A $ 17 billion deal announced Wednesday bundled several of Las Vegas’ biggest casino hotels under one real estate company.
In one of the largest real estate deals for the Las Vegas Strip, Vici Properties (a real estate spin-off of Caesars Entertainment) has entered into a deal to acquire MGM Growth Properties (a real estate spin-off of MGM Resorts International). The transaction, worth a total of $ 17.2 billion, is expected to close in the first half of 2022 and, when completed, many of the Strip’s largest and most recognizable properties will come under the same ownership.
MGM Growth’s properties in Las Vegas are MGM Grand (50.1% owned), Mirage, Mandalay Bay (50.1% owned), Park MGM, New York-New York, Excalibur and Luxor. Vici’s current portfolio of Nevada properties includes Caesars Palace Las Vegas, Harrah’s Las Vegas and Harrah’s Laughlin.
MGM Growth properties outside of Nevada include the Borgata in Atlantic City, NJ; MGM Grand Detroit; MGM National Harbor in Prince George County, Maryland; and the Beau Rivage and Gold Strike tunic in Mississippi.
Vici Properties CEO Ed Pitoniak said the transaction would create “America’s first games, entertainment and recreation REIT” in a conference call announcing the deal, making Vici the largest owner private meeting and convention space in the country and the largest hotel owner in the United States, as measured by the number of rooms.
The agreement includes entering into an initial 25-year lease with MGM Resorts International, which would continue to operate the casino hotels previously owned by MGM Growth Properties.
MGM Resorts, which established MGM Growth Properties in 2016 as the owner of most of the company’s real estate, expects to receive approximately $ 4.4 billion in cash from the deal and will hold a 1% stake in Vici worth about $ 370 million.
The Las Vegas Bounce
Caesars Entertainment returned to net profitability in the second quarter of 2021, supported by high hotel occupancy in Las Vegas.
The move is another important step in MGM Resorts’ asset relief strategy – to divest real estate while entering into leases to continue operating hotels.
MGM Resorts CEO Bill Hornbuckle said the deal was a “major step forward in simplifying our corporate structure” and marked the culmination of their efforts to “become a light asset.”
In early July, MGM Resorts announced the sale of the Aria and Vdara hotels to the Blackstone group and a corresponding sale-leaseback agreement allowing MGM to continue to operate the hotels. In January 2020, Blackstone partnered with MGM Growth Properties in a $ 4.6 billion deal to acquire the MGM Grand and Mandalay Bay real estate and lease the properties to MGM Resorts. Blackstone bought 95% of the Bellagio in 2019 for around $ 4.2 billion and also signed a sale-leaseback agreement with MGM.
