VICI Properties has completed a $3.4 billion equity offering and taken other steps toward acquiring MGM Growth Properties and assets of the Las Vegas Sands Corp. on the Strip.
VICI is spending $4 billion to acquire the Venetian, Palazzo, Venetian Expo, and the land associated with the MSG Sphere development from Las Vegas Sands.
Fitch Ratings reported Thursday that VICI completed a $3.4 billion equity offering, including the greenshoe, and settled its 26.9 million share forward-sale agreement from June 2020 for total cash proceeds of $527 million. Roughly $1.9 billion of proceeds remain to be settled from the previous March 2021 forward-sale agreement, Fitch said.
In August, MGM Growth Properties and MGM Resorts International, MGP’s controlling shareholder, announced that they have entered into an agreement in which VICI Properties will acquire MGP for $17.2 billion, inclusive of $5.7 billion of debt.
Upon completion of the merger, VICI will have an estimated enterprise value of $45 billion, solidifying its position as the largest experiential net lease REIT, while also advancing its strategic goals of portfolio enhancement and diversification.
The proceeds partially funded the repayment of VICI’s $2.1 billion secured term loan B and as a result, it has only unsecured debt outstanding.
In addition, VICI launched a change-of-control consent and exchange offer to MGP’s $4.2 billion unsecured noteholders. The offer includes exchange consideration for MGP’s senior notes maturing 2024-2029, with like notes to be issued by VICI and a small cash consent payment, according to Fitch.
VICI will reduce tenant concentration and improve asset quality following the addition of MGP’s Las Vegas Strip properties and market-leading regional casinos, a fully unencumbered asset pool, and a well-staggered maturity schedule, Fitch Ratings said.
“The combined company’s strengthened credit profile and 5.0x-5.5x net leverage target will likely be consistent with a low investment-grade IDR over the long term,” Fitch said. “This is supported by the initial funding mix of both the pending Venetian and MGP acquisitions, which includes a considerable amount of equity from the September 2021 issuance and settlement of previous forward sales.”
VICI Properties Inc. is an experiential real estate investment trust that owns one of the largest portfolios of market-leading gaming, hospitality, and entertainment destinations, including Caesars Palace. The portfolio consists of 28 gaming facilities, comprising more than 47 million square feet, and features approximately 17,800 hotel rooms and more than 200 restaurants, bars, nightclubs, and sportsbooks. Its properties are leased to gaming and hospitality operators, including Caesars Entertainment, Century Casinos, the Eastern Band of Cherokee Indians, Hard Rock International, JACK Entertainment, and Penn National Gaming.
VICI Properties also owns 34 acres of undeveloped land adjacent to the Las Vegas Strip.
