LAS VEGAS, Oct. 15, 2019 /PRNewswire/ -- MGM Resorts
International (the "Company" or "MGM Resorts") (NYSE: MGM) today
announced that it has entered into a definitive agreement to form a
joint venture with Blackstone Real Estate Income Trust ("BREIT")
that values the real estate of Bellagio at $4.25 billion, which represents a purchase price
multiple of 17.3x rent. In this landmark transaction for the gaming
and entertainment industry, the joint venture will acquire the
Bellagio real estate and lease it back to a subsidiary of MGM
Resorts for initial annual rent of $245
million. MGM Resorts will receive a 5% equity interest in
the joint venture and cash of approximately $4.2 billion. The transaction is expected to
close in the fourth quarter of 2019, subject to certain closing
conditions.
"This transaction confirms the premium value of our owned real
estate assets, highlights the unique value of Bellagio as a premier
asset in gaming and solidifies our status as a premier operator of
gaming and entertainment properties. We will use the proceeds from
this transaction, together with the proceeds from the pending sale
of Circus Circus Las Vegas, to build a fortress balance sheet and
return capital to shareholders. By the end of 2020 we intend to
have domestic net financial leverage at our operating properties of
approximately 1x," said Jim Murren,
Chairman and CEO of MGM Resorts International. "These transactions
enhance the Company's strategic and operational flexibility and
reinforce its commitment to targeted new growth opportunities,
including securing and investing in one of the integrated resort
licenses in Japan and becoming an
industry leader in sports betting in the U.S. We remain committed
to delivering on our 2020 goals and continue to be on track to
achieve our previously announced targets."
Jon Gray, Blackstone President & COO, commented: "As
big believers in MGM Resorts and Las
Vegas, we are thrilled to partner with MGM to acquire the
Bellagio on behalf of our BREIT investors. We look forward to a
long and productive partnership with this world-class company."
MGM Resorts' commitment to its asset-light strategy is the
culmination of an extensive strategic review of the interplay of
its real estate portfolio, overall valuation and operational
potential. This strategy is expected to unlock the significant
unrealized value of the Company's real estate and highlight the
strength of its operating business. MGM Resorts is evolving its
business model away from primarily a capital intensive, brick &
mortar real estate business towards a developer, manager and
operator of leading gaming, hospitality and entertainment
properties. This strategy is designed to accelerate the Company's
top line growth, enhance its return on investment profile and
result in a more financially robust, global enterprise that is best
positioned to take advantage of future growth opportunities.
"The Real Estate Committee was formed earlier this year to
support management's strategy to enhance free cash flow per share,
maximize the value of our owned real estate and equity holdings,
highlight the strength of our operating business, and fortify the
Company's financial position. This transaction represents a key
step in our comprehensive, ongoing review. The value realized in
the Bellagio transaction is highly accretive to shareholder value
and significantly greater than the implied multiple of our core
business," said Paul Salem, Chairman
of the Real Estate Committee of the Company's Board of
Directors.
Central to executing this strategy is monetizing real estate
efficiently and effectively redeploying the significant amount of
capital the Company is unlocking. Between the Bellagio transaction
and the pending Circus Circus sale, the Company is expecting to
receive gross proceeds of approximately $5
billion and estimated net cash proceeds (including expected
transaction costs) of $4.3
billion.
These transactions are the first steps in executing the
asset-light strategy, and the Company still retains several highly
valuable real estate assets including MGM Grand, MGM Springfield,
its 50% stake in CityCenter and its 68% economic ownership in MGM
Growth Properties LLC. The Company anticipates opportunistically
monetizing and/or unlocking value from the abovementioned remaining
real estate portfolio in a measured manner that maximizes value
creation for its shareholders and broader constituents. MGM's
fortress balance sheet and robust free cash flow generation will
enable it to take advantage of targeted growth initiatives and
opportunistically return capital to shareholders.
PJT Partners and J.P. Morgan are serving as financial advisors
to MGM Resorts and the Real Estate Committee of the Board of
Directors of MGM Resorts. Weil, Gotshal & Manges LLP is serving
as MGM Resorts' legal counsel.
* * *
ABOUT MGM RESORTS INTERNATIONAL
MGM Resorts International (NYSE: MGM) is an S&P 500® global
entertainment company with national and international locations
featuring best-in-class hotels and casinos, state-of-the-art
meetings and conference spaces, incredible live and theatrical
entertainment experiences, and an extensive array of restaurant,
nightlife and retail offerings. MGM Resorts creates immersive,
iconic experiences through its suite of Las Vegas-inspired brands. The MGM Resorts
portfolio encompasses 30 unique hotel and destination gaming
offerings including some of the most recognizable resort brands in
the industry. Expanding throughout the U.S. and around the world,
the company recently acquired the operations of Empire City Casino
in New York and MGM Northfield
Park. In 2018, MGM Resorts opened MGM Springfield in Massachusetts, MGM COTAI in Macau, and the first Bellagio-branded hotel in
Shanghai. The 82,000 global
employees of MGM Resorts are proud of their company for being
recognized as one of FORTUNE® Magazine's World's Most Admired
Companies®. For more information visit us at
www.mgmresorts.com.
Statements in this release that are not historical facts are
"forward-looking" statements and "safe harbor statements" within
the meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and/or uncertainties, including those described
in the Company's public filings with the SEC. The Company has based
forward-looking statements on management's current expectations and
assumptions and not on historical facts. Examples of these
statements include, but are not limited to, the anticipated closing
of the transaction, the amount of net cash proceeds to be received
from the transactions, the Company's ability to execute on its
asset-light strategy, expectations regarding future results and the
Company's financial outlook and the Company's ability to deliver on
its 2020 targets and goals. These forward-looking statements
involve a number of risks and uncertainties. Among the important
factors that could cause actual results to differ materially from
those indicated in such forward-looking statements include effects
of economic conditions and market conditions in the markets in
which the Company operates and competition with other destination
travel locations throughout the United
States and the world, the design, timing and costs of
expansion projects, risks relating to international operations,
permits, licenses, financings, approvals and other contingencies in
connection with growth in new or existing jurisdictions and
additional risks and uncertainties described in the Company's Form
10-K, Form 10-Q and Form 8-K reports (including all amendments to
those reports). In providing forward-looking statements, the
Company is not undertaking any duty or obligation to update these
statements publicly as a result of new information, future events
or otherwise, except as required by law. If the Company updates one
or more forward-looking statements, no inference should be drawn
that it will make additional updates with respect to those other
forward-looking statements.
MGM RESORTS
CONTACTS:
|
|
Investment
Community
|
News Media
|
AARON
FISCHER
|
BRIAN
AHERN
|
Chief Strategy
Officer
|
Director of Media
Relations
|
(702) 693-7152 or
afischer@mgmresorts.com
|
media@mgmresorts.com
|
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SOURCE MGM Resorts International