Full-year profit rockets at MGM Growth Properties ahead of Vici acquisition

Real estate investment trust MGM Growth Properties (MGP) posted a year-on-year rise in net profit in what was its final full financial year ahead of its scheduled acquisition by VICI Properties.


Revenue for the 12 months through to December 31 2021 amounted to $782.1m (£575.9m/€685.8m), which was 1.3% lower than the $792.6m posted in the previous year.

Rental revenue fell 1.4% year-on-year to $757.9m, while ground lease and other revenue remained level at $24.1m for the year.

Total expenses for the year were cut by 56.4% to $206.4m, primarily due to a 99.1% drop in property transactions expenses, which fell from $195.2m to just $1.7m.

Ground lease costs were level at $23.6m, while acquisition expenses rocketed by 655.3% to $7.5m. and general and administrative costs increased 12.4% to $18.1m. MGP also noted a slight drop in depreciation costs, which fell 0.6% to $235.5m.

MGP also reported $265.9m in interest expense, but this was partly offset by $100.8m in income from unconsolidated affiliates and a $39.1m on unhedged interest rate swaps, which resulted in $127.1m in finance costs, down 15.1% year-on-year.

Pre-tax profit was 116.7% higher at $368.6m, while MGP also noted that adjusted earnings before tax, interest, depreciation and amortization (EBITDA) increased by 2.5 % to $979.2m.

The business paid $9.3m in income tax, leaving $359.2m in net profit, up 123.9% year-on-year. After accounting for $153.7m attributable to non-controlling interests, $205.5m of net profit was attributable to its own shareholders, up 170.0%.

Looking at the fourth quarter, revenue in the three months to the end of December came to $199.0m, up 2.4%. Rental revenue climbed 2.5% to $193.0m, while ground lease and other revenue was flat at $6.0m.

Expenses were 10.8% higher at $75.7m and other costs amounted to $33.9m, up 7.6% from $33.9m in 2020.

Pre-tax profit was $89.4m, down by 2.1% from $91.3m in the previous year, but adjusted EBITDA was 3.8% higher at $249.4m.

After paying $2.4m in tax, net profit for the quarter was $87.0m, a decline of 4.7% from $91.3m in 2020. When accounting for $35.0m attributable to non-controlling interests, $52.0 of net profit was attributable to MGP shareholders, up 25.3% year-on-year.

The 2021 financial year is set to be MGP’s final full operating year before it is acquired by Vici Properties, the real estate investment trust spun off from Caesars Entertainment in 2017.

MGM Resorts International, which holds a controlling stake in MGP, reached an agreement in August of 2021 to sell the spun-off REIT MGM Growth Properties to Vici Properties for $17.2bn.

This week, MGM itself revealed it had returned to profit in 2021 after the easing of novel coronavirus (Covid-19) restrictions led to a resurgence in its properties’ performance. Revenue was up 87.5% to $9.68bn, while a net loss of $1.03bn in 2020 was turned into a net profit of $1.25bn.