MGM Growth Properties Potentially Interested in Sands’ Strip Casinos

Real estate investment trust (REIT) MGM Growth Properties is interested in acquiring the Venetian or another big Las Vegas Strip property as long as it finds the right partner to run such a property.

The company’s CEO, James Stewart, shed some light on their Vegas plans during a conference call with investors on Monday.

Mr. Stewart said that they would definitely be interested in adding The Venetian or another Strip casino resort to their portfolio and that should the right opportunity present itself, this is “absolutely a deal that we would do.”

Mr. Stewart’s comments came less than a week after news emerged that casino giant Las Vegas Sands is in early talks to offload its Vegas portfolio, which includes the Venetian, the Palazzo, and the Sands Expo Convention Center. It is believed the company seeks $6 billion for the properties.

MGM Growth Properties and other big casino-focused REITs are seen as potential bidders for Sands’ Strip assets.

Following a three-month closure of its casinos due to the Covid-19 pandemic, Las Vegas has now been struggling to climb back to pre-pandemic levels as the worst health crisis the world has experienced in many years has crippled its tourism and convention business.

But while many might believe that Sands’ decision to quit the local market is a repudiation of the city, Mr. Stewart said that seeking $6 billion for the company’s Strip properties should be seen as a validation of Las Vegas’ potential. He further elaborated that Sands may just want to invest its money in growing its businesses in Macau and Singapore.

Other REITs Also Potentially Interested

MGM Growth Properties may not be the only big casino REIT to be interested in Sands’ Vegas portfolio or other large Strip acquisitions

Executives at VICI Properties said last week that they were too potentially interested in adding a big Las Vegas casino to their portfolio of assets.

VICI President John Payne said during an investor call that they continue to be “excited about this market long term” and that Las Vegas has to “get over not having meeting business right now and some international business, but we believe that that will come back.”

On the other hand, Gaming & Leisure Entertainment Inc., the third of the big three casino-focused REITs, said that they are not really interested in purchasing a big asset in Las Vegas.

The company’s Senior Vice President for Investments, Matt Demchyk, said last week that when they look at the Strip and at “the fixed costs associated with the properties and the exposure to travel and conventions, right now if we underwrite assets there it’s even harder at the same economics to make them pass muster.”

Gaming & Leisure Entertainment was spun off from Penn National Gaming in 2013, MGM Growth Properties was spun off from MGM Resorts International in 2015, and VICI Properties was spun off from Caesars Entertainment Corp. in 2017.

All three casino operators transferred the ownership of their properties to their corporate spin-offs in a bid to gain some tax advantages and other benefits and focus their attention mostly on growing the properties’ operations. REITs pass along their earnings to their investors without paying corporate income taxes.

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