Supplier News
US – MGM completes purchase of Borgata
By Phil - 2 August 2016
MGM Growth Properties and MGM Resorts International completed the transactions for the acquisition of Borgata Hotel Casino & Spa following MGM Resorts’ purchase of Boyd Gaming’s stake in Borgata.
MGP acquired Borgata’s real property from MGM Resorts and leased back the real property to a subsidiary of MGM Resorts that will operate that property.
MGP funded the acquisition of the Borgata real property and refinanced its assumption of $545m of debt from a subsidiary of MGM Resorts with $260m of cash on hand, $295m of borrowings under its senior secured revolving credit facility and the issuance of 27,362,136 operating partnership units to a subsidiary of MGM Resorts.
“Our ability to enhance our portfolio with a premier asset like Borgata in such early stages of our company demonstrates our focus on prudent growth and the financial flexibility of our balance sheet,” said James Stewart, Chief Executive Officer of MGM Growth Properties. “This transaction brings geographic diversification and increased cash flows to our portfolio while maintaining neutral leverage and resulting in high single digit percentage accretion to AFFO per share.”
Borgata was added to the existing Master Lease between MGM Resorts and MGP, and the initial rent payment to MGP increased by $100m. Consistent with the Master Lease terms, 90 percent of this rent will be fixed and contractually grow at two per cent per year until 2022.
Cash proceeds paid to Boyd Gaming for its interest were $589m, after customary working capital adjustments and consideration of Borgata’s outstanding debt of $575m. A portion of this debt was refinanced and then assumed by MGM Growth Properties LLC in connection with its acquisition of the real property associated with Borgata from MGM Resorts.
“As the premier resort in Atlantic City, Borgata is a great addition to our growing presence in the mid-Atlantic and Northeast United States,” said Jim Murren, Chairman & CEO of MGM Resorts. “We are excited to welcome the talented Borgata leadership team and employees into MGM Resorts and look forward to serving guests with new and exciting opportunities through our diverse resort offerings, entertainment dominance and market-leading loyalty program, M life Rewards.”
Tom Ballance, President & COO of Borgata, said: “We welcome MGM Resorts as the new operator and are excited to further utilize its best-in-class brand to continually bring quality experiences to our guests.”
Mr. Murren added: “We have enjoyed working with Boyd Gaming since Borgata’s opening in 2003. We hold the company in the highest regard and wish them the best of luck in the future.”
