Key Highlights

● VICI raised its dividend.

● The company announced a new lease on a Canadian racetrack.

● Higher revenue was also reported for the quarter.

● Real estate broadly underperformed during the regular session.

VICI Properties shares edged higher in extended trading on Wednesday, October 28, after the experiential real estate trust raised its dividend and announced a new lease on a Canadian racetrack.

VICI Properties (NYSE:VICI) rose after the closing bell as investors responded to a quarterly report that featured higher revenue, an increased dividend and a new lease on a racetrack in Canada, according to a closing recap. The move in extended trading was modest, but it offered welcome relief for an S&P 500 real estate stock after a difficult regular session for the sector.

Income Investors Get a Raise

VICI is a real estate investment trust that owns casinos, resorts and other entertainment venues, including some of the best-known properties on the Las Vegas Strip, and leases them to operators under long-term agreements. Those leases typically run for decades and include built-in rent increases, which gives VICI a steady and predictable income stream.

That predictability is why income-focused investors watch its dividend closely. Raising the payout signals management's confidence in the durability of its rent roll. The company also reported higher revenue for the quarter.

Expanding North

The new Canadian racetrack lease adds to VICI's push to diversify beyond traditional casinos. In recent years the company has expanded into other forms of experiential real estate and into markets outside the US. A racetrack fits that strategy, adding another long-term tenant relationship and another stream of contractual rent.

Details on the property, the tenant and the lease terms were not immediately available, but the move underscores VICI's continued diversification strategy.

A Tough Day for Real Estate

VICI's after-hours gain followed a weak session for its sector. Real estate was one of the worst-performing groups in the S&P 500 on Wednesday, along with utilities and consumer staples. The culprit was the bond market: long-dated Treasury yields climbed, with the 10-year pushing past a key psychological threshold, posting its largest daily gain since late September.

Because REITs pay out much of their income as dividends, they often compete with bonds for investors' money; when Treasury yields rise, REIT shares tend to come under pressure. A dividend increase can help offset some of that pull. The Federal Reserve left its benchmark rate range unchanged in a 10-2 vote, with market odds of a December increase rising, according to CME FedWatch.

What to Watch

Investors will look for more detail on VICI's acquisition pipeline, its tenants' health and how rising borrowing costs might affect future deals, since REITs often rely on debt to fund growth.

Rate-sensitive stocks could react to Thursday's data. The advance estimate of third-quarter GDP and September PCE inflation figures arrive at 8:30 a.m. ET on October 29, and either could move Treasury yields. Mastercard (NYSE:MA), Merck (NYSE:MRK) and Caterpillar (NYSE:CAT) report before the open, and Amazon (NASDAQ:AMZN) after the close.