MGM Growth Properties Reports First Quarter Financial Results

Financial highlights for the first quarter of 2019:

• Rental revenue was $196.9 million;


• Consolidated net income was $66.4 million, or $0.23 per diluted Operating Partnership unit; which consisted of $53.6 million of net income from the REIT, and $12.8 million of net income from the TRS;


• Funds From Operations⁽¹⁾ ("FFO") was $134.0 million , or $0.46 per diluted Operating Partnership unit;


• Adjusted Funds From Operations⁽²⁾ ("AFFO") was $163.8 million, or $0.57 per diluted Operating Partnership unit;


• Adjusted EBITDA⁽³⁾ was $223.9 million; and


• General and administrative expenses were $4.2 million.

On January 29, 2019, the Company acquired the real property associated with the Empire City Casino's race track and casino from MGM Resorts International ("MGM Resorts") in exchange for the issuance of 12.9 million Operating Partnership units of MGM Growth Properties Operating Partnership LP (the "Operating Partnership") to a subsidiary of MGM Resorts and the assumption of $246.0 million of debt, which was immediately repaid. Empire City Casino was added to the existing master lease agreement (the "Master Lease") and as a result the annual rent payment increased by $50 million, prorated for the remainder of the lease year.

On March 7, 2019, the Company completed the transaction relating to renovations undertaken by MGM Resorts regarding the Park MGM and NoMad Las Vegas property for total consideration of $637.5 million. MGP funded the transaction with $605.6 million in cash and the issuance of approximately 1.0 million  Operating Partnership units to a subsidiary of MGM Resorts. As a result of the transaction, the annual rent payment to MGP increased by $50 million, prorated for the remainder of the lease year.

On April 1, 2019, the Company sold the operations of what is now the MGM Northfield Park to a subsidiary of MGM Resorts for approximately $275 million, plus working capital and other customary purchase price adjustments, and retained the associated real estate assets. MGM Resorts funded its acquisition with approximately 9.4 million Operating Partnership units that were ultimately redeemed by the Operating Partnership. Concurrent with the closing of the transaction, the TRS liquidated, the real estate assets were transferred to a subsidiary of MGP, MGM Northfield Park was added to the existing Master Lease and, as a result, the annual rent increased by $60 million.

"One week ago, we celebrated our third anniversary as a public company. We have accomplished a great deal since our IPO and we are off to another successful start in 2019," said James Stewart, CEO of MGM Growth Properties. "We completed the transactions for the acquisition of Empire City Casino real estate, the Park MGM and NoMad improvements, and the sale of operations of MGM Northfield Park, which added an additional $160 million in rental revenue in total across all three transaction closings. The third base rent escalator under our Master Lease of 2% also went into effect on April 1, 2019, resulting in an annual rent amount of $946 million for our fourth lease year, representing a 72% increase from IPO. With these transactions and other potential acquisitions, we continue to work towards growing our dividend to drive shareholder value."

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