MGM Resorts International, MGM Growth Properties and Blackstone Real Estate Income Trust have confirmed the completion of its previously announced $4.6bn transaction.
The deal sees BREIT acquire the Las Vegas real estate assets of the MGM Grand and Mandalay Bay, in a continuation of MGM’s asset light strategy which has also seen the firm announce Bellagio and Circus Circus Las Vegas sales that will provide cash proceeds in the region of $8.2bn. BREIT has also purchased approximately 4.9 million MGP Class A shares at a price of $30.67 per share.
Simultaneous with the closing of the transaction, MGP AND BREIT have entered into a joint venture regarding the properties, which will be owned 50.1 per cent by the former.
Furthermore, in connection with the completion of the transaction MGM Resorts has entered into a long-term triple net master lease for both properties, and will continue to manage, operate and be responsible for all aspects of the properties on a day-to-day basis, with the joint venture owning the properties and receiving rent payments. MGM also states that it has provided a full corporate guarantee of rent payments.
Representing a further continuation of the organisation’s asset-light strategy, the transactions become the next step in MGM’s quest to become a leader within the global gaming, hospitality and entertainment sectors.
“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,” explained Jim Murren, chairman and CEO of MGM Resorts, when the deal was first announced.
“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.”