VICI Properties completes acquisition of MGM Growth Properties

VICI Properties has completed its previously announced acquisition of MGM Growth Properties (MGP) for $17.2 billion.

Simultaneous with the closing of the MGP acquisition, the company entered into an amended and restated triple-net master lease with MGM Resorts International.

”The MGM master lease, which commences as of today, has an initial term of 25 years, with three 10-year tenant renewal options and an initial total annual rent of $860.0 million. Rent under the MGM master lease escalates at a rate of 2.0% per annum for the first 10 years and thereafter at the greater of 2.0% per annum or the annual increase in the consumer price index (CPI), subject to a 3.0% cap,” said the company in a press release.

Additionally, the company retained MGP’s 50.1% ownership stake in the joint venture between MGP and Blackstone Real Estate Income Trust, Inc. (BREIT JV), which owns the real estate assets of MGM Grand Las Vegas and Mandalay Bay.

”The BREIT JV lease remained unchanged and provides for current annual base rent of approximately $303.8 million, of which approximately $152.2 million is attributable to our investment in the BREIT JV, and an initial term of 30 years, with two 10-year tenant renewal options. Rent under the BREIT JV lease escalates at a rate of 2.0% per annum for the first 15 years and thereafter at the greater of 2.0% per annum or the annual increase in CPI, subject to a 3.0% cap. On a combined basis, the MGM master lease and BREIT JV lease will deliver initial attributable annual rent to us of approximately $1,012.2 million. The tenant’s obligations under the MGM master lease and BREIT JV lease continue to be guaranteed by MGM,” VICI said.

Edward Pitoniak, VICI Chief Executive Officer:“The addition of the MGP portfolio, together with the recent closing of our Venetian acquisition, elevates VICI to the top ranks of American 4-wall REITs, making VICI a Top-5 REIT by EBITDA and a Top-10 REIT by enterprise value. We also become the largest owner of hotel and conference real estate in America, within what we believe is the superior transparency and integrity of the Triple Net Lease model. Moreover, among Top 10 American 4-wall REITs, VICI stands out for the Class A quality of our real estate. The VICI team has accomplished a total of $21 billion in closings in the last two months with the lowest G&A cost structure of any of the Top 10 REITS by enterprise value. The productivity of the VICI Team is unmatched.”

Under the terms of the MGP Master Transaction Agreement, MGP stockholders received 1.366 shares of the company’s newly issued common stock in exchange for each Class A common share of MGP, resulting in the company issuing approximately 214.5 million shares.

MGM received $43.00 per unit in cash for the redemption of the majority of its MGP OP units, which were converted into units of VICI Properties OP LLC, the company’s new operating partnership (VICI OP), in connection with the closing of the MGP acquisition, for total cash consideration of $4.404 billion. MGM retained approximately 12.2 million VICI OP units following the closing of the MGP acquisition. The MGP Class B share that was held by MGM was cancelled and ceased to exist.

Following the MGP acquisition, the company has approximately 963.0 million shares of common stock outstanding, representing 98.7% of total outstanding VICI OP units.

The company also announced, in connection with the closing of the MGP acquisition, that its subsidiary, VICI Properties L.P., has closed on its public offering of $5.0 billion in aggregate principal amount of senior unsecured notes. The company used a portion of the net proceeds of the offering to fund the consideration for the redemption of a majority of MGM’s outstanding MGP OP units, which were converted into VICI OP units received by MGM in connection with the closing of the MGP acquisition.

The company also issued approximately $4.1 billion aggregate principal amount of senior notes in exchange for, and with the same interest rate, maturity date and redemption terms as, notes originally issued by MGP OP pursuant to the settlement of the exchange offers and consent solicitations. Following the settlement of the exchange offers and consent solicitations, approximately $0.1 billion of the MGP OP notes remain outstanding.