MGM Resorts sells two Las Vegas Strip casinos

MGM Resorts has revealed that it sold two Las Vegas Strip casinos to return capital to shareholders and focus on sports betting.

US.- MGM Resorts International announced this week that it has agreed the sale of two casinos in the Las Vegas Strip. MGM and the Blackstone Group will create a joint venture to purchase the Bellagio and leasing it back to an MGM subsidiary for US$245 million each year. The company is also selling the Circus Circus for US$825 million to Treasure Island casino owner Phil Ruffin.

In the joint venture, MGM Resorts will have a 5% ownership stake and US$4.2 billion in cash. The deals are expected to be subject to certain closing conditions and close by the end of the year. Between the Bellagio transaction and the pending Circus Circus sale, the Company is expecting to receive gross proceeds of approximately US$5 billion and estimated net cash proceeds (including expected transaction costs) of US$4.3 billion.

Jim Murren, Chairman and CEO of MGM Resorts International, said that the company will use the proceeds from the transactions to build a fortress balance sheet and return capital to shareholders. “By the end of 2020 we intend to have domestic net financial leverage at our operating properties of approximately 1x,” he said. “This transaction confirms the premium value of our owned real estate assets, highlights the unique value of Bellagio as a premier asset in gaming and solidifies our status as a premier operator of gaming and entertainment properties.”

Jon Gray, Blackstone President & COO, commented: “As big believers in MGM Resorts and Las Vegas, we are happy to partner with MGM to acquire the Bellagio on behalf of our BREIT investors. We look forward to a long and productive partnership with this world-class company.”

MGM focuses on Japan and sports betting

Murren also said that the transactions enhance the company’s strategic and operational flexibility and reinforce its commitment to targeted new growth opportunities. These opportunities include securing and investing in an integrated resort (IR) licence in Japan, as well as becoming an industry leader in sports betting in the US. “We remain committed to delivering on our 2020 goals and continue to be on track to achieve our previously announced targets,” he added.