American land-based casino operator MGM Resorts International has announced the signing of a definitive agreement that is to see Vici Properties Incorporated acquire its own MGM Growth Properties real estate investment trust (REIT) compatriot.
The Las Vegas-headquartered firm used an official press release to detail that the transaction values MGM Growth Properties at approximately $17.2 billion and will involve Vici Properties Incorporated handing over around $4.4 billion in cash so as to purchase all of this entity’s outstanding Class A shares.
MGM Resorts International established MGM Growth Properties in 2016 as part of a journey to lighten its asset load and subsequently bequeathed the ownership of some of it most famous American venues including the MGM Grand Detroit, Mandalay Bay and Mirage Las Vegas to the brand-new entity. The Nevada casino firm stated that the ‘transformational agreement’ with Vici Properties Incorporated, which was itself spun-off from Caesars Entertainment Corporation only four years ago, will allow it to retain an operating partnership stake worth in the region of $370 million and deliver on its earlier-reached strategy.
Bill Hornbuckle (pictured) serves as the Chief Executive Officer and President for MGM Resorts International and he used the press release to disclose that the premium valuation of MGM Growth Properties represents a 17.5-time pro rata multiple of the entity’s most recent earnings before interest, tax, depreciation and amortization. The boss furthermore pronounced that the completed transaction is destined to improve his company’s immediate liquidity by up to $11.6 billion and allow it to better execute its aim of ‘becoming the premier gaming entertainment company while returning value to shareholders and solidifying its balance sheet’.
Read a statement from Hornbuckle…
“In 2016 we started on our journey to become asset light and this announcement, together with our recently announced MGM Springfield and CityCenter transactions, reflects the culmination of those efforts and a major step forward in simplifying our corporate structure. As a result of these actions, we are well positioned and remain focused on pursuing growth opportunities in our core business with significant financial flexibility to continue to deploy capital to maximize shareholder value.”
For his part and Ed Pitoniak, Chief Executive Officer for Vici Properties Incorporated, proclaimed that the transaction is expected to close during the first six months of next year ‘subject to customary closing conditions, regulatory approvals and approval by stockholders’ and will result in MGM Resorts International holding around a one percent stake in his own firm.
Pitoniak’s statement read…
“We have always admired the exceptional quality of MGM Growth Properties’ real estate portfolio and are thrilled this transaction allows MGM Resorts International to reach its stated objectives while enhancing value for both Vici Properties Incorporated and MGM Growth Properties shareholders.”