LAS VEGAS—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 $545 million of debt from a subsidiary of MGM Resorts with $260 million of cash on hand, $295 million 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 $100 million. Consistent with the Master Lease terms, 90 percent of this rent will be fixed and contractually grow at 2 percent per year until 2022.