On MGM Resorts International’s latest earnings call this week, CEO Bill Hornbuckle revealed that MGM Resorts International was in the initial stages of selling The Mirage’s operations. The Mirage, which opened on the Las Vegas Strip in 1989, has been an emblematic property of the Vegas action since then. There were no deadlines or potential buyers for the Mirage sale.
MGM Restructures Portfolio of Operations
MGM Resorts has, like many casino and hotel operators, been selling some of its assets, including its real estate holdings, to concentrate on new business areas, such as entertainment, sports betting and a Japanese casino development.
In a letter sent to all MGM employees, Hornbuckle explained, “We are committed to continuing to maintain and develop our existing Las Vegas portfolio with no plans for other changes on the Strip at this time.”
According to the Las Vegas-based company, Mirage has not yet been sold and did not disclose any potential buyers. MGM’s local portfolio includes Bellagio, MGM Grand, Aria and Park MGM. Elsewhere in the US, MGM was recently authorized to sell its MGM Springfield real estate to MGM Growth Properties, a real estate investment trust (REIT) the operator previously owned.
REITs Add Bulk to Portfolios
MGM Growth is a publicly-traded REIT that MGM Resorts spun out in 2016. It still controls the Mirage’s underlying real property, but Vici Properties Inc. will acquire the casino real estate owner for $17.2 billion. This includes $5.7 billion in debt. MGM Growth owns the Las Vegas Strip properties Mandalay Bay and Luxor as well as Excalibur, Luxor, Excalibur, and MGM Grand Las Vegas.
MGM Resorts recently completed transactions that allowed it to separate the ownership of the property and the casino operations.
MGM Resorts closed in September a deal to acquire full ownership of CityCenter on the Las Vegas Strip. This complex agreement allowed MGM Resorts to both sell the realty and still earn all the revenue from the enormous Strip casino. The company also agreed to purchase The Cosmopolitan of Las Vegas operations from Blackstone for $5.65 Billion. The property will be acquired by a Blackstone REIT.
MGM Gains in Third Quarter
MGM Resorts reported its third-quarter results on Wednesday. The company saw a swing to profit this year, despite revenue rebounding from leisure and travel activities that were stopped last year due to the pandemic. The quarter’s consolidated net revenue increased more than twice from last year to $2.71 billion. It posted a net profit of $1.4 billion compared to a loss of $535 million a year ago.
According to the company, the pandemic had severely affected the third quarter 2020 results. Some properties were closed, while others were subject to operational restrictions. The removal of restrictions mandated and an increase in travel contributed to the rise in revenue in the third quarter.
The company reported that net revenue from Las Vegas Strip resorts grew 187% to $1.4 billion in the three months to September, while regional revenue jumped 66%, to $925 million.