A Treasure Island subsidiary owner Phil Ruffin has reached a final agreement to buy Circus Circus Las Vegas from MGM Resorts International for $825 million.
The purchase price of $825 m would consist of $662.5 m paid in cash and a $162.5 m bond due in 2024, reflecting a continuation of the execution of the latter’s asset-light corporate strategy.
It is estimated that the transaction will close in the fourth quarter of 2019 subject to customary closing conditions, including obtaining the necessary regulatory approvals.
In conjunction with this deal, MGM plans to report a third quarter impairment charge of about $220 m.
“MGM Resorts has engaged in an exhaustive process to evaluate its owned real estate and remains committed to executing its asset-light strategy in a measured way that maximises value for its shareholders,” noted Jim Murren, chairman and CEO of MGM Resorts.
“The company expects to utilise the proceeds from this transaction to enhance its capital allocation strategy and complement its strategic and operational flexibility.”
MGM purchased Circus Circus Las Vegas in conjunction with its acquisition of the Mandalay Resort Group 14 years ago with the property, which was originally opened in 1968, and houses the 5-acre Adventuredome indoor amusement park with 2,300 staff, 10-acre RV park and 37-acre festival grounds.
Ruffin added: “Circus Circus has anchored the north end of the Las Vegas Strip for over 50 years, and I am excited to add it to my casino portfolio.
“I have tremendous respect for Jim Murren and the MGM team, and my relationship with them goes back to my friendship with Kirk Kerkorian and continues to this day.”
MGM’s latest asset-light approach activation follows MGM and Blackstone’s real estate investment trust having entered a new joint venture which sees the latter purchase $4.25bn of Las Vegas ‘ Bellagio’s related assets.
The corporation also holds many real estate assets based in Las Vegas including MGM Grand, MGM Springfield, a 50 percent interest in CityCenter and an economic control of 68 percent of MGM Growth Properties.