MGM Resorts and MGM Growth Properties Announce Redemption of $700 Million Partnership Units
MGM Resorts had $700 million as part of its agreement with MGP to exchange $1.4 billion of the MGP Operating Partnership units owned by MGM Resorts for cash by February 2022.
MGM Resorts Left with 53% Stake in MGM Growth Properties
On Wednesday, MGM Resorts announced it has reduced its ownership stake in its real estate investment trust MGM Growth Properties (MGP), adding $700 million in cash to its balance sheet, which corresponds to 23.5 million of MGM Resorts‘ operating partnership units. This is the remaining amount part of the deal with MGP to acquire $1.4 billion of MGM Resorts‘ units in exchange for cash.
“Today’s announcement reflects our continued focus on enhancing our balance sheet to strengthen our financial flexibility.”
Bill Hornbuckle, CEO and president of MGM Resorts
Hornbuckle added that the redemption of rights combined with the recent offering of senior notes will help the company continue working towards its strategic goals within the context of the ongoing health crisis and its consequences on MGM Resorts’ properties across the United States.
Following the repurchase, the casino company’s ownership stake in MGM Growth Properties has been reduced to 53%. MGM Growth Properties has a total of 15 properties on its portfolio, 8 of which are located on the Las Vegas Strip. A few weeks ago, MGM Resorts announced reduced operating hours and closures of The Mirage and Mandalay Bay casinos as the Las Vegas Strip reported an increased number of Covid-19 cases.
The $700 million of proceeds from this redemption will be allocated for general corporate purposes, the company said in a press release. As of 30 September 2020, following the redemption and the prior bond offering, MGM Resorts’s liquidity amounts to around $5.9 billion, not to take into account MGM China and MGP.
MGM Resorts Shows Signs of Recovery in 3Q 2020 Results
Commenting on the company’s third-quarter results, MGM Resorts CEO said that the period under question presented signs of stability and recovery mostly due to the improved US Regional Operations. Hornbuckle emphasized that all markets reported stronger figures and several of the operator’s regional properties posted adjusted property EBITDAR records.
Consolidated net revenues went down by 66% to $1.1 billion in the third quarter of 2020 compared to the same period last year, given Covid-19 mitigation measures. MGM Resorts also suffered a consolidated operating loss of $495 million compared to a consolidated operating income of $238 million in 3Q2019.
Net revenues of Las Vegas Strip resorts plunged by 68% to $481 million in the third quarter compared to last year due to pandemic-related operational restrictions and limited operations at The Mirage and Park MGM.
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