MGM Growth Properties Acquires Ohio’s Hard Rock Rocksino for $1 Billion
Posted on: July 9, 2018, 03:00h.
Last updated on: July 9, 2018, 03:22h.
MGM Growth Properties on Friday finalized its $1.06 billion purchase of Cleveland’s Hard Rock Rocksino Northfield, the first property to be acquired by the REIT, an MGM Resorts spin-off.
MGM Growth will inherit a 200,000-square foot casino with 2,200 video lottery slot machines, along with the Northfield Park harness racetrack, from previous owner Milstein Entertainment. The REIT is also in the process of finalizing the acquisition of the famous Yonkers Raceway and its accompanying Empire City Casino.
MGM Growth was formed in 2016 and launched and its IPO on the New York Stock Exchange shortly afterward, raising $1.2 billion. It is 70-percent owned by MGM Resorts International.
Price is REIT
A REIT (real-estate investment trust) is essentially an investment vehicle formed to acquire and own properties, offering investors both large and small the chance to own shares of high-value commercial real restate.
REITs receive special tax considerations and can trade at higher stock market prices, potentially offering investors high returns.
On its formation, MGM Growth took over ten MGM Resort properties, including Mandalay Bay, The Mirage, New York-New York, Luxor, and Excalibur, which it leases back to MGM Resorts to operate.
The Hard Rock Rocksino Northfield Park will be rented to its majority owner for $50 to $60 million a year, the company has said.
The REIT model makes sense for large casino operators managing dozens of properties as a means to raise funds which can then be spent on further acquisitions.
Penn National started the ball rolling in 2013, and has since been joined by MGM and Caesars Entertainment, which created VICI Properties last year, as a way of easing its passage out of Chapter 11 bankruptcy.
Home of the Flying Turns
MGM Growth CEO James Stewart said in an official statement on Friday he was “excited” about the first official addition to the REIT’s portfolio, which he added would bring “further geographic diversification” to the MGM brand.
“[A REIT] improves the balance sheet of MGM Resorts, it provides another growth vehicle for the company and it will…provide a different investment opportunity, as [Growth Properties] goes out and can acquire assets,” MGM Resorts CEO Jim Murren further explained about the spin-off.
Known as the “The Home of the Flying Turns” and for its motto “Every nineteen minutes the place goes crazy,” Northfield Park is the venue for the Battle for Lake Eerie, which has grown from its 1980s inception to become one of the premier events on the Free-For-All pacing calendar.
It also operates Cedar Downs, the only off-track betting parlor in Ohio.