VICI Properties Inc. Completes $17.2 Billion Strategic Acquisition of MGM Growth Properties LLC

NEW YORK–(BUSINESS WIRE)–VICI Properties Inc. (NYSE: VICI) (“VICI”, “VICI Properties” or the “Company”), an experiential real estate investment trust, today announced the closing of the previously announced acquisition of MGM Growth Properties LLC (NYSE: MGP) (“MGP”). Upon completion of the merger, VICI will have an estimated enterprise value of approximately $44.0 billion, firmly cementing VICI’s position as the largest net experiential rental REIT while advancing VICI’s strategic improvement and diversification of the portfolio.

Concurrently with the closing of the MGP acquisition, the Company entered into an amended and restated triple net head lease with MGM Resorts International (NYSE: MGM) (“MGM Resorts” or “MGM”). MGM’s head lease, which begins effective today, has an initial term of 25 years, with three 10-year tenant renewal options and an initial total annual rent of $860.0 million. Rent under the MGM Head Lease increases at a rate of 2.0% per annum for the first 10 years and thereafter at the greater of 2.0% per annum or the annual price index increase consumption (“CPI”), subject to a rate of 3.0% cap. In addition, the Company retained MGP’s 50.1% interest in the joint venture between MGP and Blackstone Real Estate Income Trust, Inc. (“BREIT JV”), which owns the real estate assets of MGM Grand Las Vegas and Mandalay Bay. . The BREIT joint venture lease remained unchanged and provides for a current annual base rent of approximately $303.8 million, of which approximately $152.2 million is attributable to our investment in the BREIT joint venture, and an initial term of 30 years, with two 10-year tenant renewal options. The rent under the BREIT JV lease increases at a rate of 2.0% per annum for the first 15 years, then at the greater of 2.0% per annum or the annual increase in the CPI, subject to a cap of 3.0%. On a combined basis, the MGM head lease and the BREIT JV lease will earn us initial attributable annual rent of approximately $1,012.2 million. The tenant’s obligations under the MGM Head Lease and the BREIT JV Lease continue to be guaranteed by MGM.

Key Comments

  • Transformative impact on VICI portfolio and economic scale—Edward Pitoniak, CEO of VICI: “The addition of the MGP portfolio, along with the recent closing of our Venetian acquisition, elevates VICI to the top ranks of US 4-wall REITs, making VICI a top 5 REIT by EBITDA and a top 10 REIT by equity value. ‘business. We are also becoming the largest hotel and convention landlord in America, under what we believe is the superior transparency and integrity of the Triple Net Lease model. In addition, among the top 10 US 4-wall REITs, VICI stands out for the class A quality of our real estate. The VICI team has achieved a total of $21 billion in closings over the past two months with the lowest G&A cost structure of any top 10 REITS by enterprise value. The productivity of the VICI team is unmatched.
  • The new MGM-VICI partnership—Bill Hornbuckle, CEO and President of MGM Resorts International: “The VICI team has worked in conjunction with MGM to help us unlock significant value from the underlying real estate of our assets. We look forward to continuing our long-term partnership with VICI.
  • Quality of the MGP portfolio, MGM operational excellence, VICI leadership on the Las Vegas Strip—John Payne, President and COO of VICI: “We are excited to grow our portfolio with the acquisition of 15 of the highest quality Las Vegas and regional assets in American gaming, as well as continue to diversify our tenant base with one of the leading gaming and entertainment world, MGM Resorts. VICI now owns ten premier resorts on the Las Vegas Strip, comprising 1.2 million square feet of gaming space, approximately 40,775 hotel rooms and 5.9 million square feet of retail space. meeting and congress. We continue to believe in the strength of the Las Vegas market, supported by a strong post-COVID recovery, solid prospects for operators, and continued institutionalization of this real estate asset class.
  • Transformative impact on VICI’s balance sheet and access to capital—David Kieske, Executive Vice President and Chief Financial Officer of VICI: “Since the announcement of the MGP transaction, VICI has executed the largest REIT common stock offering ever, repaid all of our outstanding secured debt, and obtained an investment grade rating from S&P and Fitch, allowing us to fund the cash portion of this transaction with our $5.0 billion senior. offering of notes, the largest investment-grade REIT offering ever. This is a transformational step in the evolution of our balance sheet management and provides our company with another source of effective unsecured long-term capital, further positioning VICI and our best-in-class balance sheet to capitalize on the future growth opportunities.
  • VICI’s ability to execute transformative mergers and acquisitions—Samantha Sacks Gallagher, Executive Vice President and General Counsel of VICI: “In the past four and a half years since its inception, VICI has completed approximately $29.5 billion in mergers and acquisitions and other investment activities, demonstrating our ability to execute complex transactions and achieve our strategic goals and of growth. With the closing of the MGP acquisition, the VICI team has further strengthened its capability as the partner of choice to finance and execute transformative transactions.

Funding

Under the terms of the MGP Master Transaction Agreement, MGP shareholders received 1,366 newly issued ordinary shares of the company in exchange for each Class A ordinary share of MGP, resulting in the company issuing approximately 214.5 million shares.

MGM received $43.00 per unit in cash for the redemption of the majority of its MGP OP units, which were converted into units of VICI Properties OP LLC, the company’s new operating partnership (“VICI OP”) , in connection with the closing of the MGP acquisition, for a total cash consideration of $4.404 billion. MGM retained approximately 12.2 million VICI OP units after the closing of the MGP acquisition. The MGP Class B stock which was held by MGM was canceled and ceased to exist.

Following the acquisition of MGP, the Company has approximately 963.0 million common shares outstanding, representing 98.7% of the total VICI OP units outstanding.

The Company also announced today, in connection with the closing of the acquisition of MGP, that its subsidiary, VICI Properties LP, has closed its public offering of $5.0 billion in aggregate principal amount of unsecured notes of first rank. The Company used part of the net proceeds of the offering to finance the consideration for the redemption of a majority of the outstanding MGP OP units of MGM, which were converted into VICI OP units received by MGM in connection with the closing of the acquisition of MGP.

The Company has also issued senior notes in an aggregate principal amount of approximately $4.1 billion in exchange for notes originally issued by MGP OP with the same interest rates, maturity date and terms. redemption than the Notes originally issued by MGP OP in connection with the settlement of the Exchange Offers and Consent Solicitations. Following the settlement of the exchange offers and consent solicitations, approximately $0.1 billion of MGP OP notes remain outstanding.

Advisors

Morgan Stanley & Co LLC acted as lead strategic and financial advisor to VICI Properties on the transaction. Citigroup Global Markets Inc. also acted as financial advisor to VICI Properties. Hogan Lovells US LLP and Kramer Levin Naftalis & Frankel LLP served as legal counsel to VICI Properties.

About VICI properties

VICI Properties Inc. is an experiential real estate investment trust with one of the largest portfolios of market-leading gaming, hospitality and entertainment destinations, including Caesars Palace Las Vegas, MGM Grand and The Venetian Resort Las Vegas, three of the most iconic entertainment venues. facilities on the Las Vegas Strip. Following the closing of the MGP acquisition on April 29, 2022, VICI Properties’ national and geographically diverse portfolio consists of 43 gaming facilities comprising over 122 million square feet and includes approximately 58,700 hotel rooms and more 450 restaurants, bars, nightclubs and sports bets. Its properties are leased to leading gaming and hospitality operators including Caesars Entertainment, Inc., Century Casinos, Inc., Eastern Band of Cherokee Indians, Hard Rock International Inc., JACK Entertainment LLC, MGM Resorts International , Penn National Gaming, Inc., and The Venetian Las Vegas. VICI Properties has also invested in facilities at Chelsea Piers, New York, and owns four championship golf courses and 34 acres of undeveloped and undeveloped land adjacent to the Las Vegas Strip. VICI Properties’ strategy is to create the highest quality and most productive experiential real estate portfolio in the country. For more information, please visit www.viciproperties.com.

Forward-looking statements

This press release contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words “assumes”, “believes”, “estimates”, “expects”, “guidance”, “intends”, “plans”, “projects” and similar expressions that do not relate to historical matters. All statements other than statements of historical fact are forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements, as they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the control of the Company and could materially affect actual results, performance or achievements. Significant risk factors that could affect the Company’s business, results of operations and financial condition (including those arising from the COVID-19 pandemic and resulting changes in economic conditions and risks relating to ongoing transactions of the Company) are detailed from time to time. time in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

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