American casino operator, MGM Resorts International, has announced that it has entered into an agreement that is set to see it spend approximately $275 million in order to acquire all of the operating assets associated with northern Ohio’s Hard Rock Rocksino Northfield Park.
Arrangement with associated REIT:
The Las Vegas-based firm used an official Wednesday press release to detail that it inked the deal for the Ohio venue with the MGM Growth Properties LLC real estate investment trust (REIT) it established in 2016 and expects the arrangement to close during the first half of next year subject to the receipt of customary regulatory approvals.
To pay $60 million annual rent:
The company operates twelve venues on behalf of MGM Resorts International including The Mirage and Mandalay Bay in Las Vegas and signed an agreement in April that it saw pay some $1.06 billion in order to purchase Hard Rock Rocksino Northfield Park from previous owner, Milstein Entertainment LLC. The entity manages the MGM Grand Detroit, Beau Rivage Resort and Casino Biloxi and Gold Strike Tunica properties and will now benefit by charging its parent an annual $60 million rent for the Summit County enterprise.
Casino giant ‘pleased’ with transaction:
Jim Murren, Chairman and Chief Executive Officer for MGM Resorts International, declared that he was ‘pleased’ to be adding Hard Rock Rocksino Northfield Park and its over 700 employees to his firm’s ‘family’ and is now looking forward to ‘working with them during this transition.’
Murren’s statement read…
“Since opening its doors in 2013, Hard Rock Rocksino Northfield Park has cemented itself as the market leader in gaming and entertainment due to its superior asset quality, premium location and dedicated employees. We believe Hard Rock Rocksino Northfield Park is a great fit for the MGM Resorts International 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.”
Plethora of offerings:
Sitting on some 110 acres of land located around 17 miles southeast of downtown Cleveland, Hard Rock Rocksino Northfield Park features a 200,000 sq ft gaming floor offering over 2,300 slots as well as a plethora of retail and food and beverage outlets. The enterprise additionally includes a year-round horseracing track, a gas station and a car wash as well as a 250-seat events space and a 1,900-seat music venue.
Bests other interested parties:
For his part, James Stewart, Chief Executive Officer for MGM Growth Properties LLC, proclaimed that there had been ‘significant third-party interest in the property’ but that he was now ‘thrilled to have partnered’ with MGM Resorts International.
Stewart’s statement read…
“MGM Resorts International 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 adjusted funds from operations, positioning the company for future dividend growth and further exhibiting our commitment to maximize shareholder value.”
Leader in Ohio’s gaming market:
The pair explained that Hard Rock Rocksino recorded net revenues of around $293 million for the twelve months to the end of June while its earnings before interest, tax, depreciation and amortization came in at approximately $94 million. Regarding gross gaming revenues, they stated that the venue has led the Ohio market in 35 of the previous 39 months despite offering no table games.