Edward Pitoniak : Yes. David, if I could add one more thought in relation to this, and it’s something we haven’t talked about on this call. But when it comes to being a growth-oriented REIT and when it comes to being a REIT, that will likely continue to access the capital markets, there is really no question in our minds and don’t think there should be any question in anybody’s mind as to the advantages of scale when it comes to access to the capital markets. And I think what you could see over the next few years is an increasing bifurcation or a barbell effect emerging across the American REIT landscape, where great advantages accrue to the biggest REIT with the most compelling value-creation stories because their access to capital in large volumes will be highly superior.
You’ll always have the small REITs that can produce significant growth in their early years. But the problem is you can reach a no-man’s land of what we’ll call mid-cap REITs, where it’s really — it’s tough to access capital and high volumes and it gets a little bit tougher to produce material growth year-over-year-over-year. And we think at the scale we’re at now, as I believe, the ninth largest REIT in the RMZ, it definitely brings advantages when it comes to access to and cost of capital. And sorry, I’ll turn it back to you for your next question, David.
David Katz : Appreciate that. With respect to the Native American part, I know we’ve talked about this before, but building those relationships in a way where you can own hard assets? Or is it more building relationships by providing loans on reservation land that will enable you to sort of own real estate in other areas? Or are you trying to solve the code for reservation land?
Edward Pitoniak : We definitely worked on that, and we think there could be solutions down the road. In the near term, and I’ll turn it over to John, our greatest excitement is helping them grow either off of tribal land or adjacent to tribal land. John?
John Payne : Right. That’s exactly right, David. I mean, we continue just as we’re building relationship with commercial operators we’re getting out and meeting with many native American nations just to let them understand who we are, how we could help them grow in the commercial opportunities when if that’s what their mission is to. So I’m spending a lot of time on the road doing that and letting them understand VICI and we already have partners with three native-American nations
Operator: Our next question comes from Todd Thomas from KeyBanc.
Todd Thomas: I just wanted to go back to your interest in nongaming and following up on your comments about sensitizing underlying businesses and operators in various economic scenarios. Has your appetite changed around nongaming assets today just given the more uncertain macro and maybe sort of consumer backdrop? Or does it just require additional coverage and return?
Edward Pitoniak : I would say, Todd, that our interest in nongaming hasn’t diminished at all even amidst this lack of visibility around the consumer economy because of our strong conviction around the secular tailwinds of experiential businesses. We have seen with COVID, finally, starting to leave the landscape that what had been in place for the prior 10 years or so, 15 years prior to COVID, which was the increasing consumer preference for experiences over things, has definitely reasserted itself. And we don’t think that, that’s going to diminish. We think the aging of the baby boom into their prime leisure years, we think millennial family formation. Those are demographic waves, together with this increasing preference for experiences over things, is going to give experiential operators across a number of spectra really compelling growth opportunities and very strong economic performance, almost no matter what cyclicality looks like.
Todd Thomas : Okay. And have you — how have you increased your required returns as you think about underwriting investments going forward? I mean can you sort of quantify what you’re seeing, what you’re underwriting and also whether sellers are adjusting their expectations today?
David Kieske : Todd, it’s David. Good to talk to you. I mean as a net lease REIT, obviously, we’re a spread investor, and we have to ensure that we receive an appropriate spread for the risk of the investment and to factor the location and the asset, the tenant, the business and taking that all into account in our underwriting. And the last part of your question there is spot on, right? And you’ve heard this from other net lease REITs, right? There’s still a bid-ask spread for a lot of folks in terms of what they think the asset is worth and what we can actually acquire that with an appropriate rent coverage and generate an attractive return — attractive risk-adjusted returns. So I would tell you we’re being more diligent in terms of underwriting the business, the proof of concept, the longevity of concept, everything that we’ve talked about since day one of this company.
Is there an enduring experience the consumers are going to go to over time. And so we’re spending more time and going deeper on some certain sectors where we think there’s some opportunities and larger growth opportunities going forward in those sectors.
Todd Thomas : Okay. Do you — when you look out over — during the course of the year ahead here, do you expect the spread at which you’re investing relative to your cost of capital? Do you expect that to be wider than it was in ’22?
David Kieske : So we expect that to be wide. I mean we always want to generate 100 basis points to 150 basis points spread to our cost of capital. It’s kind of what we set as a preliminary benchmark, now that can be higher at times or it can be lower at times depending on the quality of the asset, the operator or a riskier asset and riskier operator or locations in the country.
Operator: Our next question comes from Jay Kornreich from SMBC.
