VICI Properties has inked a deal to acquire MGM Growth Properties, whose portfolio includes Excalibur, Mandalay Bay, MGM Grand Las Vegas and Luxor, all properties on the Las Vegas Strip.
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The deal values MGM Growth Properties at $17.2B, including debt. The company is a REIT spun off by MGM Resorts International in 2016 but still controlled by the hospitality giant.
Under the terms of the transaction, MGM Resorts will receive about $4.4B in cash. MGM Growth Properties' Class-A shareholders will get 1.366 shares of new VICI stock for each share they own.
That exchange ratio represents $43 a share for MGM Growth Properties, or about a 16% premium over its closing price on Tuesday ($37.11 per share). Five years ago, shares in the new REIT traded for about $26.50, rising slowly since then, except for a pandemic-inspired dip to about $16 a share in March 2020.
Through the acquisition, VICI Properties is adding to its portfolio 15 entertainment resort properties with 33,000 hotel rooms, 3.6M SF of meeting and convention space, and hundreds of food, beverage and entertainment venues. The acquisitions come at an estimated 30% to 40% discount to replacement cost, according to VICI.
VICI Properties itself is a 2017 spinoff from a larger entertainment and hospitality company, Caesars Entertainment Operating Co. The company — which takes its name from the Latin phrase “veni, vedi, vici” (“I came, I saw, I conquered”) — branded itself as an “experiential-asset focused” REIT.
The deal represents the latest move by MGM Resorts in a long-term disposition drive. In 2019, the company sold the Bellagio Hotel and Casino in Las Vegas to Blackstone Real Estate Income Trust and also sold Circus Circus and its stake in Freehand Hotels.
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