MGM Growth Properties Offers Senior Unsecured Notes for $750M

MGM Growth Properties is looking to raise $750 million of senior unsecured notes, priced at 3.875% and due 2029 at par, the real estate trust announced Tuesday. The offering which was upsized by $250 million from the initial $500 million, is expected to close November 19, subject to customary closing conditions.

MGM Resorts’ Redemption Right Placed on the Backburner

The net proceeds of the offering will be used for general corporate purposes, MGM Growth Properties said in the press release, specifically mentioning the redemption of shares held by its partner MGM Resorts International, to the amount of $700 million, provided that the casino operator elects to exercise its right.

MGM Resorts holds roughly 57% of the real estate trust and, according to information provided by its CEO Bill Hornbuckle during the company’s third quarter earnings conference call, has until February 2022 to exercise on its share redemption right, noting that option will be put on the backburner for the time being.

The new offering of notes would not influence the real estate investment trust (REIT) in the medium term, as it has no maturing debt until 2023, MGM Growth Properties CFO Andy Chen outlined. As of September 30, the company had $3.55 billion of long-term debt.

Strip Properties Acquisitions

The real estate trust was associated with the possible sale of Strip properties from Las Vegas Sands, after reports the casino and hospitality operator was looking for a buyer for The Venetian, The Palazzo and the Sands Expo Convention Center, seeking around $6 billion for the three interconnected properties on the Las Vegas Strip.

Asked about the possibility to acquire the properties, MGM Growth Properties CEO James Steward replied that the REIT might look to add to its Strip properties as long as it could diversify its casino partners.

Unlike the other two real estate investment trusts, VICI Properties and Gaming and Leisure Properties (GLPI), which have multiple casino operators as tenants for the properties, MGM Growth Properties so far has only one. MGM Growth Properties owns 15 properties in total, spread across 8 different states, 8 of which are on the Las Vegas Strip, but all of them are operated by MGM Resorts.

The new notes will be offered only to qualified institutional buyers as classified under Rule 144A of the Securities Act, as well as outside of the US in compliance with Regulation S of the Securities Act. MGM Growth Properties does not give any assurance the proposed offering of senior notes can be completed on any terms or at all.