MGM Resorts to sell Gold Strike Tunica for $450m
MGM Resorts International has reached an agreement to sell the operations of its Gold Strike Tunica land-based casino in Mississippi to Cherokee Nation Entertainment Gaming Holdings, a subsidiary of Cherokee Nation Businesses, for $450m (£360m/€423m).
Gold Strike opened in 1994 and was acquired by MGM Resorts in 2005, Gold Strike Tunica has a casino, sportsbook, hotel, shops, several nightclubs and a number of restaurants.
For the twelve months ended 31 December 2021, Gold Strike posted net income of $81m and adjusted property earnings before interest, tax, depreciation, amortisation and rent (EBITDAR) of $115m.
The transaction is expected to close in the first half of 2023, subject to regulatory approvals and other customary closing conditions.
Should the deal go through as expected, MGM Resorts’ master lease agreement with Vici Properties, which currently includes Gold Strike, will be amended to reduce annual rent by $40m.
MGM added that it expects net cash proceeds after taxes and estimated fees from the sale to be approximately $350m.
“I want to thank all of our Gold Strike employees who have consistently delivered world-class gaming and entertainment experiences to our guests,” MGM Resorts International chief executive and president Bill Hornbuckle said.
“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.”
Cherokee Nation Businesses chief executive Chuck Garrett added: “We are excited about the opportunity to grow our gaming and hospitality businesses as we execute on our strategic growth plan to expand our presence outside of the Cherokee Nation Reservation.”
Vici also agreed to enter into a new separate lease with Cherokee Nation Businesses related to the operations of Gold Strike. This lease would have an initial annual base rent of $40m, while other economic terms would primarily the same as the MGM Master Lease, including a base term of 25 years with three 10-year tenant renewal options.
“This transaction continues to demonstrate Vici’s ability to build strong relationships with new partners while working collaboratively with existing tenants to support their strategic objectives,” Vici president and chief executive John Payne said.
“We are pleased to welcome Cherokee Nation Businesses as our ninth gaming tenant, and we look forward to a long-term partnership as they pursue additional growth initiatives in the future.”