- MGM is unloading an Ohio on line casino/racetrack to personal fairness funds for $546 million
- Rumor of sale dates again to Q1 of 2024
MGM Resorts Worldwide (NYSE: MGM) introduced Thursday that it’s promoting the working rights of the MGM Northfield Park racino close to Cleveland to personal fairness funds managed by Clairvest Group for $546 million in money.
Leo the Lion stands guard outdoors MGM Northfield Park in Ohio. MGM is promoting the working rights to the venue for $546 million. (Picture: MGM Resorts)
Las Vegas-based MGM mentioned it expects to haul in after-tax proceeds of $420 million. The transaction is slated to shut within the first half of subsequent yr. The acquisition worth represents 6.6x the venue’s adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) for the 12 months ending June 30, 2025.
This is a superb end result for MGM Resorts and demonstrates consistency in driving transaction multiples at significant premiums over the place MGM Resorts at the moment trades. The divestiture underscores MGM Resorts’ distinctive monetary stewardship, delivering substantial worth effectively past the unique acquisition worth,” mentioned MGM CFO Jonathan Halkyard in a press release.
With $420 million in after-tax proceeds, MGM is popping a good revenue on Northfield Park. MGM Development Properties, the actual property funding belief (REIT) beforehand spun off from the on line casino operator, purchased the Ohio on line casino in 2018. A yr later, MGM purchased the working rights for $275 million, rebranding the venue with the MGM identify.
Ohio On line casino Sale Ends an Previous Rumor
Information of Northfield Park’s sale marks the top of an outdated. Rumor hypothesis concerning the destiny of the Ohio property and MGM Springfield in Massachusetts surfaced within the first quarter of 2024, however no deal-making occurred till at this time.
It’s not clear if MGM Springfield, which opened in August 2018 as the primary conventional on line casino in Massachusetts, remains to be on the block, however executives have beforehand mentioned the venue has upset when it comes to income. In Ohio, the vendor seems to have struck a notable deal.
“The sale a number of of 6.6x represents the very best transaction a number of for a single asset regional opco since COVID. When making use of MGM’s price of capital to the hire ascribed with this transaction, the wholeco valuation would approximate 10x,” mentioned Jefferies analyst David Katz in a notice to shoppers at this time.
The transaction may very well be considered as encouraging for an additional cause, because it reveals there’s nonetheless urge for food amongst patrons for regional gaming property regardless of rates of interest remaining elevated — one thing believed to be placing a damper on on line casino business consolidation.
MGM Will Save Some Cash, Too
MGM isn’t simply reaping a windfall by promoting Northfield Park. The operator may also be saving some money when the deal is finalized.
As a part of the sale, MGM’s grasp lease settlement with VICI Properties (NYSE: VICI) — the proprietor of Northfield Park’s actual property — will probably be amended to scale back the operator’s annual lease obligations to the REIT by $54 million.
VICI acquired the Ohio racino’s property property when it purchased MGM Development Properties for $17.2 billion in 2022.
