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IGT’s Sustainability Triumph, AAA Rating in MSCI ESG Evaluation

As proof of its unwavering devotion to environmental, social, and governance (ESG) excellence, International Game Technology PLC (IGT) proudly announced that the company has achieved the highest possible MSCI ESG rating—AAA.

This stellar score from the global rating agency reflects IGT’s year-over-year progress in managing ESG-related risks and capitalizing on opportunities, positioning the company as a sustainability leader in its sector.

Navigating ESG Terrain – IGT’s Yearly Surge

igt_achieves_highest_possible_msci_esg_rating_of_aaa_2IGT’s remarkable achievement in securing a AAA rating underscores its proactive approach to ESG considerations. The MSCI ESG Ratings, which evaluate a company’s resilience to long-term ESG risks, place IGT at the forefront of the industry, reflecting the company’s strategic alignment with sustainable practices.

Breaking down the AAA score, the company shines particularly bright in key categories. Governance, product safety and quality, carbon emissions management, and labor practices are standout areas where IGT has garnered high marks. This well-rounded performance underscores IGT’s holistic desire for sustainable practices, from governance excellence to reducing its carbon footprint and ensuring the highest standards in product safety.

MSCI ESG Research, the esteemed global authority on ESG evaluations, employs a meticulous process to assess and rate companies on a AAA-CCC scale relative to their industry peers. IGT’s top-tier rating speaks volumes about its conscientious business practices, with a focus on minimizing risks and capitalizing on opportunities in a rapidly evolving ESG landscape.

Insights for Investors, MSCI’s Critical Role

MSCI’s ESG Ratings offer investors invaluable insights into a company’s ESG-related practices. By providing a comprehensive analysis of thousands of companies globally, MSCI equips institutional investors with the tools to make informed decisions, identifying both risks and opportunities that might escape conventional investment research.

As IGT proudly displays its AAA ESG Rating, the company stands as a beacon of sustainable excellence in the gaming industry, reinforcing its loyalty to responsible business practices and resilience in the face of evolving ESG dynamics.

Wendy Montgomery, IGT SVP, Marketing, Communications and Sustainability said: “IGT achieving the MSCI AAA ESG rating demonstrates our strong commitment to enhancing our company-wide sustainability results through our ongoing Sustainable Play initiatives. Sustainability is embedded throughout our daily operations as we focus on creating long-term value for our key stakeholders.”

Source: ”IGT Achieves Highest-Possible MSCI ESG Rating of AAA”. European Gaming. January 26, 2024.

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VICI Credit Rating Affirmed at BBB-, Outlook Stable

VICI Properties’ (NYSE: VICI) corporate credit grade was affirmed at “BBB-“ with a “stable” outlook in a new report by Fitch Ratings.

Caesars asset sale
Caesars Palace on the Las Vegas Strip. Owner VICI Properties maintained an investment-grade credit rating at Fitch. (Image: CNN)

That means the largest landlord on the Las Vegas Strip carries the lowest possible investment-grade credit rating. Fitch noted that an upgrade to that mark is possible if the real estate investment trust (REIT) can sustain a net debt/earnings before interest, taxes, depreciation and amortization (EBITDA) ratio below 4.5x, if it diversifies its tenant base and if VICI and its rivals show the ability to easily tap capital markets if needed.

In terms of tenant diversification, VICI’s two biggest clients are MGM Resorts International (NYSE: MGM) and Caesars Entertainment (NASDAQ: CZR), providing the REIT with significant exposure to the Las Vegas Strip as well as a slew of regional casino markets.

VICI’s client roster also includes Apollo Global Management, Century Casinos and Hard Rock International, among others, confirming the gaming REIT is diverse across regions and casino sizes. However, Fitch notes MGM and Caesars combine for 76% of VICI’s adjusted revenue.

VICI Favorable Fundamentals

At a time of elevated stress in some corners of the commercial real estate market, namely office space, VICI stands tall in the broader real estate sector. Strong rent collections and an ability to thrive in inflationary environments are among the factors underpinning the REIT’s investment thesis.

Positively, the company has stable occupancy and rent collections with CPI-linked escalators, though overall gaming REITs have weaker contingent liquidity compared with more traditional CRE property types, which is a drag on the rating,” according to Fitch. “The ratings also contemplate Fitch’s expectation of deleveraging below 5.5x by YE 2024; if deleveraging is delayed as a result of operational issues or capital allocation, the ratings or Outlook may be revised.”

Due to a spate of deal-making over the past couple of years that significantly expanded the REIT’s client and property rosters, VICI’s leverage is running toward the higher end of the historical range. However, Fitch believes the company can drive that figure down to 5x to 5.5x by the end of 2024.

“Deleveraging will result from a combination of annual contractual increases in rental income (all fixed but includes potential upside from CPI-linked escalators) and whether retained cash flow post-merger is directed toward acquisitions,” added the ratings agency.

VICI Could Be Longer-Term Candidate for Better Ratings

Better credit ratings are imperative for any company because the higher an issuer’s grade is, the more it saves in interest payments when it sells corporate debt.

Ratings agencies, such as Fitch, typically don’t take corporate downgrades or upgrades lightly, but VICI is a credible candidate for a credit grade boost over the long haul. The ongoing desirability of Las Vegas and regional casino real estate is one reason why.

“Positively, non-traditional owners have increasingly been purchasing Las Vegas real estate (e.g. private equity), which has led to cap rate compression and is a longer term positive as it relates to the attractiveness of Las Vegas gaming real estate,” concluded Fitch. “Regional gaming outperformed many of the other hard-hit sectors during the pandemic, which should also be a longer-term positive as it relates to the attractiveness of regional gaming real estate.”

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