VICI Properties (NYSE: VICI), a REIT (real estate investment trust) based out of New York City, was formed back in 2017 as a spin-off brand of Caesars Entertainment Corporation – the infamous gaming and hotel operator.
Born out of Caesars’ Chapter 11 bankruptcy in 2015, VICI became a part of the Caesars Entertainment Operating Company (CEOC) reorganization in which CEOC split off into two new companies. One would own the real estate (through a REIT), the other would manage hotel operations.
In the plan, CEOC’s creditors were set to receive a favorable tax treatment (thanks to some tricky REIT tax law maneuvering) and Caesars would in many ways dodge a massive taxable event.
Members of Congress caught wind of what was happening and asked the IRS to step in by revoking the new REIT’s tax-free status. Things initially looked grim for the Caesars spin-off, but the IRS eventually found no wrong-doing and gave the new venture the green light.
Two years later, in 2017, CEOC emerged from bankruptcy with their REIT, named VICI (after Julius Caesar’s “veni, vidi, vici” quote). It held a portfolio of nineteen casinos and racetracks, alongside four golf courses.
VICI leased the properties to CEOC for $630 million in rent per year – a number that has grown significantly over the last two years.
And since 2017, despite battling with significant volatility, VICI shares have done relatively well. The month of August, however, has not been quite as kind.
At least, until this week.
In the weekly candlestick chart above, you can see that VICI has had a rough few months. However, this week (the furthest right candlestick), things are starting to look up for Caesars’ relatively young REIT.
VICI shares set a higher low relative to the low of late 2019 and contact with the lower Bollinger Band (BB) was made. Despite the current week starting off with a bang, stochastics are still low as well, suggesting that the stock could be lingering near oversold territory.
What I like the most about VICI, though, is that the current price sits above the candle body highs of the last 5 weeks. Should VICI rise past the high of those last 5 weeks by a significant amount (up to $21.75), it might make sense to go long.
Because unlike many other stocks out there currently, VICI is still in an uptrend, as evidenced by the positive-sloped 50-week moving average.
Better yet, if VICI moves above $23.00, we could easily see an upside breakout to new all-time-highs.
But that’s a big if. VICI may also very well stall at $23.00 before falling once again.
That’s okay, though, because a rise to $23.00 would be a gain of about 5.8%. That’s more than enough movement to generate a handsome profit, especially through an appropriately priced call option.
So, with what looks to be another week of widespread market uncertainty ahead of us, keep an eye on VICI. REITs have done very well this year, and VICI is in a unique position to potentially outperform the rest of the sector over the next month or two.
Even with a full-blown trade war raging in the background.
