Barry Jonas, managing director at Truist Securities, joined the REIT Report to discuss the gaming REIT sector, highlighting its acceptance as an asset class that provides a safe, secure rental stream
He noted that when the sector first emerged about 10-15 years ago, “it was seen as an orphan and really misunderstood. But as time has moved on, we are really seeing buy-in from the REIT community.”
Investors understand that gaming REITs are “a very safe, durable stream of rent that has tenants who are sizable, most of them are public, audited, and have at this point not seen any major defaults or lack of payments made,” he said.
In an environment of macro uncertainty and a K-shaped economic recovery, the sector has still seen low single-digit increases in gaming revenues, Jonas said. “Consumers generally want to go have fun, let off some steam, and go to a casino,” he added.
Other takeaways from the interview include:
- On the transaction side, more non-gaming deals have occurred, especially by VICI Properties Inc. (NYSE: VICI) in experiential assets such as golf courses and bowling alleys.
- The emergence of online gaming and sports betting introduces new dynamics that could affect traditional gaming revenue streams. Jonas suggested that gaming REITs will need to adapt and enhance their offerings to maintain competitive advantages in this evolving landscape.
- Las Vegas remains a critical market, with many gaming properties accessible within a short drive for most consumers. Meanwhile, geographical diversification contributes to the overall health and stability of gaming REIT revenues.
- Potential for a deconsolidation phases exists whereby companies look to focus on the parts of their portfolio that are growing faster, while offloading areas that are not as strong. “Optimization is a focus…on a go forward basis, I think it'll be fine-tuning portfolios, and changing strategies from a marketing perspective, a player development perspective, to squeeze out more earnings growth,” he said.