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Casino owner Vici Properties purchases MGM Growth Properties for $17.2 billion

Casino owner Vici Properties purchases MGM Growth Properties

August 6, 2021: -Real estate investment trust Vici Properties is acquiring MGM Growth Properties in a $17.2 billion deal that will make the casino owner the largest landowner on the Las Vegas Strip.

MGM Resorts International, owning the majority stake in MGM Growth Properties, will receive about $4.4 billion in cash in the deal. The transaction including $5.7 billion in debt.

In recent years, MGM Resorts has been selling off its real estate assets, and it spun off MGM Growth Properties in the year 2016. Its portfolio also combines Mandalay Bay and the MGM Grand Las Vegas.

Altogether, Vici will gain 15 entertainment properties in the deal, significantly expanding its geographic footprint but focusing on the casino industry.

“We’re acquiring what we believe is the best-in-class experiential real estate portfolio in America. These are magnificent assets,” said Vici’s Chief Executive Edward Pitoniak in an interview.

When Vici was helping Caesars emerge from bankruptcy, it had one tenant known as Caesars. It’s been a mission to broaden its holdings, lately announcing a deal to buy the Venetian, Palazzo, Sands Expo, and Convention Center for $4 billion.

With Vici’s more extensive portfolio, Caesars contributes 100% of Vici’s revenue to 41%. The deal will also provide the company an estimated enterprise value of $45 billion, far more significant than its tenants.

“The deal has far-reaching implications, both within the gaming REIT space and for MGM, who will now be equipped with more cash on the balance sheet to put towards ROI endeavors,” said Deutsche Bank analyst Carlo Santarelli in a research note.

MGM Resorts also touted the financial flexibility the deal will provide.

“As a result of these actions, we are well-positioned and remain focused on pursuing growth opportunities in our core business, with the significant financial flexibility to keep deploying capital to maximize shareholder value,” said Bill Hornbuckle, chief executive and president of MGM Resorts, in a news release.

On Tuesday, MGM Growth Properties shareholders will swap each Class A share for $43 in recently issued Vici stock, or a premium of 16% from MGM Growth’s closing price.

On Wednesday, MGM Growth shares increase 6.8% to close at $39.61. MGM Resorts shares inched up 0.9% to nearly $37.27, while Vici shares fell 0.3% to $30.18.

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