MGM Resorts Pulls Trigger on Mega-REIT

The newly formed MGM Growth Properties REIT recently filed a registration statement for an initial public offering.

By Scott Baltic, Contributing Editor

Las Vegas Strip, Nevada
Las Vegas Strip, Nevada

Las Vegas—MGM Growth Properties LLC, MGM Resorts International’s new real estate subsidiary, filed a registration statement for an initial public offering last week. The MGM Resorts properties that will be under the new entity’s ownership will comprise seven properties on the Las Vegas Strip (six resorts and an 8-acre dining and entertainment complex, The Park, set to open next month) and three regional resorts.

In all, the real estate to be owned by MGM Growth Properties (MGP) will total 24,466 hotel rooms, about 2.5 million square feet of convention space, more than 100 retail outlets, more than 200 food and beverage outlets, and about 20 entertainment venues, according to the U.S. Securities and Exchange Commission (SEC) filing. The properties in question are the Mandalay Bay, Mirage, New York-New York, Monte Carlo, Luxor, Excalibur and The Park, all in Las Vegas, and the MGM Grand Detroit; the Beau Rivage in Biloxi, Miss.; and the Gold Strike in Tunica, Miss.

MGP will lease back all of the properties to MGM Resorts pursuant to a 10-year triple-net master lease agreement that will reportedly also guarantee an initial yearly income of $550 million. The SEC filing pegged the gross book value of the 10 properties at $10 billion. MGM Resorts will retain ownership of a majority of MGP, which will be set up as a REIT.

Shares of MGM Growth Properties are expected to be traded on the NYSE under the symbol MGP.

Renaissance Capital estimated that the quoted amount of $100 million to be raised is “likely a placeholder for an IPO that we estimate could raise $1 billion.”

The IPO’s joint book-runners are BofA Merrill Lynch, J.P. Morgan, Morgan Stanley, Evercore ISI, Barclays, Citigroup, and Deutsche Bank Securities.

The filing left the door open for MGP to expand its real estate portfolio beyond the 10 MGM properties and beyond MGM, too: “We will also actively seek to identify additional entertainment and gaming-related properties for potential acquisition from non-MGM entities” that would be amenable to sale-leasebacks.

Back at the end of October, MGM Resorts announced that it had confidentially submitted a Form S-11 draft registration statement to the SEC regarding the proposed IPO.

Image courtesy of World Wide Gifts via Flickr