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VICI Properties Inc. has successfully completed the acquisition of a 49.9% interest in the joint venture owning MGM Grand Las Vegas and Mandalay Bay from Blackstone Real Estate Income Trust for approximately $1.27 billion. VICI will also assume a $3 billion property-level debt due in 2032 at a 3.558% interest rate. The acquisition includes a triple-net lease with MGM Resorts generating about $310 million annually, escalating at 2% annually until 2035. The lease term extends until 2050, with two renewal options.
Positive
Acquisition improves VICI's portfolio with two major Las Vegas properties.
Stable rental income of $310 million annually from MGM with escalation.
Long lease term until 2050 provides revenue stability.
Negative
VICI assumes $3 billion debt which may affect cash flow.
Interest payments of 3.558% could strain financial resources.
NEW YORK--(BUSINESS WIRE)--
VICI Properties Inc. (NYSE: VICI) (“VICI Properties” or the “Company”), an experiential real estate investment trust, announced today that the Company has closed on the previously announced acquisition of the remaining 49.9% interest in the joint venture that owns MGM Grand Las Vegas and Mandalay Bay Resort from Blackstone Real Estate Income Trust, Inc. (“BREIT”) for cash consideration of approximately $1.27 billion and VICI’s assumption of BREIT’s pro-rata share of existing property-level debt. The cash consideration was funded through a combination of cash on hand and proceeds from the settlement of forward equity sale agreements. The property-level debt has a principal balance of $3.0 billion, matures in 2032, and bears interest at a fixed rate of 3.558% per annum through March 2030.
The properties, situated at the south end of the Las Vegas Strip in Las Vegas, Nevada, are subject to an existing triple-net lease agreement between the joint venture and MGM Resorts International (NYSE: MGM). The lease remains unchanged and will generate annual rent of approximately $310 million upon the commencement of the next rental escalation on March 1, 2023.
The MGM Grand Las Vegas / Mandalay Bay triple-net lease has a remaining initial lease term of approximately 27 years (expiring in 2050), with two ten-year tenant renewal options. Rent under the lease agreement escalates annually at 2.0% through 2035 (year 15 of the initial lease term) and thereafter at the greater of 2.0% or CPI (subject to a 3.0% ceiling).
Morgan Stanley & Co. LLC acted as exclusive financial advisor and Hogan Lovells served as legal advisor to VICI Properties.
About VICI Properties
VICI Properties Inc. is an S&P 500® experiential real estate investment trust that owns one of the largest portfolios of market-leading gaming, hospitality and entertainment destinations, including Caesars Palace Las Vegas, MGM Grand and the Venetian Resort Las Vegas, three of the most iconic entertainment facilities on the Las Vegas Strip. VICI Properties’ geographically diverse portfolio consists of 49 gaming facilities across the United States and Canada comprising approximately 124 million square feet and features approximately 59,300 hotel rooms and more than 450 restaurants, bars, nightclubs and sportsbooks. Its properties are leased to industry leading gaming and hospitality operators, including Caesars Entertainment, Inc., Century Casinos, Inc., the Eastern Band of Cherokee Indians, Foundation Gaming & Entertainment, LLC, Hard Rock International Inc., JACK Entertainment LLC, MGM Resorts International, Penn Entertainment, Inc., PURE Canadian Gaming Corp., and The Venetian Las Vegas. VICI Properties has a growing array of investing and financing partnerships with leading non-gaming experiential operators, including Great Wolf Resorts, Cabot, Canyon Ranch and Chelsea Piers. VICI Properties also owns four championship golf courses and 34 acres of undeveloped and underdeveloped land adjacent to the Las Vegas Strip. VICI Properties’ strategy is to create the highest quality and most productive experiential real estate portfolio. For additional information, please visit www.viciproperties.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,” “will,” and similar expressions that do not relate to historical matters. All statements other than statements of historical fact are forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors which are, in some cases, beyond VICI’s control and could materially affect actual results, performance, or achievements. Important risk factors that may affect VICI’s business, results of operations and financial position (including those stemming from changes in economic conditions and risks relating to VICI’s pending and recently completed transactions) are detailed from time to time in VICI’s filings with the Securities and Exchange Commission. VICI does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as may be required by applicable law.
What is the significance of VICI's acquisition of MGM Grand and Mandalay Bay?
The acquisition allows VICI to enhance its portfolio by gaining full ownership of two major Las Vegas properties, expected to generate stable rental income.
How much did VICI pay for the acquisition of MGM Grand and Mandalay Bay?
VICI Properties paid approximately $1.27 billion for the acquisition.
What will be the annual rent generated from the MGM properties?
The annual rent generated will be approximately $310 million, with annual escalations.
What kind of lease agreement is in place for the MGM properties?
The properties are under a triple-net lease agreement, which ensures stable rental income and responsible maintenance by the tenant.
What are the financial implications for VICI after this acquisition?
While VICI gains substantial rental income, it also takes on $3 billion in debt, which may impact its financial flexibility.
