MGM Resorts to continue operating property
MGM Growth Properties LLC has purchased the real estate assets of MGM Resorts International’s Massachusetts casino property, MGM Springfield, for $400 million in cash.
all of MGM Resorts’ regional properties have now got snapped up by MGM Growth
Announced via an MGM Resorts press release on Tuesday, the Vegas-based organization will remain the operator of the hotel-casino by leasing the property from its real estate investment trust (REIT) MGM Growth. The MGM Springfield sale means all of MGM Resorts’ regional properties have now got snapped up by MGM Growth.
According to the press release, MGM Resorts’ existing master lease payment to the REIT will get bumped up by $30 million. Out of this amount, $27m stands as the base rent, with the rest being percentage rent. Subject to customary conditions and regulatory compliance, the expected closure of the sale will happen in Q4 of 2021.
Casino company continues “asset-light” commitment
CEO and president of MGM Resorts Bill Hornbuckle said yesterday’s move was in the best interests of shareholders of both the casino operator and the REIT. Hornbuckle added in the press release that the transaction is consistent with MGM Resorts’ “asset-light” strategy.
Hornbuckle added that the Massachusetts property displayed a robust financial performance, bouncing back from the pandemic with “a record Adjusted Property EBITDAR in the first quarter of 2021.”
move enhances MGM Resorts’ “ability to invest in its land-based casinos or BetMGM”
According to CDC Gaming Reports, J.P. Morgan gaming analyst Joe Greff told investors that the transaction boosts the casino operator’s “already strong liquidity position.” Greff added the move enhances MGM Resorts’ “ability to invest in its land-based casinos or BetMGM and return capital to shareholders.”
Sale gives MGM investment firepower
The sale of MGM Springfield gives MGM Resorts added financial firepower at an opportune time. During a Q1 2021 earnings call on April 29, Hornbuckle stated that MGM was “still very focused” on pursuing its license for a casino resort in Osaka, Japan.
The CEO added that the MGM-ORIX consortium intends to submit its additional request for proposals (RFP) by the submission deadline in July 2021.
In the same earnings call, MGM Resorts chief financial officer Jonathan Halkyard told analysts the casino operator was “just not overly keen or focused on [bidding for an Integrated Resort Casino in Chicago] at this time.” An MGM Resorts bid for the downtown Chicago resort was seemingly in the pipeline. The company was one of three casino operators to respond to the city’s request for information in 2020.