MGM Resorts International is seeking a buyer for its flagship MGM Grand property in Las Vegas, the company’s CEO, Jim Murren, said during a Wednesday conference call.
Mr. Murren’s comments came several weeks after the Las Vegas gaming and hospitality giant announced that it had agreed to offload two of its Strip properties as part of its strategy to become an “asset-light” casino operator and as it is seeking to raise capital for an integrated resort in Japan that could cost up to $10 billion.
MGM’s CEO said Wednesday that they expect to announce a buyer for MGM Grand by the end of the year. He also noted that the recent transactions and any future ones would help his company gain a more flexible financial structure and better capitalize on its strengths as a developer and operator of casino resorts.
It became known this month that New York financial services firm Blackstone Group would buy MGM’s Bellagio resort in a $4.25 billion deal. The property’s current owner will continue to manage it after the transaction closes.
MGM is also in the process of selling its Circus Circus casino to business mogul and Treasure Island owner Phil Ruffin, who has long sought to buy a Strip property. Mr. Ruffin has agreed to pay $825 million for the casino.
During the Wednesday conference call, Mr. Murren said that they will use the proceeds from the sale of MGM Grand to reduce debt and invest in net growth opportunities. The company considers Japan’s nascent casino market, which it wants to penetrate with a luxury integrated resort in Osaka, and the US sports betting field two such opportunities.
MGM’s REIT Could Buy MGM Grand
Providing further information about the sale of MGM Grand, Mr. Murren said that they could sell the property to MGM’s real estate investment trust (REIT), MGM Growth Properties. The executive noted that “if it came down to a transaction between a third party and MGP, we’re always going to favor MGP in a close race.”
It also became known Wednesday that MGM is looking to reduce its stake in its REIT to under 50% or even less. The Las Vegas casino operator put the majority of its properties into MGM Growth Properties in 2016. That business also has an option to purchase MGM Springfield, the $960 million integrated resort that MGM launched in the Massachusetts city of Springfield in August 2018.
When the casino operator offloads MGM Grand to a buyer yet to be determined, MGM Springfield will remain MGM’s last wholly owned property in the US.
Mr. Murren said that they are continuing to evaluate the sale of his company’s remaining assets, including CityCenter in Las Vegas, a joint venture with investment company Dubai World that also includes MGM’s ARIA hotel and casino resort.
MGM reported a 9% increase in third-quarter revenue to $3.3 billion and a 14% rise in Adjusted EBITDA to $814 million. However, the company noted that gaming revenue at its Strip properties declined during the third quarter of the year due to “ongoing weakness in Far East baccarat volumes.”
Source: MGM Sets Year-End Target for Sale of MGM Grand in Las Vegas, Bloomberg
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