LAS VEGAS, May 18, 2020 /PRNewswire/ -- MGM Resorts
International ("MGM Resorts") (NYSE: MGM) and MGM Growth Properties
LLC ("MGP") (NYSE: MGP) today announced that MGP has redeemed 30.3
million of MGM Resorts' operating partnership units (the "Units")
for $700 million. Following the
redemption, MGM Resorts has $700
million remaining under its agreement with MGP to purchase
up to $1.4 billion of MGM Resorts'
Units for cash through February
2022.
"Today's announcement is another example of our efforts to
bolster our already strong liquidity position during the COVID-19
pandemic," said Bill Hornbuckle,
Acting CEO and President of MGM Resorts. "As we gear up to reopen
and safely welcome our guests once again at our properties across
the U.S., maintaining a strong balance sheet and preserving our
financial flexibility remain critical pillars of long-term success.
This transaction both strengthens MGM's balance sheet and delivers
significant accretion to MGP. We continue to see significant value
in our MGP stake and are optimistic that future redemptions will
occur at higher prices."
MGM Resorts intends to use the $700
million in proceeds to repay amounts drawn under its
revolving credit facility. As of March 31,
2020, excluding MGM China and MGP, and after giving effect
to the redemption and MGM Resorts' recent bond offering, MGM
Resorts had liquidity(1) of approximately $5.3 billion.
Upon completion of the transaction, MGM Resorts will have
approximately 172 million units, representing a 56.7% economic
ownership in MGP. In addition, MGM Resorts continues to hold
significant real estate assets, including its ownership of MGM
Springfield, its 50% interest in CityCenter in Las Vegas and its 56% interest in MGM
China.
"We are pleased with the benefits this transaction brings to MGP
and our shareholders," said James
Stewart, CEO of MGM Growth Properties. "The redemption is
double digit accretive to our current run-rate AFFO per share while
maintaining low financial leverage, and the remaining $700 million unit redemption agreement provides a
clear path for future accretion. This transaction also creates an
even stronger liquidity position for our tenant, MGM Resorts,
reinforcing our confidence in the stability of our revenue stream
and the strength of our business model. As a result, we believe
this should allow us to increase our next quarterly dividend, which
would be the eleventh time in four years."
MGP utilized cash on hand to fund the redemption. As a result of
the accretion realized by this transaction, MGP expects that its
next quarterly dividend will be increased to $1.95 per share on an annualized basis, a
$0.05 increase from its prior rate of
$1.90 per share. In addition,
following the transaction, MGP will continue to have over
$1 billion of liquidity between cash
and cash equivalents and its revolving credit facility with
adjusted annualized pro rata net leverage of 4.7x.
(1) Cash and equivalents as of March 31,
2020. MGM Resorts (excluding MGM China and MGP) cash and
equivalents of $3.9 billion as of
March 31, 2020, adjusted for
$742 million of net proceeds from
issuance of $750 million 6.750%
senior notes due 2025 and adjusted for $700
million of proceeds from this redemption.
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
29 unique hotel and destination gaming offerings in the United States and Macau, including some of the most recognizable
resort brands in the industry such as Bellagio, MGM Grand, ARIA and
Park MGM. The Company's 50/50 venture, ROAR Digital LLC, offers
U.S. sports betting and online gaming through market-leading
brands, including BetMGM and partypoker. The Company is currently
pursuing targeted expansion in Asia through the integrated resort opportunity
in Japan. Through its "Focused on
What Matters: Embracing Humanity and Protecting the Planet"
initiative, MGM Resorts commits to creating a more sustainable
future, while striving to make a bigger difference in the lives of
its employees, guests, and in the communities where it operates.
The 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, please visit us at
www.mgmresorts.com. Please also connect with us @MGMResortsIntl on
Twitter as well as Facebook and Instagram.
About MGM Growth Properties
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, together with its
joint venture, currently owns a portfolio of properties, consisting
of 12 premier destination resorts in Las
Vegas and elsewhere across the
United States, MGM Northfield Park in Northfield, OH, Empire Resort Casino in
Yonkers, NY, as well as a retail
and entertainment district, The Park in Las Vegas. As of December 31, 2019, our
destination resorts, the Park, Empire Resort Casino, and MGM
Northfield Park collectively comprised approximately 27,400 hotel
rooms, 1.4 million casino square footage, and 2.7 million
convention square footage. 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. For more information about MGP,
visit the Company's website
at http://www.mgmgrowthproperties.com.
Forward-Looking Statements
Statements in this release
that are not historical facts are "forward-looking" statements and
"safe harbor statements" that involve risks and/or uncertainties,
including those described in MGM Resorts' and MGP's public filings
with the SEC. MGM Resorts and MGP have based forward-looking
statements on current expectations and assumptions and not on
historical facts. Examples of these statements include, but are not
limited to, statements MGM Resorts makes regarding the impact of
COVID-19 on its business, the expecting timing and price of any
future redemptions and the strength of its liquidity position and
statements MGP makes with regard to the expected accretion from the
transaction, the amount of its dividend and the amounts MGM Resorts
expects to receive from such dividends. 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 the continued impact of the COVID-19 pandemic on the
businesses of MGM Resorts and MGP, the general economic conditions
and market conditions in the markets in which the companies operate
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 MGM Resorts' and MGP's 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 nor MGP
is 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 or MGP 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.
Non-GAAP Financial Measures
MGP's pro rata net
leverage ratio presented in this release is calculated by dividing
MGP's total net debt after giving effect to the redemption,
including its pro rata share of the debt at MGP's 50.1% owned joint
venture entity, by MGP's annualized Adjusted EBITDA for the quarter
ended March 31, 2020. The following
table sets for MGP's calculation of pro rata net leverage as of
March 31, 2020.
Since non-GAAP financial measures are not calculated in
accordance with GAAP, they should not be considered in isolation
of, or as a substitute for, the most directly comparable GAAP
financial measures as an indicator of operating performance.
($ in
thousands)
|
Three Months
Ended
|
|
March 31,
2020
|
Net income
(loss)
|
($125,322)
|
Depreciation
|
62,047
|
Share of depreciation
of unconsolidated affiliate
|
5,319
|
Property
transactions, net
|
195,056
|
Non-cash compensation
expense
|
754
|
Straight-line rental
revenues, excluding lease incentive asset
|
10,781
|
Share of
straight-line rental revenues of unconsolidated
affiliate
|
(6,352)
|
Amortization of lease
incentive asset and deferred revenue on non-normal tenant
improvements
|
4,627
|
Acquisition-related
expenses
|
622
|
Non-cash ground lease
rent, net
|
260
|
Other
expenses
|
18,368
|
Loss on unhedged
interest rate swaps, net
|
12,120
|
Provision for income
taxes
|
1,133
|
Share of provision
for income taxes of unconsolidated affiliate
|
47
|
Interest
income
|
(1,091)
|
Interest
expense
|
49,198
|
Share of interest
expense of unconsolidated affiliate
|
6,524
|
Adjusted
EBITDA
|
$234,091
|
|
x 4
|
Annualized Adjusted
EBITDA
|
$936,364
|
|
|
Total principal
amount of debt
|
$4,000,000
|
Less: Cash and cash
equivalents
|
(1,762,616)
|
Plus: OP Unit
redemption
|
700,000
|
Adjusted Net
Debt
|
$2,937,384
|
Plus: 50.1% of Joint
Venture Debt
|
1,503,000
|
Pro Rata Net
Debt
|
$4,440,384
|
|
|
Pro Rata Net
Leverage
|
4.7x
|
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SOURCE MGM Resorts International; MGM Growth Properties LLC