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MGM and Mandalay Bay sold in lease back deal

Discussion in 'Casino Industry & Development' started by Chrisnewton, Jan 14, 2020.

  1. Chrisnewton

    Chrisnewton High-Roller

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    2020 Visit to the greatest City in the world
  2. SH0CK

    SH0CK Stylin' and Profilin' Quasi Tech Admin

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    It's the same joint venture that purchased the Bellagio property.

    Business as usual as it's basically MGM doing a sell/lease back deal to secure funds for future projects.
     
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  3. UKFanatic

    UKFanatic The Arbiter of Taste Caviar Kid

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    Probably. Basically, MGM corporate "sold" the properties to a partnership that consists of the MGM REIT and a Blackstone REIT, with the MGM REIT maintaining majority control.
     
  4. nostresshere

    nostresshere Mr. Anti Debit Card

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    I opened this thinking they had been sold... but not really. Just the PROPERTY will sit in different hands. Like Bellagio, these are still MGM/MLIFE casinos and hotels.
     
  5. zignerlv

    zignerlv VIP Whale

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    Yep, but "sold" makes a better headline, and more people will read it! Who wants to read "MGM Grand sold and leased back to MGM in accounting deal with No Impact to Customers"?
     
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  6. LVRaiders

    LVRaiders High-Roller

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    This sums it up.
     
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  7. black29

    black29 Tourist

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    This is a big nothing burger
     
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  8. VegasBJ

    VegasBJ VIP Whale

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    all in on Japan
     
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  9. Nevyn

    Nevyn VIP Whale

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    Just the general trend on the strip where they separate the casino operating companies from the companies owning the properties.

    More of the strip is now structured this way than not.
     
  10. hammie

    hammie VIP Whale

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    I read this article and the press release from MGM, how does this add up to $4.6 Billion?

    $2.4 Billion cash
    $85 million in partnership units of the new joint venture (between Blackstone and MGM Growth Properties)

    MGM is selling some of its MGM Growth Properties (stock symbol MGP) for $1.4 Billion back to MGM Growth Properties.

    And what the hell does “delivering cash” mean? Is this like the scene in the movie Casino where they bring suitcases back to Kansas City? What’s wrong with the word “paying”?

    https://investors.mgmresorts.com/investors/news-releases/press-release-details/2020/MGM-Resorts-Announces-Agreement-To-Monetize-Real-Estate-Of-MGM-Grand-Las-Vegas/default.aspx
     
  11. hammie

    hammie VIP Whale

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    Agreed, Caesars has VICI properties which is a REIT (real estate investment trust) as does PennGaming, who was the first to spin off some of its properties into a REIT, Gaming and Leisure Properties, back in 2013. Gaming and Leisure Properties owns the Tropicana in Atlantic City and is leasing it to Eldorado.
     
  12. Nevyn

    Nevyn VIP Whale

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    Seems like they used the term because the exact cash to be paid is unknown. It is up to 1.4 billion in ownership shares, with MGM having a 24 month window to decide how many to cash in.

    As for hitting 4.6 billion, the rest is going to be transferring ownership of MB from just MGM growth to the joint venture
     
  13. hammie

    hammie VIP Whale

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    Not to be a Philadelphia Lawyer, but the press release states $1.4 Billion of operating partnership units. Maybe that is the cost basis of the units back in 2016 when the REIT was formed.
     
  14. Nevyn

    Nevyn VIP Whale

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    No I think it is 1.4 billion to be paid, but it is an option to sell back that many at that price for cash.

    So MGM resorts could in theory opt not to cash all of them in depending on cash flow vs debt needs and how that looks over the next 2 years


    But this is all just guesswork. This is endlessly complicated legal maneuvering that they are trying to boil down into a few numbers
     
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  15. Elizakess

    Elizakess Low-Roller

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    For the next two years yep things will stay the same as they are leasing it back. Who knows after that point. Obviously with Kevorkian family selling the last of its shares via its Tracinda corporation, it kinda ended what started MGM. Did MGM do this because with the Caesar’s sale it’s too much on the market? Who knows but somehow I believe will clarify itself at the end of those two years.
     
  16. 44inarow

    44inarow VIP Whale

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    Yep. This is mostly a tax thing -- the very short version is that a real estate company (such as a REIT), whose operations are limited to owning the real estate rather than dealing with the hospitality side of things, gets favorable tax treatment. I personally think this will change within the next decade or so, but for now, it's generally advantageous to have the land and the physical plant owned by a separate company from the one actually running things. I'd be surprised if anything changes in the near term, and even more so because MGM Grand is almost certainly not going anywhere, considering it's the company's flagship brand.
     
  17. Frankr163

    Frankr163 High-Roller

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    Just more "above our pay grade" financial maneuvering.
    I own that, you owe them, we have a loss on that. We make money, you don't!
     
  18. shokhead

    shokhead No big spender unless eating drinking having fun!

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    WOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
     
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  19. Bubbavegas

    Bubbavegas VIP Whale

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    They also have their eyes set on here in Oklahoma with the tribal compact issues that are going on according to my host. We have the second largest tribal gaming in the nation following only California so they want a piece of that pie. A friend tight with some higher ups at Boyd said they told him the same thing, I say bring it on lets get some competition in the state.
     
  20. Gaggles

    Gaggles VIP Whale

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    We might all be dead by the time they get through all the red tape and grease the wheels of the politicians who need to be financially persuaded to give a casino the nod over there.
     
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