Boyd Gaming Corporation’s ownership of a 50% stake in Atlantic City’s Borgata Hotel Casino & Spa has been transferred to fellow casino operator MGM Resorts International, after the New Jersey Casino Control Commission greenlighted the transaction last month.
Boyd Gaming and MGM Resorts have jointly managed the hotel and casino complex since its launch in 2003. Borgata has been Atlantic City’s most profitable gambling venue over the past decade.
Boyd Gaming received $589 million in cash proceeds for its share in the casino after certain working capital adjustments and consideration of the venue’s outstanding debt totaling $575 million. Part of the debt in question was refinanced by MGM Growth Properties LLC. Generally speaking, MGM Growth Properties is a real estate investment trust that is engaged in the purchase, ownership, and further leasing of hotel and casino complexes.
The REIT purchased Borgata’s real property from owner MGM Resorts and then leased it back to an MGM Resorts subsidiary. The said subsidiary will manage the casino now as MGM Resorts is its sole owner.
Commenting on the transaction’s completion, MGM Resorts Chairman and CEO Jim Murren said that being Atlantic City’s premier casino resort, Borgata is an excellent addition to his company’s presence in the region.
Borgata President and COO Tom Ballance commented that they are glad to welcome MGM Resorts as the property’s new operator and that the company will further utilize its popular brand to provide gambling customers and guests of the complex with the best possible experience.
James Stewart, CEO of MGM Growth Properties, said that the addition of a premier asset like Borgata in such an early stage of his company’s development is indicative of their continued focus on “prudent growth” as well as of their balance sheet’s flexibility.
In 2010, MGM Resorts announced that it was selling its stake in Borgata and thus leave Atlantic City in order to pursue a better business opportunity with a Macau-based partner. The company’s 50% stake was put into trust while a purchaser was looked for. One was never found and the casino operator reclaimed its interest in the venue in 2014.
The Atlantic City-based hotel and casino resort reported net revenue of $190.3 million for the quarter ended March 31, 2016, up from the amount of $182.6 million posted for the same period of the previous year.
