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MGM Growth Properties Reports Fourth Quarter And Full Year Financial Results

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MGM Growth Properties (MGP) reported financial results for Q4 and the full year 2020. For Q4, net income was $41.5 million ($0.31 per share) with rental revenue of $188.3 million. The full year net income reached $76.1 million ($0.59 per share) and total rental revenue of $768.4 million. MGP achieved a 100% rent collection rate and a 3.7% annual dividend increase. The company successfully redeemed 23.5 million units for $700 million and issued $750 million in senior notes, enhancing its financial position with $626.4 million in cash as of year-end.

Positive
  • Q4 net income of $41.5 million; annual net income of $76.1 million.
  • Rental revenue of $188.3 million for Q4; $768.4 million for FY 2020.
  • 100% rent collection rate maintained.
  • 3.7% annual dividend increase.
  • Successful redemption of 23.5 million units for $700 million.
  • Issued $750 million in senior notes, maximizing financing terms.
Negative
  • COVID-19 challenges impacted business operations throughout 2020.

LAS VEGAS, Feb. 16, 2021 /PRNewswire/ -- MGM Growth Properties LLC ("MGP" or the "Company") (NYSE: MGP) today reported financial results for the quarter and year ended December 31, 2020. Net income attributable to MGP Class A shareholders for the quarter was $41.5 million, or $0.31 per dilutive share, and for the year ended December 31, 2020 was $76.1 million, or $0.59 per dilutive share.

Financial highlights for the fourth quarter of 2020:

  • Consolidated rental revenue of $188.3 million;
  • Consolidated net income of $91.3 million, or $0.31 per diluted Operating Partnership unit;
  • Consolidated Funds From Operations(1) ("FFO") of $160.1 million, or $0.54 per diluted Operating Partnership unit;
  • Consolidated Adjusted Funds From Operations(2) ("AFFO") of $169.6 million, or $0.57 per diluted Operating Partnership unit;
  • Consolidated Adjusted EBITDA(3) ("Adjusted EBITDA") of $240.2 million;
  • General and administrative expenses of $4.0 million; and
  • Income from unconsolidated affiliate of $25.0 million.

Financial highlights for the year ended December 31, 2020:

  • Consolidated rental revenue of $768.4 million;
  • Consolidated net income of $160.4 million for the year, or $0.52 per diluted Operating Partnership unit;
  • FFO of $629.2 million for the year, or $2.02 per diluted Operating Partnership unit;
  • AFFO of $703.7 million for the year, or $2.26 per diluted Operating Partnership unit;
  • Adjusted EBITDA of $955.3 million for the year;
  • General and administrative expenses of $16.1 million; and
  • Income from unconsolidated affiliate of $89.1 million.

On December 2, 2020, the Operating Partnership redeemed and retired 23.5 million Operating Partnership units for cash, which represented the remaining $700 million under its previously announced agreement with MGM Resorts International ("MGM") to deliver cash for up to $1.4 billion of MGM's existing Operating Partnership units. As of December 31, 2020, there were approximately 280.0 million Operating Partnership units outstanding in the Operating Partnership of which MGM owned approximately 148.5 million, or 53.0%, of the Operating Partnership units in the Operating Partnership while MGP owns the remaining 47.0%.

"While 2020 presented a unique set of challenges, MGP successfully completed transactions that put us on a solid footing to continue to execute on our long-term business strategy. We acquired majority ownership of the real estate assets of the MGM Grand Las Vegas through our joint venture with Blackstone and completed $1.4 billion of unit redemption transactions that helped grow the company and diversify our shareholder base," said James Stewart, CEO of MGM Growth Properties. "The strength of our business model was again demonstrated through our 100% rent collection record and 3.7% annualized dividend increase over the year. We remain focused on continuing to grow the company and deliver long-term shareholder value."

The following table provides a reconciliation of MGP's consolidated net income to FFO, AFFO and Adjusted EBITDA for the three months ended December 31, 2020 and for the twelve months ended December 31, 2020:


Three Months Ended December
31, 2020


Twelve Months Ended December
31, 2020


Consolidated


(In thousands, except unit and per unit amounts)

Reconciliation of Non-GAAP Financial Measures




Net income

$

91,260



$

160,371


Depreciation1

58,161



236,853


Share of depreciation of unconsolidated affiliate

10,471



36,832


Property transactions, net

192



195,182


Funds From Operations

160,084



629,238


Amortization of financing costs and cash flow hedges

6,921



20,017


Share of amortization of financing costs of unconsolidated affiliate

64



226


Non-cash compensation expense

858



2,854


Straight-line rental revenues, excluding lease incentive asset

13,633



51,679


Share of straight-line rental revenues of unconsolidated affiliate

(12,866)



(44,950)


Amortization of lease incentive asset and deferred revenue on non-normal tenant improvements

4,628



18,509


Acquisition-related expenses



980


Non-cash ground lease rent, net

258



1,036


Other expenses

182



18,999


Gain on unhedged interest rate swaps, net

(7,495)



(4,664)


Provision for income taxes

3,370



9,734


Adjusted Funds From Operations

169,637



703,658


Interest income

(442)



(4,345)


Interest expense

64,237



228,786


Share of interest expense of unconsolidated affiliate

13,731



47,403


Amortization of financing costs and cash flow hedges

(6,921)



(20,017)


Share of amortization of financing costs of unconsolidated affiliate

(64)



(226)


Adjusted EBITDA

$

240,178



$

955,259


Weighted average Operating Partnership units outstanding




Basic

295,922,089



310,687,623


Diluted

296,128,163



310,849,330






Net income per Operating Partnership units outstanding




Basic

$

0.31



$

0.52


Diluted

$

0.31



$

0.52






FFO per Operating Partnership unit




Diluted

$

0.54



$

2.02


AFFO per Operating Partnership unit




Diluted

$

0.57



$

2.26



(1) Includes depreciation on Mandalay Bay real estate assets through February 14, 2020.

Financial Position

The Company had $626.4 million of cash and cash equivalents as of December 31, 2020. Cash received from rent payments under the Master Lease for the quarter and year ended December 31, 2020 was $206.9 million and $840.1 million, respectively. Cash received from distributions from the unconsolidated affiliate, MGP BREIT Venture, for the quarter and year ended December 31, 2020 was $22.9 million and $81.0 million, respectively.

On January 15, 2021, the Operating Partnership made a cash distribution of $136.5 million relating to the fourth quarter dividend, $72.4 million of which was paid to MGM and $64.1 million of which was paid to MGP. Simultaneously, MGP paid a cash dividend of $0.4875 per share.

"During the fourth quarter, we successfully completed the issuance of $750 million in aggregate principal amount of 3.875% senior notes due 2029, which was upsized from the initial offering of $500 million. The offering permanently financed the unit redemption at the lowest interest rate for a bond offering in our company's history," said Andy Chien, CFO of MGM Growth Properties. "Our pro rata net leverage of 5.3x is within our long-term target of 5.0-5.5x and our balance sheet remains well positioned to capitalize on future growth opportunities."

The Company's debt at December 31, 2020 was as follows (in thousands):


December 31, 2020

Senior secured credit facility:


Senior secured revolving credit facility

$

10,000

5.625% senior notes, due 2024

1,050,000

4.625% senior notes, due 2025

800,000

4.50% senior notes, due 2026

500,000

5.75% senior notes, due 2027

750,000

4.50% senior notes, due 2028

350,000

3.875% senior notes, due 2029

750,000

Total principal amount of debt

4,210,000

Less: Unamortized discount and debt issuance costs

(41,041)

Total debt, net of unamortized debt issuance costs

$

4,168,959

Conference Call Details

MGP will host a conference call at 12:30 p.m. Eastern Time today which will include a brief discussion of these results followed by a question and answer period. The call will be accessible via the Internet through http://www.mgmgrowthproperties.com/events-and-presentations or by calling 1-888-317-6003 for domestic callers and 1-412-317-6061 for international callers. The conference call access code is 8021719. A replay of the call will be available through Tuesday, February 23, 2021. The replay may be accessed by dialing 1-877-344-7529 or 1-412-317-0088. The replay access code is 10151792. The call will be archived at www.mgmgrowthproperties.com. In addition, MGP will post supplemental slides today on its website at http://www.mgmgrowthproperties.com/events-and-presentations, which includes a reconciliation of MGP's pro rata net leverage.

  1. Consolidated Funds From Operations ("FFO") is consolidated net income (computed in accordance with U.S. GAAP), excluding gains and losses from sales or disposals of property (presented as property transactions, net), plus depreciation, as defined by the National Association of Real Estate Investment Trusts plus the Company's share of depreciation of its unconsolidated affiliate.
  2. Consolidated Adjusted Funds From Operations ("AFFO") is FFO as adjusted for amortization of financing costs and cash flow hedges; the Company's share of amortization of financing costs of its unconsolidated affiliate; non-cash compensation expense; straight-line rental revenue (which is defined as the difference between contractual rent and cash rent payments, excluding lease incentive asset amortization); the Company's share of straight-line rental revenues of its unconsolidated affiliate; amortization of lease incentive asset and deferred revenue relating to non-normal tenant improvements; acquisition-related expenses; non-cash ground lease rent, net; other expenses; gain on unhedged interest rate swaps, net; and provision for income taxes.
  3. Consolidated Adjusted EBITDA ("Adjusted EBITDA") is consolidated net income (computed in accordance with U.S. GAAP) as adjusted for gains and losses from sales or disposals of property (presented as property transactions, net); depreciation; the Company's share of depreciation of its unconsolidated affiliate; amortization of financing costs and cash flow hedges; the Company's share of amortization of financing costs of its unconsolidated affiliate; non-cash compensation expense; straight-line rental revenue; the Company's share of straight-line rental revenues of its unconsolidated affiliate; amortization of lease incentive asset and deferred revenue relating to non-normal tenant improvements; acquisition-related expenses; non-cash ground lease rent, net; other expenses; gain on unhedged interest rate swaps, net; interest income; interest expense (including amortization of financing costs and cash flow hedges); the Company's share of interest expense (including amortization of financing costs) of its unconsolidated affiliate; and provision for income taxes.

FFO, FFO per unit, AFFO, AFFO per unit and Adjusted EBITDA are supplemental performance measures that have not been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") that management believes are useful to investors in comparing operating and financial results between periods. Management believes that this is especially true since these measures exclude real estate depreciation and amortization expense and management believes that real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time. The Company believes such a presentation also provides investors with a meaningful measure of the Company's operating results in comparison to the operating results of other REITs. Adjusted EBITDA is useful to investors to further supplement AFFO and FFO and to provide investors a performance metric which excludes interest expense. In addition to non-cash items, the Company adjusts AFFO and Adjusted EBITDA for acquisition-related expenses. While we do not label these expenses as non-recurring, infrequent or unusual, management believes that it is helpful to adjust for these expenses when they do occur to allow for comparability of results between periods because each acquisition is (and will be) of varying size and complexity and may involve different types of expenses depending on the type of property being acquired and from whom.

FFO, FFO per unit, AFFO, AFFO per unit and Adjusted EBITDA do not represent cash flow from operations as defined by U.S. GAAP, should not be considered as an alternative to net income as defined by U.S. GAAP and are not indicative of cash available to fund all cash flow needs. Investors are also cautioned that FFO, FFO per unit, AFFO, AFFO per unit and Adjusted EBITDA as presented, may not be comparable to similarly titled measures reported by other REITs due to the fact that not all real estate companies use the same definitions.

Reconciliations of consolidated net income to FFO, AFFO and Adjusted EBITDA are included in this release. Unless otherwise indicated, the non-GAAP measures discussed herein are related to continuing operations and not discontinued operations.

About MGM Growth Properties

MGM Growth Properties LLC (NYSE:MGP) is one of the leading publicly traded real estate investment trusts engaged in the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts, whose diverse amenities include casino gaming, hotel, convention, dining, entertainment and retail offerings. MGP, together with its joint venture, currently owns a portfolio of properties, consisting of 12 premier destination resorts in Las Vegas and elsewhere across the United States, MGM Northfield Park in Northfield, OH, Empire Resort Casino in Yonkers, NY, as well as a retail and entertainment district, The Park in Las Vegas. As of December 31, 2020, MGP's portfolio of destination resorts, the Park, Empire Resort Casino, and MGM Northfield Park collectively comprised approximately 32,400 hotel rooms, 1.5 million casino square footage, and 3.6 million convention square footage. As a growth-oriented public real estate entity, MGP expects its relationship with MGM Resorts and other entertainment providers to attractively position MGP for the acquisition of additional properties across the entertainment, hospitality and leisure industries. For more information about MGP, visit the Company's website at http://www.mgmgrowthproperties.com.

This release includes "forward-looking" statements and "safe harbor statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and/or uncertainties, including those described in MGP's public filings with the Securities and Exchange Commission. MGP has based forward-looking statements on management's current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to, MGP's expectations regarding the continued impact of the COVID-19 pandemic on its business and the business of its tenant, MGP's ability to continue to grow its dividend, successfully execute on its business strategy and acquire additional properties in accretive transactions. These forward-looking statements involve a number of risks and uncertainties and the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include risks related to MGP's ability to receive, or delays in obtaining, any regulatory approvals required to own its properties, or other delays or impediments to completing MGP's planned acquisitions or projects, including any acquisitions of properties from MGM; the ultimate timing and outcome of any planned acquisitions or projects; MGP's ability to maintain its status as a REIT; the availability of and the ability to identify suitable and attractive acquisition and development opportunities and the ability to acquire and lease those properties on favorable terms; MGP's ability to access capital through debt and equity markets in amounts and at rates and costs acceptable to MGP; changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs or to the gaming or lodging industries; and other factors described in MGP's period reports filed with the Securities and Exchange Commission. In providing forward-looking statements, MGP is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law. If MGP updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements.

 

MGM GROWTH PROPERTIES LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)



Three Months Ended December 31,


Twelve Months Ended December 31,


2020


2019


2020


2019

Revenues








Rental revenue

$

188,304



$

219,846



$

768,442



$

856,421


Ground lease and other

6,039



6,039



24,155



24,657


Total Revenues

194,343



225,885



792,597



881,078










Expenses








Depreciation

58,161



71,643



236,853



294,705


Property transactions, net

192



(500)



195,182



10,844


Ground lease expense and other

5,921



5,921



23,681



23,681


Acquisition-related expenses



1,274



980



10,165


General and administrative

3,987



4,211



16,076



16,516


Total Expenses

68,261



82,549



472,772



355,911










Other income (expense)








Income from unconsolidated affiliate

25,030





89,056




Interest income

442



1,030



4,345



3,219


Interest expense

(64,237)



(58,971)



(228,786)



(249,944)


Gain (loss) on unhedged interest rate swaps, net

7,495



(3,880)



4,664



(3,880)


Other

(182)



(6,809)



(18,999)



(7,615)



(31,452)



(68,630)



(149,720)



(258,220)


Income from continuing operations before income taxes

94,630



74,706



170,105



266,947


Provision for income taxes

(3,370)



(1,827)



(9,734)



(7,598)


Income from continuing operations, net of tax

91,260



72,879



160,371



259,349


Income from discontinued operations, net of tax







16,216


Net income

91,260



72,879



160,371



275,565


Less: Net income attributable to noncontrolling interest

(49,777)



(46,947)



(84,242)



(185,305)


Net income attributable to Class A shareholders

$

41,483



$

25,932



$

76,129



$

90,260










Weighted average Class A shares outstanding:








Basic

131,574,406



103,740,424



129,490,918



93,046,859


Diluted

131,780,480



104,134,536



129,652,625



93,299,233










Earnings per share attributable to Class A shareholders:








Basic

$

0.32



$

0.25



$

0.59



$

0.97


Diluted

$

0.31



$

0.25



$

0.59



$

0.97


 

MGM GROWTH PROPERTIES LLC

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)



December 31,


2020


2019

ASSETS








Real estate investments, net

$

8,310,737



$

10,827,972


Lease incentive asset

507,161



527,181


Investment in unconsolidated affiliate

810,066




Cash and cash equivalents

626,385



202,101


Prepaid expenses and other assets

25,525



31,485


Above market lease, asset

39,867



41,440


Operating lease right-of-use assets

280,565



280,093


Total assets

$

10,600,306



$

11,910,272


LIABILITIES AND SHAREHOLDERS' EQUITY








Liabilities




Debt, net

$

4,168,959



$

4,307,354


Due to MGM Resorts International and affiliates

316



774


Accounts payable, accrued expenses and other liabilities

124,109



37,421


Accrued interest

48,505



42,904


Dividend and distribution payable

136,484



147,349


Deferred revenue

156,760



108,593


Deferred income taxes, net

33,298



29,909


Operating lease liabilities

341,133



337,956


Total liabilities

5,009,564



5,012,260


Commitments and contingencies




Shareholders' equity




Class A shares: no par value, 1,000,000,000 shares authorized, 131,459,651 and 113,806,820 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively




Additional paid-in capital

3,114,331



2,766,325


Accumulated deficit

(422,897)



(244,381)


Accumulated other comprehensive loss

(51,197)



(7,045)


Total Class A shareholders' equity

2,640,237



2,514,899


Noncontrolling interest

2,950,505



4,383,113


Total shareholders' equity

5,590,742



6,898,012


Total liabilities and shareholders' equity

$

10,600,306



$

11,910,272


 

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SOURCE MGM Growth Properties LLC

FAQ

What were MGM Growth Properties' Q4 earnings for 2020?

MGM Growth Properties reported a net income of $41.5 million, or $0.31 per share for Q4 2020.

How did MGM Growth Properties perform for the full year ended December 31, 2020?

For the full year, MGP recorded a net income of $76.1 million, or $0.59 per share, with total rental revenue of $768.4 million.

What was the dividend increase for MGM Growth Properties in 2020?

MGM Growth Properties increased its dividend by 3.7% in 2020.

What was the cash position of MGM Growth Properties at year-end 2020?

As of December 31, 2020, MGM Growth Properties had $626.4 million in cash and cash equivalents.

How did MGM Growth Properties address its debt in 2020?

MGM Growth Properties redeemed 23.5 million Operating Partnership units and issued $750 million in senior notes to enhance its financial structure.

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REIT—Diversified
Real Estate
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United States
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