MGM Resorts International and MGM Growth Properties (MGP) announced that they have entered into a definitive agreement whereby MGP will purchase the real estate assets associated with MGM Springfield in Western Massachusetts.
MGM Resorts will lease the property from MGP and continue to operate it following the consummation of the transaction, with no expected change to its employees, vendors, customers, and the community.
MGP will pay total consideration of approximately $400 million in cash (which may include cash on hand or cash from financings, including borrowings under MGP's revolving credit facility).
MGM Springfield will be added to the existing Master Lease between MGM Resorts and MGP, and the rent payment to MGP will increase by $30 million, of which $27 million will be base rent and $3 million will be percentage rent. The sale is expected to close in the fourth quarter of 2021, subject to regulatory approvals and other customary closing conditions.
The CEO and President of MGM Resorts Bill Hornbuckle, said: "We are pleased to announce today's transaction with MGM Growth Properties, which we believe serves the best interests of the shareholders of both companies and further advances our asset-light commitment. MGM Springfield has exhibited strong financial performance as it emerges from the pandemic, and the property delivered record Adjusted Property EBITDAR in the first quarter of 2021."
James Stewart, the CEO of MGM Growth Properties, commented: "We are excited to add MGM Springfield to our portfolio of high-quality gaming resort real estate and are encouraged by the property's recent record financial performance. This transaction reflects the continued execution of our growth strategy, will be immediately accretive to AFFO per share upon closing, and further strengthens our master lease with MGM."
As of March 31, 2021, MGM Resorts held a 42% economic interest in the operating partnership of MGP.