MGM GROWTH PROPERTIES LLC The following discussion and analysis of financial condition and results of operations includes discussion as of and for the year endedDecember 31, 2020 compared toDecember 31, 2019 . Discussion of our financial condition and results of operations as of and for the year endedDecember 31, 2019 compared toDecember 31, 2018 can be found in our annual report on Form 10-K for the year endedDecember 31, 2019 , filed with theSEC onFebruary 27, 2020 .
Executive Overview MGP is one of the leading publicly traded REITs engaged in the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts, whose tenants generally offer diverse amenities including casino gaming, hotel, convention, dining, entertainment and retail offerings.
MGP is a limited liability company that was formed inDelaware inOctober 2015 . MGP conducts its operations through theOperating Partnership , aDelaware limited partnership formed byMGM inJanuary 2016 that became a subsidiary of MGP on the IPO Date. The Company has elected to be taxed as a REIT commencing with its taxable year endedDecember 31, 2016 . As ofDecember 31, 2020 , we generated all of our revenues by leasing our real estate properties pursuant to the MGM-MGP Master Lease which requires the tenant to pay substantially all costs associated with each property, including real estate taxes, ground lease rent, insurance, utilities and routine maintenance, in addition to the base rent and the percentage rent, each as described below. The lease has an initial lease term of ten years (other than with respect toMGM National Harbor , whose initial lease term ends onAugust 31, 2024 ) with the potential to extend the term for four additional five-year terms thereafter at the option of the tenant. Base rent and percentage rent that are known at the lease commencement date will be recorded on a straight-line basis over 30 years, which represents the initial ten-year non-cancelable lease term and all four five-year renewal terms under the lease, as we have determined such renewal terms to be reasonably assured. Additionally, we expect to grow our portfolio through acquisitions with third parties and withMGM . In pursuing external growth initiatives, we will generally seek to acquire properties that can generate stable rental revenue through long-term, triple-net leases with tenants with established operating histories, and we will consider various factors when evaluating acquisitions.
As of
OnJanuary 29, 2019 , we completed the Empire City Transaction. Empire City was added to the MGM-MGP Master Lease. As a result, the annual rent payment to MGP increased by$50 million . Consistent with the lease terms, 90% of this rent is fixed and will contractually grow at 2% per year until 2022 with escalators thereafter subject to the tenant meeting an adjusted net revenue to rent ratio as described below. In addition, pursuant to the lease, MGP has a right of first offer with respect to certain undeveloped land adjacent to the property to the extentMGM develops additional gaming facilities and chooses to sell or transfer the property in the future. OnMarch 7, 2019 , we completed the ParkMGM Transaction . In connection with the transaction, we paid total consideration of$637.5 million , of which approximately$605.6 million was paid in cash and the remainder in issuance of approximately 1.0 million ofOperating Partnership units to a subsidiary ofMGM . As a result of the transaction, we recorded a lease incentive asset and the MGM-MGP Master Lease annual rent payment to us increased by$50 million , prorated for the remainder of the lease year. Consistent with the lease terms, 90% of this rent is fixed and will contractually grow at 2% per year until 2022 with escalators thereafter subject to the tenant meeting an adjusted net revenue to rent ratio as described below. OnApril 1, 2019 , we transferred the membership interests ofNorthfield to a subsidiary ofMGM and the Company retained the real estate assets. Our TRS that ownedNorthfield liquidated immediately prior to the transfer. Subsequently,MGM rebranded Northfield OpCo toMGM Northfield Park , which was then added to the MGM-MGP Master Lease. As a result, the annual rent payment to MGP increased by$60 million . Consistent with the lease terms, 90% of this rent is fixed and will contractually grow at 2% per year until 2022 with escalators thereafter subject to the tenant meeting an adjusted net revenue to rent ratio as described below. Northfield OpCo is presented as discontinued operations in our consolidated statements of operations for the periods presented in which we ownedNorthfield OpCo. Refer to Note 3 of the accompanying financial statements for additional discussion. 35 -------------------------------------------------------------------------------- OnFebruary 14, 2020 , theOperating Partnership andMGM completed the MGP BREIT Venture Transaction pursuant to which the real estate assets ofMGM Grand Las Vegas andMandalay Bay (includingMandalay Place ) were contributed to MGP BREIT Venture, which, following the transactions, is owned 50.1% by theOperating Partnership and 49.9% by a subsidiary of BREIT. In exchange for the contribution of theMandalay Bay real estate assets, theOperating Partnership received consideration of$2.1 billion , which was comprised of$1.3 billion of theOperating Partnership's secured indebtedness assumed byMGM BREIT Venture , theOperating Partnership's 50.1% equity interest in the MGP BREIT Venture, and the remainder in cash. In addition,MGM received$2.4 billion of cash distributed from the MGP BREIT Venture as consideration for its contribution of theMGM Grand Las Vegas real estate assets, and, additionally, theOperating Partnership issued 2.6 millionOperating Partnership units toMGM representing 5% of the equity value of the MGP BREIT Venture.MGM provides a shortfall guarantee of the principal amount of indebtedness of the MGP BREIT Venture (and any interest accrued and unpaid thereto). On the closing date, BREIT also purchased 4.9 million Class A common shares of MGP for$150 million . In connection with the transactions, MGP BREIT Venture entered into a lease with a subsidiary ofMGM for the real estate assets ofMandalay Bay andMGM Grand Las Vegas . The lease provides for a term of thirty years with two ten-year renewal options and has an initial annual base rent of$292 million , escalating annually at a rate of 2% per annum for the first fifteen years and thereafter equal to the greater of 2% and the CPI increase during the prior year subject to a cap of 3%. In addition, the lease obligates the tenant to spend a specified percentage of net revenues at the properties on capital expenditures and that the tenant andMGM to comply with certain financial covenants, which, if not met, would require the tenant to maintain cash security or provide one or more letters of credit in favor of the landlord in an amount equal to the rent for the succeeding one-year period.MGM provides a guarantee of tenant's obligations under the lease. In connection with the MGP BREIT Venture Transaction, the MGM-MGP Master Lease was modified to remove theMandalay Bay property and the annual cash rent under the MGM-MGP Master Lease was reduced by$133 million . Also, onJanuary 14, 2020 , theOperating Partnership , MGP, andMGM entered into an agreement for theOperating Partnership to waive its right to issue MGP Class A shares, in lieu of cash, toMGM in connection withMGM exercising its right to require theOperating Partnership to redeem theOperating Partnership units it holds. The waiver provided that the units would be purchased at a price per unit equal to a 3% discount to the applicable cash amount as calculated in accordance with the operating agreement. The waiver was effective upon closing of the transaction onFebruary 14, 2020 and scheduled to terminate on the earlier ofFebruary 14, 2022 orMGM receiving cash proceeds of$1.4 billion as consideration for the redemption of itsOperating Partnership units. OnMay 18, 2020 , theOperating Partnership redeemed 30.3 million ofOperating Partnership units held byMGM for$700 million , or$23.10 per unit, and onDecember 2, 2020 , theOperating Partnership redeemed 23.5 million ofOperating Partnership units held byMGM for the remaining$700 million , or$29.78 per unit. As a result, the waiver has terminated in accordance with its terms.
COVID-19 Update
The COVID-19 pandemic has not had a material impact on our operations; however, we cannot estimate the duration of the pandemic and potential impact on our business if our properties will be required to close again, or if the tenant (or the guarantor) is otherwise unable or unwilling to make rental payments. For further information regarding the potential impact of COVID-19 on our operations, refer to "Liquidity and Capital Resources" below as well as "Risk Factors" in Part I, Item 1A of this report.
Combined Results of Operations for MGP and the
Overview
The following table summarizes our financial results for the years ended
Year ended December 31,
2020 2019 2018
(in thousands)
Total Revenues $ 792,597 $ 881,078 $ 869,495
Total Expenses 472,772 355,911 429,355Income from continuing operations, net of tax 160,371 259,349 214,139
Income from discontinued operations, net of tax -
16,216 30,563
Net income 160,371
275,565 244,702
Net income attributable to Class A shareholders 76,129 90,260 67,065
36
--------------------------------------------------------------------------------Revenues
Rental revenue. Rental revenues, including ground lease and other, for the years endedDecember 31, 2020 and 2019 were$792.6 million and$881.1 million , respectively. The$88.5 million , or 10%, decrease for 2020 compared to 2019 was primarily due to a decrease in rental revenues as a result of the removal ofMandalay Bay from the MGM-MGP Master Lease in connection with the MGP BREIT Venture Transaction inFebruary 2020 , partially offset by a full period of revenue in 2020 related to the Empire City Transaction inJanuary 2019 , the ParkMGM Transaction inMarch 2019 , and the addition ofMGM Northfield Park to the MGM-MGP Master Lease inApril 2019 .
Expenses
Depreciation. Depreciation expense was$236.9 million and$294.7 million for the years endedDecember 31, 2020 and 2019, respectively. The$57.9 million , or 20%, decrease for 2020 as compared to 2019 was primarily due to the contribution ofMandalay Bay to the MGP BREIT Venture inFebruary 2020 . Property transactions, net. Property transactions, net were$195.2 million in 2020 compared to$10.8 million in 2019. The increase in 2020 is primarily due to the difference between the carrying value of theMandalay Bay real estate assets of$2.3 billion and the consideration received of$2.1 billion , as well as the expenses of$10.0 million incurred in connection with the sale, that resulted in a loss on sale of theMandalay Bay real estate assets of$193.1 million .
Ground lease expense. Ground lease expense was
Acquisition-related expenses. Acquisition-related expenses were$1.0 million and$10.2 million for the years endedDecember 31, 2020 and 2019, respectively. The$9.2 million , or 90%, decrease for 2020 as compared to 2019 primarily relates to expenses relating to the Empire City Transaction in 2019, slightly offset by expenses incurred relating to the MGP BREIT Venture Transaction inFebruary 2020 . General and administrative expenses. General and administrative expenses for the years endedDecember 31, 2020 and 2019 were$16.1 million and$16.5 million , respectively. Other Expenses Income from unconsolidated affiliate. Income from unconsolidated affiliate for the year endedDecember 31, 2020 was$89.1 million and is attributable to income from our investment in MGP BREIT Venture. There was no income from unconsolidated affiliate for the year endedDecember 31, 2019 . Other expenses, excluding income from unconsolidated affiliate, for the years endedDecember 31, 2020 and 2019 were$238.8 million and$258.2 million , respectively. The$19.4 million , or 8%, decrease for 2020 as compared to 2019 was primarily related to a decrease in interest expense due to the repayment of our term loan A and term loan B facilities inFebruary 2020 , partially offset by an increase in interest expense due to our issuance of the$800 million 4.625% senior notes due 2025 inJune 2020 and of the$750 million 3.875% senior notes due 2029 inNovember 2020 , and a loss on retirement of debt of$18.1 million relating to our repayment of the term loan A and term loan B facilities. Discontinued Operations Income from discontinued operations, net of tax for the year endedDecember 31, 2019 was$16.2 million and was entirely attributable to Northfield OpCo. There was no income from discontinued operations, net of tax for the year endedDecember 31, 2020 . See Note 3 of the accompanying financial statements for additional discussion. Provision for Income Taxes Our effective tax rate on income from continuing operations was 5.7% for the year endedDecember 31, 2020 compared to 2.8% for the year endedDecember 31, 2019 . The effective tax rate in the year endedDecember 31, 2020 was impacted by the loss resulting from the MGP BREIT Venture Transaction, which provides no federal or state income tax benefit due to our REIT status, while the effective rate in 2019 was impacted by tax consequences related to the liquidation of the TRS that had ownedNorthfield prior to transferring the operations toMGM inApril 2019 . Refer to Note 2 and Note 9 of the accompanying financial statements for additional discussion. 37 -------------------------------------------------------------------------------- Non-GAAP Measures Unless otherwise indicated, our non-GAAP measures discussed herein are related to our continuing operations and not our discontinued operations. Funds From Operations ("FFO") is net income (computed in accordance withU.S. GAAP), excluding gains and losses from sales or disposals of property (presented as property transactions, net), plus depreciation, as defined by theNational Association of Real Estate Investment Trusts , plus our share of depreciation of our unconsolidated affiliate. Adjusted Funds From Operations ("AFFO") is FFO as adjusted for amortization of financing costs and cash flow hedges; our share of amortization of financing costs of our unconsolidated affiliate; non-cash compensation expense; straight-line rental revenue (which is defined as the difference between contractual rent and cash rent payments, excluding lease incentive asset amortization); our share of straight-line rental revenues of our unconsolidated affiliate; amortization of lease incentive asset and deferred revenue relating to non-normal tenant improvements; acquisition-related expenses; non-cash ground lease rent, net; other expenses; (gain) loss on unhedged interest rate swaps, net; provision for income taxes related to the REIT; and other, net - discontinued operations. Adjusted EBITDA is net income (computed in accordance withU.S. GAAP) as adjusted for gains and losses from sales or disposals of property (presented as property transactions, net); depreciation; our share of depreciation of our unconsolidated affiliate; amortization of financing costs and cash flow hedges; our share of amortization of financing costs of our unconsolidated affiliate; non-cash compensation expense; straight-line rental revenue; our share of straight-line rental revenues of our unconsolidated affiliate; amortization of lease incentive asset and deferred revenue relating to non-normal tenant improvements; acquisition-related expenses; non-cash ground lease rent, net; other expenses; (gain) loss on unhedged interest rate swaps, net; other, net - discontinued operations; interest income; interest expense (including amortization of financing costs and cash flow hedges); our share of interest expense (including amortization of financing costs) of our unconsolidated affiliate; and provision for income taxes. FFO, FFO per unit, AFFO, AFFO per unit and Adjusted EBITDA are supplemental performance measures that have not been prepared in conformity withU.S. GAAP that management believes are useful to investors in comparing operating and financial results between periods. Management believes that this is especially true since these measures exclude real estate depreciation and amortization expense and management believes that real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time. The Company believes such a presentation also provides investors with a meaningful measure of the Company's operating results in comparison to the operating results of other REITs. Adjusted EBITDA is useful to investors to further supplement AFFO and FFO and to provide investors a performance metric which excludes interest expense. In addition to non-cash items, the Company adjusts AFFO and Adjusted EBITDA for acquisition-related expenses. While we do not label these expenses as non-recurring, infrequent or unusual, management believes that it is helpful to adjust for these expenses when they do occur to allow for comparability of results between periods because each acquisition is (and will be) of varying size and complexity and may involve different types of expenses depending on the type of property being acquired and from whom. FFO, FFO per unit, AFFO, AFFO per unit and Adjusted EBITDA do not represent cash flow from operations as defined byU.S. GAAP, should not be considered as an alternative to net income as defined byU.S. GAAP and are not indicative of cash available to fund all cash flow needs. Investors are also cautioned that FFO, FFO per unit, AFFO, AFFO per unit and Adjusted EBITDA as presented, may not be comparable to similarly titled measures reported by other REITs due to the fact that not all real estate companies use the same definitions. 38 -------------------------------------------------------------------------------- The following table provides a reconciliation of our net income to FFO, AFFO, and Adjusted EBITDA: Year ended December 31, 2020 2019 2018 (in thousands) Net income1$ 160,371 $ 275,565 $ 244,702 Depreciation2 236,853 294,705 266,622 Share of depreciation of unconsolidated affiliate 36,832 - - Property transactions, net 195,182 10,844 20,319 Funds From Operations 629,238 581,114 531,643 Amortization of financing costs and cash flow hedges 20,017 12,520 12,572 Share of amortization of financing costs of unconsolidated affiliate 226 - - Non-cash compensation expense 2,854 2,277 2,093 Straight-line rental revenues, excluding lease incentive asset 51,679 41,447 20,680 Share of straight-line rental revenues of unconsolidated affiliate (44,950) - - Amortization of lease incentive asset and deferred revenue on non-normal tenant improvements 18,509 14,347 (3,711) Acquisition-related expenses 980 10,165 6,149 Non-cash ground lease rent, net 1,036 1,038 686 Other expenses 18,999 7,615 7,191 (Gain) loss on unhedged interest rate swaps, net (4,664) 3,880 - Provision for income taxes - REIT 9,734 7,598 5,779 Other, net - discontinued operations - 3,707 9,147 Adjusted Funds From Operations 703,658 685,708 592,229 Interest income1 (4,345) (3,219) (2,501) Interest expense1 228,786 249,944 215,532 Share of interest expense of unconsolidated affiliate 47,403 - - Amortization of financing costs and cash flow hedges (20,017) (12,520) (12,572) Share of amortization of financing costs of unconsolidated affiliate (226) - - Provision for income taxes - discontinued operations - 2,890 5,056 Adjusted EBITDA$ 955,259 $ 922,803 $ 797,744 (1) Net income, interest income and interest expense are net of intercompany interest eliminations of$5.6 million and$10.9 million for the years endedDecember 31, 2019 and 2018, respectively. (2) Includes depreciation onMandalay Bay real estate assets throughFebruary 14, 2020 . 39
-------------------------------------------------------------------------------- The following table presents FFO and AFFO per dilutedOperating Partnership unit: Year Ended December 31, 2020 2019 2018 (In thousands, except per unit amounts) Weighted averageOperating Partnership units outstanding Basic 310,688 293,885 266,132 Diluted 310,850 294,137 266,320 Earnings perOperating Partnership unit Basic $ 0.52$ 0.94 $ 0.92 Diluted $ 0.52$ 0.94 $ 0.92 FFO perOperating Partnership unit Diluted $ 2.02$ 1.98 $ 2.00 AFFO perOperating Partnership unit Diluted $ 2.26$ 2.33 $ 2.22
Guarantor Financial Information
As ofDecember 31, 2020 , all of our indebtedness is held by theOperating Partnership and MGP does not guarantee any of theOperating Partnership's indebtedness.The Operating Partnership's principal debt arrangements are guaranteed by each of its wholly owned subsidiaries except for MGP JV INVESTCO 1 LLC, the entity holding the 50.1% interest in the MGP BREIT Venture, and, with respect to theOperating Partnership's senior notes,MGP Finance Co-Issuer, Inc. , the co-issuer of the senior notes, and certain other subsidiaries whose guarantees are subject to gaming approval, unless and until such approval is obtained. The guarantees provided by the subsidiary guarantors rank senior in right of payment to any future subordinated debt of ours or such subsidiary guarantors, junior to any secured indebtedness to the extent of the value of the assets securing such debt and effectively subordinated to any indebtedness and other obligations of our subsidiaries that do not guarantee the principal indebtedness. In addition, the obligations of each subsidiary guarantor under its guarantee is limited so as not to constitute a fraudulent conveyance under applicable law, which may eliminate the subsidiary guarantor's obligations or reduce such obligations to an amount that effectively makes the subsidiary guarantee lack value.
The summarized financial information of the
December 31, 2020
Balance Sheet (in thousands)
Real estate investments, net $ 8,310,737
Other assets 1,479,503
Debt, net 4,168,959
Other liabilities 840,605
Year Ended
December 31, 2020
Income Statement (in thousands)
Total revenues $ 792,597
Income from continuing operations, net of tax 71,315
Net income 71,315
40--------------------------------------------------------------------------------
Liquidity and Capital Resources
Rental revenues received under the MGM-MGP Master Lease and distributions from the MGP BREIT Venture are our primary sources of cash from operations and are dependent on the tenant's ability to pay rent and the MGP BREIT Venture's ability to pay distributions. As of the date of this filing, all of the properties in our portfolio, including those held by the MGP BREIT Venture, that had closed during 2020 and 2021 to the public pursuant to state and local government requirements as a result of the unprecedented public health crisis resulting from the COVID-19 pandemic, have re-opened without certain amenities and subject to certain occupancy limitations, which vary by jurisdictions. In addition, the tenant temporarily closed the hotel tower operations atMandalay Bay and Park MGM midweek and temporarily closed The Mirage midweek, which are expected to resume full week operations onMarch 3, 2021 . In addition, our properties may be subject to temporary, complete or partial shutdowns in the future due to COVID-19 related concerns. In particular, recently there have been significant increases in reported cases of COVID-19 across the country, which has resulted in some jurisdictions where our tenant has operations taking actions to try to minimize the spread, including setting curfews and imposing restrictions on hotel and restaurant operations. At this time, we cannot predict whether additional jurisdictions, states or the federal government will adopt similar or more restrictive measures in the future, including stay-at-home orders or the temporary closure of all or a portion of our tenant's properties. Accordingly, although our properties have re-opened, they are generating revenues for the tenant that are significantly lower than historical results which we expect to continue through 2021 and potentially thereafter. For further discussion of the potential impact of the COVID-19 pandemic on our business, see "Item 1A. Risk Factors - Risks Related to Our Business and Operations - Although all of our properties have been re-opened to the public, they are operating without certain amenities and subject to certain occupancy limitations and we are unable to predict the length of time it will take for the properties to return to normal operations or if such properties will be required to close again due to the COVID-19 pandemic." Despite the aforementioned uncertainties and as it relates to the impact of the COVID-19 pandemic, our and MGP BREIT Venture's tenants continue to make rental payments in full and on time and we believe the tenants' (together with the guarantor's) liquidity positions are sufficient to cover their expected rental obligations for the foreseeable future. Accordingly, while we do not anticipate an impact on our operations as a result of the COVID-19 pandemic, we cannot estimate the duration of the pandemic and potential impact on our business if our re-opened properties will be required to close again, or if the tenants (or guarantor) are otherwise unable or unwilling to make rental payments. All of our indebtedness is held by theOperating Partnership and MGP does not guarantee any of theOperating Partnership's indebtedness. MGP's principal funding requirement is the payment of dividends and distributions on its Class A shares, and its principal source of funding for these dividends and distributions is the distributions it receives from theOperating Partnership . MGP's liquidity is therefore dependent upon theOperating Partnership's ability to make sufficient distributions to it, which distributions are primarily funded by rental payments received from the tenant and distributions from the MGP BREIT Venture.The Operating Partnership's primary uses of cash include payment of operating expenses, debt service and distributions to MGP andMGM . We believe that theOperating Partnership currently has sufficient liquidity to satisfy all of its commitments, including its distributions to MGP, and in turn, that we currently have sufficient liquidity to satisfy all our commitments in the form of$626.4 million in cash and cash equivalents held by theOperating Partnership as ofDecember 31, 2020 , expected cash flows from operations, expected cash distributions from the MGP BREIT Venture, and$1.3 billion of borrowing capacity under theOperating Partnership's revolving credit facility as ofDecember 31, 2020 . See Note 7 to the accompanying financial statements for a description of our principal debt arrangements as ofDecember 31, 2020 . In addition, we expect to incur additional indebtedness in the future to finance acquisitions, fund potential additional redemptions of theOperating Partnership units held byMGM , or for general corporate or other purposes.
Summary of Cash Flows
Net cash provided by operating activities for the years endedDecember 31, 2020 and 2019 was$703.7 million and$100.7 million , respectively. The change was primarily due to the cash lease incentive of$605.6 million paid to a subsidiary ofMGM in connection with the ParkMGM Transaction inMarch 2019 as well as the receipt of$81.0 million of distributions from MGP BREIT Venture in 2020, the 2% fixed annual rent escalator at the beginning of the fifth lease year onApril 1, 2020 which increased the annual cash rental payments by$14.7 million , the Empire City Transaction inJanuary 2019 which increased the annual cash rental payments by$50.0 million , the ParkMGM Transaction inMarch 2019 which increased annual cash rental payments by$50.0 million , and theNorthfield real estate assets being added to the MGM-MGP Master Lease inApril 2019 which increased annual cash rental payments by$60.0 million . This was partially offset by the decrease in annual cash rental payments of$133.0 million as a result of the removal ofMandalay Bay from the MGM-MGP Master Lease inFebruary 2020 . 41 -------------------------------------------------------------------------------- Net cash provided by investing activities for the year endedDecember 31, 2020 of$58.6 million related to the net cash proceeds from the MGP BREIT Venture Transaction. Net cash provided by investing activities for the year endedDecember 31, 2019 was$3.8 million , related to cash proceeds from theNorthfield OpCo Transaction. Net cash used in financing activities for the year endedDecember 31, 2020 was$338.0 million , which reflects our issuance of Class A shares to BREIT for$150.0 million , the issuance of$800 million in aggregate principal amount of 4.625% senior notes due 2025, the proceeds of which were used to repay draws on our revolving credit facility used to fund the first redemption of$700 million ofOperating Partnership units held byMGM , and the issuance of$750 million in aggregate principal amount of 3.875% senior notes due 2029, the proceeds of which were used to fund the second redemption of$700 million ofOperating Partnership units held byMGM . This was offset by payments of$601.7 million of distributions and dividends and our$1.7 billion of net repayments under the bank credit facility, consisting of: the repayment of theOperating Partnership's $1.3 billion outstanding term loan B facility with the proceeds from the bridge loan facility, which was then assumed by the MGP BREIT Venture, and the repayment of theOperating Partnership's $399 million outstanding term loan A facility with the$374.6 million of net proceeds from the settlement of forward equity agreements; offset by a net draw of$10.0 million on the revolving credit facility. Net cash provided by financing activities for the year endedDecember 31, 2019 was$93.6 million , which was primarily attributable to our issuance of$750 million in aggregate principal amount of 5.75% senior notes due 2027, our offering of 19.6 million Class A shares in a registered public offering inJanuary 2019 for net proceeds of$548.4 million , our offering of 18.0 million Class A shares in a registered public offering inNovember 2019 for net proceeds of$540.6 million , and our offering of 5.3 million Class A shares under our "at-the-market" ("ATM") equity distribution program throughout 2019 for net proceeds of$161.0 million , partially offset by repayments of our bank credit facility of approximately$1.1 billion , net, our repayment of approximately$246.0 million of assumed indebtedness from the Empire City Transaction, and$533.7 million of dividends paid. Net cash used in operating, financing and investing activities for our discontinued operations for the year endedDecember 31, 2019 was$22.3 million and was entirely due to the operations of the Northfield OpCo, which were transferred toMGM inApril 2019 . There were no cash flows from discontinued operations for the year endedDecember 31, 2020 .
Dividends and Distributions
The following table presents the distributions declared and paid by theOperating Partnership and the distributions declared and paid by MGP. MGP pays its dividends with the receipt of its share of theOperating Partnership's distributions. Distribution/ Dividend Per Unit/ Declaration Date Record Date Share Payment Date 2020 March 13, 2020 March 31, 2020 $ 0.4750 April 15, 2020 June 15, 2020 June 30, 2020 $ 0.4875 July 15, 2020 September 15, 2020 September 30, 2020 $ 0.4875 October 15, 2020 December 15, 2020 December 31, 2020 $ 0.4875 January 15, 2021 2019 March 15, 2019 March 29, 2019 $ 0.4650 April 15, 2019 June 14, 2019 June 28, 2019 $ 0.4675 July 15, 2019 September 13, 2019 September 30, 2019 $ 0.4700 October 15, 2019 December 14, 2019 December 31, 2019 $ 0.4700 January 15, 2020 2018 March 15, 2018 March 30, 2018 $ 0.4200 April 13, 2018 June 15, 2018 June 29, 2018 $ 0.4300 July 16, 2018 September 17, 2018 September 28, 2018 $ 0.4375 October 15, 2018 December 14, 2018 December 31, 2018 $ 0.4475 January 15, 2019 Principal Debt Arrangements We have significant outstanding debt and interest payments. See Note 7 to the accompanying consolidated financial statements for information regarding our debt agreements as ofDecember 31, 2020 and the corresponding maturities of such debt. Our estimated cash interest payments based on principal amounts of debt outstanding atDecember 31, 2020 and LIBOR rates as ofDecember 31 , 42 --------------------------------------------------------------------------------
2020 for our credit facility, including the impact of the
Capital Expenditures and Lease Obligations
The MGM-MGP Master Lease has a triple-net structure, which requires the tenant to pay substantially all costs associated with each property, including real estate taxes, insurance, utilities and routine maintenance, in addition to the rent, ensuring that the cash flows associated with our lease will remain relatively predictable for the duration of its term. Additionally, our ground leases are paid by the tenant under MGM-MGP Master Lease through 2046 (including renewal periods). See Note 6 to the accompanying consolidated financial statements for information regarding our ground leases.
Application of Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance withU.S. GAAP. We have identified certain accounting policies that we believe are the most critical to the presentation of our financial information over a period of time. These accounting policies may require our management to make decisions on subjective and/or complex matters relating to reported amounts of assets, liabilities, revenue, costs, expenses and related disclosures. These would further lead us to estimate the effect of matters that may inherently be uncertain. Estimates are required in order to prepare the financial statements in conformity withU.S. GAAP. Significant estimates, judgments, and assumptions are required in a number of areas, including, but not limited to, REIT qualification, lease accounting, determining the useful lives of real estate investments and property and equipment used in operations and evaluating the impairment of such assets, and purchase price allocations. The judgment on such estimates and underlying assumptions is based on our experience and various other factors that we believe are reasonable under the circumstances. These form the basis of our judgment on matters that may not be apparent from other available sources of information. In many instances changes in the accounting estimates are likely to occur from period to period. Actual results may differ from the estimates. The future financial statement presentation, financial condition, results of operations and cash flows may be affected to the extent that the actual results differ materially from our estimates.
Income Taxes - REIT Qualification
We elected to be taxed as a REIT forU.S. federal income tax purposes commencing with our taxable year endedDecember 31, 2016 , and intend to continue to be organized and to operate in a manner that will permit us to continue to qualify as a REIT. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to shareholders, determined without regard to the dividends paid deduction and excluding any net capital gains. As a REIT, we generally will not be subject to federal income tax on income that we pay as distributions to our shareholders. If we fail to qualify as a REIT in any taxable year, we will for that year and subsequent years be subject toU.S. federal and state income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate income tax rates, and distributions paid to our shareholders would not be deductible by us in computing taxable income. Any resulting corporate liability could be substantial and could materially and adversely affect our net income and net cash available for distribution to shareholders. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which we failed to qualify to be taxed as a REIT. Leases The lease accounting guidance under ASC 842 is complex and requires the use of judgments and assumptions by management to determine the proper accounting treatment of a lease. Upon entry into a lease agreement or amendment, we assess whether such agreements are accounted for as a separate or combined contract and/or a lease modification or a new lease. This further determines whether the extent to which we need to perform lease classification testing to determine if the agreement is a finance or operating lease. The lease classification test may require judgments which may include, among other things, the fair value of the assets, the residual value of the assets at the end of the lease term, the estimated remaining economic life of the assets, and the likelihood of the tenant exercising renewal options. Refer to Note 6 for further discussion and disclosure of our leases.
Real Estate Investments and Depreciation
Real estate costs related to the acquisition and improvement of our properties
are capitalized and include expenditures that materially extend the useful lives
of existing assets. We must make estimates and assumptions when accounting for
capital expenditures. Whether an expenditure made by the tenant relating to our
real estate is considered to be an asset or that of the tenant is a matter of
judgment. In addition, our depreciation expense is highly dependent on the
assumptions we make about our assets' estimated useful lives. We determine the
estimated useful lives based on our experience with similar assets, engineering
studies, and our estimate
43
--------------------------------------------------------------------------------of the usage of the asset. Whenever events or circumstances occur which change the estimated useful life of an asset, we account for the change prospectively.
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