VICI Properties can’t block takeover of Caesars, says Mizuho

Mizuho says shares of VICI Properties (VICI) moved lower yesterday after the Wall Street Journal reported Tilman Fertitta is in talks to acquire Caesars Entertainment (CZR). VICI has Caesars as its largest tenant as 39% of its rent, the analyst tells investors in a research note. Mizuho points out that the article implied VICI has the ability to act as a “roadblock” to any acquisition for its tenants. Management, however, confirmed this is not accurate and that VICO has no veto power over an acquisition, unless the acquisition is contingent on modifications of Caesars leases with VICI, says Mizuho. At this point, there is nothing suggesting Fertitta’s offer is contingent on lease modifications, adds the firm. In addition, the analyst believes an acquisition of Caesars by Fertitta would be perceived as a tenant credit downgrade from investors because Fertitta is highly levered and would impact VICI’s broader tenant credit quality. Mizuho downgraded VICI yesterday to Neutral with a $30 price target.