MGM Resorts International and MGM Growth Properties have struck a new deal, under the terms of which MGP will pay MGM Resorts consideration of $637.5m for investments made to reposition Park MGM and NoMad Las Vegas, the property formerly known as Monte Carlo Resort and Casino. The agreement will see the annual rent under the existing master lease between MGM Resorts and MGP rise by $50m.

“The creation of Park MGM and NoMad Las Vegas, in conjunction with T-Mobile Arena, Park Theater and the entire mid-Strip neighborhood, further solidify our position as a global resort and entertainment leader,” said Jim Murren, Chairman and CEO of MGM Resorts. “As we continue to execute our multifaceted strategic plan, and as part of our ongoing efforts to optimize our portfolio, we believe that these prudent investments in our assets will bring substantial value to MGM Resorts, MGP and our respective shareholders.”

James Stewart, Chairman and CEO of MGM Growth Properties, stated: “Park MGM and NoMad Las Vegas are exciting new concepts on the Las Vegas Strip, further enhancing our already outstanding portfolio. MGM Resorts has invested in the significant repositioning of Park MGM and NoMad Las Vegas and we are excited to partner with MGM Resorts for these iconic assets.

“We intend to fund the consideration through a combination of cash and availability under our credit facility. This transaction will be immediately accretive to our AFFO and further demonstrates the power of our business model and partnership with MGM Resorts.”

Concluded Murren: “MGM Resorts will continue to deliberately reduce our owned real estate through accretive transactions in the future. MGP is an attractive partner to achieve this goal. We remain committed to our stated strategic objectives, including reducing our ownership stake in MGP.”

Rockefeller Capital Management is acting as financial adviser to the conflicts committee of the MGP Board of Directors. Consistent with the Master Lease terms, 90 percent of the increased rent will be contractually fixed to grow at two per cent per year until 2022, and thereafter will continue to grow provided a tenant revenue-to-rent ratio is met. The remaining 10 per cent is payable in percentage rent. The transaction is expected to close in the first quarter of 2019 and is subject to customary closing conditions.