MGM subsidiary buying Maryland casino; $1B share repurchase OK’d
MGM Resorts International’s MGM Growth Properties LLC subsidiary will acquire the company’s new National Harbor hotel-casino in Maryland and MGM’s board of directors authorized a $1 billion stock repurchase program designed to enhance shareholder value.
The two financial developments were announced separately by the company Tuesday afternoon.
National Harbor, the company’s 308-room hotel-casino in suburban Washington D.C., opened with great fanfare and strong reviews in December and is being acquired by MGM Growth Properties, the company’s publicly traded real estate investment trust, for $1.19 billion, including $462.5 million in cash, the assumption of $425 million in debt and $300 million in operating partnership units from MGM Growth Properties Operating Partnership LP, an MGP subsidiary.
MGM Resorts will continue to manage and operate the property and customers will see no difference in operations. A rent payment to MGP will increase by $95 million and contractually grow at 2 percent per year until 2022.
The sale is expected to close in the fourth quarter and is subject to regulatory approvals.
The share repurchase agreement, combined with a dividend approved by the MGM board earlier this year, bolsters the company’s commitment to long-term growth prospects, said Jim Murren, chairman and CEO of MGM Resorts.
Under the stock repurchase program, which is designed to return value to the company’s shareholders, the company may repurchase shares from time to time in the open market or in privately negotiated agreements.
Investors weren’t moved by the news. Shares closed down 0.2 percent, 7 cents, to $33.14 a share, rebounding 1.4 percent, 47 cents, to $33.61 a share in after-hours trading on average volume.
Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.
