MGM Resorts considering sale and leaseback

Jul 24, 2019 3:00 AM

MGM Resorts International may be looking to move some of its iconic properties on the Las Vegas Strip with the idea to lease them back.

According to Bloomberg News, the company is working with an adviser to solicit interest from potential buyers for the marquee casinos Bellagio and MGM Grand. Bloomberg said in its report that those involved asked not to be identified because the deliberations are private. MGM is open to the sale and leaseback of properties either on their own or bundled together.

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The Las Vegas-based company, which has a market value of more than $15 billion, formed a committee in January comprising three independent directors — John B. Kilroy Jr., Keith A. Meister and Paul Salem — to evaluate ways to extract value from its real estate portfolio.

MGM officials declined comment.

MGM could reap $6 billion to $7 billion of value from a sale-leaseback of the Bellagio and MGM Grand alone, assuming that rent coverage is similar to prior transactions, Macquarie Group analyst Chad Beynon said in an email. “On an after tax basis, we believe MGM could repurchase over 150 million shares,” he said.

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