VICI Properties to buy MGM Growth Properties for ~ $17.2B, including debt

  • VICI Properties (NYSE:VICI) enters an agreement with MGM Growth Properties (NYSE:MGP) and MGP's controlling shareholder, MGM Resorts International (NYSE:MGM) for VICI to acquire MGP for a total consideration of $17.2B, including the assumption of ~$5.7B of debt.
  • VICI says the deal will boost its enterprise value to $45B and position it as the largest experiential net lease REIT while advancing goals for portfolio enhancement and diversification.
  • MGP Class A shareholders will get 1.366 shares of newly issued VICI (VICI) stock for each class A share, representing an agreed upon price of $43.00 per share, or a 15.9% premium to MGP's closing stock price on Aug. 3.
  • MGM Resorts (MGM) will get $43.00 per unit in cash for the redemption of the majority of its MGP Operating Partnership units that it holds for total cash consideration of ~$4.4B; it will keep ~12M units in a newly formed operating partnership of VICI Properties (VICI).
  • MGP class B share that's held by MGM Resorts (MGM) will be cancelled.
  • At the same time the acquisition closes, VICI Properties (VICI) will enter an amended and reinstated triple-net master lease with MGM Resorts (MGM) that will have an initial total annual rent of $860M, inclusive of MGP's pending acquisition of MGM Springfield, and an initial term of 25 years, with three 10-year tenant renewal options.
  • Under the new master lease, rent will escalate at a rate of 2.0% per year for the first 10 years and thereafter at the greater of 2.0% per year or the consumer price index subject to a 3.0% cap.
  • VICI will keep MGP's existing 50.1% ownership in the joint venture with Blackstone Real Estate Income Trust, which owns the real estate assets of MGM Grand Las Vegas and Mandalay Bay.
  • The transaction is expected to close in H1 2022.
  • The company secures a $9.3B financing commitment from Morgan Stanley , J.P. Morgan, and Citibank.
  • VICI (VICI) expects the deal to immediately add to its AFFO per share.
  • After the deal closes, VICI Properties' top tenant concentration will decline to 41% from 84% currently, while 84% of its rent roll will be derived from S&P 500 tenants with a track record of having paid 100% of rent, on time and in cash, throughout the COVID-19 pandemic.
  • The company expects the deal to position its balance sheet for investment-grade status as VICI (VICI) eliminates all of its existing secured debt and establishes an unencumbered asset pool.

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