Goldman Sachs Group, Inc. REIT dual strategy: VICI Properties (VICI.US) dividends stable at 5.5%, Safehold (SAFE.US) aims for a target price of $28.

Goldman Sachs Group, Inc. updated its analysis on VICI Properties (VICI.US) and Safehold Inc. (SAFE.US) in a research report, focusing on the performance of the two companies in debt refinancing, management fee adjustments, and changes in the macroeconomic environment. VICI Properties: Debt Refinancing and Financial Adjustments Goldman Sachs Group, Inc. has included VICI's debt refinancing situation in its latest analysis. VICI issued $1.3 billion of senior unsecured bonds on March 26, with $400 million of bonds at a rate of 4.75% and $900 million of bonds at a rate of 5.625%. Goldman Sachs Group, Inc. pointed out that VICI had planned to repay $1.3 billion of maturing debt in the second quarter of 2025, but the actual refinancing rate was 5.36%, slightly lower than the expected 5.45%. This adjustment reflects VICI's optimization in financing costs. Furthermore, Goldman Sachs Group, Inc. updated its financial forecasts for VICI from 2025 to 2027. The firm expects VICI's NAREIT FFO (Funds from Operations) to reach $2.78 per share in 2025, increase slightly to $2.83 in 2026, and further rise to $2.87 in 2027. This metric reflects the company's profitability at the operational level and shows that VICI is expected to maintain a stable growth trend over the next few years. In terms of Core FFO, Goldman Sachs Group, Inc. also predicts a year-over-year growth trend for VICI. The Core FFO is forecasted to be $2.78 in 2025, $2.83 in 2026, and $2.87 in 2027. This metric excludes the impact of non-recurring items and better reflects the company's sustained profitability in core operations. Adjusted Funds from Operations (AFFO) per share, as an important measure of the company's cash flow, is predicted by Goldman Sachs Group, Inc. to be $2.35 in 2025, $2.41 in 2026, and $2.45 in 2027. The growth of this metric indicates that the company is expected to continue generating stable cash flow over the next few years, creating value for shareholders. Based on the above financial forecasts, Goldman Sachs Group, Inc. maintains a "buy" rating for VICI and sets a 12-month target price of $36. This target price is based on a multiple of 14.8 times AFFO and reflects Goldman Sachs Group, Inc.'s high recognition of VICI's future profitability. VICI Downside Risks: Tenant Credit, Inflation, Interest Rates, and Management Fee Challenges Goldman Sachs Group, Inc. pointed out in its latest research report that VICI Properties, while showing robust growth potential, also faces some potential downside risks. These risks primarily include tenant credit, macroeconomic environment, financing costs, and operating expenses. Below is a detailed analysis by Goldman Sachs Group, Inc. on the potential risks faced by VICI. VICI's income is highly dependent on the creditworthiness of its tenants and leasing stability. Goldman Sachs Group, Inc. noted that bankruptcy or departure of VICI's major tenants would directly lead to a decrease in the company's rental income. This situation would not only weaken VICI's cash flow but could also have adverse effects on its long-term growth prospects. For real estate investment trusts like VICI, tenant credit risk is an important factor that cannot be ignored in its operations. VICI's rental income is closely related to the Consumer Price Index (CPI) and variable rental adjustments. Goldman Sachs Group, Inc.'s analysis suggests that if the CPI growth rate slows down or if variable rental adjustments are lower than expected, VICI's rental income growth will be suppressed. In such a scenario, VICI may struggle to achieve its income targets as forecasted. Against the backdrop of heightened global economic uncertainty, changes in the inflation environment pose a potential threat to VICI's profitability. VICI's debt structure makes it sensitive to changes in interest rates. Goldman Sachs Group, Inc. pointed out that if market rates increase, VICI's interest expenses will also rise, eroding its profitability. A rise in interest rates not only increases VICI's financing costs but may also have negative impacts on its future capital expenditure plans. With the Federal Reserve potentially adjusting monetary policy, interest rate risk is a potential challenge that VICI needs to focus on. VICI's General and Administrative expenses (G&A) are also an important factor affecting its profitability. Goldman Sachs Group, Inc.'s analysis suggests that an increase in G&A would directly squeeze VICI's profit margin. This situation may arise from the company's expansion of operational scale or additional expenditures needed to adapt to market changes. An increase in G&A not only affects short-term financial performance but may also put pressure on VICI's long-term growth potential. Safehold Inc.: Management Fee Adjustments and Discount Rate Changes In its latest research report, Goldman Sachs Group, Inc. comprehensively updated its financial forecasts and valuation for Safehold Inc., focusing on management fee adjustments, changes in interest rates, and optimization of pricing methods.The management fee for Safehold will be increased from $5 million to $7.5 million annually, effective for the period from April 1, 2026 to March 31, 2027. This adjustment reflects the increase in the company's operating costs, but also indicates that the investment in management fees by Safehold may lead to higher operational efficiency or business expansion.Safehold SafeholdGoldman Sachs Group, Inc.Safehold SafeholdSafehold SafeholdSafehold Goldman Sachs Group, Inc.SafeholdSafeholdGrowth prospects may be affected by factors such as intensifying market competition, declining quality of acquisition targets, or increasing financing costs. Poor performance in acquisitions will not only impact Safehold's short-term financial indicators, but may also have unfavorable implications on its long-term growth strategy.Safehold faces fierce competition in the ground lease transaction market. Goldman Sachs Group, Inc. points out that the intensification of market competition may lead to higher costs and lower yields for Safehold when acquiring new lease projects. This competitive pressure may weaken Safehold's market position and pose a challenge to its profitability. In the current market environment, how to maintain a competitive advantage is a key issue that Safehold needs to focus on. Safehold's income is highly dependent on the credit condition of its tenants. Goldman Sachs Group, Inc. analysis suggests that unexpected tenant credit events, such as tenant bankruptcy or default, could directly lead to a decrease in SAFE's rental income. This situation not only weakens Safehold's cash flow but also may have adverse effects on its long-term growth prospects. Tenant credit risk is an important factor that cannot be ignored in Safehold's operations, especially against the backdrop of increased economic uncertainty. General and administrative expenses (G&A) are also an important factor affecting Safehold's profitability. Goldman Sachs Group, Inc. points out that if G&A expenses increase, it will directly compress Safehold's profit margin. This situation may result from additional expenses required to expand operations or respond to market changes. The increase in G&A expenses not only affects short-term financial performance but may also pressure Safehold's long-term growth potential. Investment recommendation: Anchoring value in the fog of interest rates Goldman Sachs Group, Inc. points out in its latest research report that the current REITs market valuation has fully reflected about 80% of the expected interest rate hikes. However, in the process of monetary policy normalization, the REIT market is undergoing a transition from being "interest rate sensitive" to "operation-driven" in terms of valuation paradigm. This change provides investors with two key investment windows that are worth exploring. VICI: Defensive choice for stable dividends For defensive investors seeking stable dividends, Goldman Sachs Group, Inc. particularly recommends VICI Properties. VICI, with its 5.5% dividend yield, provides bond-like protection, making it a solid choice amidst interest rate fluctuations. This dividend yield not only reflects VICI's defensive nature in the current market environment but also showcases its operational stability and cash flow resilience. VICI's asset portfolio focuses mainly on high-quality real estate projects that can generate stable cash flow. Even in an environment of rising interest rates, VICI's high dividend yield and robust operational performance can still provide investors with reliable returns. For investors looking to avoid high-risk and seek stable income, VICI is an ideal investment target. Safehold: Elastic target in a downward interest rate cycle On the other hand, Goldman Sachs Group, Inc. believes that Safehold Inc. is an elastic target in a downward interest rate cycle. Safehold's performance is more sensitive to interest rate changes, especially in an environment of long-term interest rate declines, where its valuation may significantly increase. However, investors need to closely monitor the movements of the 30-year US Treasury bond yield in order to adjust their investment strategy in a timely manner. Safehold's asset portfolio has a high degree of flexibility and growth potential, allowing it to achieve greater capital appreciation in a downward interest rate cycle. However, the volatility of interest rates also means that there may be higher uncertainty in Safehold's valuation. Therefore, when choosing Safehold as an investment target, investors should closely monitor changes in the macroeconomic environment and maintain a high sensitivity to the 30-year US bond yield. In summary, Goldman Sachs Group, Inc.'s analysis reveals an important underlying logic: in the process of monetary policy normalization, the REITs market valuation is transitioning from being sensitive to interest rates to focusing on operational performance. Investors need to look past the noise of interest rates and focus on the cash flow resilience of asset portfolios. This means that selecting REITs targets with stable cash flow and high-quality asset portfolios will be more competitive in future markets. For targets like VICI and Safehold, investors should consider the quality of their asset portfolios, operational efficiency, and sensitivity to interest rate changes. This comprehensive assessment can help investors find true value in a complex market environment and achieve long-term stable investment returns. Overall, Goldman Sachs Group, Inc.'s report provides two key investment windows for investors: VICI is suitable for defensive investors seeking stable dividends, while Safehold is a flexible choice in a downward interest rate cycle. Regardless of which target is chosen, investors need to focus on the underlying logic of the REITs market transitioning from being "interest rate sensitive" to "operation-driven" and consider cash flow resilience as the core evaluation criterion. This strategy will help investors anchor value in the current complex market environment and achieve steady investment returns.