MGM Confirms Asset Light Strategy Completion

MGM Resorts International, MGM Growth Properties and Blackstone Real Estate Income Trust have confirmed completion of their $4.6bn transaction previously announced.

The deal sees BREIT acquiring MGM Grand and Mandalay Bay’s Las Vegas real estate assets in a continuation of MGM’s asset light strategy, which has also seen the company announce sales of Bellagio and Circus Circus Las Vegas that will provide $8.2bn in cash proceeds. BREIT has also acquired some 4.9 million MGP Class A shares at a price of $30.67 per share.

At the same time as the deal was completed, MGP AND BREIT entered into a joint venture on the properties which the former will own by 50.1 percent.

In addition, MGM Resorts has entered into a long-term triple net master lease for both properties in connexion with the completion of the transaction, and will continue to manage, operate and be accountable for all elements of the properties on a daily basis, with the joint project owning the properties and receiving the rent payments. MGM also states it has provided a complete corporate rent payment guarantee.

As a further continuation of the asset-light strategy of the organisation, the transactions are the next step in the quest of MGM to become a leader in the global gaming, hospitality and entertainment sectors.

Jim Murren, chairman and CEO of MGM Resorts, explained when the deal was first announced: “These announcements represent a key milestone in executing the company’s previously communicated asset-light strategy, one that enables a best-in-class balance sheet and strong free cash flow generation to provide MGM Resorts with meaningful strategic flexibility to create continued value for our shareholders.

“As such, we remain determined to prudently pursue accretive opportunities related to our remaining owned real estate assets including MGM Springfield, our 50 per cent stake in CityCenter and our 55 per cent economic ownership in MGP (pro forma for the potential $1.4bn redemption).

“Our corporate objective remains crystal clear, we will continue to monetise our owned real estate assets, which facilitates our strong focus on returning capital to our shareholders, while also retaining significant flexibility to pursue our visible growth initiatives, including Japan and sports betting.”