MGM Resorts International Announces Agreement To Monetize Bellagio Real Estate Assets

LAS VEGAS, Oct. 15, 2019 /PRNewswire/ -- MGM Resorts International (the "Company" or "MGM Resorts") (NYSE: MGM) today announced that it has entered into a definitive agreement to form a joint venture with Blackstone Real Estate Income Trust ("BREIT") that values the real estate of Bellagio at $4.25 billion, which represents a purchase price multiple of 17.3x rent. In this landmark transaction for the gaming and entertainment industry, the joint venture will acquire the Bellagio real estate and lease it back to a subsidiary of MGM Resorts for initial annual rent of $245 million. MGM Resorts will receive a 5% equity interest in the joint venture and cash of approximately $4.2 billion. The transaction is expected to close in the fourth quarter of 2019, subject to certain closing conditions.

"This transaction confirms the premium value of our owned real estate assets, highlights the unique value of Bellagio as a premier asset in gaming and solidifies our status as a premier operator of gaming and entertainment properties. We will use the proceeds from this transaction, together with the proceeds from the pending sale of Circus Circus Las Vegas, to build a fortress balance sheet and return capital to shareholders. By the end of 2020 we intend to have domestic net financial leverage at our operating properties of approximately 1x," said Jim Murren, Chairman and CEO of MGM Resorts International. "These transactions enhance the Company's strategic and operational flexibility and reinforce its commitment to targeted new growth opportunities, including securing and investing in one of the integrated resort licenses in Japan and becoming an industry leader in sports betting in the U.S. We remain committed to delivering on our 2020 goals and continue to be on track to achieve our previously announced targets."

Jon Gray, Blackstone President & COO, commented: "As big believers in MGM Resorts and Las Vegas, we are thrilled to partner with MGM to acquire the Bellagio on behalf of our BREIT investors. We look forward to a long and productive partnership with this world-class company."

MGM Resorts' commitment to its asset-light strategy is the culmination of an extensive strategic review of the interplay of its real estate portfolio, overall valuation and operational potential. This strategy is expected to unlock the significant unrealized value of the Company's real estate and highlight the strength of its operating business. MGM Resorts is evolving its business model away from primarily a capital intensive, brick & mortar real estate business towards a developer, manager and operator of leading gaming, hospitality and entertainment properties. This strategy is designed to accelerate the Company's top line growth, enhance its return on investment profile and result in a more financially robust, global enterprise that is best positioned to take advantage of future growth opportunities.

"The Real Estate Committee was formed earlier this year to support management's strategy to enhance free cash flow per share, maximize the value of our owned real estate and equity holdings, highlight the strength of our operating business, and fortify the Company's financial position. This transaction represents a key step in our comprehensive, ongoing review. The value realized in the Bellagio transaction is highly accretive to shareholder value and significantly greater than the implied multiple of our core business," said Paul Salem, Chairman of the Real Estate Committee of the Company's Board of Directors.

Central to executing this strategy is monetizing real estate efficiently and effectively redeploying the significant amount of capital the Company is unlocking. Between the Bellagio transaction and the pending Circus Circus sale, the Company is expecting to receive gross proceeds of approximately $5 billion and estimated net cash proceeds (including expected transaction costs) of $4.3 billion.

These transactions are the first steps in executing the asset-light strategy, and the Company still retains several highly valuable real estate assets including MGM Grand, MGM Springfield, its 50% stake in CityCenter and its 68% economic ownership in MGM Growth Properties LLC. The Company anticipates opportunistically monetizing and/or unlocking value from the abovementioned remaining real estate portfolio in a measured manner that maximizes value creation for its shareholders and broader constituents. MGM's fortress balance sheet and robust free cash flow generation will enable it to take advantage of targeted growth initiatives and opportunistically return capital to shareholders.

PJT Partners and J.P. Morgan are serving as financial advisors to MGM Resorts and the Real Estate Committee of the Board of Directors of MGM Resorts. Weil, Gotshal & Manges LLP is serving as MGM Resorts' legal counsel.

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ABOUT MGM RESORTS INTERNATIONAL

MGM Resorts International (NYSE: MGM) is an S&P 500® global entertainment company with national and international locations featuring best-in-class hotels and casinos, state-of-the-art meetings and conference spaces, incredible live and theatrical entertainment experiences, and an extensive array of restaurant, nightlife and retail offerings. MGM Resorts creates immersive, iconic experiences through its suite of Las Vegas-inspired brands. The MGM Resorts portfolio encompasses 30 unique hotel and destination gaming offerings including some of the most recognizable resort brands in the industry. Expanding throughout the U.S. and around the world, the company recently acquired the operations of Empire City Casino in New York and MGM Northfield Park. In 2018, MGM Resorts opened MGM Springfield in Massachusetts, MGM COTAI in Macau, and the first Bellagio-branded hotel in Shanghai. The 82,000 global employees of MGM Resorts are proud of their company for being recognized as one of FORTUNE® Magazine's World's Most Admired Companies®. For more information visit us at www.mgmresorts.com.

Statements in this release that are not historical facts are "forward-looking" statements and "safe harbor statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and/or uncertainties, including those described in the Company's public filings with the SEC. The Company has based forward-looking statements on management's current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to, the anticipated closing of the transaction, the amount of net cash proceeds to be received from the transactions, the Company's ability to execute on its asset-light strategy, expectations regarding future results and the Company's financial outlook and the Company's ability to deliver on its 2020 targets and goals. These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include effects of economic conditions and market conditions in the markets in which the Company operates and competition with other destination travel locations throughout the United States and the world, the design, timing and costs of expansion projects, risks relating to international operations, permits, licenses, financings, approvals and other contingencies in connection with growth in new or existing jurisdictions and additional risks and uncertainties described in the Company's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements.

SOURCE MGM Resorts International

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