Item 1.01 Entry into a Material Definitive Agreement.
On October 15, 2019, MGM Resorts International (the "Company") entered into a
Master Transaction Agreement (the "MTA") with Bellagio, LLC ("Tenant") and BCORE
Paradise Parent LLC (the "Sponsor"), a subsidiary of Blackstone Real Estate
Income Trust, Inc., which provides for, among other things, the transfer of the
real estate assets (the "Property") related to Bellagio from the Tenant to its
wholly-owned subsidiary ("PropCo" or the "Landlord"), followed by a transfer of
100% of the interests in PropCo to a newly formed subsidiary of the Sponsor (the
"Joint Venture"). The Tenant will lease the Property from the Landlord and
continue to operate Bellagio.
Upon the terms and subject to the conditions set forth in the MTA, the Joint
Venture will acquire PropCo for total consideration of $4.25 billion, which will
consist of (i) approximately $4.2 billion in gross cash proceeds and (ii) a 5%
equity interest in the Joint Venture; provided that the purchase price (and
rent) will be adjusted to the extent the Property's Closing EBITDA (as defined
in the MTA) is less than $461 million. In connection with the transaction, the
Company will also provide a guaranty of the debt of the Joint Venture, which is
expected to be approximately $3.0 billion. The transaction is expected to close
in the fourth quarter of 2019, subject to certain closing conditions.
Pursuant to the terms of the MTA, the Property will be leased by the Landlord to
the Tenant pursuant to a lease (the "Lease") with an initial base rent of
$245 million (the "Rent") for a term of thirty years with two ten-year renewal
options. The Rent will escalate annually throughout the term of the lease at a
rate of 2% per annum for the first ten years and thereafter equal to the greater
of 2% and the CPI increase during the prior year subject to a cap of 3% during
the 11th through 20th years and 4% thereafter. In addition, the Lease will
require that the Tenant be obligated to spend a specified percentage of net
revenues at the property on capital expenditures and for the Tenant and Company
to comply with certain financial covenants, which, if not met, will require the
Tenant to maintain cash security or a letter of credit in favor of the Landlord
in an amount equal to rent for the succeeding two year period. The Company will
provide a guarantee of Tenant's obligations under the Lease.
The representations, warranties and covenants contained in the MTA were made
only for purposes of the MTA and as of the specific date (or dates) set forth
therein and were solely for the benefit of the parties to such agreement and are
subject to certain limitations as agreed upon by the contracting parties. In
addition, the representations, warranties and covenants contained in the MTA may
be subject to standards of materiality applicable to the contracting parties
that differ from those applicable to investors. Investors are not third-party
beneficiaries of the MTA and should not rely on the representations, warranties
and covenants contained therein, or any descriptions thereof, as
characterizations of the actual state of facts or conditions of the Company.
This description of the MTA is qualified in its entirety by reference to the
full text of the MTA attached hereto as Exhibit 2.1. Exhibits and schedules that
have been excluded from the text of the MTA attached hereto will be
supplementally furnished to the Commission upon request.
Item 9.01 Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
2.1 Master Transaction Agreement by and among MGM Resorts
International, Bellagio, LLC and BCORE Paradise Parent LLC, dated as
of October 15, 2019
104 Cover Page Interactive Data File (embedded within the Inline XBRL
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