MGM Asset Sales “Dry Powder” for Japan Bid

MGM Resorts’ accord to divest two major assets will raise US$4.3 billion in net proceeds and potentially raise funds for a development in Japan, according to analysts at Bernstein Research.

The company announced late Tuesday that it would sell its Bellagio property in a sale and leaseback transaction. The property will go to a joint venture between MGM and Blackstone Real Estate Income Trust, with the operator receiving US$4.2 billion in cash and a 5% stake.

MGM will enter into a lease for Bellagio with an initial annual rent of US$245 million.

The second transaction is a sale of the Circus Circus casino and adjoining land to an affiliate of businessman Phil Ruffin for US$825 million.

“Our initial reaction to the transactions is positive as it continues the deleveraging story for MGM, divests a non-core asset (Circus Circus), and potentially creates dry powder for the Japan bid,” it said.

MGM is focusing on Osaka for its IR bid in Japan and is widely viewed to be a front runner after Las Vegas Sands, Melco Resorts & Entertainment, and Wynn Resorts pulled out to focus on Yokohama.

Analysts estimate that operators are likely to invest about US$10 billion to develop an IR in one of Japan’s coveted urban locations. (AGB)