After inking a lease-back agreement for its Bellagio Las Vegas venue in October and American casino giant MGM Resorts International has now announced the signing of a similar deal covering its MGM Grand Las Vegas and Mandalay Bay Resort and Casino Las Vegas venues.
The Las Vegas-headquartered firm used an official Tuesday press release to detail that the arrangement in to involve Blackstone Real Estate Income Trust Incorporated and its own MGM Growth Properties real estate investment trust paying approximately $4.6 billion so as to take over the leases for the pair of large Nevada casino resorts.
MGM Resorts International earlier revealed that it brought in around $4.2 billion via the lease-back deal for its Bellagio Las Vegas property while it had prefaced this understanding by offloading its Circus Circus Las Vegas venue to the owner of the nearby Treasure Island Las Vegas enterprise for some $825 million.
Jim Murren, Chairman and Chief Executive Officer for MGM Resorts, used the press release (pdf) to explain that the agreement with Blackstone Real Estate Income Trust Incorporated and MGM Growth Properties is to moreover see this pair form a joint venture so as to purchase Class A shares in his firm worth about $150 million. Going forward, he declared that this new enterprise will lease the MGM Grand Las Vegas and Mandalay Bay Resort and Casino Las Vegas to its former owner for an initial rent of $292 million.
Read a statement from Murren…
“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 cashflow generation to provide MGM Resorts International with meaningful strategic flexibility to create continued value for our shareholders. 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 sportsbetting.”
For its part, MGM Growth Properties used its own Tuesday press release (pdf) to declare that it is to hold a 50.1% stake in the new joint venture with Blackstone Real Estate Income Trust Incorporated while MGM Resorts International ‘will continue to manage, operate and be responsible for all aspects of the properties on a day-to-day basis’ backed up by ‘a long-term triple net master lease’ as well as ‘a full corporate guarantee of rent payments.’
James Stewart, Chief Executive Officer for MGM Growth Properties, used his firm’s release to pronounce that these transactions are expected to close by the end of March and are to ‘be accretive’ to adjusted funds from operations via a 5.6-time ‘pro rata net leverage.’
Stewart’s statement read…
“We are pleased to announce this partnership with Blackstone Real Estate Income Trust Incorporated, which illustrates the numerous opportunities available to grow our business and emphasizes the strong institutional demand for gaming real estate assets.”