MGM Growth Properties has announced that it is on the market for a casino much like the Venetian, which is for sale by Las Vegas Sands Corp., if it can find suitable partner to run it.
The real estate investment trust (REIT)’s CEO James Stewart told investors during a conference call: “We would definitely be interested,” he said. “If we can go to bed at night without having anything keep us up over worrying about — is the rent going to get paid? It’s absolutely a deal that we would do.” MGM Growth’s largest shareholder is MGM Resorts International.
He added, “I think that (in) the city, in particular, those properties are going to be set up for some very, very significant growth once we get to the other side of Covid.”
REITs usually buy properties and then lease them to others to operate.
Sands reportedly wants $6 billion for the Venetian, the Palazzo and the Sands convention center.
Although Las Vegas is recovering from the Covid-19 pandemic, Stewart told investors that the city still has potential, as shown by the fact that the Sands believes its properties are worth $6 billion. The company probably wants capital to invest in Asia.
MGM Growth is one of several REITs created by casino companies. Others include Gaming & Leisure and Vici. Such trusts provide tax advantages and avoid corporate income taxes.
After seeing losses during the worst of the pandemic, MGM Growth has posted third quarter cash flows that beat forecasts—all while continuing to collect the rent.
Stewart said he was looking forward to conventions returning to the city. “We’re long-term believers in Las Vegas as one of the premier destinations for business and leisure travel in the world.”
Although MGM Growth is on the market for more Las Vegas properties, MGM Resorts International’s CEO Bill Hornbuckle says it is not. He told investors last week: “We think we own enough of Las Vegas to be open about it But there will be other opportunities that the market presents to us that we’ll have to take a sincere look at.”
Analysts say there are many properties—as many as 60—MGM Growth might consider suitable, i.e. with a larger than $40 million annual cash flow.
