American casino giant MGM Resorts International has announced the signing of a deal that is to see it offload operations within the 1,258-room Gold Strike Tunica property to an enterprise of the federally-recognized Cherokee Nation for a cash consideration of $450 million.
The Las Vegas-headquartered firm used an official Thursday press release to declare that the arrangement with the Oklahoma-based tribe’s Cherokee Nation Entertainment Gaming Holdings LLC vehicle could be completed by June of next year ‘subject to regulatory approvals and other customary closing conditions’.
Profitable property:
MGM Resorts International revealed that it began running operations within the 27-year-old Gold Strike Tunica in 2005 with the Mississippi venue having chalked up $81.1 million in net income for the twelve months to the end of December. The behemoth also disclosed that the development located only about 30 miles from the Tennessee city of Memphis features a 32-story hotel tower and last year recorded adjusted earnings before interest, tax depreciation and amortization of approximately $115 million.
Confined concentration:
Bill Hornbuckle serves as the President and Chief Executive Officer for MGM Resorts International and he used the press release to disclose that Gold Strike Tunica had turned in adjusted annual earnings before interest, tax, depreciation and amortization for pre-pandemic 2019 of $67 million. He moreover noted that the deal with Cherokee Nation Entertainment Gaming Holdings LLC is expected to see his firm net roughly $350 million following the imposition of ‘taxes and estimated fees’.
Read a statement from Hornbuckle…
“I want to thank all of our Gold Strike Tunica employees who have consistently delivered world-class gaming and entertainment experiences to our guests. Gold Strike Tunica is a wonderful property with a bright future ahead but for strategic reasons we decided to narrow our focus in?Mississippi?to a single resort, Beau Rivage, and dedicate more of our time and resources towards continuing to drive success at that leading and world-class resort and casino.”
Lease lift:
For his part and the Chief Financial Officer for MGM Resorts International, Jonathan Halkyard, divulged that the arrangement has furthermore seen the real estate investment trust owner of Gold Strike Tunica, Vici Properties Incorporated, agree to lower its annual rental obligation by $40 million. The experienced professional explained that this understanding was inked only about a month after his firm officially began running the prestigious The Cosmopolitan of Las Vegas property following the completion of an around $1.62 billion deal with The Blackstone Group Incorporated.
A statement from Halkyard read…
“This is a great outcome for the company as we are able to reprioritize future capital expenditures toward opportunities that will enhance the customer experience at our other locations. We appreciate Vici Properties Incorporated as the real estate owner of Gold Strike Tunica working constructively with Cherokee Nation Entertainment Gaming Holdings LLC to facilitate a new lease agreement.”