MGM Resorts redeems $700 million from real estate trust

MGM Resorts International has announced the redemption of $700 million (5.6 billion patacas) worth of “operating partnership units” from its real estate trust, MGM Growth Properties (MGP). The move comes as the Las Vegas-based casino operator seeks to shore up its financial liquidity during the Covid-19 pandemic.
Under its agreement with MGP, MGM Resorts can purchase up to another $700 million through February 2022 from a total of $1.4 billion made available to the company.
Upon completion of the transaction, MGM Resorts will have approximately 56.7% economic ownership in MGP.
According to a press statement, MGM Resorts intends to use the $700 million in proceeds to repay amounts drawn under its revolving credit facility. As of March 31, 2020, excluding MGM China and MGP, and after giving effect to the redemption and MGM Resorts’ recent bond offering, MGM Resorts had liquidity of approximately $5.3 billion.
“[This] announcement is another example of our efforts to bolster our already strong liquidity position during the Covid-19 pandemic,” said Bill Hornbuckle, acting CEO and President of MGM Resorts. “As we gear up to reopen and safely welcome our guests once again at our properties across the U.S., maintaining a strong balance sheet and preserving our financial flexibility remain critical pillars of long-term success.
“This transaction both strengthens MGM’s balance sheet and delivers significant accretion to MGP. We continue to see significant value in our MGP stake and are optimistic that future redemptions will occur at higher prices.” DB