MGM To Auction Bellagio, Circus Circus Resorts
On Wednesday, MGM Resorts International made public that it would sell its Bellagio and Circus Circus resorts in Las Vegas.
The selling would be in separate deals valuing at about $5 billion. This is after the U.S. casino operator tries to find someone to monetize its real estate assets and strengthen its balance sheet.
Meanwhile, Blackstone Real Estate Income Trust will buy the Bellagio for $4.25 billion. The buying will be through a 95-5 joint venture with MGM.
Moreover, the firm will lease it back to a unit of the casino corporation for a primary annual rent of $245 million.
MGM also indicated it would sell Circus Circus Las Vegas to an associate of Treasure Island owner Phil Ruffin. The price of the bartering would be $825 million.
As of December 2018, the disinvestment came nine months after MGM had long-term debt of $15 billion.
To figure out its real estate portfolio amid its move to an asset-light model, the corporation formed a committee.
Arrangements Anticipated to End
MGM Chief Executive Officer Jim Murren stated that the company would use the proceeds from both the contracts to “build a fortress balance sheet” and return capital to stockholders.
In the fourth quarter of 2019, both deals are anticipated to close.
MGM’s other assets consist of MGM Grand and MGM Springfield. The firm also holds stakes in CityCenter and MGM Growth Properties LLC.
In January, MGM proclaimed its plans to cut costs and lift growth.
Moreover, it has been proposing to improve the annualized adjusted earnings before interest, taxes, depreciation, and amortization by $300 million by the end of 2021.
PJT Partners and J.P. Morgan were MGM’s financial counselors for the Bellagio deal. Meanwhile, Morgan Stanley & Co LLC and CBRE were directed on the Circus Circus transaction.
Elsewhere, in 1998, Casino magnate Steve Wynn opened the Bellagio, but MGM took control in 2000. This is when Wynn’s Mirage Resorts become partners with MGM.
In 1968, Circus Circus opened, and MGM acquired it in 2005.
