MGM Resorts International is looking to sell. The group already announced they were selling the MGM Bellagio and the Circus Circus Casino, and now, they are looking for a buyer for one more property. According to the company CEO Jim Murren, the flagship property MGM Grand is now on the table, just weeks after the announced that the two other casinos were being sold.
Becoming Asset Light
It seems MGM Resorts really wants to open an integrated resort in Japan. The company has decided to go an asset-light approach, getting rid of seemingly property after property from their Nevada casino portfolio to raise enough capital to open an integrated resort in Japan. The cost of such a build could be upwards of $10 Billion.
According to Murren, the company plans on announcing a buyer for the MGM Grand by the year’s end. Any future transactions as well as recent ones are an effort by the brand to gain a flexible financial structure to capitalize on their strengths in developing and operating casino resort venues.
The MGM Bellagio recently sold to the Blackstone Group, a financial services firm based in New York. The company signed a $4.5 billion deal with MGM Resorts, with MGM maintaining the management of the property after the transaction is completed.
A deal for Circus Circus is also being worked on with Phil Ruffin, the owner of the Treasure Island casino in Las Vegas. Mr. Ruffin has wanted to purchase a property on the Strip for quite some time and this seems to be his big chance.
Once the MGM Grand sells, the company plans to use the money from the sale to reduce debt within the company and invest in net growth opportunities. The company sees the sports betting industry of the United States and the new casino market in Japan as premium opportunities for growth.
According to Murren, the MGM Grand may be sold to the real estate investment trust of MGM, which would be MGM Growth Properties. The CEO pointed out that if a deal came down to a third party and the MGM Growth Properties, then they would favor MGP.
Apparently, MGM Resorts is also looking to decrease their stake in their real estate investment trust to be under 50%. The majority of the properties owned by the company was placed in MGM Growth Properties back in 2016.
Once the MGM Grand is sold, the MGM Springfield will be the last wholly owned property of MGM located in the United States. The company is continuing to evaluate selling remaining assets including the CityCenter located in Las Vegas. The CityCenter is a join venture with Dubai World, which includes the ARIA hotel and casino.
For now, MGM is doing quite well, having seen a 9% increase in third quarter revenues of $3.3 billion. Their Adjusted EBITDA increased by 14% to $814 million. Despite the increases, the company did see a drop in gaming revenue for properties located on the Strip during the third quarter based on weakness involving baccarat volume.