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Real Estate Portfolio (Tables) | 6 Months Ended
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Jun. 30, 2022
Real Estate [Abstract] |
Schedule Real Estate Portfolio | The following is a summary of the balances of our real estate portfolio as of June 30, 2022 and December 31, 2021:
(In thousands) | June 30, 2022 |  | December 31, 2021
Investments in leases - sales-type, net (1) | $ | 17,075,857 |  |  | $ | 13,136,664 |
Investments in leases - financing receivables, net (1) | 16,486,522 |  |  | 2,644,824 |
Total investments in leases, net | 33,562,379 |  |  | 15,781,488 |
Investments in loans, net | 545,162 |  |  | 498,002 |
Investment in unconsolidated affiliate | 1,464,766 |  |  | — |
Land | 153,576 |  |  | 153,576 |
Total real estate portfolio | $ | 35,725,883 |  |  | $ | 16,433,066 |
____________________ (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 June 30, 2022 and December 31, 2021, the estimated residual values of the leased properties under our Lease Agreements were $11.4 billion and $3.8 billion, respectively.
Schedule of Components of Direct Financing and Operating Leases | The following table details the components of our income from sales-type leases and lease financing receivables:
| Three Months Ended June 30, |  | Six Months Ended June 30,
(In thousands) | 2022 |  | 2021 |  | 2022 |  | 2021
Income from sales-type leases, excluding contingent rent (1) | $ | 370,663 |  |  | $ | 290,137 |  |  | $ | 692,921 |  |  | $ | 579,711 |
Income from lease financing receivables (1) (2) | 251,345 |  |  | 60,069 |  |  | 314,364 |  |  | 119,961 |
Total lease revenue, excluding contingent rent | 622,008 |  |  | 350,206 |  |  | 1,007,285 |  |  | 699,672 |
Contingent rent (1) | 4,506 |  |  | 995 |  |  | 8,983 |  |  | 1,567 |
Total lease revenue | 626,514 |  |  | 351,201 |  |  | 1,016,268 |  |  | 701,239 |
Non-cash adjustment (3) | (86,408) |  |  | (29,398) |  |  | (121,961) |  |  | (57,275) |
Total contractual lease revenue | $ | 540,106 |  |  | $ | 321,803 |  |  | $ | 894,307 |  |  | $ | 643,964 |
____________________ (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 June 30, 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 MGM Master Lease, Harrah’s Original Call Properties and the JACK Cleveland/Thistledown Lease, all 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.
Schedule of Future Minimum Lease Payments for Operating and Capital Leases | At June 30, 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) |  | $ | 664,362 |  |  |  |  | $ | 544,358 |  |  | $ | 1,208,720 |
2023 |  | 1,344,189 |  |  |  |  | 1,103,787 |  |  | 2,447,976 |
2024 |  | 1,366,127 |  |  |  |  | 1,125,348 |  |  | 2,491,475 |
2025 |  | 1,385,348 |  |  |  |  | 1,146,509 |  |  | 2,531,857 |
2026 |  | 1,405,006 |  |  |  |  | 1,168,089 |  |  | 2,573,095 |
2027 |  | 1,425,272 |  |  |  |  | 1,190,145 |  |  | 2,615,417 |
Thereafter |  | 56,603,911 |  |  |  |  | 86,652,035 |  |  | 143,255,946 |
Total |  | $ | 64,194,215 |  |  |  |  | $ | 92,930,271 |  |  | $ | 157,124,486 |
Weighted Average Lease Term (2) |  | 36.8 years |  |  |  | 51.3 years |  | 43.9 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.
Schedule of Lease Agreements | The following is a summary of the material lease provisions of our Caesars Leases, Venetian Lease, MGM Master Lease, and BREIT JV Lease:
($ 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 |  | 18 years |  | 30 years |  | 25 years |  | 30 years
Initial term maturity |  | 7/31/2035 |  | 7/31/2035 |  | 2/29/2052 |  | 4/30/2047 |  | 2/28/2050
Renewal terms |  | Four, five-year 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) |  | 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 |  | None |  | 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 |  | None |  | None
____________________ (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, combined 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, during the three and six months ended June 30, 2022, we recognized approximately $3.1 million and $6.1 million, respectively, in contingent rent. No such rent has been recognized for the three and six months ended June 30, 2021. In relation to the Caesars Regional Master Lease, Joliet Lease, Venetian Lease, and MGM Master Lease, no such rent has been recognized for the three and six months ended June 30, 2022 and 2021. (4) Variable rent is not subject to the Escalator. The following is a summary of the material lease provisions of our Penn National Leases, Hard Rock Cincinnati Lease, Century Master Lease, JACK Cleveland/Thistledown Lease and Southern Indiana Lease:
($ In thousands) |  | Margaritaville Lease |  | Greektown Lease |  | Hard Rock Cincinnati Lease |  | Century Master Lease |  | JACK Cleveland/Thistledown Lease |  | Southern Indiana Lease
Lease Provision |  |  |  |  |  |
Initial term |  | 15 years |  | 15 years |  | 15 years |  | 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 |  | Four, five-year terms |  | Four, five-year 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) |  | 6/1/22 - 5/31/23 (Lease Year 4) |  | 10/1/21 - 9/30/22 (Lease Year 3) |  | 1/1/22 - 12/31/22 (Lease Year 3) |  | 2/1/22 - 1/31/23 (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 |  | None
Variable Rent adjustment (5) |  | Lease year three and each and every other lease year thereafter |  | 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
____________________ (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 and six months ended June 30, 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 Master 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, during the three months ended June 30, 2022 and 2021, we recognized $0.9 million and $0.8 million, respectively, in contingent rent. During the six months ended June 30, 2022 and 2021, we recognized $1.8 million,and $1.4 million, respectively, in contingent rent. In relation to the Greektown Lease during the three months ended June 30, 2022 and 2021, we recognized approximately $0.5 million, and $0.2 million, respectively, in contingent rent. During the six months ended June 30, 2022 and 2021, we recognized $1.1 million and $0.2 million, respectively, in contingent rent. (6) With respect to lease year 0, for the period Caesars Southern Indiana was closed in 2020 due to COVID-19, the Southern Indiana Lease provides for the use of 2019 net revenues, pro rated for the period of such closure.
Schedule Of Capital Expenditure Requirements Under Lease Agreements | Except as specifically provided in the below table, which summarizes the capital expenditure requirements of the respective tenants under the Caesars Leases, the Venetian Lease and the BREIT JV Lease, 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) |  | 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 |  |  |  | N/A
____________________ (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.
Summary of Investments In Loans | The following is a summary of our investments in loans as of June 30, 2022 and December 31, 2021:
|  | June 30, 2022
|  | Loan Type |  | Principal Balance |  | Carrying Value(1) |  | Future Funding Commitments(2) |  | Weighted Average Interest Rate |  | Weighted Average Term (3)
|  | Senior Secured |  | $ | 474,168 |  |  | $ | 473,900 |  |  | $ | 213,832 |  |  | 7.7 | % |  | 3.6 years
|  | Mezzanine |  | 71,808 |  |  | 71,263 |  |  | 7,692 |  |  | 8.0 | % |  | 4.0 years
|  | Total |  | $ | 545,977 |  |  | $ | 545,162 |  |  | $ | 221,523 |  |  | 7.7 | % |  | 3.6 years
|  | December 31, 2021
|  | Loan Type |  | Principal Balance |  | Carrying Value(1) |  | Future Funding Commitments(2) |  | Weighted Average Interest Rate |  | Weighted Average Term (3)
|  | Senior Secured |  | $ | 465,000 |  |  | $ | 465,034 |  |  | $ | 15,000 |  |  | 7.3 | % |  | 3.5 years
|  | Mezzanine |  | 33,614 |  |  | 32,968 |  |  | 45,886 |  |  | 8.0 | % |  | 4.0 years
|  | Total |  | $ | 498,614 |  |  | $ | 498,002 |  |  | $ | 60,886 |  |  | 7.3 | % |  | 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) Assumes all extension options are exercised; however, our loans may be repaid, subject to certain conditions, prior to such date.

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