LAS VEGAS, Sept. 19, 2018 /PRNewswire/ -- MGM Resorts
International ("MGM Resorts") (NYSE: MGM) and MGM Growth Properties
LLC ("MGP") (NYSE: MGP) today announced that they have entered into
an agreement whereby MGM Resorts will acquire all of the operating
assets of the Hard Rock Rocksino Northfield Park (the "Rocksino")
from MGP and lease the real property associated with the Rocksino
from a subsidiary of MGP.
MGM Resorts will pay total consideration of approximately
$275 million, subject to customary
working capital and other adjustments. The Rocksino will be added
to the existing master lease between MGM Resorts and MGP and the
annual rent payment to MGP will increase by $60 million. Consistent with the Master Lease
terms, 90 percent of this rent will be fixed and contractually grow
at 2 percent per year until 2022.
"We are pleased to welcome the Hard Rock Rocksino and more than
700 employees to the MGM Resorts family and look forward to working
with them during this transition," said Jim
Murren, Chairman & CEO of MGM Resorts International.
"Since opening its doors in 2013, the Rocksino has cemented itself
as the market leader in gaming and entertainment due to its
superior asset quality, premium location and dedicated
employees. We believe the Rocksino is a great fit for the MGM
portfolio and will benefit from our capabilities as a leading
global entertainment company and our award-winning M life Rewards
Program. We anticipate revenue and profit growth from this
combination."
James Stewart, CEO of MGP, said,
"We are thrilled to have partnered with MGM Resorts for this
quality asset. While there was significant third-party interest in
the property, MGM Resorts offered a rental stream at the high end
of our expected range and the continued security of our revenues as
demonstrated by the strong rent coverage via the master lease.
We expect this transaction to be accretive to AFFO,
positioning the company for future dividend growth and further
exhibiting our commitment to maximize shareholder value."
The Rocksino, which will be integrated into the MGM Resorts
portfolio of best-in-class gaming and entertainment destinations,
is a market-leading gaming, dining and entertainment facility
located in Northfield, Ohio,
a suburb approximately 17 miles southeast of
downtown Cleveland and 18 miles north of Akron. For
the last 12 months, ending June 30,
2018, the Rocksino reported approximately $293 million in net revenues and approximately
$94 million in Adjusted
EBITDAM(1). Even without the benefit of table games, the
Rocksino has a proven history of market leadership in Ohio and has led the Ohio gaming market in total Gross Gaming
Revenue for 35 of the last 39 months.
Dan D'Arrigo, Executive Vice President & Chief Financial
Officer of MGM Resorts International, said, "The Rocksino's
attractive location, market leadership, and superior non-gaming
offerings complement our portfolio of quality destinations, and we
believe there are significant opportunities for MGM Resorts to
further drive growth through our customer loyalty program and our
operating expertise and scale. We believe this accretive
transaction will enhance our free cash flow generation and, once
fully integrated, will represent a multiple of approximately six
times Adjusted EBITDA, which we expect will only improve further in
following years."
The property sits on 110 acres and consists of a
200,000-square-foot gaming facility with more than 2,300 video
lottery terminals, and a variety of retail and food and beverage
outlets, as well as entertainment venues, including a 1,900-seat
music venue and a 250-seat event space. It also includes a
year-round horse racetrack and a gas station and car wash.
The transaction is expected to close in the first half of 2019
and is subject to customary closing conditions and regulatory
approvals.
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 28 unique hotel offerings including some of
the most recognizable resort brands in the industry. Expanding
throughout the U.S. and around the world, the company in 2018
opened MGM Springfield in Massachusetts, MGM COTAI in Macau, and the first Bellagio-branded hotel in
Shanghai. The 81,000 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.
ABOUT MGM GROWTH PROPERTIES LLC
MGM Growth Properties LLC (NYSE:MGP) is one of the leading
publicly traded real estate investment trusts engaged in the
acquisition, ownership and leasing of large-scale destination
entertainment and leisure resorts, whose diverse amenities include
casino gaming, hotel, convention, dining, entertainment and retail
offerings. MGP currently owns a portfolio of properties,
consisting of 11 premier destination resorts in Las Vegas and elsewhere across the United States, the Park, a dining and
entertainment complex which opened in April
2016, and the Hard Rock Rocksino Northfield Park in
Northfield, OH. As of December 31, 2017, these properties collectively
comprise over 27,500 hotel rooms, 2.7 million convention square
footage, 100 retail outlets, 200 food and beverage outlets and 20
entertainment venues. As a growth-oriented public real estate
entity, MGP expects its relationship with MGM Resorts and other
entertainment providers to attractively position MGP for the
acquisition of additional properties across the entertainment,
hospitality and leisure industries that may be developed in the
future. For more information about MGP, visit the Company's website
at http://www.mgmgrowthproperties.com.
(1) "Adjusted EBITDAM" is Net Income ($62.6 million for the last twelve months (LTM)
ended June 30, 2018) as adjusted for
interest expense ($6.1 million for
the LTM ended June 30, 2018), loss on
sale of asset ($400,000 for the LTM
ended June 30, 2018), unrealized gain
on interest rate swaps ($228,000 for
the LTM ended June 30, 2018),
depreciation and amortization ($15.3
million for the LTM ended June 30,
2018), management and license fees ($7.2 million for the LTM ended June 30, 2018), and other expenses ($2.2 million for the LTM ended June 30, 2018). Adjusted EBITDAM does not
represent cash flow from operations as defined by U.S. GAAP, should
not be considered as an alternative to net income as defined by
U.S. GAAP and are not indicative of cash available to fund all cash
flow needs. Investors are also cautioned that Adjusted EBITDAM as
presented, may not be comparable to similarly titled measures
reported by other companies.
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 MGM Resorts' and MGP public filings with the SEC. MGM
Resorts and MGP have 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, statements regarding the closing of the acquisition and
the expected benefits to be achieved as a result of the
acquisition. 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 MGM Resorts and MGP
operate, 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 MGM Resorts' and MGP Form 10-K, Form 10-Q
and Form 8-K reports (including all amendments to those reports).
In providing forward-looking statements, neither MGM Resorts or MGP
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 MGM Resorts 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.
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SOURCE MGM Resorts International