Vici Properties to purchase MGM Progress Properties for $ 17.2 billion


Real estate mutual fund Vici Properties is acquiring MGM Growth Properties in a $ 17.2 billion deal that will likely make the casino owner the largest landowner on the Las Vegas Strip.

MGM Resorts International, which owns a majority stake in MGM Growth Properties, will receive approximately $ 4.4 billion in cash as part of the transaction. The transaction includes $ 5.7 billion in debt.

MGM Resorts has sold its real estate assets in recent years and spun off MGM Growth Properties in 2016. The portfolio includes Mandalay Bay and the MGM Grand Las Vegas.

In total, Vici will win 15 entertainment properties as part of the deal, which significantly expands its geographic presence but retains its focus on the casino industry.

Bill Hornbuckle, President and CEO of MGM Resorts International, will be announced on Jan.

Gabe Ginsberg | Getty Images

“We are acquiring what we believe to be the best experiential property portfolio in America. These are great assets,” said Edward Pitoniak, Vici’s chief executive, in an interview.

When Vici was founded to help Caesars get out of bankruptcy, it had only one tenant: Caesars. It was a mission to expand its holdings and recently announced a deal to purchase the Venetian, Palazzo and Sands Expo and Convention Center for $ 4 billion.

With Vici’s larger portfolio, Caesars is contributing from 100% to Vici’s sales to 41%. The deal will also earn the company an estimated enterprise value of $ 45 billion, which is far more than any of its tenants.

“The deal … has far-reaching implications … both within the gaming REIT space and for MGM, which will now have even more cash on the balance sheet to support ROI efforts,” said Deutsche Bank -Analyst Carlo Santerelli in a research note.

MGM Resorts also pointed out the financial flexibility the deal will offer.

“As a result of these moves, we are well positioned and remain focused on pursuing growth opportunities in our core businesses, with significant financial flexibility to continue to use capital to maximize shareholder value,” said Bill Hornbuckle, CEO and President of MGM Resorts, in a press release .

MGM Growth Properties shareholders will exchange each Class A share for $ 43 in newly issued Vici shares, or a bonus of 16% off MGM Growth’s closing price on Tuesday.

On Wednesday, MGM Growth shares rose 6.8% to close at $ 39.61. MGM Resorts shares rose 0.9% to close at $ 37.27 while Vici shares fell 0.3% to $ 30.18.