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MGM Resorts International, MGM Growth Properties Closes Acquisition of Empire City Casino in Yonkers, New York.

MANews-(C)2009-2019

31 January 2019 - US-based casino operator MGM Resorts International (NYSE: MGM) has closed the acquisition of the real property and operations associated with the Empire City Casino's race track and casino for consideration of USD 850m, the company said.

Further, MGM Resorts and MGM Growth Properties LLC (NYSE: MGP) have entered into a definitive agreement whereby MGP will acquire the developed real property associated with Empire City from MGM Resorts and lease it back to a subsidiary of MGM Resorts, after which a subsidiary of MGM Resorts will operate the property.

MGM Resorts will pay total consideration of approximately USD 850m, subject to customary working capital and other adjustments, including the refinancing of Empire City's outstanding debt, which is expected to be approximately USD 245m at the time of closing.

MGM Resorts expects that approximately USD 260m of the remaining consideration will be in the form of MGM Resorts common stock.

Furthermore, MGM Resorts has agreed to pay additional consideration of USD 50m if Empire City is awarded a license for live table games on or prior to December 31, 2022 and MGM Resorts accepts such license by December 31, 2024.

For the last twelve months ended March 31, 2018, Empire City reported approximately USD 230m in net revenues and approximately USD 70m in Adjusted EBITDA.

Subsequent to the purchase of Empire City, MGM Resorts and MGP have agreed that MGM Resorts will sell the developed real property to MGP for total consideration of approximately USD 625m, which will include the assumption of the approximately USD 245m of debt refinanced by MGM Resorts as described above and the balance through the issuance of operating partnership units to MGM Resorts based upon MGP's closing price of USD 29.38 as of May 25, 2018.

In addition, MGM Resorts has agreed to give MGP a right of first offer with respect to certain undeveloped land adjacent to the property to the extent MGM Resorts develops additional gaming facilities and chooses to sell or transfer the property in the future.

Empire City will be added to the existing Master Lease between MGM Resorts and MGP, and the annual rent payment to MGP will increase by USD 50m.

Consistent with the Master Lease terms, 90% of this rent will be fixed and contractually grow at 2% per year until 2022. The purchase price represents a cap rate of 8%, or a 12.5x EBITDA multiple.

MGP expects to fund the acquisition of the Empire City real property and the assumption of related debt with a combination of existing cash on hand, borrowings under its senior secured revolving credit facility, and the aforementioned issuance of operating partnership units to a subsidiary of MGM Resorts.

Empire City sits on a 97-acre property and serves approximately 16m eligible gaming customers in southern New York.

It is located only 15 miles from Times Square in Manhattan.

Offering gaming, racing, dining, and entertainment, Empire City features over 5,200 of the latest slots and electronic table games, multiple dining outlets, and both live and simulcast horse racing.

BofA Merrill Lynch is acting as exclusive financial advisor to MGM Resorts in connection with the transaction. PJT Partners LP is acting as financial advisor to the conflicts committee of the MGP board of directors.

MGM Resorts International has national and international locations featuring hotels and casinos, meetings and conference spaces, live and theatrical entertainment, and a range of restaurant, nightlife and retail offerings.

The MGM Resorts portfolio encompasses 28 unique hotel offerings including some of the most recognizable resort brands in the industry.

Expanding throughout the US and around the world, the company in 2018 opened MGM COTAI in Macau and the first Bellagio-branded hotel in Shanghai. It also is developing MGM Springfield in Massachusetts.

MGM Growth Properties is a real estate investment trusts engaged in the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts, whose diverse amenities include casino gaming, hotel, convention, dining, entertainment and retail offerings.

It currently owns a portfolio of properties, consisting of 11 destination resorts in Las Vegas and elsewhere across the United States, and the Park, a dining and entertainment complex which opened in April 2016.

As of December 31, 2017, these properties collectively comprise over 27,500 hotel rooms, 2.7m convention square footage, 100 retail outlets, 200 food and beverage outlets and 20 entertainment venues.

Country: USA

Sector: Hotels/Restaurants/Casinos/Catering

Target: Empire City Casino's race track and casino/ real property and operations

Buyer: MGM Resorts International

Vendor:

Deal size in USD: 850m

Type: LBO

Financing: Cash

Status: Closed

Buyer advisor: BofA Merrill Lynch , PJT Partners ,

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Publication:M & A Navigator
Date:Jan 31, 2019
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