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MGM REIT properties take-over

Discussion in 'Casino Industry & Development' started by seneca7, Oct 29, 2015.

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  1. seneca7

    seneca7 Low-Roller

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    Per Robin Leach on Twitter:

    A new Real Estate Investment Trust, MGM Growth Properties (MGMP) to take over 7 LV Strip hotels & 3 regionals. Vegas hotels include Mandalay Bay, Mirage, MonteCarlo, NYNY, Luxor, Excalibur and the Park but curiously not Bellagio. MGM will get 30-year lease rights to the MGMP hotels. MGM also reports earnings up 28% year over year & 11-13% ahead of Wall St estimates.
    MGM properties in Detroit, & Tunica, Miss included in the new REIT. Watch MGM shares jump today!
     
    seneca7, Oct 29, 2015
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  2. Callahan

    Callahan Tourist

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    More proof the beancounters rule this city now.
     
    Callahan, Oct 30, 2015
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  3. WichitaMuskie

    WichitaMuskie VIP Whale

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    It's just a tax efficiency play. I can't imagine it will have any real impact on operations.
     
    WichitaMuskie, Oct 30, 2015
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  4. 44inarow

    44inarow VIP Whale

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    Exactly. Also, MGM will still own and operate the resorts themselves. This is basically just a transfer of the land underneath to the new REIT.
     
    44inarow, Oct 30, 2015
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  5. Fafa2e

    Fafa2e High-Roller

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    It's a sale-leaseback, so it basically takes the assets (and more importantly) the related debt off the books of MGM Resorts. I suspect that they couldn't move Bellagio, MGM Grand, City Center into the REIT because the debt holders on those properties did not agree to it, plus City Center is a joint venture with China.
     
    My Longest Trip Ever
    Fafa2e, Oct 30, 2015
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  6. SH0CK

    SH0CK Stylin' and Profilin' Quasi Tech Admin

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    Joint venture with Dubai World, not China.

    This is no different than what CET did with their properties about a year ago or so. Except MGM doesn't have the mounds of debt that CET has. It could be they are doing this to free up some debt and capital for other projects. Just pure speculation on my part though.
     
    SH0CK, Oct 30, 2015
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  7. leo21

    leo21 VIP Whale

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    CET was moving entire properties to another company and that's part of the reason the bankruptcy won't clear. If they do a REIT, it won't be until after they resolve bankruptcy. And MGM does have a lot of ton of debt. They have been paying it and there doesn't appear to be notes due soon that they can't cover like CET, however, this move and the PGP are all about carrying a ton of debt.

    http://calvinayre.com/2015/10/29/casino/mgm-resorts-looks-to-dump-4b-in-debt-via-real-estate-investment-trust/
     
    leo21, Oct 30, 2015
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  8. zing

    zing Low-Roller

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    It's interesting that MGM Resorts will still own 70% of the REIT itself.

    This is a different strategy from the Penn National conversion which completely spun off the REIT and didn't retain any ownership.
     
    zing, Oct 30, 2015
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