MGM Resorts International today won final approval from state regulators for some reorganization moves related to the casino operator’s plan to create a new company that will own a lot of its real estate.
The Nevada Gaming Commission unanimously signed off on the transactions approved by the Gaming Control Board at a special meeting Wednesday, allowing MGM Resorts to move forward with a major restructuring effort.
The company announced last year that it would create a real estate investment trust called MGM Growth Properties LLC that will own 10 of its properties, including seven on the Strip.
Gaming regulators did not actually have to approve the creation of MGM Growth Properties itself. Rather, they considered a series of other MGM transactions related to the creation of the real estate investment trust.
Once the reorganization is complete, MGM Growth Properties will be the landlord of its properties, all of which MGM Resorts will lease back.
MGM Resorts will own most of MGM Growth Properties, and Chairman and CEO Jim Murren will also be chairman of the new company. The changes are not expected to impact customers and employees.
Sometime in the near future, MGM Growth Properties intends to launch an initial public offering, but it’s not clear exactly when that will occur. MGM Resorts has already named a chief executive, chief financial officer and board members for the new company.
MGM Growth Properties will own Mandalay Bay, the Mirage, Monte Carlo, New York-New York, Luxor, Excalibur and the Park development in Las Vegas.
Outside Nevada, the new company will own MGM Grand Detroit, the Beau Rivage and the Gold Strike Tunica.
Several key MGM Resorts properties will not be placed into the new real estate investment trust, including the MGM Grand, Bellagio and Circus Circus on the Strip. None of the company’s jointly owned properties, such as CityCenter and the T-Mobile Arena, will be included, either.
Murren told the commission that a desire to unlock value in his company’s real estate was a primary reason for creating MGM Growth Properties. He characterized the real estate investment trust as a big step forward for the company.
“It improves the balance sheet of MGM Resorts, it provides another growth vehicle for the company and it will...provide a different investment opportunity, as (MGM Growth Properties) goes out and can acquire assets,” Murren said.
He stressed that his company will work with the real estate trust under a triple net lease, meaning MGM Resorts is still on the hook for all capital expenditures at the properties owned by MGM Growth Properties. All workers will remain MGM Resorts employees, Murren said.
Murren also touched on some of the broader issues affecting his company and the Las Vegas casino industry more generally, from the importance of conventions to skill-based gaming and Millennial customers.
He indicated some sort of “pure social gaming environment” is in store for the MGM Grand near the Hakkasan nightclub. The company also plans to invest heavily in the Monte Carlo, which will likely get a new name, he said.
At one point, Commissioner Randolph Townsend asked Murren about transportation on the Strip, an issue that has come into focus lately as a major transit investment plan suggested building light rail in the resort corridor.
Murren did not mention light rail specifically but indicated that he may be open to the idea, saying “we should have done a lot more a long time ago” about transit.
“I’m more than willing to accept some near-term disruption, which is inevitable, if we can find a plausible, long-term solution to this incredible problem,” he said.
The light rail proposal has been presented to the Southern Nevada Tourism Infrastructure Committee, of which MGM Resorts President Bill Hornbuckle is a member.
Murren said after his commission appearance that he’s looking forward to seeing what that group comes up with, but he is “extremely open-minded” regarding ideas to improve mass transit.