MGM puts iconic Vegas property up for sale
MGM Resorts has put one of its iconic venues up for sale to reduce its exposure to Las Vegas.
Asia Gaming Brief reports that the Mirage casino is up for sale, after MGM had purchased the Cosmopolitan and 50 per cent of City Centre in early 2021.
In an earnings call to investors after its third quarter results, MGM chief executive officer Bill Hornbuckle said the Mirage was in the centre of the Strip and built to last.
The company is divesting the operations and not the real estate, which is owned by MGM Growth Properties.
“But as we look at capital allocation and we look at the notion of diversification, we have enough of Las Vegas.”
Bernstein Research said the sale would be a good thing.
The property had $150 million of earnings before interest, tax, depreciation and amortisation in 2019 and therefore a sale price of $600 million would be conservative the firm said, adding that management had given no guidance on timing or price.
“The property is not adjacent to any other MGM properties and needs capital investment to stay competitive,” the note said.
“MGM has other uses for its capital and is looking to reduce slightly its LV Strip exposure during a good valuation period.”
Renewed focus on digital assets
Bernstein said BetMGM, its joint venture with Entain, was the market leader in the combined sports betting and iGaming market in the United States, with a 23 per cent share.
It’s not the only major operator to downsize its operations in the city.
Las Vegas Sands announced in 2020 that it was selling off all of its operations, while Caesars Entertainment also plans to sell off one of its Strip assets.
Hornbuckle also stressed that he expects MGM China to retain its licence in the upcoming licence retender in Macau.
MGM sees China and Macau as major growth areas.
MGM China is committed to Macau and ready to invest further in the region as it begins its road to recovery from the COVID-19 pandemic.
MGM China chair Bill Hornbuckle confirmed the organisation’s commitment in comments he made as part of MGM China’s 2020 Annual Report, in which he outlined the company’s progress through the latter half of 2020 and into 2021.
That progress included a return to positive earnings before interest, tax, depreciation and amortisation for both Macau properties, MGM Macau and MGM Cotain, in fourth quarter 2020 with MGM China having previously reported group-wide adjusted EBITDA of US$47.4 million for the quarter.
Hornbuckle said the company was ready to invest further in Macau in the future.
“Macau is our home,” he said.
“We are committed to further growth in the region and will continue to invest in our employees, our communities and Macau itself.
“We see 2021 as a year of growth and further success, and we look forward to continuing our work with the Macau government and our community partners to help the region flourish and emerge stronger than ever.”
Noting that Macau had seen a steady improvement in market-wide gross gaming revenue in quarter four, down by around 70 per cent year-on-year versus a 93 per cent decline in quarter three, Hornbuckle said: “We expect that the rate of recovery will continue, driven by the premium mass market visitors whom MGM Macau and MGM Cotai are well-positioned to serve.”
According to Hornbuckle, the rise in Macau’s premium mass segment saw a shift in MGM China’s consumer mix in 2020, with mass now comprising 72 per cent of its GGR and VIP just 28 per cent compared with 64 per cent and 36 per cent respectively in 2019.
