It has been less than a week since Land and Buildings Investment Management, who holds less than a 1 percent stake in MGM Resorts International, suggested the company convert to real estate investment trust, and MGM has made it clear where they stand. The gaming giant has suggested to its shareholders to not vote for any board of director candidates brought forward by Land and Buildings.
MGM Resorts International Chairman and CEO Jim Murren has said numerous times his company gets bombarded by banks and investment firms suggesting they form a REIT, but the company has stood firm rejecting all notions. Land and Buildings found Jonathan Litt has reiterated to MGM that through the formation of a REIT, they could reduce their debt by $5 billion.
REITs have been the hot thing as of late, and wildly embraced by the gaming industry. The concept is that the company splits in two, with one company owning the real estate, while the other manages the casino. Through this shifting, REITs don’t pay federal income taxes, but instead distribute at least 90 percent of taxable earnings to its shareholders.
Litt also said MGM Resorts stock could raise from $33 a share to $55. Litt also believes the company’s $14.17 billion in long-term debt could be reduced through the REIT and by selling a few parts of the company, such as the Crystals retail mall inside CityCenter.
