MGM Resorts to promote Circus Circus for $825 million, strikes deal to lease support Bellagio – CNBC

MGM Resorts to promote Circus Circus for $825 million, strikes deal to lease support Bellagio – CNBC

The MGM Resorts World Bellagio Resort & On line casino stands in Las Vegas, Nevada.

Bridget Bennett | Bloomberg | Getty Photos

MGM Resorts World launched two affords Tuesday anticipated to order in billions in money, because it looks to be to be like to present a boost to its steadiness sheet within the occasion of an economic downturn.

“We desire to originate obvious — if and when the next recession comes — now we relish got a fortress steadiness sheet,” talked about Paul Salem, chairman of MGM’s genuine property committee of the corporate’s board of directors.

MGM signed a deal to promote its Circus Circus Las Vegas property for $825 million to an affiliate of Like Island owner Phil Ruffin. The corporate views Circus Circus as non-core, talked about Salem.

One after the other, Blackstone Right Estate Profits Belief and MGM agreed to form a joint venture to develop MGM’s Bellagio genuine property and lease it support to an MGM Resorts unit in a deal that values the property at $Four.25 billion. MGM Resorts will relish 5% equity within the joint venture and money proceeds of roughly $Four.2 billion once the deal closes. The MGM hotels subsidiary will pay $245 million in annual lease.

The deal for Bellagio, which valued it at roughly 17.Three events lease changed into once “one in all the very perfect ever paid for a [Las Vegas] strip asset,” talked about Salem.

It would possibly perhaps present a solid benchmark for MGM, would possibly perhaps perhaps additionally aloof it pursue identical affords with its diversified properties, talked about Salem. The resort operator’s diversified holdings embody MGM Immense, MGM Springfield, its 50% stake in CityCenter and Sixty eight% economic ownership in MGM Say Properties.

“This transaction will with out a doubt originate other folks label what the worth of Las Vegas sources is,” he talked about.

The two affords come months after MGM earlier this Twelve months added Keith Meister to their board. Meister is the chief investment officer of Corvex Management, which owned roughly Three% of MGM’s shares as of January.

“Keith changed into once on our genuine property committee and he changed into once very spirited on it. But ahead of he joined the board we had been on this course anyway,” talked about Salem. He added that Meister changed into once a “pleasure” to work with.

Shares of MGM had been up modestly after-hours. Year thus far, its shares relish climbed nearly 15%

—CNBC’s Contessa Brewer contributed to this describe.

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October 15, 2019

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