MGM Resorts International revealed that it is disposing of its real-estate spin-off arm by selling it to Vici Properties at the price of $17.2 billion.
Under the provisions of the deal, the New York-based Vici Properties will also acquire a debt of approximately $5.7 billion. The deal is expected to be completed in the first six months of 2022 after getting the required approvals from Vici shareholders and the state’s gambling regulators.
The sale, which was officially announced on August 4th, includes the pending deal of MGM Growth Properties for the acquisition of the land and buildings at MGM Springfield at the price of $400 million. Neither one of the deals is expected to disrupt or affect the MGM Springfield casino’s day-to-day operations. The properties, including the casino venue, are set to be maintained and operated by MGM Resorts under a long-term lease contract.
The CEO of MGM Resorts, Bill Hornbuckle, explained that the newly-announced transaction unlocked the considerable real estate value of the company’s assets. It also bolstered MGM’s ability to execute important growth initiatives and enhanced the operator’s financial flexibility. By selling the properties and getting them back on a lease, MGM Resorts became more flexible and raised cash.
The chances of MGM Resorts making a decision to sell the Springfield property had been discussed for a few years – in fact, almost right away after MGM Springfield started operation.
Vici Properties Expands Geographic Footprint Significantly but Keeps Focus on Casino Indistry
At the time when Vici Properties was created to help Caesars Entertainment buoy from bankruptcy, it had one tenant only. This changed a lot over the last few years.
Vici Properties already owns a total of 28 gaming facilities situated on 47 million square feet, with over 200 restaurants, nightclubs, bars and sportsbooks, and approximately 17,800 hotel rooms also included in the properties. The properties are currently leased to some of the largest gambling operators, such as Caesars Entertainment Inc., Hard Rock International Inc., Penn National Gaming, Century Casinos and JACK Entertainment LLC.
Vici Properties has also invested in various other properties and facilities, including golf courses.
As a result of the $17.2-billion acquisition deal, MGM Resorts will probably become the largest landowner on the Las Vegas Strip. The casino operator, which currently holds the majority stake in the real-estate spin-off company is set to receive about $4.4 billion in cash equivalent as part of the transaction, with the deal also including a debt equivalent of $5.7 billion.
As part of the takeover deal, Vici will get control over 15 entertainment properties, which will help it expand its geographic footprint significantly but will still allow it to remain focused on the casino industry.
This is not the first time when MGM Resorts sells a real estate property. In fact, in recent years, the company has been offsetting its real-estate assets, with MGM Growth Properties being spun off as a separate entity in 2016.