LAS VEGAS (AP) - MGM Resorts International plans to create a real estate investment trust in order to help boost value for its shareholders and give it more flexibility.
LAS VEGAS (AP) — MGM Resorts International plans to create a real estate investment trust in order to help boost value for its shareholders and give it more flexibility.
The casino operator's shares jumped more than 9 percent in premarket trading Thursday.
MGM Resorts said that the REIT, which will be called MGM Growth Properties LLC, will include real estate associated with 10 of its premier properties. These include seven Las Vegas resorts: Mandalay Bay, The Mirage, Monte Carlo, New York-New York, Luxor, Excalibur and The Park. It also includes three regional casino resorts: MGM Grand Detroit in Michigan and Beau Rivage and Gold Strike Tunica, both which are in Mississippi.
MGM Resorts will keep full ownership of the Bellagio and MGM Grand Las Vegas. It will also continue to own Circus Circus Las Vegas, undeveloped land holdings and its equity interests in CityCenter, MGM China Holdings, Borgata Hotel Casino & Spa, Grand Victoria, Las Vegas Arena and Diaoyutai MGM Hospitality.
The REIT will assume about $4 billion in debt.
MGM Resorts will keep a "substantial economic interest" in the real estate investment trust. It will lease the properties from the REIT under a long-term master lease with an initial 10-year term and four five-year extensions at MGM Resorts' option. MGM Resorts will continue to manage and run the properties.
The transaction is expected to be completed in 2016's first quarter.
MGM Resorts' stock added $2.09, or 9.6 percent, to $23.85 in premarket trading about 90 minutes before the market open Thursday.