VICI to Acquire MGM Growth Properties in a $17.2B Deal

Real estate investment trust VICI Properties has said it is acquiring MGM Growth Properties in a whopping $17.2 billion deal. The announcement that came Wednesday could make the casino owner the largest landowner on the Las Vegas Strip.

MGM Resorts International, which owns the majority stake in MGM Growth Properties, will get nearly $4.4 billion in cash in the deal.

The $17.2 billion deal also includes $5.7 billion in debt.

MGM Resorts has been selling off its real estate assets lately, and the casino operator spun off MGM Growth Properties in 2016, whose portfolio includes MGM Grand Las Vegas and Mandalay Bay.

Shares of MGM Growth rose nearly 10% in premarket trading, while MGM Resorts surged 5%, and VICI dipped nearly 1%.

Why Did MGM Resorts Sell MGM Growth?

The stock-for-stock deal includes $5.7 billion of debt and will give MGM Resorts $4.4 billion for its stake in MGM Growth. It’s a part of the global hospitality and entertainment company’s ‘asset light’ strategy to use the proceeds in areas as sports betting and casino development in Japan.

In July, MGM Resorts announced it would acquire the remaining 50% stake in its joint venture CityCenter complex in order to dispose of two properties within the complex to Blackstone for $3.89 billion.

MGM Resorts Chief Executive Officer Bill Hornbuckle said the company remains focused on pursuing growth opportunities in its core business, with the crucial financial flexibility to continue to deploy capital to maximize shareholder value.

MGM Growth owns properties including 12 resorts in Las Vegas and elsewhere in the country.

VICI to Become America’s Largest Owner of Casino Properties

When VICI was formed in 2017 as a spin-off from Caesars Entertainment Corporation, it had only one tenant: Caesars. From an incidental entity that was created to help Caesars emerge from bankruptcy, VICI has turned out to be the nation’s biggest real estate investment company specializing in casino properties.

Upon completion of the merger with MGM Growth, VICI is expected to have an enterprise value of $45 billion, making it America’s largest owner of experimental real estate, the company said.

Overall, VICI will acquire 15 entertainment properties in the mega-deal.

The real estate investment trust recently announced a deal to buy the Venetian, Palazzo, and Sands Expo and Convention Center for $4 billion.

“We’re acquiring what we think is the top-in-class experimental real estate portfolio in the country,” said VICI’s Chief Executive Edward Pitoniak in a statement.

What Will VICI DO With MGM Growth?

VICI plans to redeem a majority of the MGM Growth operating partnership units held by MGM Resorts for a fixed exchanged ratio price of $43 each. The investment company will acquire the rest in a stock-for-stock transaction.

VICI’s portfolio consists of as many as 28 gaming facilities and nearly 17,800 hotel rooms and over 200 restaurants, bars, nightclubs, and sportsbooks.

MGM Resorts will own an almost 1% stake – or worth $370 million – in the VICI operating partnership.

The deal is likely to close in the first half of 2022, according to the companies.