MGM Resorts International (MGM - Free Report) has completed the acquisition of Hard Rock Rocksino Northfield Park’s operating assets from MGM Growth Properties LLC (MGP). MGM Resorts will also lease the real property connected with Rocksino from a subsidiary of MGP. Located in Northfield, OH, Rocksino offers gaming, dining and entertainment facilities, and spreads across roughly 110 acres.
MGM Resorts also announced that it has rebranded Hard Rock Rocksino Northfield Park as MGM Northfield Park. Rocksino will be included in the existing master lease between MGM Resorts and MGP. Further, annual rent payment to MGP will increase by $60 million, 90% of which will be fixed and contractually increase 2% per year until 2022.
Rocksino — the best-in-class gaming and entertainment destination — and MGM Resorts’ global brand portfolio will provide a boost to MGM Resorts performance. Markedly, Rocksino has proven leadership in the gaming industry. The buyout will help MGM Resorts in terms of revenue and profit growth. MGM Resorts believes that the addition of Rocksino will enhance its scale and operations. It is also expected to boost free cash flow generation. On the full integration of Rocksino, MGM Resorts expects to see six times improved EBITDA.
In fact, this latest move underscores MGM Resorts’ focus on proliferating its business across segments like hotel, casino, food and beverage, and entertainment. Over the past few years, the company has taken various initiatives to bring every recognized brand under one global entertainment brand. Moving ahead, MGM Resorts aims to build a disciplined business model, with extensive focus on non-gaming revenue opportunities, high-quality assets and attractive property locations.
So far this year, shares of MGM Resorts have gained 10.1% compared with the industry’s 23% growth. An increase in visitation in the Las Vegas market, solid prospects of the Macau business and the company’s focus on non-gaming activities are likely to aid growth.
Zacks Rank & Stocks to Consider
MGM Resorts, which shares space with Melco Resorts & Entertainment Limited (MLCO - Free Report) , has a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include Wynn Resorts, Limited (WYNN - Free Report) and Zynga Inc. (ZNGA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wynn Resorts and Zynga has an impressive long-term earnings growth rate of 10% and 22.5%, respectively.
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