As it waits to merge with VICI Properties, MGM Growth Properties reported fourth-quarter drops in a key cash-flow measure and revenue, but both figures topped Wall Street forecasts.
In August, MGM Growth said it would be sold to VICI Properties in a $17.4 billion deal. The coupling of Las Vegas-based real estate investment trusts, expected to close by summer, will create the Strip’s largest landholder.
The deal will combine the landholdings of MGM Resorts International and Caesars Entertainment Corp., but leave all the MGM resort names in place. The deal includes about $5.7 billion in debt.
In a statement Wednesday, MGM Growth said its funds from operation were $160.2 million, or 60 cents per diluted share, for the three months ended Dec. 31, down from $169.6 million, or 57 cents per diluted share, a year earlier.
The latest result topped the 58 cents per diluted share in funds from operation forecast by 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.
Fourth-quarter net income was $52 million, or 33 cents per diluted share, for the three months ended Dec. 31, down from $41.4 million, or 32 cents per diluted share, a year earlier.
Fourth-quarter revenue rose 2.4 percent to $199 million from $194.3 million and topped the $196.4 million forecast by Seeking Alpha-polled analysts.
The release had no quotes from company officials. MGM Growth shares fell 66 cents, or 1.68%, to close at $38.52 on the New York Stock Exchange. The stock dipped 4 cents more after hours, to settle at $38.48.
MGM Growth’s results follow a pair of fourth-quarter transactions. On Oct. 29, the REIT acquired the MGM Springfield’s real estate assets from MGM Resorts International for $400 million. MGM Springfield was added to the MGM Resorts-MGM Growth Properties master lease.
Then, on Dec. 13, MGM agreed to sell The Mirage’s equity interests to an affiliate of Seminole Hard Rock Entertainment Inc. The deal is expected to close in this year’s second half, subject to conditions, including the VICI transaction’s consummation or termination.
American Banking and Market News reported that MGM Growth drew short interest in January. By Jan. 15, the website said, short interest totaled 1.98 million shares, up 26.9% from the 1.56 million shares Dec. 31.
The site noted that Macquarie lowered MGM Growth Properties’ rating from “outperform” rating to “neutral” and set a $43 price target on Dec. 6. Zacks Investment Research raised MGM Growth Properties to “buy” from “hold” and set a $43 price target to Jan. 14.
For the 12 months ended Dec. 31, MGM Growth had funds from operation of $638.4 million, or $2.37 per share, down from $703.7 million, or $2.26 per share, in the previous 12 months. Twelve-month revenue fell 1.4 percent $782.1 million from $793 million.
Follow Matthew Crowley on Twitter @copyjockey
