MGM Growth Properties reports second quarter results
Net income up slightly in last earnings release before company is acquired by VICI Properties.
MGM Growth Properties LLC on Friday reported financial results for the quarter ending June 30.
Net income attributable to MGP Class A shareholders for the quarter was $43.9m, or $0.28 per dilutive share. In Q2 2020 net income was slightly more than $41.0m.
The company said financial highlights for Q2 2021 included consolidated rental revenue of $188.3m, consolidated net income of $73.7m, or $0.28 per diluted Operating Partnership unit, and consolidated funds from operations (FFO) of $142.0m, or $0.53 per diluted Operating Partnership unit.
The company said in the just completed quarter it had consolidated adjusted EBITDAof $244.3m, general and administrative expenses of $4.3m, and income from unconsolidated affiliate of $25.3m.
As of June 30, 2021, there were approximately 268m Operating Partnership units outstanding in the Operating Partnership, of which MGM owned approximately 111.4m, or 41.6%, while MGP owns the remaining 58.4%.
On May 11, the company entered into an agreement to acquire the real estate assets of MGM Springfield from MGM Resorts International for $400m in cash. MGM Springfield will be added to the company’s existing master lease with MGM and the annual rent payment will increase by $30m, $27m of which will be fixed and contractually grow at 2% per year with escalators subject to the tenant meeting an adjusted net revenue to rent ratio.
The transaction is expected to close in the fourth quarter of 2021, upon receipt of interim regulatory approvals from the Massachusetts Gaming Commission and the satisfaction of other customary closing conditions.
On August 4, the company and the Operating Partnership entered into an agreement with VICI Properties, Inc., and MGM, whereby VICI will acquire MGP in a stock-for-stock transaction.
Pursuant to the agreement, MGP Class A shareholders will have the right to receive 1.366 shares of newly issued VICI stock in exchange for each MGP Class A share outstanding and MGM will have the right to receive 1.366 units of the new VICI operating partnership in exchange for each Operating Partnership unit held by MGM.
The parties said the fixed exchange ratio represents an agreed upon price of $43 per share of MGP Class A share to the five-day volume weighted average price of VICI stock as of the close of business on July 30, 2021.
Subsequent to the exchange, VICI OP will redeem the majority of MGM’s VICI OP units for cash consideration of $4.4 billion, with MGM retaining approximately 12.2m VICI OP units.
MGP’s Class B share that is held by MGM will be cancelled.
The transaction is expected to close in the first half of 2022, subject to customary closing conditions, regulatory approvals, and approval by VICI stockholders.
“Since our IPO in 2016, MGP completed more than $7 billion of real estate transactions that grew our portfolio of premier entertainment assets, including introducing innovative transaction structures to the gaming REIT universe,” James Stewart, CEO of MGP, said in a statement. “As a result of our completed and announced transactions, MGP’s pro rata rental revenue has nearly doubled from $550m at IPO to approximately $1.0 billion, our annualized dividends per share increased 44%, and our total shareholder return has more than doubled. Following the announced strategic VICI Transaction, MGP shareholders will benefit from the collective strengths of both companies.”
MGM Growth Properties is a publicly traded real estate investment trust engaged in the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts. Its holdings 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 resorts in Las Vegas and elsewhere across the United States, including MGM Northfield Park in Northfield, Ohio, Empire Resort Casino in Yonkers, N.Y., and The Park in Las Vegas.
As of December 31, 2020, the company’s resorts collectively comprise approximately 32,400 hotel rooms, 1.5m casino square footage, and 3.6m convention square footage.
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