MGM Growth may access capital markets, repays term loans A and B debt

By Devika Patel

Knoxville, Tenn., Feb. 14 – MGM Growth Properties LLC may access the capital markets to fund unit redemptions, management said Friday.

MGM Growth Properties Operating Partnership LP plans to redeem up to $1.4 billion of MGM Resorts International’s existing MGM Growth Properties Operating Partnership units for two years post-closing should MGM Resorts International elect to have any units redeemed.

The company may access capital markets to fund these redemptions.

“In terms of the capital markets activity for the upcoming redemptions, having the debt capacity to do so provides us the flexibility to do so when the request comes in,” chief financial officer Andy H. Chien said on the company’s fourth quarter and year ended Dec. 31, 2019 earnings conference call on Friday.

“We do have a certain amount of time to deliver the cash upon the request, but this gives us balance sheet flexibility to do it quickly and efficiently,” Chien said.

“This really lets us control how this gets done to a much greater degree, because debt in today’s world is very inexpensive and permits us to basically eliminate any kind of market risk to ourselves out of such a transaction, and we have very significant capacity compared to where our targets are for leverage, so all those things, we just thought it made the most sense to [fund the redemption through debt],” chief executive officer James C. Stewart said on the call.

The company also recently repaid its term loans A and B and sold $750 million of senior notes last year, giving the company more flexibility.

“Subsequent to year-end, our term loans A and B have been fully repaid,” Chien said.

Management praised the support shown by the capital markets for a $750 million sale of senior notes last year.

“[In 2019,] 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,” Chien stated in a Friday press release.

“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,” Chien stated.

Adjusted EBITDA was $233 million for the fourth quarter and $922.8 million for the year.

The company had $202.1 million of cash and cash equivalents as of Dec. 31, 2019.

At year-end, the company’s net leverage was 4.5x.

MGM Growth Properties is a Las Vegas-based real estate investment trust that acquires, owns and leases large-scale destination entertainment and leisure resorts.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.