Operator News
US – New dawn in New York as MGM buys Empire City
By Phil - 30 May 2018
MGM Resorts has made a move on New York’s casino set up with the US$850m purchase of the Empire City race track and casino in southern New York.
The venue 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.
“We are excited to announce the addition of Empire City to the MGM Resorts portfolio,” said Jim Murren, Chairman and CEO of MGM Resorts International. “This acquisition represents an excellent opportunity to further solidify our presence on the East Coast, and in particular, expand our reach into the high-density New York City region. We believe this transaction enhances our free cash flow profile and presents attractive future opportunities for the Company, and we look forward to welcoming the Empire City team and guests to the MGM Resorts family.”
“With Empire City’s approximately 40 per cent share of gross gaming revenues in the market, we believe there are significant opportunities for MGM Resorts to further drive growth,” said Dan D’Arrigo, Executive Vice President and Chief Financial Officer of MGM Resorts International. “We believe the transaction will be value-accretive within its first year of closing, with incremental revenue synergies expected to support growth in 2020 and beyond.”
“Following the sale of the developed real property to MGP, the net purchase price to MGM Resorts of approximately $225m represents a multiple of less than six times Adjusted EBITDA, inclusive of expected operational synergies and identified revenue growth opportunities.”
For the last twelve months ended March 31, 2018, Empire City reported approximately $230m in net revenues and approximately $70 million in Adjusted EBITDA.
MGM Resorts and MGM’s subsidiary MM Growth Properties 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.
James Stewart, CEO of MGM Growth Properties, said: “Today’s announcement further illustrates our ability to partner with MGM Resorts to acquire valuable real estate assets to add to our portfolio of properties through accretive transactions. This acquisition will further increase our regional geographic footprint, giving MGP exposure to the New York City market, with another high-quality asset that will create meaningful value to shareholders and provide us with increased cash flows and growth opportunities.”
