- Creates
America’s Largest Owner of Experiential Real Estate with an
Enterprise Value of Approximately $45 Billion -
- Transaction
Expected to be Accretive to AFFO per Share Immediately Upon
Closing -
- Positions
Balance Sheet for Investment Grade Status -
- Significantly Diversifies
Tenant Base While Enhancing Portfolio Quality, Size and Scale to
Drive Future Growth and Value Creation -
- VICI Announces 9.1%
Dividend Increase -
- Conference
Call to Discuss Transaction to be Held at 8:00am ET
-
VICI Properties Inc. (NYSE: VICI) (“VICI Properties” or “VICI”),
MGM Growth Properties LLC (NYSE: MGP) (“MGP”) and MGM Resorts
International (NYSE: MGM) (“MGM Resorts”), MGP’s controlling
shareholder, announced today that they have entered into a
definitive agreement (the “Master Transaction Agreement”) pursuant
to which VICI Properties will acquire MGP for total consideration
of $17.2 billion, inclusive of the assumption of approximately $5.7
billion of debt. Upon completion of the merger, VICI will have an
estimated enterprise value of $45 billion, firmly solidifying
VICI’s position as the largest experiential net lease REIT while
also advancing VICI’s strategic goals of portfolio enhancement and
diversification.
Under the terms of the Master Transaction Agreement, MGP Class A
shareholders will receive 1.366 shares of newly issued VICI stock
in exchange for each Class A share of MGP. The fixed exchange ratio
represents an agreed upon price of $43.00 per share of MGP Class A
shares based on VICI’s trailing 5-day volume weighted average price
of $31.47 as of July 30, 2021 and represents a 15.9% premium to
MGP’s closing stock price on August 3, 2021. MGM Resorts will
receive $43.00 per unit in cash for the redemption of the majority
of its MGP Operating Partnership units (“OP Units”) that it holds
for total cash consideration of approximately $4.4 billion and will
also retain approximately 12 million units in a newly formed
operating partnership of VICI Properties. The MGP Class B share
that is held by MGM Resorts will be cancelled and cease to
exist.
Simultaneous with the closing of the transaction, VICI
Properties will enter into an amended and restated triple-net
master lease with MGM Resorts. The lease will have an initial total
annual rent of $860.0 million, inclusive of MGP’s pending
acquisition of MGM Springfield, and an initial term of 25 years,
with three 10-year tenant renewal options. Rent under the amended
and restated master lease will escalate at a rate of 2.0% per annum
for the first 10 years and thereafter at the greater of 2.0% per
annum or the consumer price index (“CPI”), subject to a 3.0% cap.
Additionally, VICI will retain MGP’s existing 50.1% ownership stake
in the joint venture with Blackstone Real Estate Income Trust, Inc.
(“BREIT JV”), which owns the real estate assets of MGM Grand Las
Vegas and Mandalay Bay. The BREIT JV lease will remain unchanged
and provides for current annual base rent of approximately $298
million and an initial term of 30 years, with two 10-year tenant
renewal options. Rent under the BREIT JV lease escalates at a rate
of 2.0% per annum for the first 15 years and thereafter at the
greater of 2.0% per annum or CPI, subject to a 3.0% cap. On a
combined basis, the MGM master lease and BREIT JV lease will
deliver initial attributable rent to VICI of approximately $1.0
billion.
The transaction was approved by the Board of Directors of each
of MGM Resorts, MGP and VICI Properties (and, in the case of MGP,
the Conflicts Committee). The parties expect the transaction to
close in the first half of 2022, subject to customary closing
conditions, regulatory approvals and approval by the stockholders
of VICI Properties. The VICI Properties Board of Directors and
management team will remain unchanged.
Strategic Merits
- Immediately accretive to AFFO per share: The transaction
extends VICI Properties’ track record of consistent value creation
since its formation in 2017 and is expected to provide immediate,
high quality, accretion to AFFO per share upon closing
- Enhances portfolio quality, size, and scale at significant
discount to replacement cost: VICI Properties will add 15 Class
A entertainment resort properties spread across 9 regions
comprising 33,000 hotel rooms, 3.6 million square feet of meeting
and convention space and hundreds of food, beverage and
entertainment venues to its portfolio at an estimated 30% to 40%
discount to replacement cost. Following the transaction,
approximately 55% of VICI’s rent base will be generated by
market-leading Regional properties while the remaining 45% will
come from properties on the Las Vegas Strip
- Significantly diversifies tenant base: Upon closing,
VICI Properties’ top tenant concentration will be reduced to ~41%
(from 84% currently) while 84% of VICI Properties’ rent roll will
be derived from S&P 500 tenants with a track record of having
paid 100% of rent, on time and in cash throughout the COVID-19
pandemic
- Adds a global leader in hospitality and entertainment to
tenant roster: The transaction adds a 55-year master lease,
inclusive of tenant renewal options, with inflation protection
through a CPI kicker and a corporate guarantee from MGM Resorts, an
S&P 500 global entertainment company with national and
international locations
- Bolsters retained cash flow and strengthens ability to fund
accretive growth: Following the acquisition of MGP and the
pending acquisition of the real estate of the Venetian Resort and
Sands Expo Center, VICI Properties is expected to retain
approximately $500 million of annualized free cash flow, after
dividend payments, which may be deployed toward highly attractive
growth opportunities across gaming and other experiential
sectors
- Positions balance sheet for investment grade status: The
transaction will position VICI Properties’ balance sheet for
investment grade status as VICI eliminates all of its existing
secured debt and establishes an unencumbered asset pool
- Amplified index demand and trading liquidity: The
transaction unlocks significant new index eligibility for MGP Class
A shareholders while allowing investors in the combined company to
benefit from index rebalancing, given the significantly larger
size, and strong positioning for S&P 500 inclusion and enhanced
trading liquidity
- Lower cost of capital given larger scale, diversity,
improved credit profile and enhanced index inclusion: With
improving cost of capital and retained cash flow, VICI is
positioned to continue to grow its portfolio accretively in both
gaming and non-gaming sectors
Additional details can be found in the Transaction Overview
presentation posted on the VICI Properties website.
“Through this transformative strategic acquisition, we are
merging MGP’s best-in-class portfolio into VICI’s best-in-class
management and governance platform, creating the premier gaming,
entertainment and leisure REIT in America,” said Ed Pitoniak, CEO
of VICI Properties. “We want to thank James Stewart, Andy Chien and
the MGP Board for building and stewarding a portfolio of such
exceptional quality, and going forward we are honored to become a
key real estate and capital partner for Bill Hornbuckle and the MGM
Resorts management team and Board. We look forward to supporting
their strategic growth objectives for decades to come.”
“After many years of growing both of our portfolios, combining
them into one company will generate the best results for the
shareholders of both companies,” said James Stewart, CEO of MGP.
“The combined company will create a superior platform for
delivering exceptional returns to MGP’s existing shareholders, by
improving diversification, increasing scale, lowering cost of
capital and benefiting from future growth.”
Bill Hornbuckle, CEO and President of MGM Resorts, said, “This
transaction unlocks the significant real estate value of our
assets, enhances our financial flexibility and strengthens our
ability to execute key growth initiatives. We look forward to our
long-term partnership with VICI.”
Financing
VICI Properties has secured a $9.3 billion financing commitment
from Morgan Stanley, J.P. Morgan and Citibank.
Advisors
Morgan Stanley & Co LLC is acting as lead strategic and
financial advisor to VICI Properties on the transaction. Citigroup
Global Markets Inc. is also acting as financial advisor to VICI
Properties. Hogan Lovells US LLP and Kramer Levin Naftalis &
Frankel LLP are serving as legal advisors to VICI Properties. Baker
Botts LLP is serving as legal advisor to MGP. Evercore is acting as
financial advisor and Potter Anderson & Corroon LLP is serving
as legal advisor to the Conflicts Committee of the MGP Board of
Directors. J.P. Morgan is acting as financial advisor and Weil,
Gotshal & Manges LLP is serving as legal advisor to MGM
Resorts.
Dividend
VICI Properties also announced today that its Board of Directors
has declared a regular quarterly cash dividend of $0.36 per share
of common stock, representing an annualized amount of $1.44 per
share and a 9.1% increase from the current dividend rate. The
dividend will be payable on October 7, 2021 to stockholders of
record as of the close of business on September 24, 2021.
Conference Call Information
VICI Properties will host a conference call and audio webcast on
Wednesday, August 4, 2021 at 8:00 a.m. Eastern Time (ET). The
conference call can be accessed by dialing 844-200-6205 (domestic)
or +44 208 0682 558 (international) and entering conference ID
582076. An audio replay of the conference call will be available
until midnight ET on August 11, 2021 and can be accessed by dialing
929-458-6194 (domestic) or +44 204 525 0658 (international) and
entering the passcode 840028.
About VICI Properties
VICI Properties Inc. is an experiential real estate investment
trust that owns one of the largest portfolios of market-leading
gaming, hospitality and entertainment destinations, including the
world-renowned Caesars Palace. VICI Properties’ national,
geographically diverse portfolio consists of 28 gaming facilities
comprising over 47 million square feet and features approximately
17,800 hotel rooms and more than 200 restaurants, bars, nightclubs
and sportsbooks. Its properties are leased to industry leading
gaming and hospitality operators, including Caesars Entertainment,
Inc., Century Casinos, Inc., Hard Rock International Inc., JACK
Entertainment LLC and Penn National Gaming, Inc. VICI Properties
also has an investment in the Chelsea Piers, New York facility and
owns four championship golf courses and 34 acres of undeveloped
land adjacent to the Las Vegas Strip. VICI Properties’ strategy is
to create the nation’s highest quality and most productive
experiential real estate portfolio. For additional information,
please visit www.viciproperties.com.
About MGM Growth Properties
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, together with its joint venture, currently owns a
portfolio of properties, consisting of 12 premier destination
resorts in Las Vegas and elsewhere across the United States, MGM
Northfield Park in Northfield, OH, Empire Resort Casino in Yonkers,
NY, as well as a retail and entertainment district, The Park in Las
Vegas. As of December 31, 2020, MGP's portfolio of destination
resorts, the Park, Empire Resort Casino, and MGM Northfield Park
collectively comprised approximately 32,400 hotel rooms, 1.5
million casino square footage, and 3.6 million convention square
footage.
About MGM Resorts
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 31 unique hotel and gaming
destinations globally, including some of the most recognizable
resort brands in the industry. The Company's 50/50 venture, BetMGM,
LLC, offers U.S. sports betting and online gaming through
market-leading brands, including BetMGM and partypoker. The Company
is currently pursuing targeted expansion in Asia through the
integrated resort opportunity in Japan. Through its "Focused on
What Matters: Embracing Humanity and Protecting the Planet"
philosophy, MGM Resorts commits to creating a more sustainable
future, while striving to make a bigger difference in the lives of
its employees, guests, and in the communities where it operates.
The global employees of MGM Resorts are proud of their company for
being recognized as one of FORTUNE® Magazine's World's Most Admired
Companies®.
Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, with respect to the proposed transaction described herein,
including statements regarding the anticipated benefits of the
transaction, the anticipated timing of the transaction and the
markets of each company. These forward-looking statements generally
are identified by the words “anticipates,” “assumes,” “believes,”
“estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,”
“strategy,” “future,” “opportunity,” “plan,” “may,” “should,”
“will,” “would” and similar expressions. Forward-looking statements
are predictions, projections and other statements about future
events that are based on current expectations and assumptions and,
as a result, are subject to risks and uncertainties.
Currently, one of the most significant factors that could cause
actual outcomes to differ materially from our forward-looking
statements is the impact of the COVID-19 pandemic on VICI
Properties’, MGP’s and each company’s respective tenants’ financial
condition, results of operations, cash flows and performance. The
extent to which the COVID-19 pandemic continues to adversely affect
each company’s tenants, and ultimately impacts each company’s
business and financial condition, depends on future developments
which cannot be predicted with confidence. Many additional factors
could cause actual future events and results to differ materially
from the forward-looking statements, including but not limited to:
(i) the possibility that VICI stockholders do not approve the
proposed transaction or that other conditions to the closing of the
proposed transaction are not satisfied or waived at all or on the
anticipated timeline, (ii) failure to realize the anticipated
benefits of the proposed transaction, including as a result of
delay in completing the proposed transaction, (iii) the risk that
MGP’s business will not be integrated successfully or that such
integration may be more difficult, time-consuming or costly than
expected, (iv) unexpected costs or liabilities relating to the
proposed transaction, (v) potential litigation relating to the
proposed transaction that could be instituted against VICI
Properties or MGP or their respective directors or officers and the
resulting expense or delay, (vi) the risk that disruptions caused
by or relating to the proposed transaction will harm VICI’s or
MGP’s business, including current plans and operations, (vii) the
ability of VICI Properties or MGP to retain and hire key personnel,
(viii) potential adverse reactions by tenants or other business
partners or changes to business relationships, including joint
ventures, resulting from the announcement or completion of the
proposed transaction, (ix) risks relating to the market value of
VICI common stock to be issued in the proposed transaction, (x)
risks associated with third-party contracts containing consent
and/or other provisions that may be triggered by the proposed
transaction, (xi) the impact of public health crises, such as
pandemics (including the COVID-19 pandemic) and epidemics and any
related company or government policies and actions intended to
protect the health and safety of individuals or government policies
or actions intended to maintain the functioning of national or
global economies and markets, (xii) general economic and market
developments and conditions, (xiii) restrictions during the
pendency of the proposed transaction or thereafter that may impact
VICI’s or MGP’s ability to pursue certain business opportunities or
strategic transactions, (xiv) either company’s ability to maintain
its status as a real estate investment trust for U.S. federal
income tax purposes, and (xv) the occurrence of any event, change
or other circumstances that could give rise to the termination of
the Master Transaction Agreement relating to the proposed
transaction. The foregoing list of factors is not exhaustive. You
should carefully consider the foregoing factors and the other risks
and uncertainties that affect the businesses of VICI and MGP
described in the “Risk Factors” section of their respective Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and other
documents filed by either of them from time to time with the SEC.
These filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Investors are cautioned to interpret many of the risks identified
in the “Risk Factors” section of these filings as being heightened
as a result of the ongoing and numerous adverse impacts of the
COVID-19 pandemic. Forward-looking statements speak only as of the
date they are made. Readers are cautioned not to put undue reliance
on forward-looking statements, and VICI and MGP assume no
obligation and do not intend to update or revise these
forward-looking statements, whether as a result of new information,
future events or otherwise. Neither VICI Properties nor MGP gives
any assurance that either company will achieve its
expectations.
Additional Information about the Proposed Transaction and
Where to Find It
In connection with the merger, VICI Properties intends to file
with the SEC a registration statement on Form S-4 that will include
a proxy statement of VICI Properties and that also constitutes a
prospectus of VICI Properties and information statement of MGP.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS/INFORMATION STATEMENT AND OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Investors and security holders may obtain free copies
of these documents, when they become available, and other documents
filed with the SEC at www.sec.gov. In addition, investors and
security holders may obtain free copies of the documents filed with
the SEC by VICI Properties by contacting VICI Properties Investor
Relations. Investors and security holders may obtain free copies of
the documents filed with the SEC by MGP by contacting MGP Investor
Relations.
Participants in the Solicitation
VICI Properties and its directors and executive officers and
other members of management and employees may be deemed to be
participants in the solicitation of proxies in respect of the
proposed transaction. Information about the directors and executive
officers of VICI Properties is available in VICI Properties’ proxy
statement for its 2021 Annual Meeting of Stockholders, which was
filed with the SEC on March 15, 2021. Other information regarding
the participants in the proxy solicitation and a description of
their direct and indirect interests, by security holdings or
otherwise, will be contained in the definitive proxy
statement/prospectus/information statement and other relevant
materials filed with the SEC regarding the merger when they become
available. Investors should read the definitive proxy statement
/prospectus/information statement carefully when it becomes
available before making any voting or investment decisions. You may
obtain free copies of these documents from VICI Properties using
the sources indicated above.
No Offer or Solicitation
This communication and the information contained herein shall
not constitute an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the U.S. Securities Act of 1933, as
amended.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210804005523/en/
Investor and Media VICI Properties:
Investors@viciproperties.com (646) 949-4631 Or David Kieske EVP,
Chief Financial Officer DKieske@viciproperties.com
Danny Valoy Vice President, Finance
DValoy@viciproperties.com
MGP: News Media (702) 669-1480 or media@mgpreit.com
Investment Community ANDY H. CHIEN Chief Financial Officer MGM
Growth Properties LLC (702) 669-1470
MGM Resorts: News Media BRIAN AHERN Director of Corporate
Media Relations media@mgmresorts.com
Investment Community CATHERINE PARK Executive Director of
Investor Relations cpark@mgmresorts.com
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