Vici Properties buys MGM Growth Properties for $17.2 billion

MGM Resorts Worldwide President and CEO Invoice Hornbuckle is interviewed throughout the launch of the 100-megawatt MGM Resorts Mega Photo voltaic Array, the hospitality business’s largest instantly sourced renewable electrical energy mission on the planet on June 28, 2021 in Dry Lake Valley, Nevada.

Gabe Ginsberg | Getty Photos

Actual property funding belief Vici Properties is buying MGM Growth Properties in a $17.2 billion deal that may probably make the on line casino proprietor the biggest landowner on the Las Vegas Strip.

MGM Resorts International, which owns the bulk stake in MGM Progress Properties, will obtain about $4.4 billion in money within the deal. The transaction consists of $5.7 billion in debt.

MGM Resorts has been promoting off its actual property property lately, and it spun off MGM Progress Properties in 2016. Its portfolio consists of Mandalay Bay and the MGM Grand Las Vegas.

All collectively, Vici will acquire 15 leisure properties within the deal, considerably increasing its geographic footprint, however preserving its concentrate on the on line casino business.

“We’re buying what we imagine is the best-in-class experiential actual property portfolio in America. These are magnificent property,” mentioned Vici’s Chief Government Edward Pitoniak in an interview.

When Vici was created to assist Caesars emerge from chapter, it had just one tenant: Caesars. It has been a mission to broaden its holdings, not too long ago asserting a deal to purchase the Venetian, Palazzo and Sands Expo and Conference Middle for $4 billion.

With Vici’s larger portfolio, Caesars goes from contributing 100% of Vici’s income to 41%. The deal will even give the corporate an estimated enterprise worth of $45 billion, which is way bigger than any of its tenants.

“The deal … has far reaching implications … each inside the gaming REIT house and for MGM, who will now be geared up with much more money on the stability sheet to place in direction of ROI endeavors,” mentioned Deutsche Financial institution analyst Carlo Santerelli in a analysis notice.

MGM Resorts additionally touted the monetary flexibility the deal will present.

“On account of these actions, we’re effectively positioned and stay centered on pursuing progress alternatives in our core enterprise, with important monetary flexibility to proceed to deploy capital to maximise shareholder worth,” mentioned Invoice Hornbuckle, chief govt and president of MGM Resorts, in a information launch.

MGM Progress Properties shareholders will swap every Class A share for $43 in newly issued Vici inventory, or a premium of 16% from MGM Progress’s closing value on Tuesday.

On Wednesday, MGM Progress shares rose 6.8% to shut at $39.61. MGM Resorts shares inched up 0.9% to shut at $37.27, whereas Vici shares fell 0.3% to $30.18.

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