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MGM Growth Properties Plans to Continue Capital Structure Improvement

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Las Vegas-based MGM Growth Properties LLC recently revealed financial results for the quarter ended March 31, 2018. Net income attributable to MGP Class A shareholders for the quarter was $15.8 million, or $0.22 per dilutive share.

According to the firm’s Andy Chien, CFO of MGM Growth Properties, “In the first quarter of 2018, MGP repriced the Term Loan B credit facility to a new rate of L+2.00%, resulting in an annual cash interest expense savings of $4.5 million. Continuing to improve our capital structure remains a top priority as part of our objective to deliver value for our shareholders.”

Chien also explains that “Maintaining a strong balance sheet allows us to be in position to pursue acquisitions such as the Hard Rock Rocksino Northfield Park and accretively grow our portfolio.”

MGP is off to a successful start in 2018 in what will be an exciting year for our shareholders, said James Stewart, CEO of MGM Growth Properties. “The second base rent escalator under our Master Lease of 2% went into effect on April 1, 2018, resulting in an annual rent amount of $770.3 million for our third lease year. On April 4th, we entered into an agreement to purchase the Hard Rock Rocksino Northfield Park. The property is a market leader in the region and further diversifies our holdings geographically. We anticipate the property will add $50 – 60 million of annual rent, which is expected to represent a rent coverage of approximately 1.8x. The attractive addition to our portfolio is expected to result in mid to high single digit accretion to AFFO per share.  We expect to ultimately sell the entities holding the licenses and operating assets to a third-party operator. We are looking forward to closing the transaction in the second half of 2018 and continuing to execute on our business strategy.”

Financial highlights for the first quarter of 2018 were as follows:

  • Rental revenue was $186.6 million;
  • Net income was $58.2 million, or $0.22 per diluted Operating Partnership unit;
  • Funds From Operations(1) (“FFO”) was $131.2 million, or $0.49 per diluted Operating Partnership unit;
  • Adjusted Funds From Operations(2) (“AFFO”) was $140.6 million, or $0.53 per diluted Operating Partnership unit;
  • Adjusted EBITDA(3) was $185.7 million; and
  • General and administrative expenses were $3.9 million.