Casinos & Hotels
MGM Hits $5 Billion Jackpot From Vegas Casino Sales; More to Come?
Published:
Last Updated:
MGM Resorts International (NYSE: MGM) late Tuesday announced the sale of Circus Circus Las Vegas property and the establishment of a joint venture with a subsidiary of Blackstone Group Inc. (NYSE: BX) for the sale and leaseback of the Bellagio property in Las Vegas.
MGM sold Circus Circus to an affiliate of Treasure Island owner Phil Ruffin for $662.5 million in cash and a note for $152.5 million due in 2024. Ruffin was a partner in Donald Trump’s Las Vegas hotel and condo development (non-casino), Trump International, which opened in 2008.
The joint venture deal for Bellagio is valued at $4.25 billion and gives Blackstone Real Estate Investment Trust (NYSE: BREIT) a 95% ownership stake in the joint venture with MGM Resorts, which retains a 5% stake in the property.
The sales are additional transactions in MGM’s move to become a propertyless casino operator. Once these two transactions are completed, the company will own just two properties outright: the MGM Grand in Las Vegas and the MGM Springfield in Massachusetts. The company also will hold a 50% interest in the Las Vegas CityCenter mixed-use urban project and a 68% stake in MGM Growth Properties LLC (NYSE: MGP).
An analyst with Macquarie told Casino.org in July that Bellagio and the MGM Grand could command sales prices totaling $6 billion to $7 billion. That leaves a range of $1.75 billion to $2.75 billion as a price tag for the MGM Grand.
That same analyst suggested that MGM might use some of the proceeds from the sales to buyback as much as 100 million shares (around $2.75 billion). Of course, management also could choose to whittle down the $15 billion in long-term debt, but the share price won’t be rewarded for that.
While MGM Resorts becomes a propertyless casino operator, MGM Growth Properties will still own Las Vegas properties like Excalibur, Luxor, Mandalay Bay and the Mirage.
Shares of MGM Resorts traded down about 1.2% in the late morning Wednesday, at $27.56 in a 52-week range of $21.62 to $31.68. The 12-month consensus price target on the stock is $33.26. MGM pays a dividend yield of 1.86%.
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
