LAS VEGAS, May 29, 2018 /PRNewswire/ -- MGM Resorts
International (the "Company" or "MGM Resorts") (NYSE: MGM) and MGM
Growth Properties LLC (NYSE: MGP) today announced that MGM Resorts
has entered into an agreement to acquire the real property and
operations associated with the Empire City Casino's ("Empire City")
race track and casino for consideration of $850 million. Further, MGM Resorts and MGP have
entered into a definitive agreement whereby MGP will acquire the
developed real property associated with Empire City from MGM
Resorts and lease it back to a subsidiary of MGM Resorts, after
which a subsidiary of MGM Resorts will operate the property.
"We are excited to announce the addition of Empire City to the
MGM Resorts portfolio," said Jim Murren, Chairman and CEO of
MGM Resorts International. "This acquisition represents an
excellent opportunity to further solidify our presence on the East
Coast, and in particular, expand our reach into the high-density
New York City region. We believe
this transaction enhances our free cash flow profile and presents
attractive future opportunities for the Company, and we look
forward to welcoming the Empire City team and guests to the MGM
Resorts family."
MGM Resorts will pay total consideration of
approximately $850 million, subject to customary working
capital and other adjustments, including the refinancing of Empire
City's outstanding debt, which is expected to be
approximately $245 million at the time of closing. MGM Resorts
expects that approximately $260
million of the remaining consideration will be in the form
of MGM Resorts common stock. Furthermore, MGM Resorts has agreed to
pay additional consideration of $50
million if Empire City is awarded a license for live table
games on or prior to December 31,
2022 and MGM Resorts accepts such license by December 31, 2024.
"With Empire City's approximately 40 percent share of gross
gaming revenues in the market, we believe there are
significant opportunities for MGM Resorts to further drive
growth," said Dan D'Arrigo, Executive Vice President
and Chief Financial Officer of MGM Resorts
International. "We believe the transaction will be
value-accretive within its first year of closing, with incremental
revenue synergies expected to support growth in 2020 and
beyond."
Concluded Mr. D'Arrigo, "Following the sale of the developed
real property to MGP, the net purchase price to MGM Resorts of
approximately $225 million represents
a multiple of less than 6 times Adjusted EBITDA, inclusive of
expected operational synergies and identified revenue growth
opportunities."
For the last twelve months ended March 31, 2018, Empire
City reported approximately $230 million in net revenues
and approximately $70 million in Adjusted EBITDA.
Subsequent to the purchase of Empire City, MGM Resorts and MGP
have agreed that MGM Resorts will sell the developed real property
to MGP for total consideration of approximately $625 million,
which will include the assumption of the approximately $245 million of debt refinanced by MGM Resorts as
described above and the balance through the issuance of operating
partnership units to MGM Resorts based upon MGP's closing price
of $29.38 as of May 25, 2018. In addition, MGM
Resorts has agreed to give MGP a right of first offer with respect
to certain undeveloped land adjacent to the property to the extent
MGM Resorts develops additional gaming facilities and chooses to
sell or transfer the property in the future.
Empire City will be added to the existing Master Lease between
MGM Resorts and MGP, and the annual rent payment to MGP will
increase by $50 million. Consistent with the Master Lease
terms, 90 percent of this rent will be fixed and contractually grow
at 2 percent per year until 2022. The purchase price represents a
cap rate of 8.0%, or a 12.5x EBITDA multiple.
"Today's announcement further illustrates our ability to partner
with MGM Resorts to acquire valuable real estate assets to add to
our portfolio of properties through accretive transactions,"
said James Stewart, CEO of MGM Growth Properties. "This
acquisition will further increase our regional geographic
footprint, giving MGP exposure to the New
York City market, with another high-quality asset that will
create meaningful value to shareholders and provide us with
increased cash flows and growth opportunities."
MGP expects to fund the acquisition of the Empire City real
property and the assumption of related debt with a combination of
existing cash on hand, borrowings under its senior secured
revolving credit facility, and the aforementioned issuance of
operating partnership units to a subsidiary of MGM Resorts.
Empire City sits on a 97-acre property and serves approximately
16 million eligible gaming customers in southern New York. It is located only 15 miles from
Times Square in Manhattan.
Offering gaming, racing, dining, and entertainment, Empire City
features over 5,200 of the latest slots and electronic table games,
multiple dining outlets, and both live and simulcast horse
racing.
BofA Merrill Lynch is acting as exclusive financial advisor to
MGM Resorts in connection with the transaction. PJT Partners LP is
acting as financial advisor to the conflicts committee of the MGP
Board of Directors.
The transactions are expected to close in the first quarter of
2019, subject to regulatory approvals and other customary closing
conditions.
ABOUT MGM RESORTS INTERNATIONAL
MGM Resorts International (NYSE: MGM) is
an S&P 500® global entertainment company with
national and international locations featuring best-in-class hotels
and casinos, state-of-the-art meetings and conference spaces,
incredible live and theatrical entertainment experiences, and an
extensive array of restaurant, nightlife and retail
offerings. MGM Resorts creates immersive, iconic
experiences through its suite of Las Vegas-inspired brands.
The MGM Resorts portfolio encompasses 28 unique hotel
offerings including some of the most recognizable resort brands in
the industry. Expanding throughout the U.S. and around the world,
the company in 2018 opened MGM COTAI in Macau and the
first Bellagio-branded hotel in Shanghai. It also is
developing MGM Springfield in Massachusetts. The 78,000 global
employees of MGM Resorts are proud of their company for
being recognized as one of FORTUNE® Magazine's World's Most Admired
Companies®. For more information visit us
at www.mgmresorts.com.
ABOUT MGM GROWTH PROPERTIES LLC
MGM Growth Properties LLC (NYSE:MGP) is one of the leading
publicly traded real estate investment trusts engaged in the
acquisition, ownership and leasing of large-scale destination
entertainment and leisure resorts, whose diverse amenities include
casino gaming, hotel, convention, dining, entertainment and retail
offerings. MGP currently owns a portfolio of properties, consisting
of 11 premier destination resorts in Las
Vegas and elsewhere across the
United States, and the Park, a dining and entertainment
complex which opened in April 2016.
As of December 31, 2017, these
properties collectively comprise over 27,500 hotel rooms, 2.7
million convention square footage, 100 retail outlets, 200 food and
beverage outlets and 20 entertainment venues. As a growth-oriented
public real estate entity, MGP expects its relationship with MGM
Resorts and other entertainment providers to attractively position
MGP for the acquisition of additional properties across the
entertainment, hospitality and leisure industries that may be
developed in the future. For more information about MGP, visit the
Company's website at http://www.mgmgrowthproperties.com.
Statements in this release that are not historical facts are
"forward-looking" statements and "safe harbor statements" within
the meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and/or uncertainties, including those described
in the Company's public filings with the SEC. The Company has
based forward-looking statements on management's current
expectations and assumptions and not on historical facts. Examples
of these statements include, but are not limited to, the Company's
expectations regarding the closing of the acquisition, the ultimate
amount of the consideration to be paid in debt and equity, and any
benefits to be received as a result of the acquisition, including
expected synergies. These forward-looking statements involve a
number of risks and uncertainties. Among the important factors that
could cause actual results to differ materially from those
indicated in such forward-looking statements include effects of
economic conditions and market conditions in the markets in which
the Company operates and competition with other destination travel
locations throughout the United States and the world, the
design, timing and costs of expansion projects, risks relating to
international operations, permits, licenses, financings, approvals
and other contingencies in connection with growth in new or
existing jurisdictions and additional risks and uncertainties
described in the Company's Form 10-K, Form 10-Q and Form 8-K
reports (including all amendments to those reports). In providing
forward-looking statements, the Company is not undertaking any duty
or obligation to update these statements publicly as a result of
new information, future events or otherwise, except as required by
law. If the Company updates one or more forward-looking statements,
no inference should be drawn that it will make additional updates
with respect to those other forward-looking statements.
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SOURCE MGM Resorts International; MGM Growth Properties LLC