MGM Growth Properties announced plans to raise $750 million in new debt on Tuesday, but the real estate investment trust didn’t disclose plans for the financing, other than “general corporate purposes.”
The new debt would mature in 2029. The company initially announced it was seeking $500 million in new debt, but upsized the raise by $250 million by the end of the day.
In addition to the debt, MGM Growth said the proceeds may be used to redeem up to $700 million in partnership shares held by MGM Resorts. The casino operator owns roughly 57% of MGM Growth.
During MGM’s third-quarter conference call, CEO Bill Hornbuckle said the company had until February 2022 to execute on the share redemption.
“We’re going to let that go by the wayside,” Hornbuckle said. “We have … between now and then we’ll clearly do something.”
MGM Growth CFO Andy Chen said the company does not have any debt maturities until 2023. MGM Growth had $3.55 billion in long term debt as of Sept. 30.
Earlier this month, analysts asked the REIT’s management about any interest in acquiring two resorts and a convention complex on the Strip operated by Las Vegas Sands.
The company had been in talks reportedly to sell The Venetian and Palazzo, seeking at least $6 billion for the hotel-casinos and the Sands Expo and Convention Center.
MGM Growth CEO James Stewart told analysts the REIT would consider adding another Strip resort as long as the company has a suitable partner. The company owns the land and real estate of eight Strip properties and 15 properties in total covering eight states, all of which are managed by MGM Resorts International.
“We think a deal could get done on the Strip. We would definitely be interested,” Stewart said. He added that an operating tenant, “has to be one who has a great incentive to keep on paying the rent because there could be some bumpy times here in the next little while.”
Other gaming REITs – VICI Properties and Gaming and Leisure Properties – have multiple operator tenants.
Shares of MGM Growth closed at $31.15 on the New York Stock Exchange Tuesday, up 35 cents or 1.14%. Shares of MGM Resorts declined 9 cents or 0.34% to close at $26.42, also on the New York Stock Exchange.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
