MGM Resorts International has completed the acquisition of the operating assets of the Hard Rock Rocksino Northfield Park from MGM Growth Properties LLC. MGM Resorts is leasing the land from MGP.
With the deal, MGM Resorts has rebranded the property as MGM Northfield Park.
As consideration for the transaction, MGM Growth Properties Operating Partnership LP redeemed approximately 9.4 million of its Operating Partnership units from a subsidiary of MGM Resorts, representing a purchase price of $275 million. Following the redemption, MGM Resorts' economic ownership stake in the Operating Partnership is approximately 69 percent.
"With the operational expertise of MGM Resorts, we expect MGM Northfield Park to continue to grow as the No. 1 market leading asset in northern Ohio," MGM Growth Properties CEO James Stewart said in a statement. "With the addition of this property to the master lease, MGP shareholders will further benefit from our market leading net rent coverage as well as our tenant's significant cash flows and strong credit profile. This further illustrates our continued ability to generate shareholder value with attractive net real estate acquisition prices and the enhanced AFFO accretion as a result of the redemption of operating partnership units."
MGM Northfield Park was added to the existing master lease and the annual rent was increased by $60 million. Consistent with the lease terms, 90 percent of the increased rent will be contractually fixed to grow at two percent per year until 2022, and thereafter will continue to grow provided a tenant revenue-to-rent ratio is met. The remaining 10 percent is payable in percentage rent.
MGM Growth Properties acquired the Hard Rock Rocksino Northfield Park for $1.06 billion from Milstein Entertainment LLC IN July 2018.