MGM Resort’s IPO REIT debuts

MGM Resort has launched a controlled Real Estate Investment Trust – REIT (MGM Growth Properties). According to “Seeking Alpha,” an online investment research platform, “the REIT is essentially a nifty piece of financial engineering, superior in concept to other hotel/gaming/REITs.”
Interviewed by the Times in November 2015, MGM Resorts chairman and CEO Jim Murren explained that the REIT would be a way for the company to shift casino assets and debt to the new property company, and then lease the properties back from the trust.
“We own over 700 acres of land on the prized Las Vegas Boulevard, and it has been a really rewarding but complicated exercise to conclude how best to allow investors to realize the value of this untapped, unlocked potential.  We decided early on that a spin-off is not a good idea.  A spin-off would be if we had taken our resorts and spun them [off], or given them to shareholders, or sold them to another entity that we did not control and in some cases, would not even manage. So instead, we came up with the structure of a company that can simply move many of our resorts into a subsidiary of MGM,” Murren said.
MGM Growth Properties prices its IPO at USD21 per share. The pricing is on the high end of the expected range. The new real estate firm will raise $1.05 billion in the offering at the NY exchange. MGM Resorts holds a 76 percent stake in MGM Growth Properties.