Real estate investment trust Vici Properties acquires MGM Growth Properties under a $ 17.2 billion deal that will likely make the casino owner the largest landowner in the Las Vegas Strip.
MGM Resorts International, which owns a majority stake in MGM Growth Properties, will receive about $ 4.4 billion in cash in the deal. The transaction includes $ 5.7 billion in debt.
MGM Resorts has sold its real estate assets in recent years, and opened MGM Growth Properties in 2016. Its portfolio includes Mandalay Bay and MGM Grand Las Vegas.
Together, Vici will gain 15 entertainment properties in the business, significantly expanding its geographical footprint, but maintaining its focus on the casino industry.
MGM Resorts President and CEO Bill Hornbuckle is interviewed during the launch of the 100-megawatt MGM Resorts Mega Solar Array, the world’s largest directly renewable electricity project in the hospitality industry on 28 June 2021 in Dry Lake Valley, Nevada.
Gabe Ginsberg | Getty Images
“We’ve got what we believe is the best experimental real estate portfolio in America. These are magnificent assets,” Vici general manager Edward Pitoniak said in an interview.
When Vici was created to help Cesare get out of bankruptcy, he had only one tenant: Cesare. It was a mission to expand its participation, recently announcing an agreement to buy the Veneta, Palazzo and Sands Expo and Convention Center for $ 4 billion.
With Vici’s largest portfolio, Caesars goes on to contribute 100% of Vici’s revenue to 41%. The deal will also give the company an estimated $ 45 billion in business value, which is far greater than any of its tenants.
“The agreement … has far-reaching implications … both in the gaming REIT space and for MGM, which will now be equipped with even more money in the balance sheet to put towards ROI efforts,” said Carlo Santerelli, Deutsche Bank analyst in a research note.
MGM Resorts has also announced the financial flexibility that the deal will give you.
“As a result of these actions, we are well positioned and remain focused on finding growth opportunities in our core business, with significant financial flexibility to continue to invest capital to maximize shareholder value,” Bill said. Hornbuckle, general manager and president of MGM Resorts, in a press release.
Shares of MGM Growth Properties will trade each Class A share for $ 43 in newly issued Vice stock, or a 16% premium off the closing price of MGM Growth Tuesday.
On Wednesday, shares of MGM Growth rose 6.8% to close at $ 39.61. Shares of MGM Resorts rose 0.9% to close at $ 37.27, while shares of Vici fell 0.3% to $ 30.18.