MGM Resorts International has raised $700m after arranging for real estate investment trust (REIT) MGM Growth Properties (MGP) to redeem 23.5m operating partnership units.
The redemption represents the remaining amount agreed under an existing arrangement for MGP to secure up to $1.4bn of MGM Resorts units in exchange for cash.
MGM Resorts said it intends to use the proceeds from the redemption for general corporate purposes.
“This announcement reflects our continued focus on enhancing our balance sheet to strengthen our financial flexibility,” MGM Resorts’ president and chief executive Bill Hornbuckle said.
“As the pandemic continues to impact operations at our properties across the US, we believe the opportunistic exercise of our redemption right as well as our recent senior notes offering allow us to continue pursuing our strategic goals while navigating the crisis.”
Upon completion of the transaction, MGM Resorts will hold approximately 149m units, representing a 53% economic ownership in MGP.
MGM Resorts will also continue to hold significant real estate assets, including its ownership of MGM Springfield in Massachusetts, a 50% interest in CityCenter in Las Vegas, Nevada, and a 56% interest in the MGM China operation.
MGP chief executive James Stewart said: “Our recent capital raise will allow us to fully fund this final redemption under the waiver agreement with cash on hand while still maintaining a balance sheet positioned for future growth.”
The agreement comes after MGM Resorts in October said that while its regional US properties began to recover from novel coronavirus (Covid-19) shut-downs in the third quarter, continuing restrictions in Macau meant revenue remained down significantly year-on-year.
Revenue for the quarter ended 30 September was down 66.0% at $1.13bn, while net loss for the period reached $534.7m, compared to a $37.1m loss in the prior year.