Actual property funding belief Vici Properties is buying MGM Progress Properties in a $17.2 billion deal that may seemingly make the on line casino proprietor the most important landowner on the Las Vegas Strip.
MGM Resorts Worldwide, which owns the bulk stake in MGM Progress Properties, will obtain about $4.4 billion in money within the deal. The transaction contains $5.7 billion in debt.
MGM Resorts has been promoting off its actual property property lately, and it spun off MGM Progress Properties in 2016. Its portfolio contains Mandalay Bay and the MGM Grand Las Vegas.
All collectively, Vici will acquire 15 leisure properties within the deal, considerably increasing its geographic footprint, however retaining its deal with the on line casino trade.
MGM Resorts Worldwide President and CEO Invoice Hornbuckle is interviewed through the launch of the 100-megawatt MGM Resorts Mega Photo voltaic Array, the hospitality trade’s largest immediately sourced renewable electrical energy venture on the planet on June 28, 2021 in Dry Lake Valley, Nevada.
Gabe Ginsberg | Getty Photos
“We’re buying what we consider is the best-in-class experiential actual property portfolio in America. These are magnificent property,” mentioned Vici’s Chief Government Edward Pitoniak in an interview.
When Vici was created to assist Caesars emerge from chapter, it had just one tenant: Caesars. It has been a mission to broaden its holdings, not too long ago asserting a deal to purchase the Venetian, Palazzo and Sands Expo and Conference Middle for $4 billion.
With Vici’s greater portfolio, Caesars goes from contributing 100% of Vici’s income to 41%. The deal may also give the corporate an estimated enterprise worth of $45 billion, which is much bigger than any of its tenants.
“The deal … has far reaching implications … each throughout the gaming REIT area and for MGM, who will now be geared up with much more money on the steadiness sheet to place in direction of ROI endeavors,” mentioned Deutsche Financial institution analyst Carlo Santerelli in a analysis observe.
MGM Resorts additionally touted the monetary flexibility the deal will present.
“Because of these actions, we’re properly positioned and stay targeted on pursuing progress alternatives in our core enterprise, with vital monetary flexibility to proceed to deploy capital to maximise shareholder worth,” mentioned Invoice Hornbuckle, chief government and president of MGM Resorts, in a information launch.
MGM Progress Properties shareholders will swap every Class A share for $43 in newly issued Vici inventory, or a premium of 16% from MGM Progress’s closing worth on Tuesday.
On Wednesday, MGM Progress shares rose 6.8% to shut at $39.61. MGM Resorts shares inched up 0.9% to shut at $37.27, whereas Vici shares fell 0.3% to $30.18.