MGM Resorts International has agreed to sell the operations of The Mirage Hotel & Casino on the Las Vegas Strip to Hard Rock International for $1.075bn in cash, subject to customary working capital adjustments.
Through the acquisition, Hard Rock plans to build a Guitar-shaped hotel that will be located on the Vegas Strip, entering into a long-term lease agreement with VICI Properties Inc for the real estate property of The Mirage.
The transaction is expected to close in the second half of 2022, subject to regulatory approvals and other customary closing conditions.
Jim Allen, Chairman of Hard Rock International, stated: “We are honored to welcome The Mirage’s 3,500 team members to the Hard Rock family. When complete, Hard Rock Las Vegas will be a fully integrated resort welcoming meetings, groups, tourists, and casino guests from around the world to its nearly 80-acre center-Strip location.”
Hard Rock International had no prior involvement with the Hard Rock Hotel & Casino in Las Vegas before 2020. The licensing and naming rights for Hard Rock Hotel & Casino Las Vegas were purchased by the company in May 2020.
Opening in 1989, The Mirage was acquired by MGM Resorts in 2000 and is known for its 90-foot Strip-side volcano and entertainment options.
Under the terms of the deal, The Mirage name and brand will be retained by MGM Resorts, licensing it to Hard Rock royalty-free for a maximum period of three years while it finalizes rebranding plans for the property.
Commenting on the sale of The Mirage, Bill Hornbuckle, CEO & President, MGM Resorts International, said: “This transaction is a significant milestone for MGM Resorts, and for Las Vegas. 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.”
Paul Salem, Chairman of the Board of Directors, MGM Resorts International, added: “This announcement marks the culmination of a series of transformational transactions for MGM Resorts during the last several years.
“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.”
The Mirage reported adjusted property EBITDAR of $154m for the 12 months ended December 31, 2019. 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 $90m. The company expects net cash proceeds after taxes and estimated fees to be approximately $815m.
Jonathan Halkyard, CFO & Treasurer, MGM Resorts International, noted: “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.
“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.
“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.”