MGM Growth Properties (MGP) - Get MGM Growth Properties LLC Class A Report jumped after the real estate investment trust agreed to be acquired by VICI Properties (VICI) - Get VICI Properties Inc Report for $43 a share in stock.
Under the terms, VICI, the New York entertainment-focused REIT, would assume some $5.7 billion of debt. VICI shares recently traded off 0.4% at $30.15.
"In 2016 we started on our journey to become asset light," MGM Resorts Chief Executive Bill Hornbuckle said in a statement.
This deal, along with the recent Springfield and CityCenter transactions, is "a major step forward in simplifying our corporate structure," he said.
Terms call for MGM Growth Properties holders to receive 1.366 shares of VICI for each share of MGP they own.
MGM Resorts gets $4.4 billion cash and retains a 1% VICI operating-partnership stake valued at about $370 million.
At closing VICI will enter into a restated triple-net master lease with MGM Resorts that will have an initial total annual rent of $860 million.
The companies expect the transaction to close in the first half of 2022, subject to conditions including regulatory clearances.
As part of the deal VICI will add 15 entertainment-resort properties across nine regions, featuring 33,000 hotel rooms and 3.6 million square feet of meeting and convention space.
About 55% of VICI's rent base will come from regional properties, with the remaining 45% coming from properties on the Las Vegas Strip.