Vici Properties owns a leading portfolio of gaming and experiential properties.
People are increasingly craving experiences that they can't get at home. They want to watch blockbuster films on the big screen, have a spa day, meet friends at a bowling alley, or go to a casino. Spending on experiences has steadily grown over the past quarter-century as people seek new adventures.
Each of the experiences I named have one thing in common. They require a physical space that can deliver a memorable experience. Many of the companies that have developed these experiential properties are realizing that they don't need to own these properties to deliver the best experience to consumers. That's leading them to partner with real estate companies that will own the properties, which provides them with capital to expand.
There are an estimated $400 billion of operator-owned casino properties in the U.S. and more than $100 billion of other experiential properties. That's providing real estate investment trusts (REITs) focused on this unique sector with a wide-open door to expand their portfolios, providing them with more rental income to increase their dividends. Here's a look at three REITs cashing in on this $500 billion opportunity.
EPR Properties (NYSE: EPR) is a pioneer in the experiential real estate space. The REIT has built a diversified portfolio over the past 25 years, consisting of over 330 experiential properties across the U.S. and Canada, leased to more than 200 tenants. It owns movie theaters (38% of its earnings), eat & play venues (24%), attractions and cultural properties (13%), fitness and wellness locations (8%), ski properties (7%), experiential lodging (2%), and gaming (2%). It also has a small educational property portfolio (early childhood education and private schools) that it's steadily selling off to recycle capital into experiential properties.
The company aims to invest $200 million to $300 million annually into new experiential properties. It will acquire properties; it bought Diggerland USA for $14.3 million in the first quarter, the only construction-themed attraction and water park in the country. The REIT will also fund experiential development and redevelopment projects. It recently made its first traditional golf investment by financing the construction of a private club in Georgia. The company currently has $148 million of projects lined up that it has agreed to fund over the next two years.