Cherokee Nation Entertainment purchases MGM Resorts property in Tunica
Located in Mississippi, the Gold Strike Tunica will be purchased for $450m.
Cherokee Nation Entertainment Gaming Holdings has acquired the Gold Strike Tunica located in Tunica, Mississippi. The property has been operated by MGM Resorts International since its purchase in 2005.
This location was one of two resorts owned by MGM Resorts in Mississippi. The Gold Strike, however, is technically owned by real estate investment trust VICI Properties Inc. and operated by MGM Resorts.
To complete the sale, the trust was asked to amend the lease agreement with Cherokee Nation Entertainment, which includes reducing the rent by $40m a year. MGM expects the net cash proceeds after taxes and the estimated fees to be around $350m.
MGM Resorts President and CEO Bill Hornbuckle said: “Gold Strike is a wonderful property with a bright future ahead.”
Hornbuckle continued: “Strategically, though, we decided to narrow our focus in Mississippi to a single resort – Beau Rivage – and dedicate more of our time and resources towards continuing to drive success at that leading, world-class resort and casino.”
MGM Resorts’ Chief Financial Officer and Treasurer Jonathan Halkyard said: “We appreciate VICI, as the real estate owner of Gold Strike, working constructively with CNE to facilitate a new lease agreement.”
For the 12 months that ended on December 31, MGM Resorts reported that Gold Strike Tunica reported a net income of $81.1m and adjusted property cash flow of $115m.
Cherokee Nation Entertainment is the gaming and hospitality company of the Cherokee Indian tribe. Currently, the company owns and operates Hard Rock Hotel & Casino Tulsa and nine tribal casinos.
Cherokee Nation Businesses (CNB) is the tribally owned holding company of the largest Indian nation in the United States. The businesses operated by CNB employ 11,000 people and own companies in various industries.
MGM Resorts is currently in the midst of multiple property transactions, including the purchase of The Cosmopolitan of Las Vegas.
Carlo Santarelli is a gaming industry analyst in the New York office of Deutsche Bank. Santarelli stated that he views the Gold Strike Tunica transaction as “largely equity value-neutral.”
The deal is anticipated to close by the first half of 2023 and is subject to regulatory approvals.
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