LAS VEGAS, Feb. 14, 2020 /PRNewswire/ -- MGM Growth
Properties LLC ("MGP" or the "Company") (NYSE: MGP) today reported
financial results for the quarter and year ended December 31,
2019. Net income attributable to MGP Class A shareholders for the
quarter was $25.9 million, or
$0.25 per dilutive share, and for the
year ended December 31, 2019 was $90.3
million, or $0.97 per dilutive
share.
Financial highlights for the fourth quarter of 2019:
- Rental revenue was $219.8
million;
- Consolidated net income was $72.9
million, or $0.24 per diluted
Operating Partnership unit;
- Funds From Operations(1) ("FFO") was $144.0 million, or $0.47 per diluted Operating Partnership
unit;
- Adjusted Funds From Operations(2) ("AFFO") was
$177.5 million, or $0.58 per diluted Operating Partnership
unit;
- Adjusted EBITDA(3) was $233.0
million; and
- General and administrative expenses were $4.2 million.
Financial highlights for the year ended December 31, 2019:
- Rental revenue was $856.4
million;
- Consolidated net income was $275.6
million for the year, or $0.94
per diluted Operating Partnership unit;
- FFO was $581.1 million for the
year, or $1.98 per diluted Operating
Partnership unit;
- AFFO was $685.7 million for the
year, or $2.33 per diluted Operating
Partnership unit;
- Adjusted EBITDA was $922.8
million for the year; and
- General and administrative expenses were $16.5 million.
On January 14, 2020, the Operating
Partnership entered into a definitive agreement with Blackstone
Real Estate Income Trust, Inc. pursuant to which the real estate
assets of MGM Grand Las Vegas and Mandalay Bay will be contributed
to a newly formed entity ("MGP BREIT Venture"), which, following
the transactions, will be owned 50.1% by the Company and 49.9% by
BCORE Windmill Parent LLC. In exchange for the contribution of the
Mandalay Bay real estate assets, the Operating Partnership will
receive consideration of approximately $2.1
billion, comprised of $1.3
billion of the Operating Partnership's secured indebtedness
to be assumed by MGP BREIT Venture, the Operating Partnership's
50.1% equity interest in the MGP BREIT Venture, and the remainder
in cash. In addition, MGM will receive approximately $2.4 billion of cash distributed from MGP BREIT
Venture as consideration for its contribution of the MGM Grand Las
Vegas assets, and, additionally, the Operating Partnership will
issue operating partnership units to MGM equal to 5% of the equity
value of the MGP BREIT Venture.
Mandalay Bay and MGM Grand Las Vegas will be leased back to a
subsidiary of MGM pursuant to a triple net master lease with an
initial base rent of $292 million for
a term of thirty years with two ten-year renewal options.
Finally, the Operating Partnership will also enter into an
agreement with MGM to deliver cash for up to $1.4 billion of MGM's existing Operating
Partnership units for a period of 24 months post-closing should MGM
elect to have any units redeemed.
"2019 was a year of significant growth for MGP as we closed
three accretive transactions, acquiring the real estate assets of
Empire City Casino from a third party, selling the previously
acquired operations of Northfield Park to MGM and monetizing the
Park MGM improvements, which resulted in $160 million of additional rent and further
demonstrated the power of our leading partnership with our tenant,
MGM Resorts," said James Stewart,
CEO of MGP. "2020 is off to an exciting start as we expect to
complete the transaction to acquire majority ownership of MGM Grand
Las Vegas, an iconic casino resort on the Las Vegas Strip, in the
near term and we are looking forward to continuing to seek
opportunities to grow our portfolio this year and executing on all
facets of our business plan to prudently deliver shareholder
value."
The following table provides a reconciliation of MGP's net
income to FFO, AFFO and Adjusted EBITDA for the three months ended
December 31, 2019:
|
Three Months Ended
December 31, 2019
|
|
Consolidated
|
|
(In thousands,
except unit and per unit
amounts)
|
Reconciliation of
Non-GAAP Financial Measures
|
|
Net
income
|
$
|
72,879
|
|
Real estate
depreciation
|
71,643
|
|
Property
transactions, net
|
(500)
|
|
Funds From
Operations
|
144,022
|
|
Amortization of
financing costs and cash flow hedges
|
2,504
|
|
Non-cash compensation
expense
|
669
|
|
Straight-line rental
revenues, excluding lease incentive asset
|
11,664
|
|
Amortization of lease
incentive asset and deferred revenue on non-normal tenant
improvements
|
4,628
|
|
Acquisition-related
expenses
|
1,274
|
|
Non-cash ground lease
rent, net
|
260
|
|
Other
expenses
|
6,809
|
|
Loss on unhedged
interest rate swaps, net
|
3,880
|
|
Provision for income
taxes
|
1,827
|
|
Adjusted Funds
From Operations
|
177,537
|
|
Interest
income
|
(1,030)
|
|
Interest
expense
|
58,971
|
|
Amortization of
financing costs and cash flow hedges
|
(2,504)
|
|
Adjusted
EBITDA
|
$
|
232,974
|
|
Weighted average
Operating Partnership units outstanding
|
|
Basic
|
303,442,967
|
|
Diluted
|
303,837,079
|
|
|
|
Net income per
Operating Partnership units outstanding
|
|
Basic
|
$
|
0.24
|
|
Diluted
|
$
|
0.24
|
|
|
|
FFO per Operating
Partnership unit
|
|
Diluted
|
$
|
0.47
|
|
AFFO per Operating
Partnership unit
|
|
Diluted
|
$
|
0.58
|
|
The following table provides a reconciliation of MGP's net
income to FFO, AFFO and Adjusted EBITDA for the twelve months ended
December 31, 2019:
|
Twelve Months
Ended December 31, 2019
|
|
Consolidated
|
|
(In thousands,
except unit and per unit
amounts)
|
Reconciliation of
Non-GAAP Financial Measures
|
|
Net
income(1)
|
$
|
275,565
|
|
Real estate
depreciation
|
294,705
|
|
Property
transactions, net
|
10,844
|
|
Funds From
Operations
|
581,114
|
|
Amortization of
financing costs and cash flow hedges
|
12,520
|
|
Non-cash compensation
expense
|
2,277
|
|
Straight-line rental
revenues, excluding lease incentive asset
|
41,447
|
|
Amortization of lease
incentive asset and deferred revenue on non-normal tenant
improvements
|
14,347
|
|
Acquisition-related
expenses
|
10,165
|
|
Non-cash ground lease
rent, net
|
1,038
|
|
Other
expenses
|
7,615
|
|
Loss on unhedged
interest rate swaps, net
|
3,880
|
|
Provision for income
taxes - REIT
|
7,598
|
|
Other, net -
discontinued operations
|
3,707
|
|
Adjusted Funds
From Operations
|
685,708
|
|
Interest
income(1)
|
(3,219)
|
|
Interest
expense(1)
|
249,944
|
|
Amortization of
financing costs and cash flow hedges
|
(12,520)
|
|
Provision for income
taxes - discontinued operations
|
2,890
|
|
Adjusted
EBITDA
|
$
|
922,803
|
|
Weighted average
Operating Partnership units outstanding
|
|
Basic
|
293,884,939
|
|
Diluted
|
294,137,313
|
|
|
|
Net income per
Operating Partnership units outstanding
|
|
Basic
|
$
|
0.94
|
|
Diluted
|
$
|
0.94
|
|
|
|
FFO per Operating
Partnership unit
|
|
Diluted
|
$
|
1.98
|
|
AFFO per Operating
Partnership unit
|
|
Diluted
|
$
|
2.33
|
|
|
(1) Net income,
interest income and interest expense are net of intercompany
interest eliminations of $5.6 million for the year ended December
31, 2019.
|
Financial Position
The Company had $202.1 million of
cash and cash equivalents as of December 31, 2019. Cash
received from rent payments under the Master Lease for the quarter
and year ended December 31, 2019 was $236.5 million and $914.2
million, respectively.
On January 15, 2020, the Operating
Partnership made a cash distribution of $147.3 million relating to the fourth quarter
dividend, $93.9 million of which was
paid to subsidiaries of MGM and $53.4
million of which was paid to MGP. Simultaneously, MGP paid a
cash dividend of $0.47 per share.
On November 22, 2019, the Company
completed an offering of 30.0 million Class A shares in a
registered public offering, of which 18.0 million settled at the
closing of the offering for net proceeds of approximately
$540.6 million, after deducting
underwriting discounts and commissions, and 12.0 million which were
sold pursuant to forward purchase agreements that settled
between February 11 and February 13,
2020. In addition, as part of the MGP BREIT Venture
transaction BREIT will purchase 4,891,395 Class A common shares
from MGP pursuant to a registered direct offering, representing an
aggregate investment of $150
million.
"2019 was marked by many significant achievements for MGP,
highlighted by three dividend increases that resulted in an
annualized dividend of $1.88 per
share which represents a total increase of $0.09 per share year over year," said
Andy Chien, CFO of MGP. "We received
strong support from the capital markets as demonstrated by the two
successful follow-on equity offerings and the issuance of
$750 million in senior notes. These
capital market transactions positioned the balance sheet to expand
our portfolio throughout the year and also provided the flexibility
to fund future transactions, while remaining in our target leverage
range."
The Company's debt at December 31, 2019 was as follows
(in thousands):
|
December 31,
2019
|
Senior secured credit
facility:
|
|
Senior secured term
loan A facility
|
$
|
399,125
|
|
Senior secured term
loan B facility
|
1,304,625
|
|
Senior secured
revolving credit facility
|
—
|
|
$1,050 million 5.625%
senior notes, due 2024
|
1,050,000
|
|
$500 million 4.50%
senior notes, due 2026
|
500,000
|
|
$750 million 5.75%
senior notes, due 2027
|
750,000
|
|
$350 million 4.50%
senior notes, due 2028
|
350,000
|
|
Total principal
amount of debt
|
4,353,750
|
|
Less: Unamortized
discount and debt issuance costs
|
(46,396)
|
|
Total debt, net of
unamortized debt issuance costs
|
$
|
4,307,354
|
|
Conference Call Details
MGP will host a conference call at 12:30
p.m. Eastern Time today which will include a brief
discussion of these results followed by a question and answer
period. The call will be accessible via the Internet through
http://www.mgmgrowthproperties.com/events-and-presentations or by
calling 1-888-317-6003 for domestic callers and 1-412-317-6061 for
international callers. The conference call access code is 3701417.
A replay of the call will be available through Friday, February 21, 2020. The replay may be
accessed by dialing 1-877-344-7529 or 1-412-317-0088. The
replay access code is 10138296. The call will be archived at
www.mgmgrowthproperties.com.
- Funds From Operations ("FFO") is net income (computed in
accordance with U.S. GAAP), excluding gains and losses from sales
or disposals of property (presented as property transactions, net),
plus real estate depreciation, as defined by the National
Association of Real Estate Investment Trusts.
- Adjusted Funds From Operations ("AFFO") is FFO as adjusted for
amortization of financing costs and cash flow hedges; non-cash
compensation expense; straight-line rent (which is defined as the
difference between contractual rent and cash rent payments,
excluding lease incentive asset amortization); amortization of
lease incentive asset and deferred revenue relating to non-normal
tenant improvements; acquisition-related expenses; non-cash ground
lease rent, net; other expenses; loss on unhedged interest rate
swaps, net; provision for income taxes related to the REIT; and
other, net - discontinued operations.
- Adjusted EBITDA is net income (computed in accordance with U.S.
GAAP) as adjusted for gains and losses from sales or disposals of
property (presented as property transactions, net); real estate
depreciation; amortization of financing costs and cash flow hedges;
non-cash compensation expense; straight-line rent; amortization of
lease incentive asset and deferred revenue relating to non-normal
tenant improvements; acquisition-related expenses; non-cash ground
lease rent, net; other expenses; loss on unhedged interest rate
swaps, net; other, net – discontinued
operations; interest income; interest expense (including
amortization of financing costs and cash flow hedges); and
provision for income taxes.
FFO, FFO per unit, AFFO, AFFO per unit and Adjusted EBITDA are
supplemental performance measures that have not been prepared in
conformity with accounting principles generally accepted in
the United States ("U.S. GAAP")
that management believes are useful to investors in comparing
operating and financial results between periods. Management
believes that this is especially true since these measures exclude
real estate depreciation and amortization expense and management
believes that real estate values fluctuate based on market
conditions rather than depreciating in value ratably on a
straight-line basis over time. The Company believes such a
presentation also provides investors with a meaningful measure of
the Company's operating results in comparison to the operating
results of other REITs. Adjusted EBITDA is useful to investors to
further supplement AFFO and FFO and to provide investors a
performance metric which excludes interest expense. In addition to
non-cash items, the Company adjusts AFFO and Adjusted EBITDA for
acquisition-related expenses. While we do not label these expenses
as non-recurring, infrequent or unusual, management believes
that it is helpful to adjust for these expenses when they do occur
to allow for comparability of results between periods because each
acquisition is (and will be) of varying size and complexity and may
involve different types of expenses depending on the type of
property being acquired and from whom.
FFO, FFO per unit, AFFO, AFFO per unit and Adjusted EBITDA do
not represent cash flow from operations as defined by U.S. GAAP,
should not be considered as an alternative to net income as defined
by U.S. GAAP and are not indicative of cash available to fund all
cash flow needs. Investors are also cautioned that FFO, FFO per
unit, AFFO, AFFO per unit and Adjusted EBITDA as presented, may not
be comparable to similarly titled measures reported by other REITs
due to the fact that not all real estate companies use the same
definitions.
Reconciliations of net income to FFO, AFFO and Adjusted EBITDA
are included in this release.
About MGM Growth Properties
MGM Growth Properties LLC (NYSE:MGP) is one of the leading
publicly traded real estate investment trusts engaged in the
acquisition, ownership and leasing of large-scale destination
entertainment and leisure resorts, whose diverse amenities include
casino gaming, hotel, convention, dining, entertainment and retail
offerings. MGP currently owns a portfolio of properties, consisting
of 11 premier destination resorts in Las
Vegas and elsewhere across the
United States, MGM Northfield Park in Northfield, OH, Empire Resort Casino in
Yonkers, NY, as well as a retail
and entertainment district, The Park in Las Vegas. As of December 31, 2019, our destination resorts, the
Park, and MGM Northfield Park collectively comprise approximately
27,400 hotel rooms, 1.4 million casino square footage, and 2.7
million convention square footage. As a growth-oriented public real
estate entity, MGP expects its relationship with MGM Resorts and
other entertainment providers to attractively position MGP for the
acquisition of additional properties across the entertainment,
hospitality and leisure industries. For more information about MGP,
visit the Company's website at
http://www.mgmgrowthproperties.com.
This release includes "forward-looking" statements and "safe
harbor statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 that involve risks and/or
uncertainties, including those described in MGP's public filings
with the Securities and Exchange Commission. MGP has based
forward-looking statements on management's current expectations and
assumptions and not on historical facts. Examples of these
statements include, but are not limited to, MGP's expectations
regarding the timing of the closing of the MGP BREIT Venture
transaction, MGP's ability to continue to grow its dividend,
successfully execute on its business strategy and acquire
additional properties in accretive transactions. These
forward-looking statements involve a number of risks and
uncertainties and the important factors that could cause actual
results to differ materially from those indicated in such
forward-looking statements include risks related to MGP's ability
to receive, or delays in obtaining, any regulatory approvals
required to own its properties, or other delays or impediments to
completing MGP's planned acquisitions or projects, including any
acquisitions of properties from MGM; the ultimate timing and
outcome of any planned acquisitions or projects; MGP's ability to
maintain its status as a REIT; the availability of and the ability
to identify suitable and attractive acquisition and development
opportunities and the ability to acquire and lease those properties
on favorable terms; MGP's ability to access capital through debt
and equity markets in amounts and at rates and costs acceptable to
MGP; changes in the U.S. tax law and other state, federal or local
laws, whether or not specific to REITs or to the gaming or lodging
industries; and other factors described in MGP's periodic reports
filed with the Securities and Exchange Commission. In providing
forward-looking statements, MGP is not undertaking any duty or
obligation to update these statements publicly as a result of new
information, future events or otherwise, except as required by law.
If MGP updates one or more forward-looking statements, no inference
should be drawn that it will make additional updates with respect
to those other forward-looking statements.
MGM GROWTH
PROPERTIES LLC
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In thousands,
except share and per share amounts)
|
(Unaudited)
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues
|
|
|
|
|
|
|
|
Rental
revenue
|
$
|
219,846
|
|
|
$
|
186,563
|
|
|
$
|
856,421
|
|
|
$
|
746,253
|
|
Tenant reimbursements
and other
|
6,039
|
|
|
30,044
|
|
|
24,657
|
|
|
123,242
|
|
|
225,885
|
|
|
216,607
|
|
|
881,078
|
|
|
869,495
|
|
Expenses
|
|
|
|
|
|
|
|
Depreciation
|
71,643
|
|
|
66,689
|
|
|
294,705
|
|
|
266,622
|
|
Property
transactions, net
|
(500)
|
|
|
1,468
|
|
|
10,844
|
|
|
20,319
|
|
Ground lease and
other reimbursable expenses
|
5,921
|
|
|
29,096
|
|
|
23,681
|
|
|
119,531
|
|
Amortization of above
market lease, net
|
—
|
|
|
172
|
|
|
—
|
|
|
686
|
|
Acquisition-related
expenses
|
1,274
|
|
|
1,546
|
|
|
10,165
|
|
|
6,149
|
|
General and
administrative
|
4,211
|
|
|
6,027
|
|
|
16,516
|
|
|
16,048
|
|
|
82,549
|
|
|
104,998
|
|
|
355,911
|
|
|
429,355
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Interest
income
|
1,030
|
|
|
28
|
|
|
3,219
|
|
|
2,501
|
|
Interest
expense
|
(58,971)
|
|
|
(58,283)
|
|
|
(249,944)
|
|
|
(215,532)
|
|
Loss on unhedged
interest rate swaps, net
|
(3,880)
|
|
|
—
|
|
|
(3,880)
|
|
|
—
|
|
Other
|
(6,809)
|
|
|
(782)
|
|
|
(7,615)
|
|
|
(7,191)
|
|
|
(68,630)
|
|
|
(59,037)
|
|
|
(258,220)
|
|
|
(220,222)
|
|
Income from
continuing operations before income taxes
|
74,706
|
|
|
52,572
|
|
|
266,947
|
|
|
219,918
|
|
Provision for income
taxes
|
(1,827)
|
|
|
(635)
|
|
|
(7,598)
|
|
|
(5,779)
|
|
Income from
continuing operations, net of tax
|
72,879
|
|
|
51,937
|
|
|
259,349
|
|
|
214,139
|
|
Income from
discontinued operations, net of tax
|
—
|
|
|
16,614
|
|
|
16,216
|
|
|
30,563
|
|
Net
income
|
72,879
|
|
|
68,551
|
|
|
275,565
|
|
|
244,702
|
|
Less: Net income
attributable to noncontrolling interest
|
(46,947)
|
|
|
(49,946)
|
|
|
(185,305)
|
|
|
(177,637)
|
|
Net income
attributable to Class A shareholders
|
$
|
25,932
|
|
|
$
|
18,605
|
|
|
$
|
90,260
|
|
|
$
|
67,065
|
|
|
|
|
|
|
|
|
|
Weighted average
Class A shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
103,740,424
|
|
|
71,008,881
|
|
|
93,046,859
|
|
|
70,997,589
|
|
Diluted
|
104,134,536
|
|
|
71,211,797
|
|
|
93,299,233
|
|
|
71,185,674
|
|
|
|
|
|
|
|
|
|
Net income per
share attributable to Class A shareholders:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.25
|
|
|
$
|
0.26
|
|
|
$
|
0.97
|
|
|
$
|
0.94
|
|
Diluted
|
$
|
0.25
|
|
|
$
|
0.26
|
|
|
$
|
0.97
|
|
|
$
|
0.94
|
|
MGM GROWTH
PROPERTIES LLC
|
CONSOLIDATED
BALANCE SHEETS
|
(In thousands,
except share amounts)
|
(Unaudited)
|
|
|
December
31,
|
|
2019
|
|
2018
|
ASSETS
|
Real estate
investments, net
|
$
|
10,827,972
|
|
|
$
|
10,506,129
|
|
Lease incentive
asset
|
527,181
|
|
|
—
|
|
Cash and cash
equivalents
|
202,101
|
|
|
3,995
|
|
Tenant and other
receivables, net
|
566
|
|
|
7,668
|
|
Prepaid expenses and
other assets
|
30,919
|
|
|
34,813
|
|
Above market lease,
asset
|
41,440
|
|
|
43,014
|
|
Operating lease
right-of-use assets
|
280,093
|
|
|
—
|
|
Assets held for
sale
|
—
|
|
|
355,688
|
|
Total
assets
|
$
|
11,910,272
|
|
|
$
|
10,951,307
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
Liabilities
|
|
|
|
Debt, net
|
$
|
4,307,354
|
|
|
$
|
4,666,949
|
|
Due to MGM Resorts
International and affiliates
|
774
|
|
|
227
|
|
Accounts payable,
accrued expenses and other liabilities
|
37,421
|
|
|
20,796
|
|
Above market lease,
liability
|
—
|
|
|
46,181
|
|
Accrued
interest
|
42,904
|
|
|
26,096
|
|
Dividend and
distribution payable
|
147,349
|
|
|
119,055
|
|
Deferred
revenue
|
108,593
|
|
|
163,926
|
|
Deferred income
taxes, net
|
29,909
|
|
|
33,634
|
|
Operating lease
liabilities
|
337,956
|
|
|
—
|
|
Liabilities related
to assets held for sale
|
—
|
|
|
28,937
|
|
Total
liabilities
|
5,012,260
|
|
|
5,105,801
|
|
Commitments and
contingencies
|
|
|
|
Shareholders'
equity
|
|
|
|
Class A shares: no
par value, 1,000,000,000 shares authorized, 113,806,820 and
70,911,166 shares issued and outstanding as of December 31, 2019
and December 31, 2018, respectively
|
—
|
|
|
—
|
|
Additional paid-in
capital
|
2,766,325
|
|
|
1,712,671
|
|
Accumulated deficit
|
(244,381)
|
|
|
(150,908)
|
|
Accumulated other
comprehensive income (loss)
|
(7,045)
|
|
|
4,208
|
|
Total Class A
shareholders' equity
|
2,514,899
|
|
|
1,565,971
|
|
Noncontrolling
interest
|
4,383,113
|
|
|
4,279,535
|
|
Total shareholders'
equity
|
6,898,012
|
|
|
5,845,506
|
|
Total liabilities and
shareholders' equity
|
$
|
11,910,272
|
|
|
$
|
10,951,307
|
|
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SOURCE MGM Growth Properties LLC