We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
MGM Resorts to Sell 2 Casinos, Focus on Asset Light Strategy
Read MoreHide Full Article
MGM Resorts International (MGM - Free Report) has announced two separate deals in an effort to strengthen its balance sheet. Firstly, MGM Resorts International and Blackstone Real Estate Income Trust (“BREIT”) will form a 95%/5% BREIT-led joint venture to acquire MGM Resorts’ Bellagio for $4.25 billion and then lease it back to a unit of MGM Resorts for annual rent of $245 million.
Following the completion of the transaction, MGM Resorts will receive 5% equity interest in the joint venture and cash of nearly $4.2 billion. Notably, the deal is likely to be concluded in fourth-quarter 2019.
Secondly, the company also announced that its has entered into a definitive agreement with an affiliate of Treasure Island owner Phil Ruffin to sell Circus Circus Las Vegas for $825 million. The transaction is likely to be completed in fourth-quarter 2019. The company stated that it is likely to incur impairment charge of approximately $220 million during the third quarter with regard to this transaction.
MGM Resorts International, Chairman and CEO Jim Murren said, “These transactions enhance the Company's strategic and operational flexibility and reinforce its commitment to targeted new growth opportunities, including securing and investing in one of the integrated resort licenses in Japan and becoming an industry leader in sports betting in the U.S. We remain committed to delivering on our 2020 goals and continue to be on track to achieve our previously announced targets.”
The abovementioned deals are first steps toward implementing asset light strategy. The company still has real estate assets, which includes MGM Grand, MGM Springfield, 50% stake in CityCenter and 68% economic ownership in MGM Growth Properties LLC.
Following the news, the company’s shares gained 1.2% in after-hour trading session on Oct 15. Moreover, the stock has increased 1.1% in the past six months, against the industry’s decline of 15.2%.
Focus on Sports Betting
Instead of being a capital intensive, brick & mortar real estate business, the company intends to be a developer, manager and operator of major gaming, hospitality and entertainment properties. The company stated that it wants to focus on sports and live entertainment.
We believe, legalization of sports betting outside Nevada has given the industry a new lease of life. The Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA) that banned sports betting outside Nevada.
Other casino operators like Penn National Gaming, Inc. (PENN - Free Report) , Boyd Gaming Corporation (BYD - Free Report) and Caesars Entertainment Corporation (CZR - Free Report) are also focusing on sport betting.
Today you are invited to download our just-released Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
Image: Bigstock
MGM Resorts to Sell 2 Casinos, Focus on Asset Light Strategy
MGM Resorts International (MGM - Free Report) has announced two separate deals in an effort to strengthen its balance sheet. Firstly, MGM Resorts International and Blackstone Real Estate Income Trust (“BREIT”) will form a 95%/5% BREIT-led joint venture to acquire MGM Resorts’ Bellagio for $4.25 billion and then lease it back to a unit of MGM Resorts for annual rent of $245 million.
Following the completion of the transaction, MGM Resorts will receive 5% equity interest in the joint venture and cash of nearly $4.2 billion. Notably, the deal is likely to be concluded in fourth-quarter 2019.
Secondly, the company also announced that its has entered into a definitive agreement with an affiliate of Treasure Island owner Phil Ruffin to sell Circus Circus Las Vegas for $825 million. The transaction is likely to be completed in fourth-quarter 2019. The company stated that it is likely to incur impairment charge of approximately $220 million during the third quarter with regard to this transaction.
MGM Resorts International, Chairman and CEO Jim Murren said, “These transactions enhance the Company's strategic and operational flexibility and reinforce its commitment to targeted new growth opportunities, including securing and investing in one of the integrated resort licenses in Japan and becoming an industry leader in sports betting in the U.S. We remain committed to delivering on our 2020 goals and continue to be on track to achieve our previously announced targets.”
The abovementioned deals are first steps toward implementing asset light strategy. The company still has real estate assets, which includes MGM Grand, MGM Springfield, 50% stake in CityCenter and 68% economic ownership in MGM Growth Properties LLC.
Following the news, the company’s shares gained 1.2% in after-hour trading session on Oct 15. Moreover, the stock has increased 1.1% in the past six months, against the industry’s decline of 15.2%.
Focus on Sports Betting
Instead of being a capital intensive, brick & mortar real estate business, the company intends to be a developer, manager and operator of major gaming, hospitality and entertainment properties. The company stated that it wants to focus on sports and live entertainment.
We believe, legalization of sports betting outside Nevada has given the industry a new lease of life. The Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA) that banned sports betting outside Nevada.
Other casino operators like Penn National Gaming, Inc. (PENN - Free Report) , Boyd Gaming Corporation (BYD - Free Report) and Caesars Entertainment Corporation (CZR - Free Report) are also focusing on sport betting.
MGM Resorts currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our just-released Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
Download Free Report Now >>