MGM Resorts International closed on the previously announced acquisition of Boyd Gaming Corporation's 50 per cent equity interest in Marina District Development Holding Co., LLC, the parent company of Borgata Hotel Casino & Spa in Atlantic City, New Jersey, for approximately USD 900 million. The deal was first announced on the 31st of May 2016 and has taken approximately two months to finalise.
A total of USD 589 million was paid out to Boyd Gaming for their share in the resort casino, after customary working capital adjustments and consideration of Borgata's outstanding debt of USD 575 million.
The plan that MGM Resorts International had initially mapped out for the acquisition involved firstly purchasing the shares of the property from Boyd Gaming. Upon completion of the sale and transfer of Boyd’s shares in Borgata, MGM Resorts would sell their newly acquired stake to MGM Growth Properties LLC, which is the real estate investment branch of MGM, for approximately USD 1.175 billion. Once that transaction would be completed, MGM Growth Properties would lease the casino hotel stake back to MGM Resorts International and charge them a sum of USD 100 million, per year.
In accordance with the original plan, a fraction of Borgata’s outstanding debt was refinanced and subsequently assumed by MGM Growth Properties LLC., in connection with the acquisition of the actual brick and mortar property, which was associated with the acquisition of Borgata from MGM Resorts.
These proceeds that Boyd Gaming received from MGM, do not include any of their share of future property tax settlement benefits. Borgata had announced that they expect the resort casino to be entitled to property tax refunds totalling USD 160 million, including the amounts due under court decisions that were rendered in its favour and returns estimated for open tax appeals.
While the sum is a little less than the original USD 180 million in property tax returns that Boyd had estimated, the gaming corporation plans on using the money from the transaction to reduce their outstanding debts and for other general corporate purposes.
In the struggling casino market of Atlantic City that saw four out of their 12 casinos close in 2014, and a fifth announce closure in 2016, Borgata has remained the market leader since they opened on the 2nd of July 2003. In the 12 month period that ended on the 31st of March 2016, the resort casino reported USD 812 million in net revenue and USD 212 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).
About Borgata Hotel Casino & Spa
Located in Atlantic City's Marina District, Borgata Hotel Casino & Spa features 2,000 guest rooms and suites, 161,000 square feet of gaming space; with 184 table games, 3,026 slot machines, a poker room; with more than 75 tables. The property also features eleven retail boutiques, five acclaimed fine dining restaurants by renowned chefs, ten other casual dining options and a 54,000 square foot spa. Borgata also owns 70,000 square feet of event space, a pool and garden area over 20,000 square feet in size, which has both indoor and outdoor spaces, the hotel also has a 32,000 square foot outdoor pool, four signature nightlife experiences and lastly a parking lot that can accommodate 7,100 cars. The market leading resort also features Atlantic City's first cosmopolitan hotel experience – The Water Club at Borgata; with 800 guest rooms and suites, a 36,000 square foot spa, 18,000 square feet of meeting space; six designer retail boutiques and five heated indoor and outdoor pools. Finally, Borgata also offers online gaming within the state of New Jersey through its real money gaming sites – BorgataCasino.com and BorgataPoker.com. For more information on Borgata, please visit TheBorgata.com or follow then on Twitter @BorgataAC.
About MGM Resorts International
MGM Resorts International, which is listed on the New York Stock Exchange (NYSE:MGM), is one of the world's leading global hospitality companies. MGM Resorts International operates a portfolio of destination resort brands including Bellagio, MGM Grand, Mandalay Bay and The Mirage. The Company is in the process of developing the MGM National Harbour in Maryland and MGM Springfield in Massachusetts. MGM Resorts controls, and holds a 76 per cent economic interest in the operating partnership of MGM Growth Properties LLC., which is also listed on the New York Stock Exchange (NYSE: MGP), a premier triple-net lease real estate investment trust engaged in the acquisition, ownership and leasing of large scale destination entertainment and leisure resorts. The Company also owns 51 per cent of MGM China Holdings Limited, listed on the Hong Kong Stock Market (HK: 2282), owns the MGM Macau Resort and Casino and is developing a gaming resort in Cotai. MGM China is also the owner of 50 per cent of the new development in Las Vegas by MGM- CityCenter, which is to features ARIA Resort & Casino on their property. MGM Resorts has been named among Fortune Magazine's 2016 list of World's Most Admired Companies. For more information about MGM Resorts International, visit the company's website at MGMResorts.com.
About Boyd Gaming Corporation
Founded in 1975, Boyd Gaming Corporation is one of the largest and most successful casino entertainment companies in the United States. They currently own and operate 21 gaming entertainment properties in seven states – Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana and Mississippi. The company prides itself on being one of the most respected names in the gaming industry and offering guests an outstanding entertainment experience, all delivered with the unrivalled attention to customer service.
While Borgata has come off the portfolio for Boyd Gaming in this transaction, the company is only getting bigger. They continue to pursue opportunities for growth in their existing businesses and any new opportunities that come their way. Boyd Gaming has been very active purchasing new properties in 2016; in the month of April this year, they acquired The Aliante Casino Hotel & Spa located in North Las Vegas and then followed it up with the purchase of the Las Vegas assets of Cannery Casino Resorts LLC.