MGM Once more Reduces MGP Stake, Hauling in $1.2 Billion in Money

    Posted on: March 16, 2021, 09:02h. 

    Final up to date on: March 16, 2021, 09:25h.

    MGM Resorts Worldwide (NYSE:MGM) continues thinning its place in its actual property associate MGM Development Properties (NYSE:MGP).

    The outside of the Mirage Las Vegas, seen right here. Operator MGM offered extra MGM Development inventory. (Picture: Las Vegas Evaluate-Journal)

    Late Monday, the on line casino operator mentioned it redeemed one other 37.1 million items of the gaming actual property funding belief (REIT), leading to a haul of $1.2 billion in gross proceeds. The sale sends MGM’s money available to north of $7 billion, giving it one of many strongest stability sheets within the business.

    Our robust liquidity place has been a useful asset to the corporate by means of the disaster,” mentioned MGM CFO Jonathan Halkyard in an announcement.

    The newest sale of MGP fairness reduces the gaming firm’s stake in the true property agency to 42.1 p.c from 53 p.c. Within the span of a couple of 12 months, the Mirage operator has lowered its funding within the REIT from 61 p.c. MGM Development Properties was spun-off from the mum or dad firm in April 2016.

    Predictable Transfer by MGM

    It’s not shocking that the gaming firm continues paring its stake in its major landlord. On the fourth-quarter earnings convention name final month, each Halkyard and MGM CEO Invoice Hornbuckle mentioned downsizing the MGP stake.

    Hornbuckle mentioned the plan is to scale back that funding over time, if not eradicate it solely. Halkyard added paring that place would simplify the MGM company story and construction. The newest sale is well-timed as a result of MGP shares are greater by 9.17 p.c year-to-date, confirming the gaming firm is promoting into energy.

    Monday’s announcement arrived after MGM offered $1.4 billion price of MGP fairness final 12 months in two tranches of $700 million apiece – one in Might and one other in December.

    The on line casino big didn’t say precisely what it plans to do with the inflow of money, however Halkyard notes the capital can be utilized for “key development alternatives, sustaining a robust stability sheet, and returning money to shareholders.”

    On the peak of the coronavirus pandemic final 12 months, MGM scrapped a share buyback plan and slashed its dividend to token ranges.

    Advantages for MGP, Too

    For MGM Development, there are potential advantages in additional separation from its former mum or dad, particularly within the type of elevated independence.

    That’s a difficulty some Wall Road analysts beforehand talked about concerning the true property firm. Whereas rivals Gaming & Leisure Properties (NASDAQ:GLPI) and VICI Properties (NYSE:VICI) have a number of purchasers, MGP’s lone tenant to this point is MGM.

    Within the US, the REIT owns the property property of all MGM-operated casinos apart from Bellagio on the Las Vegas Strip and MGM Springfield in Massachusetts.

    Individually, MGP mentioned Monday it’s boosting its annual dividend by three cents, to $1.98 a share. That’s the 12th time it’s elevated the payout since going public.

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