Vici Properties, a casino-focused actual property funding belief, will purchase MGM Progress Properties, which owns a portfolio of casinos together with the Luxor and MGM Grand on the Las Vegas Strip, for $17.2 billion.
Vici pays MGM Resorts, which is the biggest shareholder of MGM Progress Properties, roughly $4.4 billion in money. MGM Resorts will retain a 1% possession stake within the REIT, value about $370 million.
Invoice Hornbuckle, chief govt and president of MGM Resorts stated that the settlement is a continuation of the corporate’s “journey to grow to be asset gentle” and enhance its “monetary flexibility.”
5 years in the past, MGM spun off MGM Progress Properties to take actual property property off its steadiness sheet and put money into cellular gaming and different ventures.
The merger will make Vici the biggest on line casino REIT, with an estimated enterprise worth of $45 billion. The deal comes after Vici introduced in March that it could purchase subsidiaries that maintain the actual property and actual estate-related property of The Venetian on the Strip for $4 billion in money from Las Vegas Sands. Vici’s portfolio of 28 casinos is essentially targeted on regional venues within the Mid-West and South, however it additionally boasts iconic Vegas Strip properties like Caesars Palace.
The deal will add 15 properties to Vici’s portfolio, together with the Mandalay Bay, the Luxor, the MGM Grand in addition to Empire Metropolis in Yonkers, the Borgata in Atlantic Metropolis, Beau Rivage in Biloxi, Mississippi and extra. Roughly 55% of Vici’s lease shall be generated by regional casinos, which have loved sturdy development through the pandemic, and 45% will come from casinos on the Las Vegas Strip.
The phrases of the deal give MGM Progress Properties Class A shareholders 1.366 shares of Vici inventory in trade for MGP shares at an trade ratio of $43 per share, the businesses stated. MGP shareholders will get almost a 16% premium over the closing worth on Tuesday.
Together with the closing of the transaction, Vici will enter right into a 25-year triple-net grasp lease settlement with MGM Resorts. Initially, MGM pays Vici $860 million a yr in lease to occupy its 15 properties. Lease will enhance at a price of two% each year for the primary 10 years.
The transaction is slated to shut through the first half of 2022 and is topic to regulatory and stockholder approval. Vici stated it has secured $9.2 billion in financing dedication from Citibank, J.P. Morgan and Morgan Stanley.