MGM Resorts International and MGM Growth Properties LLC have completed the previously announced transaction concerning MGM Resorts’ acquisition of the operating assets of the Hard Rock Rocksino Northfield Park from MGP and lease the real property from MGP. MGM Resorts also announced it has officially rebranded the property as MGM Northfield Park.
“We are pleased to welcome the 950 employees of MGM Northfield Park into the MGM Resorts family,” said Jim Murren, Chairman and CEO of MGM Resorts. “Over the years, we have strategically and thoughtfully expanded our presence in key US regions where we can leverage our expertise, maximize our cross-marketing efforts and drive company-wide growth. Today’s announcement reinforces this strategy. We remain excited for the future of MGM Northfield Park as it further cements itself as a market leader under the MGM brand and Chris Kelley‘s leadership.”
As consideration for the transaction, MGM Growth Properties Operating Partnership LP redeemed approximately 9.4 million of its operating partnership units from a subsidiary of MGM Resorts, representing a purchase price of $275m subject to customary adjustments. Following the redemption, MGM Resorts’ economic ownership stake in the operating partnership is approximately 69%.
“With the operational expertise of MGM Resorts, we expect MGM Northfield Park to continue to grow as the number one market leading asset in northern Ohio,” said James Stewart, CEO of MGM Growth Properties. “With the addition of this property to the master lease, MGP shareholders will further benefit from our market leading net rent coverage as well as our tenant’s significant cash flows and strong credit profile.
“This further illustrates our continued ability to generate shareholder value with attractive net real estate acquisition prices and the enhanced AFFO accretion as a result of the redemption of Operating Partnership units.”
MGM Northfield Park was added to the existing master lease and the annual rent was increased by $60m. Consistent with the master lease terms, 90 per cent of the increased rent will be contractually fixed to grow at two per cent per year until 2022, and thereafter will continue to grow provided a tenant revenue-to-rent ratio is met. The remaining 10 per cent is payable in percentage rent.