Under the agreement, MGM Resorts International will receive about US$4.4 billion in cash. MGM Resorts spun off MGM Growth Properties in 2016 and still controls the REIT, whose portfolio on the Las Vegas Strip includes Mandalay Bay, Luxor, Excalibur and MGM Grand Las Vegas.
The US$17.2bn total consideration figure also includes VICI’s assumption of around US$5.7bn in MGM Growth Properties’ debt.
VICI said the deal would bring the combined entity’s enterprise value to US$45bn, making the new business the largest “experiential REIT (Real Estate Investment Trust)” in the US.
When the deal closes, VICI will then enter into a new master lease agreement with MGM for the MGM properties it will own, such as the Mirage and Park MGM.
VICI will also continue MGM Growth Properties’ joint venture with the Blackstone Real Estate Investment Trust (BREIT). This joint venture made a number of property acquisitions from MGM Resorts in 2019 and 2020, such as the Mandalay Bay and Bellagio as the operator moved to a less property-heavy portfolio.
The deal will be financed through a US$9.3bn financing commitment from Morgan Stanley, J.P. Morgan, and Citibank.
VICI said the deal would allow it to diversify its portfolio in terms of clients. Currently, Caesars makes up 84% of VICI’s revenue, but following the merger, the new business’ top client will contribute only 41%.
Last week, VICI reported a year-on-year increase in revenue and net profit during the first half of its 2021 financial year.
Revenue for the six months to June 30 amounted to US$750.7m, up 46.4% from US$512.9m in the same period last year.
Source: GMB / iGB
