Casino REIT Vici Properties acquires MGM Growth Properties in $17B deal

Acquisition, which includes $5.7B in debt, is expected to close next year

MGM Growth Properties CEO James Stewart and Vici CEO Edward Pitoniak (MGM, Vici)
MGM Growth Properties CEO James Stewart and Vici CEO Edward Pitoniak (MGM, Vici)

Real-estate investment trust Vici Properties is gambling big bucks on a leader in the resort and casino business, agreeing to buy fellow REIT MGM Growth Properties in a deal that values the latter company at $17.2 billion.

Vici will assume about $5.7 billion in debt in the transaction. MGM Resorts, which spun off MGM Growth Properties back in 2016 but remains in its control, will receive about $4.4 billion in cash in the stock-for-stock deal, according to the Wall Street Journal.

Vici, which emerged from a Chapter 11 reorganization of Caesars Entertainment Operating Company in 2015, owns over two-dozen entertainment properties around the county, including Caesars- and Harrah’s-branded hotels and casinos on the Las Vegas Strip and in Atlantic City, New Jersey.

The acquisition will expand its portfolio with a further 15 entertainment resorts, which include a combined 3,000 hotel rooms and 3.6 million square feet of convention space. MGM Growth’s holdings include the Excalibur, Luxor and Mirage casinos on the Vegas Strip as well as the Borgata in Atlantic City and Yonkers Raceway & Empire City Casino in Yonkers, New York.

Class A shareholders of MGM Growth Properties can exchange their shares for $43 worth of Vici stock, a 16 percent premium on MGM Growth’s previous closing price, the Journal reported. MGM Resorts will retain about a 1 percent stake in Vici, worth nearly $370 million.

Sign Up for the undefined Newsletter

By signing up, you agree to TheRealDeal Terms of Use and acknowledge the data practices in our Privacy Policy.

After an expected close in the first half of 2022, Vici will also enter into an amended triple-net master lease with MGM Resorts. Initial rent will be a total of $860 million a year for 25 years, with three 10-year renewal options.

Vici also announced a $9.3 billion financing commitment courtesy of Morgan Stanley, J.P. Morgan and Citibank and will up its quarterly dividend by more than 9 percent.

[WSJ] — Holden Walter-Warner