Real Estate Portfolio

3 Months Ended

Mar. 31, 2022

As of March 31, 2022, our real estate portfolio consisted of the following:

•Investments in leases - sales-type, representing our investment in 23 casino assets leased on a triple-net basis to our tenants, Apollo, Caesars, Century Casinos, EBCI, Hard Rock and Penn National, under nine separate lease agreements;

•Investments in leases - financing receivables, representing our investment in five casino assets leased on a triple-net basis to our tenants, Caesars and JACK Entertainment, under two separate lease agreements;

•Investments in loans, representing our investment in the Chelsea Piers Mortgage Loan, Forum Convention Center Mortgage Loan and Great Wolf Mezzanine Loan; 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 March 31, 2022 and December 31, 2021:


(In thousands)	March 31, 2022		December 31, 2021
Minimum lease payments receivable under sales-type leases (1)	$	64,524,789	$	44,485,224
Estimated residual values of leased property (not guaranteed)	6,578,781		3,334,549
Gross investment in sales-type leases	71,103,570		47,819,773
Unamortized initial direct costs	40,718		23,363
Less: Unearned income	(53,526,411)		(34,271,620)
Less: Allowance for credit losses	(504,178)		(434,852)
Investments in leases - sales-type, net	17,113,699		13,136,664

Investments in leases - financing receivables, net	2,650,633		2,644,824
Total investments in leases, net	19,764,332		15,781,488
Investments in loans, net	513,128		498,002
Land	153,576		153,576
Total real estate portfolio	$	20,431,036	$	16,433,066

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

Lease Portfolio

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


	Three Months Ended March 31,
(In thousands)	2022		2021
Income from sales-type leases, excluding contingent rent (1)	$	322,258	$	289,574

Income from lease financing receivables (1) (2)	63,019		59,892
Total revenue, excluding contingent rent	385,277		349,466
Contingent rent (1)	4,477		572
Total lease revenue	389,754		350,038
Non-cash adjustment (3)	(35,553)		(27,877)
Total contractual lease revenue	$	354,201	$	322,161

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(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 March 31, 2022, we have recognized contingent rent from our Margaritaville Lease, Greektown Lease, and Caesars Las Vegas Master Lease in relation to the variable rent portion of the respective leases. Refer to the Lease Provisions section below for information regarding contingent rent on each lease.

(2) Represents the Harrah’s Original Call Properties and the JACK Cleveland/Thistledown Lease, both of which were sale leaseback transactions. In accordance with ASC 842, since the lease agreements were determined to meet the definition of a sales-type lease and control of the asset is not considered to have been transferred to us, such lease agreements are accounted for as financings under ASC 310.

(3) 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 March 31, 2022, 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
2022 (remaining)	$	994,936	$	171,273	$	1,166,209
2023	1,344,189		232,320		1,576,509
2024	1,366,127		236,452		1,602,579
2025	1,385,348		239,835		1,625,183
2026	1,405,006		243,281		1,648,287
2027	1,425,272		246,841		1,672,113
Thereafter	56,603,911		8,309,373		64,913,284
Total	$	64,524,789	$	9,679,375	$	74,204,164

Weighted Average Lease Term (2)	37.0 years		33.2 years		35.5 years

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(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.

Lease Provisions

Lease Overview

The following is a summary of the material lease provisions of our Caesars Leases, Venetian Lease, MGM Master Lease, and BREIT JV Lease (the MGM Master Lease as entered into and BREIT JV Lease as assumed by us, each as part of the closing of the MGP Transactions on April 29, 2022):

($ In thousands)

Caesars Regional Master Lease and Joliet Lease

Caesars Las Vegas Master Lease

Venetian Lease

MGM Master Lease

BREIT JV Lease

Lease Provision

Initial term

18 years

30 years

25 years

30 years

Initial term maturity

7/31/2035

2/29/2052

4/30/2047

2/28/2050

Renewal terms

Four, five-year terms

Two, ten-year terms

Three, ten-year terms

Two, ten-year terms

Current lease year (1)

11/1/21 - 10/31/22 (Lease Year 5)

2/23/22 - 2/28/23 (Lease Year 1)

4/29/22-4/30/23 (Lease Year 1)

3/1/22 - 2/28/23 (Lease Year 3)

Current annual rent (2)

$649,572

$422,224

$250,000

$860,000

$303,800 (VICI’s 50.1% Pro Rata Share: $152,203)

Annual escalator (3)

Lease years 2-5 - 1.5%

Lease years 6-end of term - CPI subject to 2.0% floor

> 2% / change in CPI

>2% / change in CPI (capped at 3%) beginning in Lease year 2

Lease years 2-10 - 2%

Lease years 11-end of term - >2% / change in CPI (capped at 3%)

Lease years 2-15 - 2%

Lease years 16-end of term - >2% / change in CPI (capped at 3%)

Variable rent adjustment (4)

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 (3)

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

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(1) For the Venetian Lease, lease year two will begin on the earlier of (i) March 1, 2024 and (ii) the first day of the first month following the month in which the net revenue of the Venetian Resort for the trailing twelve months equals or exceeds 2019 net revenue.

(2) 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, Current annual rent under the Caesars Regional Master Lease and Joliet Lease is $641.2 million.

(3) Any amounts representing rents in excess of the CPI floors specified above are considered contingent rent in accordance with GAAP. In relation to the Caesars Las Vegas Master Lease, we recognized approximately $3.1 million in contingent rent during the three months ended March 31, 2022. No such rent has been recognized for the three months ended March 31, 2021. In relation to the Caesars Regional Master Lease, Joliet Lease, Venetian Lease, MGM Master Lease no such rent has been recognized for the three months ended March 31, 2022 and 2021.

(4) Variable Rent is not subject to the Escalator.

The following is a summary of the material lease provisions of our Penn National Leases, Hard Rock Cincinnati Lease, Century Portfolio Lease, JACK Cleveland/Thistledown Lease and CSI Lease:

($ In thousands)

Margaritaville Lease

Greektown Lease

Hard Rock Cincinnati Lease

Century Portfolio Lease

JACK Cleveland/Thistledown Lease

CSI Lease

Lease Provision

Initial term

15 years

20 years

15 years

Initial term maturity

1/31/2034

5/31/2034

9/30/2034

12/31/2034

1/31/2040

8/31/2036

Renewal terms

Four, five-year terms

Three, five-year terms

Four, five-year terms

Current lease year

2/1/22 - 1/31/23
(Lease Year 4)

6/1/21 - 5/31/22
(Lease Year 3)

10/1/21 - 9/30/22
(Lease Year 3)

1/1/22 - 12/31/22
(Lease Year 3)

2/1/22 - 1/31/22
(Lease Year 3)

9/3/21 - 8/31/22
(Lease Year 1)

Current annual rent (1)

$23,813

$51,321

$44,042

$25,503

$68,704

$32,500

Annual escalator (2)

2% of Building base rent ($17.2 million)

2% of Building base rent ($42.8 million)

Lease years 2-4 - 1.5%

Lease years 5-15 - > 2% / change in CPI (3)

Lease years 2-3 - 1.0%

Lease years 4-15 - > 1.25% / CPI

Lease year 3 - 1.0%

Lease years 4-6 - 1.5%

Lease years 7-20 - >1.5%/change in CPI (capped at 2.5%)

Lease years 2-5 - 1.5%

Lease years 6-15 - >2.0% / change in CPI

Coverage

floor (4)

Net revenue to rent ratio:

6.1x net revenue commencing lease year two

Net revenue ratio to be mutually agreed upon prior to the commencement of lease year five

None

7.5x net revenue commencing lease year six

None

Variable Rent adjustment (5)

Lease year three and each and every other lease year thereafter

Lease year 8: 80% base rent and 20% variable rent

Lease year 8 and 11: 80% Base Rent and 20% Variable Rent

None

Lease year 8 and 11: 80% Base Rent and 20% Variable Rent

Variable Rent adjustment calculation

4% of the average net revenues for trailing

2 year period less threshold amount (defined as 50% of LTM net revenues prior to acquisition)

4% of the average net revenues for trailing

2 year period less threshold amount (defined as 50% of LTM net revenues prior to acquisition)

4% of revenue increase/decrease:

Year 8: Avg. of years 5-7 less avg. of years 1-3

4% of revenue increase/decrease:

Year 8: Avg. of years 5-7 less avg. of years 1-3

Year 11: Avg. of years 8-10 less avg. of years 5-7

None

4% of revenue increase/decrease:

Year 8: Avg. of years 5-7 less avg. of years 0-2 (6)

Year 11: Avg. of years 8-10 less avg. of years 5-7

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(1) For the JACK Cleveland/Thistledown Lease, the annualized rent is inclusive of an increase of $1.8 million, effective April 1, 2022, related to the gaming patio amenity at JACK Thistledown.

(2) Any amounts representing rents in excess of the CPI floors specified above are considered contingent rent in accordance with GAAP. No such rent has been recognized for the three months ended March 31, 2022 and 2021.

(3) Starting in lease year 5, if the change in CPI is less than 0.5%, there will be no escalation in rent for such lease year.

(4) In the event that the net revenue to rent ratio coverage, as applicable, is below the stated floor, the escalation will be reduced to such amount to achieve the stated net revenue to rent ratio coverage, as applicable, provided that the amount shall never result in a decrease to the prior year’s rent. With respect to the Century Portfolio Lease, if the coverage ratio is below the stated amount the escalator will be reduced to 0.75%.

(5) Variable (percentage rent) is subject to the percentage rent multiplier. With respect to the Penn National Leases, after the first percentage rent reset, any amounts related to variable (percentage) rent are considered contingent rent in accordance with GAAP. In relation to the Margaritaville Lease, we recognized approximately $0.9 million in contingent rent during the three months ended March 31, 2022, and approximately $0.6 million in contingent rent during the three months ended March 31, 2021. In relation to the Greektown Lease during the three months ended March 31, 2022 we recognized approximately $0.5 million in contingent rent. No such contingent rent was recognized for the three months ended March 31, 2021 for the Greektown Lease.

(6) With respect to lease year 0, for the period Caesars Southern Indiana was closed in 2020 due to COVID 19, the CSI Lease provides for the use of 2019 net revenues, pro rated for the period of such closure.

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. Except for as specifically provided for in the below table, which summarizes the capital expenditure requirements of the respective tenants under certain of the Lease Agreements, the tenants under our other Lease Agreements are all required to spend a minimum of 1% of net revenues or net gaming revenues, as the case may be:

Provision

Caesars Regional Master Lease and Joliet Lease

Caesars Las Vegas Master Lease

Venetian Lease

BREIT JV Lease

Yearly minimum expenditure

1% of net revenues (1)

2% of net revenues based on rolling three-year basis

3.5% of net revenues based on 5-year rolling test, 1.5% monthly reserves

Rolling three-year minimum (2)

$311 million

$84 million

N/A

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(1) The Caesars Leases require a $114.5 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.

(2) 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 $537.5 million on capital expenditures (including gaming equipment) across certain of its affiliates and other assets, together with the $380.3 million requirement.

Loan Portfolio

The following is a summary of our investments in loans as of March 31, 2022 and December 31, 2021:


($ In thousands)	March 31, 2022
Investment Name	Loan Type	Principal Balance		Carrying Value(1)		Future Funding Commitments(2)		Interest Rate(3)		Final Maturity(4)
Forum Convention Center Mortgage Loan	Senior Secured	$	400,000	$	400,033	$	—	7.9	%	9/18/2025
Chelsea Piers Mortgage Loan	Senior Secured	65,000		64,998		15,000		7.0	%	8/31/2027
Great Wolf Mezzanine Loan	Mezzanine	49,173		48,097		30,327		8.0	%	7/9/2026
Total		$	514,173	$	513,128	$	45,327	7.8	%


($ In thousands)	December 31, 2021
Investment Name	Loan Type	Principal Balance		Carrying Value(1)		Future Funding Commitments(2)		Interest Rate(3)		Final Maturity(4)
Forum Convention Center Mortgage Loan	Senior Secured	$	400,000	$	400,036	$	—	7.9	%	9/18/2025
Chelsea Piers Mortgage Loan	Senior Secured	65,000		64,998		15,000		7.0	%	8/31/2027
Great Wolf Mezzanine Loan	Mezzanine	33,614		32,968		45,886		8.0	%	7/9/2026
Total		$	498,614	$	498,002	$	60,886	7.8	%

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(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) Represents current interest rate per annum. The interest rate of the Forum Convention Center Mortgage Loan is subject to a 2.0% annual escalation.

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