LAS VEGAS, Jan. 14, 2020 /PRNewswire/ -- MGM Resorts
International (the "Company" or "MGM Resorts") (NYSE: MGM) today
announced that it has entered into a definitive agreement pursuant
to which a newly formed joint venture between MGM Growth Properties
LLC ("MGP") and Blackstone Real Estate Income Trust ("BREIT") (the
"Joint Venture") will acquire the MGM Grand Las Vegas real estate
assets in a transaction valued at approximately $2.5 billion, which represents a multiple of
15.75x rent. In connection with the transaction, MGM Resorts
expects to receive net cash proceeds of approximately $2.4 billion and approximately $85 million in MGP operating partnership units.
MGP has also entered into an agreement with MGM Resorts to deliver
cash for up to $1.4 billion of MGM
Resorts' existing operating partnership units. MGM Resorts can
elect to redeem units for up to 24 months post-closing, and
anticipates doing so within the early part of that window. Combined
with the previously announced Bellagio and Circus Circus Las Vegas
transactions, and assuming the redemption of $1.4 billion in operating partnership units,
these transactions are expected to provide total net cash proceeds
to MGM Resorts of $8.2 billion. The
transactions, as part of our broader asset-light strategy, will
uniquely position MGM Resorts as a leader within the global gaming,
hospitality and entertainment sector as a significant return of
capital story, while also enabling it to achieve a fortress balance
sheet.
"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," said
Jim Murren, Chairman and CEO of MGM
Resorts. "As such, we remain determined to prudently pursue
accretive opportunities related to our remaining owned real estate
assets including MGM Springfield, our 50% stake in CityCenter and
our 55% economic ownership in MGP (pro forma for the potential
$1.4bn redemption). Our corporate
objective remains crystal clear, we will continue to monetize 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."
The previously completed Bellagio and Circus Circus Las Vegas
transactions provided significant proceeds for deleveraging and the
continued execution of the Company's 2020 initiatives are expected
to further support improvements to the Company's balance sheet. The
Company remains confident in achieving its previously stated net
domestic financial leverage target, excluding MGP, of approximately
1x by end of 2020. The Company anticipates that a substantial
portion of proceeds from this transaction, along with near-term
cash proceeds from the operating partnership unit redemptions, will
be used to return capital to shareholders through share repurchases
and dividends. The Company intends to provide a more specific
update on its capital allocation plan in connection with its
earnings release for the fourth quarter of 2019.
"The valuation levels achieved on the Bellagio and MGM Grand Las
Vegas transactions are a testament to MGM Resorts as a high-quality
tenant and our overall asset quality. The robust interest in
our recent transactions further validates the Company's conviction
on being able to unlock value for our shareholders through its
asset light strategy" said Paul
Salem, Chairman of the Real Estate Committee of the
Company's Board of Directors. "The transaction represents another
key phase of our ongoing review of the Company's assets and is
in-line with all of the Real Estate Committee's principal
objectives of enhancing free cash flow per share, maximizing the
value of our owned real estate and equity holdings, highlighting
the strength of our operating business, and strengthening the
Company's financial position."
The Joint Venture, which will be owned 50.1% by MGP and 49.9% by
BREIT, will also acquire the real estate assets of Mandalay Bay
from MGP and will lease both properties to MGM Resorts for an
initial rent of $292 million.
Jon Gray, Blackstone President & COO, said, "This
transaction reflects our continuing strong conviction in
Las Vegas. We are pleased to once
again partner with MGM Resorts, a world-class operator, as well as
MGM Growth Properties."
The transaction is expected to close in the first quarter of
2020, subject to certain closing conditions.
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 Hard Rock Rocksino in
Ohio, which was rebranded as 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 expected net cash proceeds as well as the
contemplated use of those proceeds, the Company's ability to
maximize value for its shareholders, execute on its asset light
strategy and achieve its financial 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