MGM Resorts International ("MGM Resorts" or the "Company") (NYSE:MGM) today announced it has reached an agreement to sell the operations of The Mirage Hotel & Casino ("The Mirage") to
MGM Resorts International ("MGM Resorts" or the "Company") (NYSE:MGM) today announced it has reached an agreement to sell the operations of The Mirage Hotel & Casino ("The Mirage") to Hard Rock International ("Hard Rock") for $1.075 billion in cash, subject to customary working capital adjustments.
"This transaction is a significant milestone for MGM Resorts, and for Las Vegas," said Bill Hornbuckle, CEO & President, MGM Resorts International. "As part of the team that opened The Mirage in 1989, I know firsthand how special it is, and what a great opportunity it presents to the Hard Rock team. I want to thank all of our Mirage employees who have consistently delivered world-class gaming and entertainment experiences to our guests for more than three decades."
"This announcement marks the culmination of a series of transformational transactions for MGM Resorts during the last several years," said Paul Salem, Chairman of the Board of Directors, MGM Resorts International. "The monetization of our entire real property portfolio, together with the addition of CityCenter and our agreement to acquire The Cosmopolitan of Las Vegas, will position the Company with a fortress balance sheet, premier portfolio, and significant financial resources to pursue our strategic objectives."
For the twelve months ended December 31, 2019, The Mirage reported Adjusted Property EBITDAR of $154 million. At the closing of the transaction, MGM Resorts' master lease that currently includes The Mirage property will be amended to reduce the annual rent by $90 million. The Company expects net cash proceeds after taxes and estimated fees to be approximately $815 million.
"This is a fantastic outcome for the Company, as we are able to re-prioritize future capital expenditures toward opportunities that will enhance the customer experience at our other locations in Las Vegas," said Jonathan Halkyard, CFO & Treasurer, MGM Resorts International. "We appreciate VICI, as the real estate owner of The Mirage once its acquisition of MGM Growth Properties closes, working constructively with Hard Rock to facilitate a new lease agreement."
Halkyard concluded, "As it relates to use of proceeds, we will remain disciplined allocators of our capital to maximize shareholder value. This consists of maintaining a strong balance sheet, returning cash to shareholders, and pursuing targeted growth opportunities that advance our vision to be the world's premier gaming entertainment company."
The Mirage opened in 1989 and was acquired by MGM Resorts in 2000. The iconic property, located at the heart of the Las Vegas Strip, is known worldwide for its 90-foot Strip-side volcano, as well as for its dynamic entertainment options.
Under the terms of the agreement, MGM Resorts will retain The Mirage name and brand, licensing it to Hard Rock royalty-free for a maximum period of three years while it finalizes its plans to rebrand the property.
The transaction is expected to close in the second half of 2022, subject to regulatory approvals and other customary closing conditions.
BofA Securities and PJT Partners served as financial advisors and Weil, Gotshal & Manges LLP served as legal counsel to MGM Resorts.