U.S.-based casino operator MGM Resorts International says it has earned US$700-million worth of “operating partnership units” from its affiliated real estate investment trust, MGM Growth Properties LLC (MGP). MGM Resorts has until February 2022 to cash out on another US$700-million worth of such units under its agreement with its REIT, according to a Monday press release.
MGM Resorts stated it intends to use the US$700 million in proceeds to repay amounts drawn under its revolving credit facility.
“Today’s announcement is another example of our efforts to bolster our already-strong liquidity position during the Covid-19 pandemic,” said Bill Hornbuckle, acting chief executive and president of MGM Resorts, in prepared remarks.
“As we gear up to reopen and safely welcome our guests once again at our properties across the U.S., maintaining a strong balance sheet and preserving our financial flexibility remain critical pillars of long-term success,” stated Mr Hornbuckle.
He added: “This transaction both strengthens MGM’s balance sheet and delivers significant accretion to MGP. We continue to see significant value in our MGP stake and are optimistic that future redemptions will occur at higher prices.”
MGP is a publicly-traded REIT of which MGM Resorts is the majority owner. The former owns several real estate assets in the U.S., including iconic casino hotel properties operated by MGM Resorts. The latter is the parent company of Macau casino operator MGM China Holdings Ltd.
As of March 31, excluding MGM China and MGP, and after giving effect to the redemption and the group’s recent bond offering, MGM Resorts had liquidity of approximately US$5.3 billion.
Upon completion of the transaction, MGM Resorts will still control approximately 172 million operating partnership units, representing a 56.7 percent economic ownership in MGP.
MGM Resorts recorded consolidated net revenue of US$2.3 billion in the first quarter of 2020, down 29 percent from the prior-year period.
Net income attributable to MGM Resorts has reached US$807 million in the first three months this year, compared with US$31 million in the prior-year quarter. Such increase was primarily driven by a US$1.5 billion net gain related to the MGM Grand Las Vegas/Mandalay Bay real estate transaction, according to the firm.
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Amount that each Macau casino operator paid for the circa six-month extension of their respective contract