MGM Resorts International will soon unveil a controlled REIT, MGM Growth Properties (MGP), that will assume an estimated $4 billion of the company’s debt with an aim to decrease total debt and increase stock price.
“MGM Resorts is creating a new growth platform to allow it to more effectively execute its strategic initiatives, including portfolio diversification,” says Jim Murren, chairman and CEO of MGM Resorts.
Slated for completion during the first quarter of 2016, the transaction will create a publicly traded REIT; strengthen the company’s financial profile; ensure a majority economic interest in MGP; lease properties from MGP under a long-term, triple-net master lease; enable MGP to expand with additional properties; and minimize transaction costs. The company has already submitted documents to the SEC for its proposed initial public offering.
MGM Resorts will place 10 of its properties into MGP, encompassing more than 24,000 hotel rooms and 2.3 million square feet of function space. These include seven Las Vegas resorts—Mandalay Bay, the Mirage, Monte Carlo, New York-New York, Luxor, Excalibur, and the Park; and three regional casino resort properties—MGM Grand Detroit, and Mississippi’s Beau Rivage and Gold Strike Tunica properties. All will continue to be operated by their respective casinos.
