MGM Growth Properties hung tough during a dismal 2020.
The Las Vegas-based, publicly traded real estate investment trust (NYSE: MGP), founded and majority owned by MGM Resorts International, weathered a 10.2 percent decline in annual revenues to post an increase in funds from operations from $581.1 million to $703.7 million.
On a per share basis, the difference was an increase of 28 cents to $2.26 per share.
The results were boosted by a strong fourth quarter in which the company overcame a 14 percent drop in revenues to post an increase in FFO from $144 million in Q4 2019 to $169.6 million, or 57 cents per share.
FFO, generally calculated as net income plus depreciation and amortization, is a key measure of REIT cash flow.
“While 2020 presented a unique set of challenges, MGM Growth successfully completed transactions that put us on a solid footing to continue to execute on our long-term business strategy,” CEO James Stewart said in a statement. “The strength of our business model was again demonstrated through our 100 percent rent collection record and 3.7 percent annualized dividend increase over the year.”
The year was highlighted by the company’s acquisition, in partnership with Blackstone Real Estate Income Trust, of Mandalay Bay and the MGM Grand on the Las Vegas Strip.
The joint venture paid MGM Resorts $4.6 billion for the properties, which MGM continues to operate in exchange for rent payments under an industry standard triple net lease.
MGP, which is 53 percent owned by MGM, owns most of MGM’s Strip resorts. In addition to the Grand and Mandalay Bay they include: The Mirage, Park MGM and The Park entertainment enclave, New York-New York, Luxor and Excalibur.
The company’s casino assets elsewhere, purchased from MGM under similar agreements, are: MGM Grand Detroit; MGM Northfield Park outside Cleveland; MGM National Harbor on the Maryland side of the border with Washington, D.C.; Beau Rivage in Biloxi, Miss.; Borgata in Atlantic City; and Empire City in Yonkers, N.Y.
Truist Securities analyst Barry Jonas noted that while MGP is open to acquiring non-gaming real estate, “Gaming is their preferable asset class.”
