MGM Growth ‘Definitely Interested’ in Vegas Strip Casino Buy as Las Vegas Sands Looks to Sell

  • MGM Growth CEO Stewart expressed interest in buying a Strip casino in a Q3 earnings call
  • News followed LVS's announcement last week that it was in talks to sell $6bn of its Vegas assets
  • An LVS company spokesman declined to comment that it was in talks with MGM Growth
  • Stewart is eyeing Strip growth amid an expected rise in Vegas’s attractiveness post-pandemic
Views from the Venetian casino resort in Las Vegas
MGM Growth Properties expressed a real interest in buying a Vegas Strip casino just once week after Las Vegas Sands announced it was in early talks to sell $6bn of its Sin City assets. [Image:]

On the lookout for a suitable tenant

MGM Growth Properties LLC has said it is “definitely interested” in buying a large Las Vegas Strip casino, provided it can find a suitable tenant to operate it. The news comes just one week after casino resort operator Las Vegas Sands announced it was in early talks to sell $6bn worth of its Sin City assets.

MGM Growth CEO James Stewart expressed the real estate investment trust (REIT)’s interest in acquiring a Strip property following a question by John DeCree, an analyst from Union Gaming, during a Q3 earnings call Monday. Stewart said MGM Growth, an MGM Resorts International affiliate, was in the market for a property that “obviously” fits in with the REIT’s high-quality portfolio.

Vegas-headquartered MGM Growth acts as landlord to a number of casinos, including Excalibur, Luxor, Mandalay Bay, New York-New York, Park MGM, and The Mirage. Its sole tenant is MGM Resorts.

Although there is no indicated time frame for when a deal might take place, Stewart believes that, out of all the REITs, MGM Growth is “the most alerted to and aware of […] the trends” on the Strip.

Las Vegas Sands staying silent

According to the Las Vegas Review-Journal, Las Vegas Sands (LVS) spokesman Ron Reese declined to comment Monday on whether the company was in any discussions with MGM Growth.

nothing has been finalized”

While LVS confirmed last week that it “was in very early discussions” to divest its Strip properties, it said at the time that “nothing has been finalized”. The company operates the Palazzo, The Venetian, and the Sands Expo and Convention Center in the area.

The decision by LVS to potentially leave Las Vegas follows an earnings call on October 21, where it reported an 82% net revenue drop year-on-year for Q3. Net revenue stood at $586m, a significant drop from the $3.3bn posted during the same period in 2019. In contrast, LVS’s assets in Macau and Singapore both generated more Q3 revenue than their Sin City counterparts.

MGM eyeing post-COVID pickup

MGM Growth is certainly looking at the bigger, longer-term picture. “I think that the city, particularly those [Strip] properties, are going to be set up for some very significant growth once we get to the other side of COVID,” Stewart said during the earnings call.

the attractiveness of Vegas and its venues is only going to increase

The REIT CEO compared convention locations on the Las Vegas strip with those in Florida, New York, and Chicago, adding that the attractiveness of Vegas and its venues is only going to increase. According to Stewart, any deal would require a tenant “who has some real skin in the game”. He said the potential party would need to have an incentive to keep paying the rent, citing what could be some rocky times in Vegas in the short term.

Stewart declined to comment on whether MGM Growth was currently having “very active conversations” with LVS.

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