Hard Rock International, the legendary hospitality and entertainment company, today announced its agreement to acquire the operations of The Mirage Hotel and Casino in Las Vegas from MGM Resorts International, subject to regulatory approvals and other customary closing conditions.
Through the acquisition, Hard Rock plans to build an iconic Guitar-shaped Hotel which will be located on the famous Las Vegas Strip.
HRI will pay $1.075bn in cash for the operating assets of The Mirage Hotel and Casino, subject to customary working capital adjustments. The iconic hospitality and entertainment brand will enter into a long-term lease agreement with VICI Properties Inc. for the real estate property of The Mirage.
“We are honoured to welcome The Mirage’s 3,500 team members to the Hard Rock family,” said Jim Allen, Chairman of Hard Rock International. “When complete, Hard Rock Las Vegas will be a fully integrated resort welcoming meetings, groups, tourists and casino guests from around the world to its nearly 80 acre center-Strip location.”
Prior to 2020, Hard Rock International had no previous involvement with the Hard Rock Hotel & Casino in Las Vegas. HRI purchased the licensing and naming rights for Hard Rock Hotel & Casino Las Vegas in May 2020 and vowed to bring the iconic brand to the Las Vegas Strip when the right opportunity presented itself.
“This transaction is a significant milestone for MGM Resorts, and for Las Vegas,” said Bill Hornbuckle, CEO & President, MGM Resorts International. “As part of the team that opened The Mirage in 1989, I know firsthand how special it is, and what a great opportunity it presents to the Hard Rock team. I want to thank all of our Mirage employees who have consistently delivered world-class gaming and entertainment experiences to our guests for more than three decades.”
“This announcement marks the culmination of a series of transformational transactions for MGM Resorts during the last several years,” said Paul Salem, Chairman of the Board of Directors, MGM Resorts International. “The monetization of our entire real property portfolio, together with the addition of CityCenter and our agreement to acquire The Cosmopolitan of Las Vegas, will position the Company with a fortress balance sheet, premier portfolio, and significant financial resources to pursue our strategic objectives.”
For the twelve months ended December 31, 2019, The Mirage reported Adjusted Property EBITDAR of $154m. At the closing of the transaction, MGM Resorts’ master lease that currently includes The Mirage property will be amended to reduce the annual rent by $90m. The Company expects net cash proceeds after taxes and estimated fees to be approximately $815m.
“This is a fantastic outcome for the Company, as we are able to re-prioritize future capital expenditures toward opportunities that will enhance the customer experience at our other locations in Las Vegas,” said Jonathan Halkyard, CFO & Treasurer, MGM Resorts International. “We appreciate VICI, as the real estate owner of The Mirage once its acquisition of MGM Growth Properties closes, working constructively with Hard Rock to facilitate a new lease agreement.”
Halkyard concluded, “As it relates to use of proceeds, we will remain disciplined allocators of our capital to maximize shareholder value. This consists of maintaining a strong balance sheet, returning cash to shareholders, and pursuing targeted growth opportunities that advance our vision to be the world’s premier gaming entertainment company.”
The Mirage opened in 1989 and was acquired by MGM Resorts in 2000. The iconic property, located at the heart of the Las Vegas Strip, is known worldwide for its 90-foot Strip-side volcano, as well as for its dynamic entertainment options.
Under the terms of the agreement, MGM Resorts will retain The Mirage name and brand, licensing it to Hard Rock royalty-free for a maximum period of three years while it finalizes its plans to rebrand the property.