additional debt and transfer, pledge or assign certain equity interests or its assets, and covenants requiring certain affiliates of the MGM Grand/Mandalay Bay JV to exist as “special purpose entities,” maintain certain ongoing reserve funds and comply with other customary obligations for commercial mortgage-backed securities loan financings.

Bridge Facilities

On March 2, 2021 and August 4, 2021, in connection with the completion of the Venetian Acquisition and MGP Transactions, respectively, VICI PropCo entered into Commitment Letters with certain lenders pursuant to which they provided commitments in an amount up to $4.0 billion and $9.3 billion, respectively, in the aggregate, each consisting of a 364-day first lien secured bridge facility (the “Venetian Acquisition Bridge Facility” and the “MGP Transactions Bridge Facility,” respectively), for the purpose of providing a portion of the financing necessary in connection with the closing of the Venetian Acquisition and MGP Transactions, as applicable. In each case the commitments were subject to a tiered commitment fee based on the period the respective commitment was outstanding and a structuring fee. During the nine months ended September 30, 2022, we recognized $16.3 million in such fees, which were recorded in Interest expense in our Statement of Operations. We did not recognize any such fees during the three months ended September 30, 2022 and the three and nine months ended September 30, 2023, since the Venetian Acquisition Bridge Facility and MGP Transactions Bridge Facility were fully terminated on February 23, 2022 and April 29, 2022, respectively, in connection with such closings.

Financial Covenants

As described above, our debt obligations are subject to certain customary financial and protective covenants that restrict VICI LP, VICI PropCo and its subsidiaries’ ability to incur additional debt, sell certain asset and restrict certain payments, among other things. These covenants are subject to a number of exceptions and qualifications, including the ability to make restricted payments to maintain our REIT status. At September 30, 2023, we were in compliance with all financial covenants under our debt obligations.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Note 8 — Derivatives

Forward-Starting Derivatives

From March through September 2023, we entered into five forward-starting interest rate swap agreements with an aggregate notional amount of $400.0 million to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance of $400.0 million of senior unsecured notes, including three forward-starting interest rate swap agreements for an aggregate notional amount of $150.0 million during the quarter ended September 30, 2023. Subsequent to quarter-end, we entered into one forward-starting interest rate swap agreement for an additional notional amount of $50.0 million. We hedged our exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period ending December 2024. The forward-starting interest rate swaps are designated as cash-flow hedges.

The following table details our outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk as of September 30, 2023. As of December 31, 2022, there were no derivative instruments outstanding.


($ In thousands)	September 30, 2023
Instrument	Number of Instruments	Fixed Rate	Notional		Index	Maturity
Forward-starting interest rate swap	1	3.4565%	$	200,000	USD-SOFR-COMPOUND	March 6, 2034
Forward-starting interest rate swap	1	3.0615%	50,000		USD-SOFR-COMPOUND	March 6, 2034
Forward-starting interest rate swap	1	3.4520%	50,000		USD-SOFR-COMPOUND	March 6, 2034
Forward-starting interest rate swap	1	3.9775%	50,000		USD-SOFR-COMPOUND	March 6, 2034
Forward-starting interest rate swap	1	4.1660%	50,000		USD-SOFR-COMPOUND	March 6, 2034

From December 2021 through April 2022, we entered into five forward-starting interest rate swap agreements with an aggregate notional amount of $2.5 billion and two U.S. Treasury Rate Lock agreements with an aggregate notional amount of $500.0 million to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $3.0 billion of long-term debt. The forward-starting interest rate swaps and treasury locks were designated as cash-flow hedges. In April 2022 in connection with the April 2022 Notes offering, we settled the outstanding forward-starting interest rate swaps for total net proceeds of $202.3 million and the treasury locks for total net proceeds of $4.5 million. Since the forward-starting swaps and treasury locks were hedging the interest rate risk on the April 2022 Notes, the unrealized gain in Accumulated other comprehensive income will be amortized over the term of the respective derivative instruments, which matches that of the underlying note, as a reduction in interest expense.

The following table presents the effect of our forward-starting derivative financial instruments on our Statement of Operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2023		2022		2023		2022
Unrealized gain recorded in other comprehensive income	$	20,109	$	—	$	20,289	$	200,550
Reduction in interest expense related to the amortization of the forward-starting interest rate swaps and treasury locks	(6,037)		(6,037)		(18,111)		(10,196)

Net Investment Hedges

The C$140.0 million and C$75.0 million draws on the Revolving Credit Facility in connection with the PURE Canadian Gaming Transaction and Century Canadian Portfolio Transaction, respectively, reduce the impact of exchange rate variations associated with our investments in such entities, and, accordingly, has been designated as a hedge of the net investment in the PURE Canadian Gaming entities and Century Canadian Portfolio entities, respectively. As non-derivative net investment hedges, the impact of changes in foreign currency exchange rates on the principal balances are recognized as a cumulative translation adjustment within accumulated other comprehensive income. For the three and nine months ended September 30, 2023, we recognized $2.9 million and $1.7 million, respectively, in unrealized losses related to such net investment hedges, which were recorded as a component of Foreign currency translation adjustments in the Statement of Operations.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Note 9 — Fair Value

The following table summarizes our assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022:


	September 30, 2023
(In thousands)			Fair Value
	Carrying Amount		Level 1		Level 2		Level 3
Financial assets:
Derivative instruments – forward-starting interest rate swaps (1)	$	20,289	$	—	$	20,289	$	—


	December 31, 2022
(In thousands)			Fair Value
	Carrying Amount		Level 1		Level 2		Level 3
Financial assets:

Short-term investments (2)	$	217,342	$	—	$	217,342	$	—

(1) The fair values of our interest rate swap derivative instruments were estimated using advice from a third-party derivative specialist, based on contractual cash flows and observable inputs comprising interest rate curves and credit spreads, which are Level 2 measurements as defined under ASC 820.

(2) The carrying value of these investments is equal to their fair value due to the short-term nature of the investments as well as their credit quality.

The estimated fair values of our financial instruments as of September 30, 2023 and December 31, 2022 for which fair value is only disclosed are as follows:


	September 30, 2023				December 31, 2022
(In thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Investments in leases – financing receivables (1)	$	17,337,665	$	17,955,365	$	16,740,770	$	17,871,771
Investments in loans and securities (2)	973,217		915,899		685,793		675,456
Cash and cash equivalents	510,884		510,884		208,933		208,933

Financial liabilities:
Debt (3)
Revolving Credit Facility	158,348		158,348		—		—
MGM Grand/Mandalay Bay CMBS Debt	2,767,065		2,495,347		—		—
Senior Unsecured Notes	13,767,315		12,825,517		13,739,675		13,020,636

*(1)*These investments represent the JACK Master Lease, the Harrah’s Call Properties, the MGM Master Lease, the Foundation Master Lease, the Mirage Lease, the Gold Strike Lease, the PURE Master Lease and the Century Canadian Portfolio component of the Century Master Lease. In relation to the Harrah’s Call Properties, JACK Master Lease, Mirage Lease, Gold Strike Lease and MGM Master Lease, the fair value of these assets is based on significant “unobservable” market inputs and, as such, these fair value measurements are considered Level 3 of the fair value hierarchy. In relation to the Foundation Master Lease, PURE Master Lease and the Century Canadian Portfolio component of the Century Master Lease, given the proximity of the date of our investment to the date of the financial statements, we determined that the fair value materially approximates the purchase price of the acquisition of these financial assets.

*(2)*These investments represent our investments in twelve senior secured and mezzanine loans and one series of senior secured notes. The fair value of investments in loans is based on significant “unobservable” market inputs and, as such, these fair value measurements are considered Level 3 of the fair value hierarchy. The fair value of our senior secured notes was estimated using quoted prices for identical or similar liabilities in markets that are not active and, as such, these fair value measurements are considered Level 2 of the fair value hierarchy.

*(3)*The fair value of our debt instruments was estimated using quoted prices for identical or similar liabilities in markets that are not active and, as such, these fair value measurements are considered Level 2 of the fair value hierarchy.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Note 10 — Commitments and Contingent Liabilities

Litigation

In the ordinary course of business, from time to time, we may be subject to legal claims and administrative proceedings. As of September 30, 2023, we are not subject to any litigation that we believe could have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations, liquidity or cash flows.

Lease Commitments

Operating Lease Commitments. We are liable under various operating leases for: (i) land at the Cascata golf course, which expires in 2038 and has three 10-year extension options and (ii) our corporate headquarters in New York, NY, which expires in 2035 and has one five-year renewal option.
Sub-Lease Commitments. Certain of our acquisitions necessitate that we assume, as the lessee, ground and use leases that are integral to the operations of the property, the cost of which is passed to our tenants through the Lease Agreements, which require the tenants to pay all costs associated with such ground and use leases and provide for their direct payment to the landlord.

We have determined we are the primary obligor of certain of such ground and use leases and, accordingly, have presented these leases on a gross basis on our Balance Sheet and Statement of Operations.

For the ground and use leases determined to be operating leases, we recorded a sub-lease right-of-use assets in Other assets and sub-lease liabilities in Other liabilities. For ground and lease uses determined to be finance leases, we recorded a sales-type sub-lease in Other assets and finance sub-lease liability in Other liabilities.

The following table details the balance and location in our Balance Sheet of the ground and use sub-leases as of September 30, 2023 and December 31, 2022:


(In thousands)	September 30, 2023		December 31, 2022
Others assets (operating lease and sub-leases)	$	40,052	$	28,953
Other liabilities (operating lease and sub-lease liabilities)	40,052		28,953
Others assets (sales-type sub-leases, net) (1)	786,895		764,509
Other liabilities (finance sub-lease liabilities)	806,178		784,259

Total rental expense for operating lease commitments and total rental income and rental expense for operating and Finance sub-lease commitments and contractual rent expense under these agreements were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2023		2022		2023		2022
Operating leases
Rent expense(1)	$	508	$	503	$	1,515	$	1,504
Contractual rent	483		475		1,438		1,424
Operating sub-leases
Rental income and expense(2)	1,712		1,712		5,137		3,995
Contractual rent	1,650		1,602		4,918		3,720
Finance sub-leases
Rental income and expense(2)	14,490		14,466		43,349		33,392
Contractual rent	15,925		18,925		44,488		37,910

(1) Total rental expense is included in golf operations and general and administrative expenses in our Statement of Operations.

(2) Total rental income and rental expense for operating and finance sub-lease commitments are presented gross and included in Other income and Other expenses in our Statement of Operations.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

The future minimum lease commitments relating to the base lease rent portion of noncancelable operating leases and ground and use sub-leases at September 30, 2023 are as follows:


(In thousands)	Operating Lease Commitments		Operating Sub-Lease Commitments		Financing Sub-Lease Commitments
2023 (remaining)	$	466	$	1,667	$	14,700
2024	1,347		6,553		61,132
2025	2,025		5,129		61,308
2026	2,772		3,934		61,308
2027	2,792		4,010		61,308
2028	2,814		3,034		61,394
Thereafter	23,515		2,094		2,595,488
Total minimum lease commitments	$	35,731	$	26,421	$	2,916,638
Discounting factor	20,286		1,815		2,110,460
Lease liability	$	15,445	$	24,606	$	806,178

Discount rates (1)	5.3% – 5.5%		2.6% – 2.9%		6.0% – 8.0%

Weighted average remaining lease term	13.2 years		4.9 years		53.5 years

(1) The discount rates for the leases were determined based on the yield of our then current secured borrowings, adjusted to match borrowings of similar terms.

Note 11 — Stockholder’s Equity

Stock

Authorized

As of September 30, 2023, we have the authority to issue 1,400,000,000 shares of stock, consisting of 1,350,000,000 shares of common stock, $0.01 par value per share, and 50,000,000 shares of preferred stock, $0.01 par value per share.

Public Offerings

From time to time, we offer shares of our common stock through public offerings registered with the SEC. In connection with such offerings, we may issue and sell the offered shares of common stock upon settlement of the offering or, alternatively, enter into forward sale agreements with respect to all or a portion of the shares of common stock sold in such public offerings, pursuant to which the offered shares are borrowed by the forward sale purchasers and the issuance of such shares takes place upon settlement of the applicable forward sale agreement in accordance with its terms.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Forward Offerings

On January 12, 2023, we completed a primary forward offering of 30,302,500 shares of common stock (inclusive of 3,952,500 shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares of common stock) at a public offering price of $33.00 per share for an aggregate offering value of $1,000.0 million, resulting in net proceeds, after deduction of the underwriting discount and expenses, of $964.4 million, subject to forward sale agreements (the “January 2023 Forward Sale Agreements”).

The following table summarizes the terms of the forward sale agreements outstanding as of September 30, 2023:


(In thousands, except share and per share data)	Effective Date (1)	Total Shares Remaining	Public Offering Price Per Share		Aggregate Offering Value		Initial Net Forward Sales Price Per Share		Initial Net Value
January 2023 Forward Sale Agreements (2) (3)	January 18, 2023	17,702,500	$	33.00	$	584,183	$	31.85	$	563,186

*(1)*The forward sale agreements generally require settlement within twelve months of the trade date, which is January 16, 2024 with respect to the January 2023 Forward Sale Agreements.

*(2)*As of September 30, 2023, the net forward sales price per share under the January 2023 Forward Sale Agreements was $31.58 and would result in us receiving approximately $559.1 million in net cash proceeds if we were to physically settle the shares. Alternatively, if we were to cash settle the shares under the January 2023 Forward Sale Agreements, it would result in a cash inflow of $44.0 million, or, if we were to net share settle the shares under the January 2023 Forward Sale Agreements, it would result in us receiving approximately 1.5 million shares.

*(3)*Subsequent to quarter-end, on October 17, 2023, we physically settled all of the remaining 17,702,500 shares of common stock under the January 2023 Forward Sale Agreements at a forward sale price of $31.65 per share in exchange for total net proceeds of approximately $560.3 million to fund a portion of the purchase price of the Bowlero Transaction and for general corporate purposes.

We did not receive any proceeds from the sale of shares at the time we entered into each of the respective forward sale agreements. We determined that the forward sale agreements meet the criteria for equity classification and, therefore, are exempt from derivative accounting. We recorded the forward sale agreements at fair value at inception, which we determined to be zero. Subsequent changes to fair value are not required under equity classification.

The following table summarizes settlement activity of the outstanding forward sale agreements during the nine months ended September 30, 2023:


(In thousands, except share and per share data)	Settlement Date	Settlement Type	Number of Shares Settled	Net Forward Sales Price Upon Settlement		Total Net Proceeds
January 2023 Forward Sale Agreements	August 31, 2023	Physical	3,400,000	$	31.88	$	108,393
January 2023 Forward Sale Agreements	July 20, 2023	Physical	6,000,000	31.71		190,287
January 2023 Forward Sale Agreements	April 4, 2023	Physical	3,200,000	31.71		101,467
November 2022 Forward Sale Agreements	January 6, 2023	Physical	18,975,000	30.34		575,628

The following table summarizes settlement activity of the outstanding forward sale agreements during the nine months ended September 30, 2022:


(In thousands, except share and per share data)	Settlement Date	Settlement Type	Number of Shares Settled	Net Forward Share Price Upon Settlement		Total Net Proceeds
September 2021 Forward Sale Agreements	February 18, 2022	Physical	50,000,000	$	27.81	$	1,390,600
March 2021 Forward Sale Agreements	February 18, 2022	Physical	69,000,000	26.50		1,828,600

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

At-the-Market Offering Program

On February 28, 2023, we entered into an equity distribution agreement, pursuant to which we may sell, from time to time, up to an aggregate sales price of $1,500.0 million of our common stock and terminated our prior equity distribution agreement, pursuant to which we previously sold, from time to time, shares of our common stock (collectively, the “ATM Program”). Sales of common stock, if any, made pursuant to the ATM Program may be sold in negotiated transactions or transactions that are deemed to be “at the market” offerings, as defined in Rule 415 of the Securities Act. The equity distribution agreement also provides that the Company may sell shares of its common stock under the ATM Program through forward sale contracts. Actual sales under the ATM Program will depend on a variety of factors including market conditions, the trading price of our common stock, our capital needs, and our determination of the appropriate sources of funding to meet such needs.

The following table summarizes our activity under the ATM Program during the nine months ended September 30, 2023 and 2022, all of which were sold subject to forward sale agreements.


(In thousands, except share and per share data)	Number of Shares	Weighted Average Share Price		Aggregate Value		Initial Net Forward Sales Price Per Share		Aggregate Net Value
June 2022 ATM Forward Sale Agreement	11,380,980	$	32.28	$	367,400	$	31.64	$	360,000
August 2022 ATM Forward Sale Agreement	3,918,807	34.73		136,082		34.40		134,800
June 2023 ATM Forward Sale Agreement (1)	327,306	32.36		10,600		31.71		10,400
July 2023 ATM Forward Sale Agreement (2)	271,071	32.13		8,709		31.81		8,624
September 2023 ATM Forward Sale Agreement (3)	7,572,281	30.85		233,577		30.26		229,129

*(1)*As of September 30, 2023, the net forward sales price per share under the June 2023 ATM Forward Sale Agreement was $31.67 and would result in us receiving approximately $10.4 million in net cash proceeds if we were to physically settle the shares. Alternatively, if we were to cash settle the shares under the June 2023 ATM Forward Sale Agreements, it would result in a cash inflow of $0.8 million, or, if we were to net share settle the shares under the June 2023 ATM Forward Sale Agreements, it would result in us receiving approximately 28,858 shares.

*(2)*As of September 30, 2023, the net forward sales price per share under the July 2023 ATM Forward Sale Agreement was $31.71 and would result in us receiving approximately $8.6 million in net cash proceeds if we were to physically settle the shares. Alternatively, if we were to cash settle the shares under the July 2023 ATM Forward Sale Agreements, it would result in a cash inflow of $0.7 million, or, if we were to net share settle the shares under the July 2023 ATM Forward Sale Agreements, it would result in us receiving approximately 24,300 shares.

*(3)*As of September 30, 2023, the net forward sales price per share under the September 2023 ATM Forward Sale Agreement was $30.26 and would result in us receiving approximately $229.2 million in net cash proceeds if we were to physically settle the shares. Alternatively, if we were to cash settle the shares under the September 2023 ATM Forward Sale Agreements, it would result in a cash inflow of $8.8 million, or, if we were to net share settle the shares under the September 2023 ATM Forward Sale Agreements, it would result in us receiving approximately 302,553 shares.

We did not receive any proceeds from the sale of shares at the time we entered into each of the respective ATM Program forward sale agreements. We determined that the ATM Program forward sale agreements meet the criteria for equity classification and, therefore, are exempt from derivative accounting. We recorded the ATM Program forward sale agreements at fair value at inception, which we determined to be zero. Subsequent changes to fair value are not required under equity classification.

The following table summarizes our settlement activity of the outstanding forward shares under the ATM Program, all of which were sold subject to the ATM Program forward sale agreements and the previous equity distribution agreement, as applicable, during the nine months ended September 30, 2023. There was no settlement activity of the outstanding forward shares under the ATM Program during the nine months ended September 30, 2022.

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)


(In thousands, except share and per share data)	Settlement Date	Settlement Type	Number of Shares Settled	Net Forward Share Price Upon Settlement		Total Net Proceeds
December 2022 ATM Forward Sale Agreement	January 6, 2023	Physical	6,317,805	$	32.99	$	208,402
August 2022 ATM Forward Sale Agreement	January 6, 2023	Physical	3,918,807	33.96		133,073
June 2022 ATM Forward Sale Agreement	January 3, 2023	Physical	11,380,980	31.20		355,168

As of September 30, 2023, we have 8,170,658 forward shares outstanding under the ATM Program.

Common Stock Outstanding

The following table details the issuance of outstanding shares of common stock, including restricted common stock:


	Nine Months Ended September 30,
Common Stock Outstanding	2023	2022
Beginning Balance January 1,	963,096,563	628,942,092

Issuance of common stock upon physical settlement of forward sale agreements	53,192,592	119,000,000

Issuance of common stock in connection with the MGP Transactions	—	214,552,532
Issuance of restricted and unrestricted common stock under the stock incentive program, net of forfeitures	538,728	598,800
Ending Balance September 30,	1,016,827,883	963,093,424

Distributions

Dividends declared (on a per share basis) during the nine months ended September 30, 2023 and 2022 were as follows:


Nine Months Ended September 30, 2023
Declaration Date	Record Date	Payment Date	Period	Dividend
March 9, 2023	March 23, 2023	April 6, 2023	January 1, 2023 – March 31, 2023	$	0.3900
June 8, 2023	June 22, 2023	July 6, 2023	April 1, 2023 – June 30, 2023	$	0.3900
September 7, 2023	September 21, 2023	October 5, 2023	July 1, 2023 – September 30, 2023	$	0.4150


Nine Months Ended September 30, 2022
Declaration Date	Record Date	Payment Date	Period	Dividend
March 10, 2022	March 24, 2022	April 7, 2022	January 1, 2022 – March 31, 2022	$	0.3600
June 9, 2022	June 23, 2022	July 7, 2022	April 1, 2022 – June 30, 2022	$	0.3600
September 8, 2022	September 22, 2022	October 6, 2022	July 1, 2022 – September 30, 2022	$	0.3900

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Note 12 — Earnings Per Share and Earnings Per Unit

Earnings Per Share

Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, excluding net income attributable to participating securities (unvested restricted stock awards). Diluted earnings per share reflects the additional dilution for all potentially dilutive securities such as stock options, unvested restricted shares, unvested performance-based restricted shares and the shares to be issued by us upon settlement of any outstanding forward sale agreements for the period such dilutive security is outstanding. The shares issuable upon settlement of any outstanding forward sale agreements, as described in Note 11 – Stockholder’s Equity, are reflected in the diluted earnings per share calculations using the treasury stock method for the period outstanding prior to settlement. Under this method, the number of shares of our common stock used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares of common stock that would be issued upon full physical settlement of the shares under any outstanding forward sale agreements for the period prior to settlement over the number of shares of common stock that could be purchased by us in the market (based on the average market price during the period prior to settlement) using the proceeds receivable upon full physical settlement (based on the adjusted forward sales price immediately prior to settlement).

The following tables reconcile the weighted-average shares of common stock outstanding used in the calculation of basic earnings per share to the weighted-average shares of common stock outstanding used in the calculation of diluted earnings per share:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Determination of shares:
Weighted-average shares of common stock outstanding	1,012,986,784	962,573,646	1,007,110,068	848,839,357
Assumed conversion of restricted stock	602,856	988,518	790,478	795,370
Assumed settlement of forward sale agreements	—	572,176	536,906	1,188,310
Diluted weighted-average shares of common stock outstanding	1,013,589,640	964,134,340	1,008,437,452	850,823,037


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except share and per share data)	2023		2022		2023		2022
Basic:
Net income attributable to common stockholders	$	556,329	$	330,905	$	1,765,771	$	513,582
Weighted-average shares of common stock outstanding	1,012,986,784		962,573,646		1,007,110,068		848,839,357
Net income basic EPS	$	0.55	$	0.34	$	1.75	$	0.61

Diluted:
Net income attributable to common stockholders	$	556,329	$	330,905	$	1,765,771	$	513,582
Diluted weighted-average shares of common stock outstanding	1,013,589,640		964,134,340		1,008,437,452		850,823,037
Net income diluted EPS	$	0.55	$	0.34	$	1.75	$	0.60

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Earnings Per Unit

The following section presents the basic earnings per unit (“EPU”) and diluted EPU of VICI OP, our operating partnership and the direct parent and 100% interest holder in VICI LP. VICI LP’s interests are not expressed in units. However, given that VICI OP has a unit ownership structure and the financial information of VICI OP is substantially identical with that of VICI LP, we have elected to present the EPU of VICI OP. Basic EPU is computed by dividing net income attributable to partners’ capital by the weighted-average number of units outstanding during the period. In accordance with the VICI OP limited liability company agreement, for each share of common stock issued at VICI, a corresponding unit is issued by VICI OP. Accordingly, diluted EPU reflects the additional dilution for all potentially dilutive units resulting from potentially dilutive VICI stock issuances, such as options, unvested restricted stock awards, unvested performance-based restricted stock unit awards and the units to be issued by us upon settlement of any outstanding forward sale agreements of VICI for the period such dilutive security is outstanding. The units issuable upon settlement of any outstanding forward sale agreements of VICI are reflected in the diluted EPU calculations using the treasury stock method for the period outstanding prior to settlement. Under this method, the number of units used in calculating diluted EPU is deemed to be increased by the excess, if any, of the number of units that would be issued upon full physical settlement of the units under any outstanding forward sale agreements for the period prior to settlement over the number of shares of VICI common stock that could be purchased by us in the market (based on the average market price during the period prior to settlement) using the proceeds receivable upon full physical settlement (based on the adjusted forward sales price immediately prior to settlement). Upon VICI’s physical settlement of the shares of VICI common stock under the outstanding forward sale agreement, the delivery of shares of VICI common stock resulted in an increase in the number of VICI OP units outstanding and resulting dilution to EPU.

The following tables reconcile the weighted-average units outstanding used in the calculation of basic EPU to the weighted-average units outstanding used in the calculation of diluted EPU:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Determination of units:
Weighted-average units outstanding	1,025,218,157	974,805,019	1,019,341,441	855,783,910
Assumed conversion of VICI restricted stock	602,856	988,518	790,478	795,370
Assumed settlement of VICI forward sale agreements	—	572,176	536,906	1,188,310
Diluted weighted-average units outstanding	1,025,821,013	976,365,713	1,020,668,825	857,767,590


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except share and per share data)	2023		2022		2023		2022
Basic:
Net income attributable to partners	$	562,350	$	334,271	$	1,779,908	$	509,584
Weighted-average units outstanding	1,025,218,157		974,805,019		1,019,341,441		855,783,910
Net income basic EPU	$	0.55	$	0.34	$	1.75	$	0.60

Diluted:
Net income attributable to partners	$	562,350	$	334,271	$	1,779,908	$	509,584
Weighted-average units outstanding	1,025,821,013		976,365,713		1,020,668,825		857,767,590
Net income diluted EPU	$	0.55	$	0.34	$	1.74	$	0.59

VICI PROPERTIES INC. AND VICI PROPERTIES L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Note 13 — Stock-Based Compensation

The 2017 Stock Incentive Plan (the “Plan”) is designed to provide long-term equity-based compensation to our directors and employees. The Plan is administered by the Compensation Committee of the Board of Directors. Awards under the Plan may be granted with respect to an aggregate of 12,750,000 shares of common stock and may be issued in the form of: (a) incentive stock options, (b) non-qualified stock options, (c) stock appreciation rights, (d) dividend equivalent rights, (e) restricted stock, (f) restricted stock units or (g) unrestricted stock. In addition, the Plan limits the total number of shares of common stock with respect to which awards may be granted to any employee or director during any one calendar year. At September 30, 2023, 10.2 million shares of common stock remained available for issuance by us as equity awards under the Plan.

The following table details the stock-based compensation expense recorded as General and administrative expense in the Statement of Operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2023		2022		2023		2022
Stock-based compensation expense	$	4,019	$	3,493	$	11,517	$	9,359

The following table details the activity of our time-based restricted stock and performance-based restricted stock units:


	Nine Months Ended September 30, 2023
	Incentive and Time-Based Restricted Stock			Performance-Based Restricted Stock Units
	Shares	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value
Outstanding at beginning of period	507,339	$	27.47	769,589	$	22.88
Granted	208,179	28.46		474,867	28.59
Vested	(210,165)	28.12		(363,267)	19.90
Forfeited	(32,718)	28.44		(115,607)	19.90
Canceled	—	—		—	—
Outstanding at end of period	472,635	$	27.55	765,582	$	28.28


	Nine Months Ended September 30, 2022
	Incentive and Time-Based Restricted Stock			Performance-Based Restricted Stock Units
	Shares	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value
Outstanding at beginning of period	300,031	$	24.72	588,134	$	19.32
Granted	385,291	28.61		488,252	27.03
Vested	(157,785)	25.78		(227,166)	22.68
Forfeited	(13,657)	25.26		(80,586)	22.68
Canceled	—	—		—	—
Outstanding at end of period	513,880	$	27.30	768,634	$	22.87

As of September 30, 2023, there was $22.1 million of unrecognized compensation cost related to non-vested stock-based compensation arrangements under the Plan. This cost is expected to be recognized over a weighted average period of 1.8 years.

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