MGM Growth Properties, the real estate investment trust that functions as the landlord for 10 MGM Resorts casino properties in the U.S., recently announced a >MGM Growth Properties, the real estate investment trust that functions as the landlord for 10 MGM Resorts casino properties in the U.S., recently announced a $0.03 dividend increase on its first anniversary as a public company. It’s also the subject of speculation over when it may acquire MGM National Harbor.<.03 dividend increase on its first anniversary as a public company. It's also the subject of speculation over when it may acquire MGM National Harbor.
Adjusted funds from operations, a REIT-specific metric, totaled $121.7 million, or $0.50, for the quarter. On a conference call with investors, Chief Executive Officer James Stewart said, “In the quarter, we celebrated our first anniversary of being a public company and received our first rent escalator under the Master Lease. The $12 million increase in annual rent and related increase to AFFO per share allowed us to increase our dividend to $1.58 representing a $0.03 increase from our prior annual dividend rate and a more than 10 percent increase from our dividend at IPO.”
Total rental revenues for the quarter were $163.2 million, assisted by the activation of a $12 million annual escalator. Net income was $43.9 million and adjusted EBITDA was $162.7 million.
Union Gaming Analyst John DeCree said, “By design, there were no surprises in the numbers.” He said the next major event is expected to be the acquisition of MGM National Harbor, which opened December 1, 2016 south of Washington, D.C. “We believe the next leg up for MGP will likely come with the potential purchase of MGM National Harbor in the coming quarters. The question is more when than if MGP/MGM strike a deal. While we believe an end-of-year announcement is still reasonable, we are not concerned if it flows into 2018.”
MGM Resorts Chief Executive Jim Murren said last month in a second-quarter conference call that the company planned to wait a few quarters before opening negotiations with MGP. “Well, we have a few quarters under our belt right now, so I would think that it would be logical to assume that a transaction would be more in the near term than the long term between MGM and MGP,” he said.
Murren added MGP, in which MGM holds an ownership stake, is aggressively seeking to expand its portfolio, both inside and beyond MGM properties. “MGP is out on the prowl on a variety of other transactions, some of which will not involve MGM, but others very likely could,” he said, adding MGM Springfield was also a likely candidate.
Aside from Gaming and Leisure Properties, MGP currently is the only REIT focused specifically on casino gaming. Stewart said MGP also is considering non-gaming acquisitions and noted he is seeing a “marked uptick” in opportunities.
As of June 30, MGP had $376.8 million in cash on hand and total debt of $3.6 billion.
