MGM Resorts International revealed on Monday that it had added $700 million to its balance sheet after redeeming a portion of its partnership units in real estate investment trust MGM Growth Properties.
In a statement reported exclusively by CDC Gaming Reports, MGM Resorts said the transaction increased the company’s liquidity position to $5.3 billion while supporting its corporate efforts during the ongoing Covid-19 pandemic. MGM’s portfolio of properties in eight states has been closed since mid-March. The operator has said it will begin to reopen its Las Vegas Strip properties beginning with New York-New York and Bellagio once given the go-ahead by regulators and Governor Steve Sisolak.
“Today’s announcement is another example of our efforts to bolster our already strong liquidity position during the Covid-19 pandemic,” MGM Resorts acting CEO Bill Hornbuckle said in the statement. “As we gear up to reopen and safely welcome our guests once again at our properties across the U.S., maintaining a strong balance sheet and preserving our financial flexibility remain critical pillars of long-term success.”
The transaction for MGM Resorts was part of a previous agreement with MGM Growth, which was spun off by the company in 2016, to purchase up to $1.4 billion of the company’s units in the REIT for cash through February 2022.
On Monday, MGM said it would redeem 30.3 million units. MGM Resorts still has roughly 172 million units in MGM Growth, representing a 56.7 percent ownership stake.
“This transaction both strengthens MGM’s balance sheet and delivers significant accretion to MGM Growth,” Hornbuckle said. “We continue to see significant value in our MGM Growth stake and are optimistic that future redemptions will occur at higher prices.”
