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MGM Growth Properties’ profits decline ahead of acquisition by VICI


Real estate investment trust MGM Growth Properties’ (MGP) revenue remained exactly stable at $194.3m in Q3, while profits dipped, ahead of its $17.2bn sale to VICI Properties.

Just like in 2020, the revenue for the group — which owns a number of MGM Resorts-operated properties such as the MGM Grand, Mandalay Bay and The Mirage — comprised $188.3m in rental revenue and $6.0m from ground leases.

Expenses, however, did rise⁠ — growing 9.5% to $74.0m. Depreciation was the largest source of expenses, but declined by 1.0% to $57.6m. The increase in costs was mostly driven by $6.3m in new acquisition-related expenses, while the business also paid $5.9m in ground lease expenses and $3.9m in general and administrative costs.

As a result, MGP’s operating revenue came to $120.3m, down 5.1%.

MGM Growth Properties incurred a further $34.8m in net non-operating costs, a 30.8% increase from the same period of 2020. These non-operating costs included $64.2m in interest income, a 7.0% rise, partially offset by $25.0m in income from businesses in which MGM Growth Properties holds a non-controlling stake, as well as $4.4m in income from interest swaps.

As a result, MGP recorded pre-tax income of $85.5m, a 15.5% decline from 2020.

After paying $2.4m in income taxes, the REIT was left with $83.1m in net income, a 14.7% year-on-year decline.

After accounting for $33.1m attributable to non-controlling interests, a total of $50.0m of MGP’s income was attributable to its own shareholders, up 15.2%.

In August, VICI Properties — a REIT spun off of Caesars and owner of many Caesars properties — agreed a deal to acquire MGP from its controlling shareholder MGM Resorts for $17.2bn.

Under the deal, MGM Growth Properties Class A shareholders will receive 1.366 shares of newly issued VICI stock for every share of MGM Growth Properties they hold. The issuance of these new shares was approved by VICI shareholders earlier this week, bringing the deal — which is set to close in the first half of 2022 — closer to completion.

MGM Resorts itself reported its third-quarter figures earlier this week. It recorded revenue figures of $2.71bn, representing a 145.5% increase on the same period last year. In addition, the operator announced plans to sell the operations of The Mirage, a property owned by MGP.