VICI Investors Approve Share Sale to Fund MGP Acquisition

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Posted on: Oct 30, 2021, 4:29 a.m.

Last updated on: October 30, 2021, 6:47 a.m.

The shareholders of VICI Properties (NYSE: VICI) have approved the issuance of a massive amount of new shares. The goal is to finance the company’s $ 17.2 billion acquisition of shares in rival MGM Growth Properties (NYSE: MGP).

VICI POP
Investors in Caesars Palace owner VICI Properties have approved the issuance of new shares. This will pay for the $ 17.2 billion takeover of MGM Growth Properties. The location in Las Vegas is shown here. (Picture: Bloomberg)

The owner of Caesars Palace announced in August that he was buying MGM Growth. The deal creates the largest casino owner on the Las Vegas Strip and beyond. MGP investors will receive 1,366 newly issued VICI shares for each MGP share they currently own, valuing the owner of MGM Grand at $ 43 per share.

To finance the takeover, VICI is issuing new shares equivalent to 90 percent of its current outstanding shares. As of Oct. 29, the gaming real estate investment trust (REIT) had 555.15 million shares outstanding, according to data from Finviz.

At the extraordinary shareholders’ meeting of VICI Properties held (Friday), more than 99.9% of the votes cast were in favor of the issuance of new ordinary shares of VICI to the shareholders of MGP Class A in consideration for the merger, which votes represented approximately 90 percent of VICI’s outstanding common shares, ”according to a statement issued by the REIT.

The transaction is expected to be finalized in the first half of 2022.

VICI becomes a major striptease player

Under the terms of the transaction, VICI takes on $ 5.7 billion of MGP debt. He also obtains MGM Resorts International’s (NYSE: MGM) $ 4.4 billion stake in the real estate investment trust (REIT) it created in 2016.

With the purchase of MGP, VICI is turning into a major game on the Strip real estate scene. Although the REIT owns the real estate assets of famous Caesars, it generates less than a third of its rental income in Las Vegas. The MGP acquisition significantly changes VICI’s portfolios, as Target owns all or part of the real estate assets of six locations on the Strip – Excalibur, Luxor, Mandalay Bay, MGM Grand, Mirage and New York New York.

Overall, the buyer adds 15 gambling hall real estate to their portfolio, with Las Vegas accounting for 45% of their rent base. Regional casinos will do the rest.

In January, New York-based VICI signaled plans to increase its footprint on the Strip. He partnered with private equity firm Apollo Global Management (NYSE: APO) to acquire the Venetian Resort and Sands Expo and Convention Center on the Strip for $ 6.25 billion from Las Vegas Sands.

VICI earnings

Neither Venetian trades nor MGP trades are finalized, so these trades do not yet affect VICI’s top and bottom results.

The REIT released third-quarter figures on Wednesday, saying revenue jumped 10.6% to $ 375.7 million. That was when funds acquired from operations (AFFO) increased 12.9% year-on-year to $ 257.4 million.

VICI has confirmed that the MGP acquisition will add $ 1.009 billion in annualized rent.


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