New York City and Las Vegas — VICI Properties Inc. (NYSE: VICI), MGM Growth Properties LLC (NYSE: MGP) and MGM Resorts International (NYSE: MGM) have entered into a definitive agreement under which VICI will acquire MGP for a total consideration of $17.2 billion, including the assumption of approximately $5.7 billion of debt. MGM Resorts is the controlling shareholder of MGP.
Upon completion of the merger, VICI will have an estimated enterprise value of $45 billion representing 43 properties in 15 states. The deal will add 15 Class A entertainment resort properties across the country to VICI’s portfolio, comprising 33,000 hotel rooms; 3.6 million square feet of meeting and convention space; and hundreds of food, beverage and entertainment venues. The deal represents an estimated 30 to 40 percent discount to replacement cost.
The move will solidify VICI as the largest experiential net-lease REIT, while also advancing its goals of portfolio enhancement and diversification, according to the company. Following the transaction, approximately 55 percent of VICI’s rent base will be generated by market-leading regional properties, while the remaining 45 percent will come from properties on the Las Vegas Strip.
Simultaneous with the closing of the transaction, VICI will enter into an amended triple-net master lease with MGM Resorts. The lease will have an initial total annual rent of $860 million, including MGP’s pending acquisition of MGM Springfield, and an initial term of 25 years with three 10-year renewal options.
Additionally, VICI will retain MGP’s existing 50.1 percent ownership stake in the joint venture with Blackstone Real Estate Income Trust Inc., which owns the real estate assets of MGM Grand Las Vegas and Mandalay Bay.
The board of directors of each of MGM, MGP and VICI approved the transaction, which is expected to close in the first half of 2022.
“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,” says Ed Pitoniak, CEO of VICI.
Citing improved diversification, increased scale and lower cost of capital, James Stewart, CEO of MGP, says that combining the portfolios into one company will generate the best results for the shareholders of both companies.
“This transaction unlocks the significant real estate value of our assets, enhances our financial flexibility and strengthens our ability to execute key growth initiatives,” adds Bill Hornbuckle, CEO and president of MGM Resorts.
VICI has secured a $9.3 billion financing commitment from Morgan Stanley, J.P. Morgan and Citibank for the deal.
Based in New York City, VICI owns one of the largest portfolios of gaming, hospitality and entertainment destinations, including Caesars Palace. VICI’s portfolio consists of 28 gaming facilities comprising more than 47 million square feet with roughly 17,800 hotel rooms and more than 200 restaurants, bars, nightclubs and sportsbooks. VICI’s stock price opened at $30.05 per share Wednesday, Aug. 4, up from $22.70 per share one year ago.
MGP, a publicly traded REIT, acquires, owns and leases large-scale destination entertainment and leisure resorts. MGP and its joint venture partner currently own a portfolio of 12 properties consisting of destination resorts in Las Vegas and elsewhere in the United States. The stock price for MGP opened at $39.70 per share Wednesday, Aug. 4, up from $27.48 per share one year ago.
— Kristin Hiller