Updated December 2, 2020 - 2:50 pm
MGM Resorts International has cashed out on $700 million as the COVID-19 pandemic continues to damage the national gaming and hospitality industries.
On Wednesday, the company announced that its affiliated real estate investment trust, MGM Growth Properties, had given MGM Resorts the money in exchange for 23.5 million operating partnership units. While MGM Resorts surrendered some of its stake in the REIT, it now has more liquidity on hand to weather the rest of the coronavirus pandemic.
This is the second time MGM has exchanged operating partnership units in exchange for $700 million from MGM Growth properties, which owns the land under a number of MGM properties. The two companies agreed that MGM Growth could purchase up to $1.4 billion worth of units, and the first $700 million exchange took place in May.
As of Sept. 30, MGM Resorts’ liquidity stood at roughly $5.9 billion. MGM Resorts plans to use the additional $700 million “for general corporate purposes,” according to a Wednesday statement.
“Today’s announcement reflects our continued focus on enhancing our balance sheet to strengthen our financial flexibility,” said MGM Resorts CEO and President Bill Hornbuckle. “As the pandemic continues to impact operations at our properties across the U.S., we believe the opportunistic exercise of our redemption right as well as our recent senior notes offering allow us to continue pursuing our strategic goals while navigating the crisis.”
MGM Resorts had gone from a 61 percent stake in MGM Growth, to 57 percent and then 53 percent following the two transactions.
“Our recent capital raise will allow us to fully fund this final redemption under the waiver agreement with cash on hand while still maintaining a balance sheet positioned for future growth,” said MGM Growth CEO James Stewart in the statement.
MGM shares closed up 1.7 percent to $29.35 of the New York Stock Exchange Wednesday. MGM Growth shares closed down 0.3 percent to $31.46 on the same exchange.