MGM Growth Properties makes offer for Vici Properties

Jan 17, 2018 9:19 AM

MGM Growth Properties, the real estate investment trust (REIT) that MGM Resorts International established in 2016 for its property holdings, made public Tuesday its unsolicited offer for Vici Properties, the REIT that was spun off from Caesars Entertainment when it emerged from bankruptcy last October.

Several prominent casino operators have formed such investment trusts in recent years as a means of debt reduction. VICI’s properties are leased to Caesars and operate under leading brands such as Caesars, Horseshoe, Harrah’s and Bally’s, and feature approximately 32.5 million square feet of space

In a Jan. 5th letter to Vici Properties, MGM Growth Properties said it’s offering $19.50 a share for Vici, an approximately $6 billion offer.

Under the agreement, Vici, whose shareholders are creditors from the Caesars Entertainment bankruptcy, would own 43% of the combined company, which would be the 13th largest U.S. REIT by enterprise value, according to MGM Growth Properties. MGM Growth Properties is making an all-stock offer, though it would consider paying a portion of the acquisition in cash.

Although the massive REIT would own the various properties, Caesars would continue to operate them through its lease arrangements.

"The combined company will have a leading portfolio of premier large-scale destination leisure, entertainment and hospitality assets with even greater geographic, asset and tenant diversity," MGM Growth Properties said in a statement.

"Vici has elected not to engage in meaningful discussions," MGM Growth Properties said.