MGM Closes Las Vegas Strip Deal, Sells Another Casino
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Finding the exact right mix of properties on the iconic Las Vegas Strip has been an ongoing challenge for both MGM Resorts International (MGM) - Get MGM Resorts International Report and rival Caesars Entertainment (CZR) - Get Caesars Entertainment Inc. Report. Both companies need the right balance of value, mid-tier, and upper level properties spread out to best serve their customers' needs.
It's a problem that has both companies tinkering with their Las Vegas holdings. Caesars plans to sell the Flamingo (though it could still end up operating it) and will transform it's sort of bland Bally's casino into its Horseshoe brand -- a name the company associates with a gambler-friendly concept.
MGM has been even more active, selling the Mirage to Hard Rock International (which plans to build a Guitar Hotel on part of the site) and acquiring The Cosmopolitan -- a more chic, upscale property. That deal recently closed.
"This is a big moment for our company and for the Las Vegas Strip. The Cosmopolitan of Las Vegas has already established itself as one of the Strip's premier resorts with an iconic brand, well-curated experiences and a loyal customer base," said MGM Resorts CEO Bill Hornbuckle in a press release.
The company has been a bit vague about its plans for The Cosmopolitan, but Hornbuckle did offer some hints.
"We look forward to improving upon The Cosmopolitan's already strong results by offering their customers access to the extensive and exclusive amenities and other benefits only MGM Resorts can provide," he added.
Now, with its Las Vegas Strip lineup taking shape, MGM has turned its attention to its regional properties.
MGM Sells Another Casino
In addition to its Las Vegas Strip properties, MGM owns casinos and hotels all over the world including a number spread out around the United States. The company has reached a deal to sell the operations of Gold Strike Tunica in Mississippi to Cherokee Nation Entertainment Gaming Holdings for $450 million in cash.
In 2021 Gold Strike reported net income of $81.1 million. The physical property the casino sits on is owned by VICI Properties (VICI) - Get VICI Properties Inc. Report, MGM's landlord for multiple properties. With the sale of Gold Strike, MGM's rent will drop by $40 million annually and Cherokee Nation will make its own rental deal.
After the sales MGM expects net cash proceeds of $350 million.
"Gold Strike is a wonderful property with a bright future ahead. Strategically, though, 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, world-class resort and casino," said MGM CEO Bill Hornbuckle in a press release.
Open since 1994, Gold Strike was purchased by MGM in 2005. The property stands at 32 stories tall making it a striking site in Tunica where "the iconic property is one of the most recognizable buildings in Tunica and towers above all other structures," according to MGM. "When it was built the gold tower was reported to be the tallest building in Mississippi."
The transaction is expected to close in the first half of 2023.
