Real estate investment trust MGM Growth Properties, scheduled to merge with VICI Properties this summer, reported year-to-year increases in first-quarter adjusted cash flow and revenue, both of which topped Wall Street forecasts.
Last August, MGM Growth said it would be sold to VICI Properties in a $17.4 billion deal. The pairing of Las Vegas-based real estate investment trusts will create the Strip’s largest landholder.
In a Thursday 8-K filing with the Securities and Exchange Commission, MGM Growth said funds from operation, a cash-flow measure, were $191.4 million, or 74 cents per share, for the three months ended March 31, up from $184.7 per share, or 67 cents per share, a year earlier.
Adjusted funds from operation, which exclude one-time costs, were $253.6 million, or 69 cents per share, which topped the 61 cents per share average forecast of analysts surveyed by Seeking Alpha.
Funds from operation, a closely watched fiscal yardstick for real estate investment trusts, takes net income and adds back depreciation and amortization.
Net income was $116.5 million, or 44 cents per share, compared with $115.4 million, or 44 cents per share, a year earlier.
Revenue rose 3.9% to $201.9 million from $194.3 million and topped the $201.5 million average forecast of Seeking Alpha-polled analysts.
The earnings statement contained no commentary from company executives.
MGM Growth Properties raised its quarterly dividend to 53 cents per share from 52.5 cents per share. That represented an annual increase of 2 cents per share.
Zacks Investment Research on Wednesday raised its rating on MGM Growth to “buy” from “hold” and has a $46 per share price target. On Monday, Fitch Ratings upgraded the default ratings for MGM Growth Properties LLC and its subsidiary, MGM Growth Properties Operating Partnership, to ‘BBB-‘ from ‘BB+’.
In a statement, Fitch said the upgrade reflects its increased confidence that the pending acquisition by VICI Properties will close as planned.
“Fitch views the merger as strategically sound, in that it alleviates some considerations that were previously restraining the two companies’ stand-alone credit profiles, such as tenant and asset diversification,” the statement said. “The combination should also improve, pro forma, VICI’s relative access to the capital markets, and has limited integration risk given the triple-net leased nature of the portfolios.”
MGM Growth shares fell 5 cents, or 0.12%, Thursday to close at $41.10 on the New York Stock Exchange. The shares have risen 2.6% in 2022.
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