filings.toolsItem 1. Financial Statements
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Item 1. Financial Statements
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| September 30, 2021 | December 31, 2020 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 5,570,833 | $ | 5,101,637 | |||||||
| Accounts receivable, net | 532,298 | 316,502 | |||||||||
| Inventories | 94,198 | 88,323 | |||||||||
| Income tax receivable | 199,010 | 243,415 | |||||||||
| Prepaid expenses and other | 273,982 | 200,782 | |||||||||
| Total current assets | 6,670,321 | 5,950,659 | |||||||||
| Property and equipment, net | 14,528,041 | 14,632,091 | |||||||||
| Other assets | |||||||||||
| Investments in and advances to unconsolidated affiliates | 941,145 | 1,447,043 | |||||||||
| Goodwill | 3,484,966 | 2,091,278 | |||||||||
| Other intangible assets, net | 3,669,107 | 3,643,748 | |||||||||
| Operating lease right-of-use assets, net | 11,551,415 | 8,286,694 | |||||||||
| Other long-term assets, net | 493,328 | 443,421 | |||||||||
| Total other assets | 20,139,961 | 15,912,184 | |||||||||
| $ | 41,338,323 | $ | 36,494,934 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 273,447 | $ | 142,523 | |||||||
| Construction payable | 27,921 | 30,149 | |||||||||
| Current portion of long-term debt | 1,000,000 | — | |||||||||
| Accrued interest on long-term debt | 185,502 | 138,832 | |||||||||
| Other accrued liabilities | 1,923,590 | 1,545,079 | |||||||||
| Total current liabilities | 3,410,460 | 1,856,583 | |||||||||
| Deferred income taxes, net | 2,389,277 | 2,153,016 | |||||||||
| Long-term debt, net | 11,618,913 | 12,376,684 | |||||||||
| Operating lease liabilities | 11,775,109 | 8,390,117 | |||||||||
| Other long-term obligations | 362,823 | 472,084 | |||||||||
| Commitments and contingencies (Note 9) | |||||||||||
| Redeemable noncontrolling interests | 120,764 | 66,542 | |||||||||
| Stockholders' equity | |||||||||||
| Common stock, $.01 par value: authorized 1,000,000,000 shares, issued and outstanding 469,728,258 and 494,317,865 shares | 4,697 | 4,943 | |||||||||
| Capital in excess of par value | 2,639,804 | 3,439,453 | |||||||||
| Retained earnings | 4,210,726 | 3,091,007 | |||||||||
| Accumulated other comprehensive loss | (25,273) | (30,677) | |||||||||
| Total MGM Resorts International stockholders' equity | 6,829,954 | 6,504,726 | |||||||||
| Noncontrolling interests | 4,831,023 | 4,675,182 | |||||||||
| Total stockholders' equity | 11,660,977 | 11,179,908 | |||||||||
| $ | 41,338,323 | $ | 36,494,934 |
The accompanying notes are an integral part of these consolidated financial statements.
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Casino | $ | 1,400,337 | $ | 690,218 | $ | 3,835,094 | $ | 1,907,893 | |||||||||||||||
| Rooms | 490,460 | 175,450 | 1,053,907 | 641,024 | |||||||||||||||||||
| Food and beverage | 416,478 | 126,317 | 876,556 | 552,797 | |||||||||||||||||||
| Entertainment, retail and other | 315,693 | 101,618 | 639,926 | 420,132 | |||||||||||||||||||
| Reimbursed costs | 84,571 | 32,317 | 217,765 | 146,700 | |||||||||||||||||||
| 2,707,539 | 1,125,920 | 6,623,248 | 3,668,546 | ||||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Casino | 640,041 | 368,310 | 1,808,849 | 1,197,373 | |||||||||||||||||||
| Rooms | 160,864 | 107,361 | 402,364 | 321,221 | |||||||||||||||||||
| Food and beverage | 301,963 | 133,937 | 651,349 | 533,879 | |||||||||||||||||||
| Entertainment, retail and other | 204,742 | 87,592 | 385,293 | 342,878 | |||||||||||||||||||
| Reimbursed costs | 84,571 | 32,317 | 217,765 | 146,700 | |||||||||||||||||||
| General and administrative | 623,275 | 543,293 | 1,759,891 | 1,591,163 | |||||||||||||||||||
| Corporate expense | 112,114 | 70,437 | 287,021 | 356,823 | |||||||||||||||||||
| Preopening and start-up expenses | 1,547 | 11 | 1,642 | 51 | |||||||||||||||||||
| Property transactions, net | 3,677 | 4,116 | 842 | 85,440 | |||||||||||||||||||
| Gain on REIT transactions, net | — | — | — | (1,491,945) | |||||||||||||||||||
| Gain on consolidation of CityCenter, net | (1,562,329) | — | (1,562,329) | — | |||||||||||||||||||
| Depreciation and amortization | 279,403 | 294,363 | 853,579 | 911,859 | |||||||||||||||||||
| 849,868 | 1,641,737 | 4,806,266 | 3,995,442 | ||||||||||||||||||||
| Income from unconsolidated affiliates | 35,111 | 20,635 | 92,870 | 48,030 | |||||||||||||||||||
| Operating income (loss) | 1,892,782 | (495,182) | 1,909,852 | (278,866) | |||||||||||||||||||
| Non-operating income (expense) | |||||||||||||||||||||||
| Interest expense, net of amounts capitalized | (200,049) | (173,808) | (598,116) | (487,701) | |||||||||||||||||||
| Non-operating items from unconsolidated affiliates | (23,421) | (23,604) | (67,473) | (79,986) | |||||||||||||||||||
| Other, net | (49,241) | 13,889 | 70,302 | (102,054) | |||||||||||||||||||
| (272,711) | (183,523) | (595,287) | (669,741) | ||||||||||||||||||||
| Income (loss) before income taxes | 1,620,071 | (678,705) | 1,314,565 | (948,607) | |||||||||||||||||||
| Benefit (provision) for income taxes | (282,135) | 76,734 | (222,263) | 84,668 | |||||||||||||||||||
| Net income (loss) | 1,337,936 | (601,971) | 1,092,302 | (863,939) | |||||||||||||||||||
| Less: Net loss attributable to noncontrolling interests | 12,497 | 67,240 | 31,055 | 278,820 | |||||||||||||||||||
| Net income (loss) attributable to MGM Resorts International | $ | 1,350,433 | $ | (534,731) | $ | 1,123,357 | $ | (585,119) | |||||||||||||||
| Earnings (loss) per share | |||||||||||||||||||||||
| Basic | $ | 2.81 | $ | (1.08) | $ | 2.19 | $ | (1.10) | |||||||||||||||
| Diluted | $ | 2.77 | $ | (1.08) | $ | 2.17 | $ | (1.10) | |||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Basic | 478,405 | 493,517 | 487,509 | 494,126 | |||||||||||||||||||
| Diluted | 484,215 | 493,517 | 493,184 | 494,126 |
The accompanying notes are an integral part of these consolidated financial statements.
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net income (loss) | $ | 1,337,936 | $ | (601,971) | $ | 1,092,302 | $ | (863,939) | |||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Foreign currency translation adjustment | (11,956) | 538 | (19,167) | 29,163 | |||||||||||||||||||
| Unrealized gain (loss) on cash flow hedges | 7,241 | (448) | 24,629 | (90,648) | |||||||||||||||||||
| Other comprehensive income (loss) | (4,715) | 90 | 5,462 | (61,485) | |||||||||||||||||||
| Comprehensive income (loss) | 1,333,221 | (601,881) | 1,097,764 | (925,424) | |||||||||||||||||||
| Less: Comprehensive loss attributable to noncontrolling interests | 13,111 | 66,810 | 24,903 | 306,236 | |||||||||||||||||||
| Comprehensive income (loss) attributable to MGM Resorts International | $ | 1,346,332 | $ | (535,071) | $ | 1,122,667 | $ | (619,188) |
The accompanying notes are an integral part of these consolidated financial statements.
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net income (loss) | $ | 1,092,302 | $ | (863,939) | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | 853,579 | 911,859 | |||||||||
| Amortization of debt discounts, premiums and issuance costs | 30,136 | 24,918 | |||||||||
| Loss on early retirement of debt | 37 | 126,462 | |||||||||
| Provision for credit losses | 5,815 | 76,228 | |||||||||
| Stock-based compensation | 38,688 | 77,681 | |||||||||
| Property transactions, net | 842 | 85,440 | |||||||||
| Gain on REIT transaction, net | — | (1,491,945) | |||||||||
| Gain on consolidation of CityCenter, net | (1,562,329) | — | |||||||||
| Noncash lease expense | 131,586 | 139,914 | |||||||||
| Other investment gains | (38,572) | — | |||||||||
| Loss (income) from unconsolidated affiliates | (25,397) | 31,956 | |||||||||
| Distributions from unconsolidated affiliates | 74,418 | 62,399 | |||||||||
| Deferred income taxes | 153,464 | 49,633 | |||||||||
| Change in operating assets and liabilities: | |||||||||||
| Accounts receivable | (167,622) | 192,393 | |||||||||
| Inventories | 5,310 | 5,692 | |||||||||
| Income taxes receivable and payable, net | 44,406 | (143,213) | |||||||||
| Prepaid expenses and other | (52,155) | (44,895) | |||||||||
| Accounts payable and accrued liabilities | 382,122 | (450,378) | |||||||||
| Other | (79,925) | (39,810) | |||||||||
| Net cash provided by (used in) operating activities | 886,705 | (1,249,605) | |||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures, net of construction payable | (322,139) | (177,571) | |||||||||
| Dispositions of property and equipment | 10,191 | 433 | |||||||||
| Proceeds from sale of investments in unconsolidated affiliates | 32,400 | — | |||||||||
| Proceeds from sale of Aria and Vdara real estate assets | 3,888,431 | — | |||||||||
| Acquisition of CityCenter, net of cash acquired | (1,789,604) | — | |||||||||
| Proceeds from Mandalay Bay and MGM Grand Las Vegas transaction | — | 2,455,839 | |||||||||
| Investments in unconsolidated affiliates | (151,845) | (71,110) | |||||||||
| Distributions from unconsolidated affiliates | 9,245 | 63,578 | |||||||||
| Other | 342 | 385 | |||||||||
| Net cash provided by investing activities | 1,677,021 | 2,271,554 | |||||||||
| Cash flows from financing activities | |||||||||||
| Net repayments under bank credit facilities – maturities of 90 days or less | (2,242,487) | (1,071,180) | |||||||||
| Issuance of long-term debt | 749,775 | 2,050,000 | |||||||||
| Retirement of senior notes | — | (846,815) | |||||||||
| Debt issuance costs | (11,358) | (42,030) | |||||||||
| Proceeds from issuance of bridge loan facility | — | 1,304,625 | |||||||||
| Issuance of MGM Growth Properties Class A shares, net | 792,851 | 524,704 | |||||||||
| Dividends paid to common shareholders | (3,638) | (76,370) | |||||||||
| Distributions to noncontrolling interest owners | (239,514) | (219,775) | |||||||||
| Purchases of common stock | (1,026,194) | (353,720) | |||||||||
| Other | (112,862) | (29,601) | |||||||||
| Net cash provided by (used in) financing activities | (2,093,427) | 1,239,838 | |||||||||
| Effect of exchange rate on cash | (1,103) | 2,481 | |||||||||
| Cash and cash equivalents | |||||||||||
| Net increase for the period | 469,196 | 2,264,268 | |||||||||
| Balance, beginning of period | 5,101,637 | 2,329,604 | |||||||||
| Balance, end of period | $ | 5,570,833 | $ | 4,593,872 | |||||||
| Supplemental cash flow disclosures | |||||||||||
| Interest paid, net of amounts capitalized | $ | 508,056 | $ | 428,520 | |||||||
| Federal, state and foreign income taxes paid, net | 34,836 | 8,595 | |||||||||
| Non-cash investing and financing activities | |||||||||||
| Investment in MGP BREIT Venture | $ | — | $ | 802,000 | |||||||
| MGP BREIT Venture assumption of bridge loan facility | — | 1,304,625 |
The accompanying notes are an integral part of these consolidated financial statements.
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
| Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Par Value | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Total MGM Resorts International Stockholders' Equity | Non- Controlling Interests | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||
| Balances, June 30, 2021 | 486,530 | $ | 4,865 | $ | 3,335,015 | $ | 2,861,474 | $ | (21,173) | $ | 6,180,181 | $ | 4,923,941 | $ | 11,104,122 | ||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | 1,350,433 | — | 1,350,433 | (15,157) | 1,335,276 | |||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | — | (6,686) | (6,686) | (5,270) | (11,956) | |||||||||||||||||||||||||||||||||||||||
| Cash flow hedges | — | — | — | — | 2,585 | 2,585 | 4,656 | 7,241 | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 10,084 | — | — | 10,084 | 1,197 | 11,281 | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock pursuant to stock-based compensation awards | 408 | 4 | (6,228) | — | — | (6,224) | — | (6,224) | |||||||||||||||||||||||||||||||||||||||
| Cash distributions to noncontrolling interest owners | — | — | — | — | — | — | (3,266) | (3,266) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared and paid to common shareholders ($0.0025 per share) | — | — | — | (1,181) | — | (1,181) | — | (1,181) | |||||||||||||||||||||||||||||||||||||||
| MGP dividend payable to Class A shareholders | — | — | — | — | — | — | (81,459) | (81,459) | |||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | (17,210) | (172) | (686,361) | — | — | (686,533) | — | (686,533) | |||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable noncontrolling interest to redemption value | — | — | (7,580) | — | — | (7,580) | — | (7,580) | |||||||||||||||||||||||||||||||||||||||
| MGP Class A share issuances | — | — | 40 | — | 1 | 41 | 230 | 271 | |||||||||||||||||||||||||||||||||||||||
| Other | — | — | (5,166) | — | — | (5,166) | 6,151 | 985 | |||||||||||||||||||||||||||||||||||||||
| Balances, September 30, 2021 | 469,728 | $ | 4,697 | $ | 2,639,804 | $ | 4,210,726 | $ | (25,273) | $ | 6,829,954 | $ | 4,831,023 | $ | 11,660,977 | ||||||||||||||||||||||||||||||||
| Balances, December 31, 2020 | 494,318 | $ | 4,943 | $ | 3,439,453 | $ | 3,091,007 | $ | (30,677) | $ | 6,504,726 | $ | 4,675,182 | $ | 11,179,908 | ||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | 1,123,357 | — | 1,123,357 | (38,364) | 1,084,993 | |||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | — | (10,806) | (10,806) | (8,361) | (19,167) | |||||||||||||||||||||||||||||||||||||||
| Cash flow hedges | — | — | — | — | 10,116 | 10,116 | 14,513 | 24,629 | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 35,271 | — | — | 35,271 | 3,417 | 38,688 | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock pursuant to stock-based compensation awards | 1,352 | 13 | (17,895) | — | — | (17,882) | — | (17,882) | |||||||||||||||||||||||||||||||||||||||
| Cash distributions to noncontrolling interest owners | — | — | — | — | — | — | (166,236) | (166,236) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared and paid to common shareholders ($0.0075 per share) | — | — | — | (3,638) | — | (3,638) | — | (3,638) | |||||||||||||||||||||||||||||||||||||||
| MGP dividend payable to Class A shareholders | — | — | — | — | — | — | (81,459) | (81,459) | |||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | (25,942) | (259) | (1,025,935) | — | — | (1,026,194) | — | (1,026,194) | |||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable noncontrolling interest to redemption value | — | — | (54,019) | — | — | (54,019) | — | (54,019) | |||||||||||||||||||||||||||||||||||||||
| MGP Class A share issuances | — | — | 99,934 | — | 3,240 | 103,174 | 656,361 | 759,535 | |||||||||||||||||||||||||||||||||||||||
| Redemption of Operating Partnership units | — | — | 171,332 | — | 5,327 | 176,659 | (227,487) | (50,828) | |||||||||||||||||||||||||||||||||||||||
| Other | — | — | (8,337) | — | (2,473) | (10,810) | 3,457 | (7,353) | |||||||||||||||||||||||||||||||||||||||
| Balances, September 30, 2021 | 469,728 | $ | 4,697 | $ | 2,639,804 | $ | 4,210,726 | $ | (25,273) | $ | 6,829,954 | $ | 4,831,023 | $ | 11,660,977 |
The accompanying notes are an integral part of these consolidated financial statements.
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
| Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Par Value | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Total MGM Resorts International Stockholders' Equity | Non- Controlling Interests | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||
| Balances, June 30, 2020 | 493,281 | $ | 4,933 | $ | 3,333,074 | $ | 4,075,812 | $ | (39,030) | $ | 7,374,789 | $ | 4,973,993 | $ | 12,348,782 | ||||||||||||||||||||||||||||||||
| Net loss | — | — | — | (534,731) | — | (534,731) | (69,423) | (604,154) | |||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | — | 424 | 424 | 114 | 538 | |||||||||||||||||||||||||||||||||||||||
| Cash flow hedges | — | — | — | — | (764) | (764) | 316 | (448) | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 19,739 | — | — | 19,739 | 2,209 | 21,948 | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock pursuant to stock-based compensation awards | 26 | — | (129) | — | — | (129) | — | (129) | |||||||||||||||||||||||||||||||||||||||
| Cash distributions to noncontrolling interest owners | — | — | — | — | — | — | (1,044) | (1,044) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared and paid to common shareholders ($0.0025 per share) | — | — | — | (1,233) | — | (1,233) | — | (1,233) | |||||||||||||||||||||||||||||||||||||||
| MGP dividend payable to Class A shareholders | — | — | — | — | — | — | (64,085) | (64,085) | |||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable noncontrolling interest to redemption value | — | — | 3,009 | — | — | 3,009 | — | 3,009 | |||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | — | — | (522) | (522) | |||||||||||||||||||||||||||||||||||||||
| Balances, September 30, 2020 | 493,307 | $ | 4,933 | $ | 3,355,693 | $ | 3,539,848 | $ | (39,370) | $ | 6,861,104 | $ | 4,841,558 | $ | 11,702,662 | ||||||||||||||||||||||||||||||||
| Balances, December 31, 2019 | 503,148 | $ | 5,031 | $ | 3,531,099 | $ | 4,201,337 | $ | (10,202) | $ | 7,727,265 | $ | 4,935,654 | $ | 12,662,919 | ||||||||||||||||||||||||||||||||
| Net loss | — | — | — | (585,119) | — | (585,119) | (282,974) | (868,093) | |||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | — | 16,353 | 16,353 | 12,810 | 29,163 | |||||||||||||||||||||||||||||||||||||||
| Cash flow hedges | — | — | — | — | (50,422) | (50,422) | (40,226) | (90,648) | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 73,062 | — | — | 73,062 | 4,619 | 77,681 | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock pursuant to stock-based compensation awards | 1,020 | 11 | (7,140) | — | — | (7,129) | — | (7,129) | |||||||||||||||||||||||||||||||||||||||
| Cash distributions to noncontrolling interest owners | — | — | — | — | — | — | (155,081) | (155,081) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared and paid to common shareholders ($0.1550 per share) | — | — | — | (76,370) | — | (76,370) | — | (76,370) | |||||||||||||||||||||||||||||||||||||||
| MGP dividend payable to Class A shareholders | — | — | — | — | — | — | (64,085) | (64,085) | |||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock units | — | — | 2,142 | — | — | 2,142 | — | 2,142 | |||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | (10,861) | (109) | (353,611) | — | — | (353,720) | — | (353,720) | |||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable noncontrolling interest to redemption value | — | — | 42,029 | — | — | 42,029 | — | 42,029 | |||||||||||||||||||||||||||||||||||||||
| MGP Class A share issuances | — | — | 64,188 | — | 646 | 64,834 | 442,717 | 507,551 | |||||||||||||||||||||||||||||||||||||||
| MGP BREIT Venture transaction | — | — | (6,503) | — | (59) | (6,562) | 8,287 | 1,725 | |||||||||||||||||||||||||||||||||||||||
| Redemption of Operating Partnership units | — | — | 12,055 | — | 4,772 | 16,827 | (20,032) | (3,205) | |||||||||||||||||||||||||||||||||||||||
| Other | — | — | (1,628) | — | (458) | (2,086) | (131) | (2,217) | |||||||||||||||||||||||||||||||||||||||
| Balances, September 30, 2020 | 493,307 | $ | 4,933 | $ | 3,355,693 | $ | 3,539,848 | $ | (39,370) | $ | 6,861,104 | $ | 4,841,558 | $ | 11,702,662 |
The accompanying notes are an integral part of these consolidated financial statements.
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1 — ORGANIZATION
Organization. MGM Resorts International (together with its consolidated subsidiaries, unless otherwise indicated or unless the context requires otherwise, the “Company”) is a Delaware corporation that acts largely as a holding company and, through subsidiaries, owns and operates casino resorts.
As of September 30, 2021, the Company owns and operates the following integrated casino, hotel and entertainment resorts in Las Vegas, Nevada: Aria (including Vdara), Bellagio, MGM Grand Las Vegas (including The Signature), The Mirage, Mandalay Bay, Luxor, New York-New York, Park MGM, and Excalibur. The Company owns, along with local investors, and operates MGM Grand Detroit in Detroit, Michigan, MGM National Harbor in Prince George’s County, Maryland, and MGM Springfield in Springfield, Massachusetts. The Company also owns and operates Borgata located on Renaissance Pointe in the Marina area of Atlantic City, New Jersey, Empire City in Yonkers, New York, MGM Northfield Park in Northfield Park, Ohio, and the following resorts in Mississippi: Beau Rivage in Biloxi and Gold Strike in Tunica. Additionally, the Company owns and operates The Park, a dining and entertainment district located between New York-New York and Park MGM, Shadow Creek, an exclusive world-class golf course located approximately ten miles north of its Las Vegas Strip Resorts, and Fallen Oak golf course in Saucier, Mississippi.
MGM Growth Properties LLC (“MGP”), a consolidated subsidiary of the Company, is organized as an umbrella partnership REIT (commonly referred to as an UPREIT) structure in which substantially all of its assets are owned by and substantially all of its businesses are conducted through MGM Growth Properties Operating Partnership LP (the “Operating Partnership”). MGP has two classes of authorized and outstanding voting common shares (collectively, the “shares”): Class A shares and a single Class B share. The Company owns MGP’s Class B share, which does not provide its holder any rights to profits or losses or any rights to receive distributions from operations of MGP or upon liquidation or winding up of MGP. MGP’s Class A shareholders are entitled to one vote per share, while the Company, as the owner of the Class B share, is entitled to an amount of votes representing a majority of the total voting power of MGP’s shares so long as the Company and its controlled affiliates’ (excluding MGP) aggregate beneficial ownership of the combined economic interests in MGP and the Operating Partnership does not fall below 30%. The Company and MGP each hold Operating Partnership units representing limited partner interests in the Operating Partnership. The general partner of the Operating Partnership is a wholly owned subsidiary of MGP. The Operating Partnership units held by the Company are exchangeable into Class A shares of MGP on a one-to-one basis, or cash at the Fair Market Value of a Class A share (as defined in the Operating Partnership’s partnership agreement). The determination of settlement method is at the option of MGP’s independent conflicts committee. As of September 30, 2021, the Company owned 41.6% of the Operating Partnership units, and MGP held the remaining 58.4% ownership interest in the Operating Partnership.
Pursuant to a master lease agreement between a subsidiary of the Company and a subsidiary of the Operating Partnership, the Company leases the real estate assets of The Mirage, Luxor, New York-New York, Park MGM, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata, Empire City, MGM National Harbor, and MGM Northfield Park. Pursuant to a lease agreement between a subsidiary of the Company and a venture that is 5% owned by such subsidiary and 95% owned by a subsidiary of Blackstone Real Estate Income Trust, Inc. (“BREIT”, and such venture, the “Bellagio BREIT Venture”), the Company leases the real estate assets of Bellagio. Additionally, pursuant to a lease agreement between a subsidiary of the Company and a venture that is 50.1% owned by a subsidiary of the Operating Partnership and 49.9% by a subsidiary of BREIT (such venture, the “MGP BREIT Venture”), the Company leases the real estate assets of Mandalay Bay and MGM Grand Las Vegas. Refer to Note 8 for further discussion of the leases.
On August 4, 2021, the Company entered into an agreement with VICI Properties, Inc. (“VICI”) and MGP whereby VICI will acquire MGP in a stock-for-stock transaction (such transaction, the “VICI Transaction”). Pursuant to the agreement, MGP Class A shareholders will receive 1.366 shares of newly issued VICI stock in exchange for each MGP Class A share outstanding and the Company will receive 1.366 units of the new VICI operating partnership (“VICI OP”) in exchange for each Operating Partnership unit held by the Company. The fixed exchange ratio represents an agreed upon price of $43 per share of MGP Class A share to the five-day volume weighted average price of VICI stock as of the close of business on July 30, 2021. In connection with the exchange, VICI OP will redeem the majority of the Company’s VICI OP units for cash consideration of $4.4 billion, with the Company retaining an approximate $370 million ownership interest in the VICI OP (based upon the close price of VICI stock as of August 3, 2021). MGP’s Class B share that is held by the Company will be cancelled.
As part of the transaction, the Company will enter into an amended and restated master lease with VICI. The new master lease will have an initial term of 25 years, with three ten-year renewals, and initial annual rent of $860 million, escalating annually at a rate of 2.0% 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%. The transaction is expected to close in the first half of 2022, subject to customary closing conditions, regulatory approvals, and approval by VICI stockholders (which was obtained on October 29, 2021).
On September 27, 2021, the Company completed the acquisition of the 50% ownership interest in CityCenter Holdings, LLC ("CityCenter") held by Infinity World Development Corp ("Infinity World"), a wholly owned subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity. CityCenter is located between Bellagio and Park MGM and consists of Aria, an integrated casino, hotel and entertainment resort; and Vdara, a luxury condominium-hotel. Refer to Note 3 for additional information on this acquisition.
On September 28, 2021, the Company sold the real estate assets of Aria and Vdara to an affiliate of Blackstone Group Inc. ("Blackstone") for cash consideration of $3.89 billion and entered into a lease through which the real property is leased back to a subsidiary of the Company, as further discussed in Note 8.
On September 26, 2021, the Company entered into an agreement to acquire the operations of The Cosmopolitan of Las Vegas ("The Cosmopolitan") for cash consideration of $1.625 billion, subject to customary working capital adjustments. Additionally, the Company will enter into a lease agreement for the real estate assets of The Cosmopolitan. The Cosmopolitan lease will have an initial term of 30 years with three subsequent 10-year renewal periods, exercisable at the Company’s option. The initial term of the lease provides for an initial annual cash rent of $200 million with a fixed 2% escalator for the first fifteen years, and thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3%. Additionally, the lease will require the Company to spend a specified percentage of net revenues over a rolling five-year period at the property on capital expenditures and for the Company to comply with certain financial covenants, which, if not met, would require the Company to maintain cash security or a letter of credit in favor of the landlord in an amount equal to rent for the succeeding one-year period. The transaction is expected to close in the first half of 2022, subject to regulatory approvals and other customary closing conditions.
On October 29, 2021, MGP acquired the real estate assets of MGM Springfield from the Company and MGM Springfield was added to the MGP master lease between the Company and MGP through which MGP leases back the real property to a subsidiary of the Company. Transactions with MGP, including transactions under the MGP master lease, have been eliminated in the Company’s consolidation of MGP. Refer to Note 13 for additional information.
The Company has an approximate 56% controlling interest in MGM China Holdings Limited (together with its subsidiaries, “MGM China”), which owns MGM Grand Paradise, S.A. (“MGM Grand Paradise”). MGM Grand Paradise owns and operates the MGM Macau and MGM Cotai, two integrated casino, hotel and entertainment resorts in Macau, as well as the related gaming subconcession and land concessions.
Gaming in Macau is currently administered by the Macau Government through concessions awarded to three different concessionaires and three subconcessionaires, of which a subsidiary of MGM China is a subconcessionaire. Pursuant to the Macau gaming law, upon reaching the maximum duration of twenty years, the term of the concessions may be extended one or more times by order of the Chief Executive, which period may not exceed, in total, five years. In 2019, the expiration of MGM China’s subconcession term was extended from March 31, 2020 to June 26, 2022, consistent with the expiration of the other concessionaires and subconcessionaires. On September 14, 2021, the Macau government released a consultation paper on the revision of the Macau gaming law and commenced a 45-day public consultation process soliciting feedback. Unless the subconcession is extended or replaced with a similar governmental license, or legislation with regard to reversion of casino premises is amended, the casino area premises and gaming-related equipment subject to reversion will automatically be transferred to the Macau Government upon expiration, and MGM China will cease to generate any revenues from such gaming operations. In addition, certain events relating to the loss, termination, rescission, revocation or modification of MGM China’s gaming subconcession in Macau, where such events have a material adverse effect on the financial condition, business, properties, or results of operations of MGM China, taken as a whole, may result in a special put option triggering event under MGM China’s senior notes and in an event of default under MGM China’s revolving credit facilities. MGM China continues to closely monitor developments regarding the gaming concessions retendering or extension including the issuance of guidance by the Macau Government. MGM China intends to respond proactively to all relevant Macau Government requirements when known relating to the gaming subconcession extension or retendering. The Company cannot provide any assurance that the gaming subconcession will be extended beyond the current term; however, management believes that the gaming subconcession will be extended or replaced with a similar governmental license.
The Company owns 50% of BetMGM, LLC (“BetMGM”), which provides online sports betting and iGaming in certain jurisdictions in the United States. The other 50% of BetMGM is owned by Entain plc.
The Company has three reportable segments: Las Vegas Strip Resorts, Regional Operations and MGM China. See Note 12 for additional information about the Company’s segments.
Financial Impact of COVID-19. The spread of the novel 2019 coronavirus (“COVID-19”) and developments surrounding the global pandemic have had a significant impact on the Company’s business, financial condition, results of operations and cash flows in 2020 and 2021 and may potentially thereafter. In March 2020, all of the Company’s domestic properties were temporarily closed pursuant to state and local government restrictions imposed as a result of COVID-19. Throughout the second and third quarters of 2020, all of the Company’s properties that were temporarily closed re-opened to the public, but continued to operate without certain amenities and subject to certain occupancy limitations, with restrictions varying by jurisdiction and with further temporary re-closures and re-openings occurring for the Company’s properties or portions thereof into the first quarter of 2021. Upon re-opening of the properties, the Company implemented certain measures to mitigate the spread of COVID-19, including limitations on the number of gaming tables allowed to operate and on the number of seats at each table game, as well as slot machine spacing, temperature checks, mask protection, limitations on restaurant capacity, entertainment events and conventions as well as other measures to enforce social distancing.
Beginning in the latter part of the first quarter of 2021 and continuing into the second quarter of 2021, the Company’s domestic jurisdictions eased and removed prior operating restrictions, including capacity and occupancy limits as well as social distancing policies. However, certain operations and amenities are limited or constrained due to available staffing and/or mid-week visitation levels, and in July 2021, certain jurisdictions reinstated mask protection guidelines as a result of the emergence and spread of certain COVID-19 variants.
Although all of the Company’s properties have re-opened, in light of the unpredictable nature of the pandemic, including the emergence and spread of COVID-19 variants, the properties may be subject to temporary complete or partial shutdowns in the future. At this time, the Company cannot predict whether jurisdictions, states or the federal government will adopt similar or more restrictive measures in the future than in the past, including stay-at-home orders or the temporary closure of all or a portion of the Company’s properties.
In Macau, following a temporary closure of the Company’s properties on February 5, 2020, operations resumed on February 20, 2020, subject to certain health safeguards, such as limiting the number of seats available at each table game, slot machine spacing, reduced operating hours at a number of restaurants and bars, temperature checks, and mask protection. Although the issuance of tourist visas (including the individual visit scheme) for residents of Zhuhai, Guangdong Province and all other provinces in mainland China to travel to Macau resumed on August 12, 2020, August 26, 2020 and September 23, 2020, respectively, several travel and entry restrictions in Macau, Hong Kong and mainland China remain in place (including the temporary suspension of ferry services from Hong Kong to Macau, a negative nucleic acid test result, and mandatory quarantine requirements for visitors from Hong Kong and Taiwan, and bans on entry or enhanced quarantine requirements on other visitors into Macau), which have significantly impacted visitation to the Company’s Macau properties. In recent months, local COVID-19 cases were identified in Macau. Upon such occurrences, a state of immediate prevention was declared and mass mandatory nucleic acid testing was imposed in Macau, the validity period of negative test results for re-entry into mainland China was shortened and quarantine requirements were imposed, certain events were cancelled or suspended, and in some instances certain entertainment and leisure facilities were closed throughout Macau. Although gaming and hotel operations have remained open during these states of immediate prevention, such measures have had a negative effect on the Company's operations and it is uncertain whether further closures, including the closure of the Company’s properties, or travel restrictions to Macau will be implemented if additional local COVID-19 cases are identified.
NOTE 2 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation. As permitted by the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These consolidated financial statements should be read in conjunction with the Company’s 2020 annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s interim financial statements. The results for such periods are not necessarily indicative of the results to be expected for the full year.
Principles of consolidation. The Company evaluates entities for which control is achieved through means other than voting rights to determine if it is the primary beneficiary of a variable interest entity (“VIE”). A VIE is an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a VIE when it determines that it is its primary beneficiary. For these VIEs, the Company records a noncontrolling interest in the consolidated balance sheets. The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. The Company performs this analysis on an ongoing basis.
Management has determined that MGP is a VIE because the Class A equity investors as a group lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance. The Company has determined that it is the primary beneficiary of MGP and consolidates MGP because (i) its ownership of MGP’s single Class B share entitles it to a majority of the total voting power of MGP’s shares, and (ii) the exchangeable nature of the Operating Partnership units owned provide the Company the right to receive benefits from MGP that could potentially be significant to MGP. The Company has recorded MGP’s ownership interest in the Operating Partnership as noncontrolling interest in the Company’s consolidated financial statements. As of September 30, 2021, on a consolidated basis MGP had total assets of $10.1 billion, primarily related to its real estate investments, and total liabilities of $5.0 billion, primarily related to its indebtedness.
Management has determined that Bellagio BREIT Venture is a VIE because the equity holders as a group lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance. The Company has determined that it is not the primary beneficiary of Bellagio BREIT Venture and, accordingly, does not consolidate the venture, because the Company does not have power to direct the activities that could potentially be significant to the venture; BREIT, as the managing member, has such power. The Company has recorded its 5% ownership interest in Bellagio BREIT Venture as an investment in unconsolidated affiliates in the Company’s consolidated financial statements, for which such amount was $58 million as of September 30, 2021. The Company’s maximum exposure to loss as a result of its involvement with Bellagio BREIT Venture is equal to the carrying value of its investment, assuming no future capital funding requirements, plus the exposure to loss resulting from the Company’s guarantee of the debt of Bellagio BREIT Venture, which guarantee is immaterial as of September 30, 2021, as further discussed in Note 9.
For entities determined not to be a VIE, the Company consolidates such entities in which the Company owns 100% of the equity. For entities in which the Company owns less than 100% of the equity interest, the Company consolidates the entity under the voting interest model if it has a controlling financial interest based upon the terms of the respective entities’ ownership agreements, such as MGM China. For these entities, the Company records a noncontrolling interest in the consolidated balance sheets and all intercompany balances and transactions are eliminated in consolidation. If the entity does not qualify for consolidation under the voting interest model and the Company has significant influence over the operating and financial decisions of the entity, the Company accounts for the entity under the equity method, such as the Company’s investments in MGP BREIT Venture and BetMGM, which do not qualify for consolidation as the Company has joint control, given the entities are structured with substantive participating rights whereby both owners participate in the decision making process, which prevents the Company from exerting a controlling financial interest in such entities, as defined in ASC 810.
For equity interests in entities in which the Company does not have significant influence, the Company records its equity investment under ASC 321 and reflects such investments within “Other long-term assets, net” on the consolidated balance sheets. During the three and nine months ended September 30, 2021, the Company recorded a loss of $48 million and a gain of $39 million, respectively, within “Other, net” on the Company’s consolidated statement of operations related primarily to the change in fair value of an equity instrument that previously qualified for the measurement alternative under
ASC 321, which was discontinued upon the equity interest having a readily determinable fair value as a result of becoming exchange traded. The fair value of such equity investment was $76 million as of September 30, 2021.
Reclassifications. Certain reclassifications have been made to conform the prior period presentation.
Fair value measurements. Fair value measurements affect the Company’s accounting and impairment assessments of its long-lived assets, investments in unconsolidated affiliates or in equity interests, assets acquired, and liabilities assumed in an acquisition, and goodwill and other intangible assets. Fair value measurements also affect the Company’s accounting for certain of its financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured according to a hierarchy that includes: Level 1 inputs, such as quoted prices in an active market; Level 2 inputs, which are observable inputs for similar assets; or Level 3 inputs, which are unobservable inputs. The Company used the following inputs in its fair value measurements:
-
Level 1 inputs when measuring its equity investments under ASC 321;
-
Level 1 and Level 2 inputs for its long-term debt fair value disclosures. See Note 6;
-
Level 2 inputs when measuring the Operating Partnership’s fair value of its interest rate swaps. See Note 6; and
-
Level 1, Level 2, and Level 3 inputs when assessing the fair value of assets acquired and liabilities assumed in the CityCenter acquisition. See Note 3.
Revenue recognition. The Company’s revenue from contracts with customers consists of casino wagers transactions, hotel room sales, food and beverage transactions, entertainment shows, and retail transactions.
For casino wager transactions that include incentives earned by customers under the Company’s loyalty programs, the Company allocates a portion of net win based upon the standalone selling price of such incentive (less estimated breakage). This allocation is deferred and recognized as revenue when the customer redeems the incentive. When redeemed, revenue is recognized in the department that provides the goods or service. Redemption of loyalty incentives at third party outlets are deducted from the loyalty liability and amounts owed are paid to the third party, with any discount received recorded as other revenue. After allocating revenue to other goods and services provided as part of casino wager transactions, the Company records the residual amount to casino revenue.
Contract and Contract-Related Liabilities. There may be a difference between the timing of cash receipts from the customer and the recognition of revenue, resulting in a contract or contract-related liability. The Company generally has three types of liabilities related to contracts with customers: (1) outstanding chip liability, which represents the amounts owed in exchange for gaming chips held by a customer, (2) loyalty program obligations, which represents the deferred allocation of revenue relating to loyalty program incentives earned, as discussed above, and (3) customer advances and other, which is primarily funds deposited by customers before gaming play occurs (“casino front money”) and advance payments on goods and services yet to be provided such as advance ticket sales and deposits on rooms and convention space or for unpaid wagers. These liabilities are generally expected to be recognized as revenue within one year of being purchased, earned, or deposited and are recorded within “Other accrued liabilities” on the Company’s consolidated balance sheets.
The following table summarizes the activity related to contract and contract-related liabilities:
| Outstanding Chip Liability | Loyalty Program | Customer Advances and Other | |||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||
| Balance at January 1 | $ | 212,671 | $ | 314,570 | $ | 139,756 | $ | 126,966 | $ | 382,287 | $ | 481,095 | |||||||||||||||||||||||
| Balance at September 30 | 177,066 | 350,848 | 142,969 | 138,785 | 662,096 | 359,877 | |||||||||||||||||||||||||||||
| Increase / (decrease) | $ | (35,605) | $ | 36,278 | $ | 3,213 | $ | 11,819 | $ | 279,809 | $ | (121,218) |
Revenue by source. The Company presents the revenue earned disaggregated by the type or nature of the good or service (casino, room, food and beverage, and entertainment, retail and other) and by relevant geographic region within Note 12.
Leases. Refer to Note 8 for discussion of leases under which the Company is a lessee. The Company is a lessor under certain other lease arrangements. Lease revenues earned by the Company from third parties are classified within the
line item corresponding to the type or nature of the tenant’s good or service. During the three and nine months ended September 30, 2021, lease revenues from third-party tenants include $13 million and $29 million recorded within food and beverage revenue, respectively, and $22 million and $58 million recorded within entertainment, retail, and other revenue for the same such periods, respectively. During the three and nine months ended September 30, 2020, lease revenues from third-party tenants include $7 million and $21 million recorded within food and beverage revenue, respectively, and $14 million and $47 million recorded within entertainment, retail, and other revenue for the same such periods, respectively. Lease revenues from the rental of hotel rooms are recorded as rooms revenues within the consolidated statements of operations.
NOTE 3 — ACQUISITION
On September 27, 2021, the Company completed the acquisition of Infinity World's 50% ownership interest in CityCenter for cash consideration of $2.125 billion.
Through the acquisition, the Company obtained 100% of the equity interests in CityCenter and therefore consolidated CityCenter as of September 27, 2021. Prior to the acquisition, the Company held a 50% ownership interest, which was accounted for under the equity method. The fair value of the equity interests of CityCenter was determined by the transaction price and equaled $4.25 billion. The carrying value of the Company's equity method investment was less than its share of the fair value of CityCenter at the acquisition date, resulting in a net gain of $1.6 billion upon consolidation, which is recognized as "Gain on consolidation of CityCenter, net" on the consolidated statements of operations.
On September 28, 2021, the Company sold the real estate assets of Aria and Vdara for cash consideration of $3.89 billion and entered into a lease agreement pursuant to which the Company leases back the real property. The Company classified the real estate assets as held for sale as of the acquisition date and accordingly measured the real estate assets at fair value less costs to sell, as reflected in the table below. See Note 8 for additional information regarding the lease.
The Company recognized 100% of the assets and liabilities of CityCenter at fair value at the date of the acquisition. Under the acquisition method, the fair value was allocated to the assets acquired and liabilities assumed in the transaction. The Company estimated fair value using level 1 inputs, level 2 inputs, and level 3 inputs. As the transaction closed on September 27, 2021, the allocation of fair value for substantially all of the assets and liabilities is preliminary as of September 30, 2021, and may be adjusted up to one year after the acquisition.
The following table sets forth the preliminary purchase price allocation (in thousands):
| Fair value of assets acquired and liabilities assumed: | |||||
| Cash and cash equivalents | $ | 335,396 | |||
| Receivables and other current assets | 106,417 | ||||
| Property and equipment - real estate assets held for sale | 3,888,431 | ||||
| Property and equipment | 320,826 | ||||
| Trademarks | 180,000 | ||||
| Goodwill | 1,399,484 | ||||
| Other assets | 13,924 | ||||
| Accounts payable, accrued liabilities, and other current liabilities | (200,974) | ||||
| Debt | (1,729,451) | ||||
| Other liabilities | (64,054) | ||||
| $ | 4,250,000 |
The Company recognized the identifiable intangible assets of CityCenter at fair value, which consisted of indefinite-lived trade names, which was determined using methodologies under the relief from royalty method based on significant inputs that were not observable. The goodwill is primarily attributable to the profitability of CityCenter in excess of identifiable assets. Based upon preliminary tax determinations as of September 30, 2021, approximately 50% of the goodwill is expected to be deductible for income tax purposes. All of the goodwill was assigned to the Company’s Las Vegas Strip Resorts segment.
Results. CityCenter’s net revenue for the period from September 27, 2021 through September 30, 2021 was $14 million and operating income and net income were each $3 million.
Unaudited pro forma information. The operating results for CityCenter are included in the accompanying consolidated statements of operations from the date of acquisition. The following unaudited pro forma consolidated financial information for the Company has been prepared assuming the Company’s acquisition of its controlling interest had occurred as of January 1, 2020 and excludes the gain on consolidation discussed above. The pro forma information does not reflect transactions that occurred subsequent to acquisition, such as the subsequent sale-leaseback transaction or the repayment of CityCenter's assumed debt. The unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of January 1, 2020.
| Nine Months Ended September 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In thousands) | |||||||||||
| Net revenues | $ | 7,096,711 | $ | 3,911,327 | |||||||
| Net income attributable to MGM Resorts International | 291,469 | (600,236) |
NOTE 4 — INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
Investments in and advances to unconsolidated affiliates consisted of the following:
| September 30, 2021 | December 31, 2020 | ||||||||||
| (In thousands) | |||||||||||
| CityCenter (50% as of December 31, 2020) | $ | — | $ | 441,893 | |||||||
| MGP BREIT Venture (50.1% owned by the Operating Partnership) | 815,399 | 810,066 | |||||||||
| BetMGM (50%) | 22,983 | 27,310 | |||||||||
| Other | 102,763 | 167,774 | |||||||||
| $ | 941,145 | $ | 1,447,043 |
The Company recorded its share of income (loss) from unconsolidated affiliates, including adjustments for basis differences, as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Income from unconsolidated affiliates | $ | 35,111 | $ | 20,635 | $ | 92,870 | $ | 48,030 | |||||||||||||||
| Non-operating items from unconsolidated affiliates | (23,421) | (23,604) | (67,473) | (79,986) | |||||||||||||||||||
| $ | 11,690 | $ | (2,969) | $ | 25,397 | $ | (31,956) |
The following table summarizes information related to the Company’s share of operating income (loss) from unconsolidated affiliates:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| CityCenter (through September 26, 2021) | $ | 40,747 | $ | (6,041) | $ | 128,127 | $ | (24,489) | |||||||||||||||
| MGP BREIT Venture | 38,959 | 38,976 | 116,876 | 97,787 | |||||||||||||||||||
| BetMGM | (49,060) | (9,057) | (154,275) | (24,976) | |||||||||||||||||||
| Other | 4,465 | (3,243) | 2,142 | (292) | |||||||||||||||||||
| $ | 35,111 | $ | 20,635 | $ | 92,870 | $ | 48,030 |
MGP BREIT Venture distributions. For the three and nine months ended September 30, 2021, the Operating Partnership received $24 million and $70 million in distributions from MGP BREIT Venture, respectively. For the three and nine months ended September 30, 2020, the Operating Partnership received $23 million and $58 million in distributions from MGP BREIT Venture, respectively.
BetMGM contributions. For the three and nine months ended September 30, 2021, the Company contributed $50 million and $150 million to BetMGM, respectively. For the three and nine months ended September 30, 2020, the Company contributed $25 million and $55 million to BetMGM, respectively.
CityCenter distributions. In April 2020, CityCenter paid a $101 million distribution, of which the Company received its 50% share, or approximately $51 million.
CityCenter sale of Harmon land. In June 2021, CityCenter closed the sale of its Harmon land for $80 million on which it recorded a $30 million gain. The Company recorded a $50 million gain, which included $15 million of its 50% share of the gain recorded by CityCenter and $35 million representing the reversal of certain basis differences.
Other. During the nine months ended September 30, 2020, the Company recognized other-than-temporary impairment charges of $64 million within “Property transactions, net” in the consolidated statements of operations related to an investment in an unconsolidated affiliate previously classified within “Other” in the “Investments in and advances to unconsolidated affiliates” table above.
NOTE 5 — GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets consisted of the following:
| September 30, 2021 | December 31, 2020 | |||||||||||||
| (In thousands) | ||||||||||||||
| Goodwill | $ | 3,484,966 | $ | 2,091,278 | ||||||||||
| Indefinite-lived intangible assets: | ||||||||||||||
| Detroit development rights | $ | 98,098 | $ | 98,098 | ||||||||||
| MGM Northfield Park and Empire City racing and gaming licenses | 280,000 | 280,000 | ||||||||||||
| Trademarks and other | 479,238 | 299,238 | ||||||||||||
| Total indefinite-lived intangible assets | 857,336 | 677,336 | ||||||||||||
| Finite-lived intangible assets: | ||||||||||||||
| MGM Grand Paradise gaming subconcession | 4,522,623 | 4,541,990 | ||||||||||||
| Less: Accumulated amortization | (1,823,362) | (1,697,481) | ||||||||||||
| 2,699,261 | 2,844,509 | |||||||||||||
| MGM National Harbor and MGM Springfield gaming licenses | 106,600 | 106,600 | ||||||||||||
| Less: Accumulated amortization | (24,432) | (19,102) | ||||||||||||
| 82,168 | 87,498 | |||||||||||||
| Other finite-lived intangible assets | 65,207 | 60,649 | ||||||||||||
| Less: Accumulated amortization | (34,865) | (26,244) | ||||||||||||
| 30,342 | 34,405 | |||||||||||||
| Total finite-lived intangible assets, net | 2,811,771 | 2,966,412 | ||||||||||||
| Total other intangible assets, net | $ | 3,669,107 | $ | 3,643,748 |
Goodwill. A summary of changes in the Company’s goodwill by reportable segment is as follows for the nine months ended September 30, 2021 and twelve months ended December 31, 2020:
| 2021 | ||||||||||||||||||||||||||
| Balance at January 1 | Acquisitions | Currency exchange | Balance at September 30 | |||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| Goodwill, net by segment: | ||||||||||||||||||||||||||
| Las Vegas Strip Resorts | $ | 30,452 | $ | 1,399,484 | $ | — | $ | 1,429,936 | ||||||||||||||||||
| Regional Operations | 701,463 | — | — | 701,463 | ||||||||||||||||||||||
| MGM China | 1,359,363 | — | (5,796) | 1,353,567 | ||||||||||||||||||||||
| $ | 2,091,278 | $ | 1,399,484 | $ | (5,796) | $ | 3,484,966 |
| 2020 | ||||||||||||||||||||||||||
| Balance at January 1 | Acquisitions | Currency exchange | Balance at December 31 | |||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| Goodwill, net by segment: | ||||||||||||||||||||||||||
| Las Vegas Strip Resorts | $ | 30,452 | $ | — | $ | — | $ | 30,452 | ||||||||||||||||||
| Regional Operations | 701,463 | — | — | 701,463 | ||||||||||||||||||||||
| MGM China | 1,352,649 | — | 6,714 | 1,359,363 | ||||||||||||||||||||||
| $ | 2,084,564 | $ | — | $ | 6,714 | $ | 2,091,278 |
Goodwill was recognized in 2021 related to the acquisition of the 50% ownership interest in CityCenter, which is included in Las Vegas Strip Resorts, as further discussed in Note 3.
MGM Grand Paradise gaming subconcession. Pursuant to the agreement dated April 19, 2005 between MGM Grand Paradise and SJM Resorts S.A. (“SJMSA”, formerly Sociedade de Jogos de Macau, S.A.), a gaming subconcession was acquired by MGM Grand Paradise for the right to operate casino games of chance and other casino games for a period commencing on April 20, 2005 through March 31, 2020. In March 2019, MGM Grand Paradise and SJMSA entered into a Subconcession Extension Contract (the “Extension Agreement”), pursuant to which the gaming subconcession was extended to June 26, 2022, which coincides with the current expiration of all the other concessions and subconcessions. MGM Grand Paradise paid the government of Macau approximately $25 million and paid SJMSA approximately $2 million as a contract premium for such extension. The Company cannot provide any assurance that the gaming subconcession will be extended beyond the current term; however, management believes that the gaming subconcession will be extended or replaced with a similar governmental license. As such, as of September 30, 2021 and December 31, 2020, the Company amortizes the gaming subconcession intangible asset on a straight-line basis over the initial term of the Cotai land concession, ending in January 2038.
NOTE 6 — LONG-TERM DEBT
Long-term debt consisted of the following:
| September 30, 2021 | December 31, 2020 | ||||||||||
| (In thousands) | |||||||||||
| Operating Partnership senior credit facility | $ | — | $ | 10,000 | |||||||
| MGM China first revolving credit facility | 264,574 | 770,034 | |||||||||
| 7.75% senior notes, due 2022 | 1,000,000 | 1,000,000 | |||||||||
| 6% senior notes, due 2023 | 1,250,000 | 1,250,000 | |||||||||
| 5.625% Operating Partnership senior notes, due 2024 | 1,050,000 | 1,050,000 | |||||||||
| 5.375% MGM China senior notes, due 2024 | 750,000 | 750,000 | |||||||||
| 6.75% senior notes, due 2025 | 750,000 | 750,000 | |||||||||
| 5.75% senior notes, due 2025 | 675,000 | 675,000 | |||||||||
| 4.625% Operating Partnership senior notes, due 2025 | 800,000 | 800,000 | |||||||||
| 5.25% MGM China senior notes, due 2025 | 500,000 | 500,000 | |||||||||
| 5.875% MGM China senior notes, due 2026 | 750,000 | 750,000 | |||||||||
| 4.5% Operating Partnership senior notes, due 2026 | 500,000 | 500,000 | |||||||||
| 4.625% senior notes, due 2026 | 400,000 | 400,000 | |||||||||
| 5.75% Operating Partnership senior notes, due 2027 | 750,000 | 750,000 | |||||||||
| 5.5% senior notes, due 2027 | 675,000 | 675,000 | |||||||||
| 4.75% MGM China senior notes, due 2027 | 750,000 | — | |||||||||
| 4.5% Operating Partnership senior notes, due 2028 | 350,000 | 350,000 | |||||||||
| 4.75% senior notes, due 2028 | 750,000 | 750,000 | |||||||||
| 3.875% Operating Partnership senior notes, due 2029 | 750,000 | 750,000 | |||||||||
| 7% debentures, due 2036 | 552 | 552 | |||||||||
| 12,715,126 | 12,480,586 | ||||||||||
| Less: Premiums, discounts, and unamortized debt issuance costs, net | (96,213) | (103,902) | |||||||||
| 12,618,913 | 12,376,684 | ||||||||||
| Less: Current portion | (1,000,000) | — | |||||||||
| $ | 11,618,913 | $ | 12,376,684 |
Senior credit facility. At September 30, 2021, the Company’s senior credit facility consisted of a $1.5 billion revolving facility. At September 30, 2021, no amounts were drawn on the revolving credit facility.
In February 2021, the Company amended its credit facility to extend the covenant relief period provided under the previous amendment related to its financial maintenance covenants through the earlier of (x) the day immediately following the date the Company delivers to the administrative agent a compliance certificate with respect to the quarter ending June 30, 2022 and (y) the date the Company delivers to the administrative agent an irrevocable notice terminating the covenant relief period, and to adjust the required leverage and interest coverage levels for the covenant when it is reimposed at the end of the waiver period. In addition, in connection with the February 2021 amendment, the Company agreed to an increase of the liquidity test such that the Company’s borrower group (as defined in the credit agreement) is required to maintain a minimum liquidity level of not less than $1.0 billion (including unrestricted cash, cash equivalents and availability under the revolving credit facility), tested at the end of each month during the covenant relief period.
The Company’s senior credit facility contains customary representations and warranties, events of default and positive and negative covenants. The Company was in compliance with its applicable covenants at September 30, 2021.
Operating Partnership senior credit facility and bridge facility. At September 30, 2021, the Operating Partnership senior credit facility consisted of a $1.35 billion revolving credit facility. At September 30, 2021, no amounts were drawn on the revolving credit facility. The Operating Partnership was in compliance with its revolving credit facility covenants at September 30, 2021.
The Operating Partnership is party to interest rate swaps to mitigate the effects of interest rate volatility inherent in its variable rate debt as well as forecasted debt issuances. As of September 30, 2021, the Operating Partnership has currently effective interest rate swap agreements on which it pays a weighted average fixed rate of 1.783% on total notional amount of $700 million. The Operating Partnership has an additional $900 million total notional amount of forward starting interest rate swaps that are not currently effective. The fair value of interest rate swaps designated as cash flow hedges was $31 million, with $4 million recorded as a current liability and $27 million recorded as a long-term liability, as of September 30, 2021, and $41 million, with $1 million recorded as a current liability and $40 million recorded as a long-term liability, as of December 31, 2020. The fair value of interest rate swaps not designated as cash flow hedges was $33 million, with $11 million recorded as a current liability and $22 million recorded as a long-term liability, as of September 30, 2021, and $78 million, with $31 million recorded as a current liability and $47 million recorded as a long-term liability, as of December 31, 2020. Interest rate swaps in a current liability position are recorded within “Other accrued expenses” and those in a long-term liability position are recorded within “Other long-term liabilities” on the consolidated balance sheets.
MGM China first revolving credit facility. At September 30, 2021, the MGM China first revolving credit facility consisted of a $1.25 billion unsecured revolving credit facility. At September 30, 2021, $265 million was drawn on the MGM China first revolving credit facility and the weighted average interest rate was 2.81%.
The MGM China first revolving credit facility contains customary representations and warranties, events of default, and positive, negative and financial covenants, including that MGM China maintains compliance with a maximum leverage ratio and a minimum interest coverage ratio. In February 2021, MGM China amended its credit agreement to provide for a waiver of its maximum leverage ratio and its minimum interest coverage ratio through the fourth quarter of 2022. MGM China was in compliance with its applicable MGM China first revolving credit facility covenants at September 30, 2021.
MGM China second revolving credit facility. At September 30, 2021, the MGM China second revolving credit facility consisted of a $400 million unsecured revolving credit facility with an option to increase the amount of the facility up to $500 million, subject to certain conditions. Draws will be subject to satisfaction of certain conditions precedent, including evidence that the MGM China first revolving credit facility has been fully drawn. At September 30, 2021, no amounts were drawn on the MGM China second revolving credit facility**.**
The MGM China second revolving credit facility contains customary representations and warranties, events of default, and positive, negative and financial covenants, including that MGM China maintains compliance with a maximum leverage ratio and a minimum interest coverage ratio beginning in the third quarter of 2021. In February 2021, MGM China amended its credit agreement to provide for a waiver of its maximum leverage ratio and its minimum interest coverage ratio through the fourth quarter of 2022. MGM China was in compliance with its applicable MGM China second revolving credit facility covenants at September 30, 2021.
MGM China senior notes. In March 2021, MGM China issued $750 million in aggregate principal amount of 4.75% senior notes due 2027 at an issue price of 99.97%.
CityCenter senior credit facility. In connection with the CityCenter acquisition, the Company assumed $1.7 billion of CityCenter's indebtedness, which was repaid and extinguished in September 2021 with cash on hand.
Fair value of long-term debt. The estimated fair value of the Company’s long-term debt was $13.4 billion and $13.2 billion at September 30, 2021 and December 31, 2020, respectively. Fair value was estimated using quoted market prices for the Company’s senior notes and credit facilities.
NOTE 7 — INCOME TAXES
For interim income tax reporting the Company estimates its annual effective tax rate and applies it to its year-to-date ordinary income. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur. The Company’s effective income tax rate was a provision of 17.4% and 16.9% on income before income taxes for the three and nine months ended September 30, 2021, respectively, compared to benefits of 11.3% and 8.9% on loss before income taxes for the three and nine months ended September 30, 2020, respectively.
The Company recognizes deferred income tax assets, net of applicable reserves, related to net operating losses, tax credit carryforwards and certain temporary differences. The Company recognizes future tax benefits to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied.
The Company increased its valuation allowance for its foreign tax credits (“FTCs”) by $10 million and $5 million in the three and nine months ended September 30, 2021, respectively, with a corresponding increase to provision for income taxes. The Company's FTCs are attributable to the Macau Special Gaming Tax, which is 35% of gross gaming revenue in Macau. Significant judgment is required in assessing the need for a valuation allowance and future changes to assumptions used in this assessment could result in material changes in the valuation allowance with a corresponding impact on the provision for income taxes in the period including such change.
An extension of the annual fee arrangement that covers distributions of profits earned for the period of April 1, 2020 through June 26, 2022 was accepted by MGM Grand Paradise and confirmed by the Macau government on July 26, 2021. The agreement with the Macau government allows MGM Grand Paradise to settle the 12% complementary tax that would otherwise be due by its shareholder, MGM China, on distributions of its gaming profits by paying a flat annual fee regardless of the amount of distributable dividends. The agreement requires payments of approximately $1 million for the period April 1, 2020 through December 31, 2020, $2 million for January 1, 2021 through December 31, 2021, and $1 million for the period January 1, 2022 through June 26, 2022. The Company accrued $3 million of income tax expense through the three and nine months ended September 30, 2021 under the extension, including $1 million for the April 1, 2020 through December 31, 2020 period.
During the nine months ended September 30, 2021, the Company reached a settlement with the IRS Appeals Office on the examination of its 2014 U.S. consolidated federal income tax return. No cash tax payments were due as a result of the settlement. In addition, one of the Company's subsidiaries, Marina District Development Company, LLC, closed an examination in the state of New Jersey for tax years 2015 through 2018 with no change in tax due. As a result of the federal and New Jersey audit closures, the Company reversed $30 million of unrecognized tax benefits during the nine months ended September 30, 2021, none of which was recognized during the current year quarter.
NOTE 8 — LEASES
The Company leases the land underlying certain of its properties, real estate, and various equipment under operating and, to a lesser extent, finance lease arrangements. The master lease agreement with MGP is eliminated in consolidation and, accordingly is not included within the disclosures below; refer to Note 13 for further discussion of the master lease with MGP.
Bellagio real estate assets. The Bellagio lease has an initial term of 30 years that began on November 15, 2019, with two subsequent ten-year renewal periods, exercisable at the Company’s option. The initial term of the lease provides for a fixed 2% escalator to rent for the first ten years and, thereafter, an escalator 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. As a result of the fixed 2% escalator that went into effect on December 1, 2020 in connection with the commencement of the second lease year, annual cash rent payments increased to $250 million. The Company was in compliance with its applicable lease covenants as of September 30, 2021.
Mandalay Bay and MGM Grand Las Vegas real estate assets. The Mandalay Bay and MGM Grand Las Vegas lease has an initial term of 30 years that began on February 14, 2020, with two subsequent ten-year renewal periods, exercisable at the Company’s option. The initial term of the lease provides for a fixed 2% escalator to rent for the first fifteen years and, thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3%. As a result of the fixed 2% escalator that went into effect on March 1, 2021 in connection with the commencement of the second lease year, annual cash rent payments increased to $298 million. The Company was in compliance with its applicable lease covenants as of September 30, 2021.
Aria and Vdara real estate assets. The Aria and Vdara lease has an initial term of 30 years with three subsequent ten-year renewal periods, exercisable at the Company's option. The initial term of the lease provides for an initial annual cash rent of $215 million with a fixed 2% escalator for the first fifteen years, and thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3%. The Company does not consider the renewal options reasonably certain of being exercised and, accordingly, has determined the lease term to be 30 years. In consideration of such, the Company determined the expected lease term of 30 years to be less than 75% of the economic useful life of the real estate assets of Aria and Vdara. Further, the lessor provided its implicit rate to the Company, with which the Company determined that the present value of the future minimum lease payments is less than 90% of the fair value of the real estate assets. Accordingly, in consideration of these lease classification tests, as well as the fact that the lease does not transfer ownership of the assets back to the Company at the end of the lease term or grant the Company a purchase option and the real estate assets have alternative uses at the end of the lease term, the Company classified the Aria and Vdara lease as an operating lease.
Additionally, the lease requires the Company to spend a specified percentage of net revenues over a rolling five-year period at the property on capital expenditures and for the Company to comply with certain financial covenants, which, if not met, would require the Company to maintain cash security or a letter of credit in favor of the landlord in an amount equal to rent for the succeeding one-year period. The Company was in compliance with its applicable lease covenants as of September 30, 2021.
Other information. Components of lease costs and other information related to the Company’s leases was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Operating lease cost, primarily classified within "General and administrative"(1) | $ | 201,265 | $ | 199,166 | $ | 599,219 | $ | 551,807 | |||||||||||||||
| Finance lease costs | |||||||||||||||||||||||
| Interest expense(2) | $ | 1,186 | $ | (5,990) | $ | 134 | $ | (19,796) | |||||||||||||||
| Amortization expense | 17,785 | 17,851 | 53,271 | 52,495 | |||||||||||||||||||
| Total finance lease costs | $ | 18,971 | $ | 11,861 | $ | 53,405 | $ | 32,699 |
(1)The Bellagio lease and the Mandalay Bay and MGM Grand Las Vegas lease are held with related parties, as further discussed in Note 13. Operating lease cost includes $83 million for each of the three months ended September 30, 2021 and 2020 and, $248 million for each of the nine months ended September 30, 2021 and 2020 related to the Bellagio lease. Operating lease cost includes $99 million for each of the three months ended September 30, 2021 and 2020 and $296 million and $248 million for the nine months ended September 30, 2021 and 2020, respectively, related to the Mandalay Bay and MGM Grand Las Vegas lease.
(2)For the three and nine months ended September 30, 2021 and 2020, interest expense includes the effect of COVID-19 related rent concessions received on certain finance leases, for which such effect was recognized as negative variable rent expense.
| September 30, 2021 | December 31, 2020 | ||||||||||
| Supplemental balance sheet information | (In thousands) | ||||||||||
| Operating leases | |||||||||||
| Operating lease right-of-use assets, net(1) | $ | 11,551,415 | $ | 8,286,694 | |||||||
| Operating lease liabilities - current, classified within "Other accrued liabilities" | $ | 31,632 | $ | 31,843 | |||||||
| Operating lease liabilities - long-term(2) | 11,775,109 | 8,390,117 | |||||||||
| Total operating lease liabilities | $ | 11,806,741 | $ | 8,421,960 | |||||||
| Finance leases | |||||||||||
| Finance lease right-of-use assets, net classified within "Property and equipment, net" | $ | 168,886 | $ | 200,980 | |||||||
| Finance lease liabilities - current, classified within "Other accrued liabilities" | $ | 84,298 | $ | 80,193 | |||||||
| Finance lease liabilities - long-term, classified within "Other long-term obligations" | 91,879 | 134,287 | |||||||||
| Total finance lease liabilities | $ | 176,177 | $ | 214,480 | |||||||
| Weighted-average remaining lease term (years) | |||||||||||
| Operating leases | 29 | 30 | |||||||||
| Finance leases | 2 | 3 | |||||||||
| Weighted-average discount rate (%) | |||||||||||
| Operating leases | 7 | 8 | |||||||||
| Finance leases | 3 | 3 |
(1)As of September 30, 2021 and December 31, 2020, operating lease right-of-use assets, net included $3.6 billion and $3.7 billion related to the Bellagio lease, respectively, and $4.0 billion related to the Mandalay Bay and MGM Grand Las Vegas lease for each of the respective periods.
(2)As of September 30, 2021 and December 31, 2020, operating lease liabilities – long-term included $3.8 billion related to the Bellagio lease for each of the respective periods, and $4.1 billion related to the Mandalay Bay and MGM Grand Las Vegas lease for each of the respective periods.
| Nine Months Ended September 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | (In thousands) | ||||||||||
| Operating cash outflows from operating leases | $ | 483,031 | $ | 421,932 | |||||||
| Operating cash outflows from finance leases | 3,685 | 1,741 | |||||||||
| Financing cash outflows from finance leases(1) | 55,815 | 19,514 | |||||||||
| ROU assets obtained in exchange for new lease liabilities | |||||||||||
| Operating leases | $ | 3,388,103 | $ | 4,120,312 | |||||||
| Finance leases | 21,081 | 175,446 |
(1)Included within “Other” within the “Cash flows from financing activities” on the accompanying consolidated statements of cash flows.
Maturities of lease liabilities were as follows:
| Operating Leases | Finance Leases | ||||||||||
| Year ending December 31, | (In thousands) | ||||||||||
| 2021 (excluding the nine months ended September 30, 2021) | $ | 187,052 | $ | 24,688 | |||||||
| 2022 | 836,616 | 81,942 | |||||||||
| 2023 | 849,198 | 72,871 | |||||||||
| 2024 | 863,096 | 1,029 | |||||||||
| 2025 | 876,445 | 514 | |||||||||
| Thereafter | 27,580,105 | — | |||||||||
| Total future minimum lease payments | 31,192,512 | 181,044 | |||||||||
| Less: Amount of lease payments representing interest | (19,385,771) | (4,867) | |||||||||
| Present value of future minimum lease payments | 11,806,741 | 176,177 | |||||||||
| Less: Current portion | (31,632) | (84,298) | |||||||||
| Long-term portion of lease liabilities | $ | 11,775,109 | $ | 91,879 |
NOTE 9 — COMMITMENTS AND CONTINGENCIES
Litigation. The Company is a party to various legal proceedings, most of which relate to routine matters incidental to its business. Management does not believe that the outcome of such proceedings will have a material adverse effect on the Company’s financial position, results of operations or cash flows.
Other guarantees. The Company and its subsidiaries are party to various guarantee contracts in the normal course of business, which are generally supported by letters of credit issued by financial institutions. The Company’s senior credit facility limits the amount of letters of credit that can be issued to $850 million. At September 30, 2021, $33 million in letters of credit were outstanding under the Company’s senior credit facility. The Operating Partnership’s senior credit facility limits the amount of letters of credit that can be issued to $75 million. No letters of credit were outstanding under the Operating Partnership’s senior credit facility at September 30, 2021. The amount of available borrowings under each of the credit facilities is reduced by any outstanding letters of credit.
MGM China bank guarantee. In connection with the extension of the expiration of the gaming subconcession to June 2022, MGM Grand Paradise provided a bank guarantee to the government of Macau in May 2019 to warrant the fulfillment of an existing commitment of labor liabilities upon the expiration of the gaming subconcession in June 2022. The amount of the bank guarantee was approximately $102 million as of September 30, 2021 when giving effect to foreign currency exchange rate fluctuation.
Bellagio BREIT Venture shortfall guarantee. The Company provides a shortfall guarantee of the $3.01 billion principal amount of indebtedness (and any interest accrued and unpaid thereon) of Bellagio BREIT Venture, which matures in 2029. The terms of the shortfall guarantee provide that after the lenders have exhausted certain remedies to collect on the obligations under the indebtedness, the Company would then be responsible for any shortfall between the value of the collateral, which is the real estate assets of Bellagio owned by Bellagio BREIT Venture, and the debt obligation. This guarantee is accounted for under ASC 460 at fair value; such value is immaterial.
MGP BREIT Venture shortfall guarantee. The Company provides a shortfall guarantee of the $3.0 billion principal amount of indebtedness (and any interest accrued and unpaid thereon) of MGP BREIT Venture, which has an initial term of twelve years, maturing in 2032, with an anticipated repayment date of March 2030. The terms of the shortfall guarantee provide that after the lenders have exhausted certain remedies to collect on the obligations under the indebtedness, the Company would then be responsible for any shortfall between the value of the collateral, which is the real estate assets of Mandalay Bay and MGM Grand Las Vegas, owned by MGP BREIT Venture, and the debt obligation. This guarantee is accounted for under ASC 460 at fair value; such value is immaterial.
MGP BREIT Venture bad acts guarantee. The Operating Partnership provides a guarantee for the losses incurred by the lenders of the indebtedness of the MGP BREIT Venture arising out of certain bad acts by the Operating Partnership, its venture partner, or the venture, such as fraud or willful misconduct, based on the party’s percentage ownership of the MGP
BREIT Venture. This guarantee is capped at 10% of the principal amount outstanding at the time of the loss. The Operating Partnership and its venture partner have separately indemnified each other for the other party’s share of the overall liability exposure, if at fault. The guarantee is accounted for under ASC 460 at fair value; such value is immaterial.
NOTE 10 — INCOME PER SHARE OF COMMON STOCK
The table below reconciles basic and diluted income per share of common stock. Diluted weighted-average common and common equivalent shares include adjustments for potential dilution of share-based awards outstanding under the Company’s stock compensation plan.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income (loss) attributable to MGM Resorts International | $ | 1,350,433 | $ | (534,731) | $ | 1,123,357 | $ | (585,119) | |||||||||||||||
| Adjustment related to redeemable noncontrolling interests | (7,580) | 1,777 | (54,019) | 42,028 | |||||||||||||||||||
| Net income (loss) available to common stockholders – basic | 1,342,853 | (532,954) | 1,069,338 | (543,091) | |||||||||||||||||||
| Other | — | (25) | — | (21) | |||||||||||||||||||
| Net income (loss) attributable to common stockholders - diluted | $ | 1,342,853 | $ | (532,979) | $ | 1,069,338 | $ | (543,112) | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average common shares outstanding – basic | 478,405 | 493,517 | 487,509 | 494,126 | |||||||||||||||||||
| Potential dilution from share-based awards | 5,810 | — | 5,675 | — | |||||||||||||||||||
| Weighted-average common and common equivalent shares – diluted | 484,215 | 493,517 | 493,184 | 494,126 | |||||||||||||||||||
| Antidilutive share-based awards excluded from the calculation of diluted earnings per share | 77 | 6,183 | 32 | 5,143 |
NOTE 11 — STOCKHOLDERS’ EQUITY
Noncontrolling interest ownership transactions
MGP Class A share issuance – March 2021. On March 15, 2021, MGP completed an offering of 22 million of its Class A shares, the proceeds of which were used to partially satisfy MGP’s obligations pursuant to the notice of redemption delivered by certain MGM subsidiaries, discussed below. Subsequent to MGP’s Class A share issuance and the redemption of Operating Partnership units, discussed below, the Company indirectly owned 42.1% of the partnership units in the Operating Partnership.
Redemption of Operating Partnership units – March 2021. In March 2021, subsidiaries of the Company delivered a notice of redemption to MGP covering approximately 37 million Operating Partnership units that they held in accordance with the terms of the Operating Partnership’s partnership agreement. Upon receipt of the notice of redemption, MGP formed a conflicts committee to determine the mix of consideration that it would provide for the Operating Partnership units. The conflicts committee determined that MGP would redeem approximately 15 million Operating Partnership units for cash (with such Operating Partnership units retired upon redemption) and would satisfy its remaining obligation under that notice covering the remaining 22 million Operating Partnership units using the proceeds, net of the underwriters’ discount, of MGP’s Class A offering, for aggregate cash proceeds received by the Company of approximately $1.2 billion. The Company adjusted the carrying value of the noncontrolling interests for the change in noncontrolling interests’ ownership percentage of the Operating Partnership’s net assets, with offsetting adjustments to capital in excess of par value and accumulated other comprehensive loss. Subsequent to the collective transactions, the Company indirectly owned 42.1% of the partnership units in the Operating Partnership**.**
MGP Class A share issuances – At-the-Market (“ATM”) program. During the three and nine months ended September 30, 2021, MGP issued less than 0.1 million and approximately 3 million Class A shares under its ATM program, which completed its ATM program. In connection with the issuances, the Operating Partnership issued an equal amount of Operating Partnership units to MGP. The Company adjusted the carrying value of the noncontrolling interests for the change in noncontrolling interests’ ownership percentage of the Operating Partnership’s net assets, with offsetting adjustments to capital in excess of par value and accumulated other comprehensive loss. Subsequent to the collective issuances, the Company indirectly owned 41.6% of the partnership units in the Operating Partnership.
Other equity activity
MGM Resorts International dividends. On November 3, 2021 the Company’s Board of Directors approved a quarterly dividend of $0.0025 per share that will be payable on December 15, 2021 to holders of record on December 10, 2021**.**
MGM Resorts International stock repurchase program. In February 2020, upon substantial completion of the May 2018 $2.0 billion stock repurchase program, the Company’s Board of Directors authorized a $3.0 billion stock repurchase program. Under the stock repurchase program, the Company may repurchase shares from time to time in the open market or in privately negotiated agreements. Repurchases of common stock may also be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The timing, volume and nature of stock repurchases will be at the sole discretion of management, dependent on market conditions, applicable securities laws, and other factors, and may be suspended or discontinued at any time**.**
During the three months ended September 30, 2021, the Company repurchased approximately 17 million shares of its common stock at an average price of $39.89 per share for an aggregate amount of $687 million. During the nine months ended September 30, 2021, the Company repurchased approximately 26 million shares of its common stock at an average price of $39.56 per share for an aggregate amount of $1.0 billion. Repurchased shares were retired. During the nine months ended September 30, 2021, the Company completed its May 2018 $2.0 billion stock repurchase program and the remaining availability under the February 2020 $3.0 billion stock repurchase program was $2.0 billion as of September 30, 2021.
Subsequent to the quarter ended September 30, 2021, the Company repurchased 2 million shares of its common stock at an average price of $44.51 per share for an aggregate amount of $80 million. Repurchased shares were retired.
There were no repurchases made during the three months ended September 30, 2020. During the nine months ended September 30, 2020, the Company repurchased approximately 11 million shares of its common stock at an average price of $32.57 per share for an aggregate amount of $354 million. Repurchased shares were retired.
Accumulated other comprehensive loss. Changes in accumulated other comprehensive loss attributable to MGM Resorts International are as follows:
| Currency Translation Adjustments | Cash Flow Hedges | Other | Total | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Balances, June 30, 2021 | $ | 8,844 | $ | (47,826) | $ | 17,809 | $ | (21,173) | |||||||||||||||
| Other comprehensive income (loss) before reclassifications | (11,956) | 1,818 | — | (10,138) | |||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss to interest expense | — | 5,423 | — | 5,423 | |||||||||||||||||||
| Other comprehensive income (loss), net of tax | (11,956) | 7,241 | — | (4,715) | |||||||||||||||||||
| Other changes in accumulated other comprehensive loss: | |||||||||||||||||||||||
| MGP Class A share issuances | — | — | 1 | 1 | |||||||||||||||||||
| Changes in accumulated other comprehensive loss: | (11,956) | 7,241 | 1 | (4,714) | |||||||||||||||||||
| Other comprehensive loss (income) attributable to noncontrolling interest | 5,270 | (4,656) | — | 614 | |||||||||||||||||||
| Balances, September 30, 2021 | $ | 2,158 | $ | (45,241) | $ | 17,810 | $ | (25,273) | |||||||||||||||
| Balances, December 31, 2020 | $ | 12,964 | $ | (55,357) | $ | 11,716 | $ | (30,677) | |||||||||||||||
| Other comprehensive income (loss) before reclassifications | (19,167) | 7,824 | — | (11,343) | |||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss to interest expense | — | 16,805 | — | 16,805 | |||||||||||||||||||
| Other comprehensive income (loss), net of tax | (19,167) | 24,629 | — | 5,462 | |||||||||||||||||||
| Other changes in accumulated other comprehensive loss: | |||||||||||||||||||||||
| MGP Class A share issuances | — | — | 3,240 | 3,240 | |||||||||||||||||||
| Redemption of Operating Partnership units | — | — | 5,327 | 5,327 | |||||||||||||||||||
| Other | — | — | (2,473) | (2,473) | |||||||||||||||||||
| Changes in accumulated other comprehensive loss: | (19,167) | 24,629 | 6,094 | 11,556 | |||||||||||||||||||
| Other comprehensive loss (income) attributable to noncontrolling interest | 8,361 | (14,513) | — | (6,152) | |||||||||||||||||||
| Balances, September 30, 2021 | $ | 2,158 | $ | (45,241) | $ | 17,810 | $ | (25,273) |
NOTE 12 — SEGMENT INFORMATION
The Company’s management views each of its casino resorts as an operating segment. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate and their management and reporting structure. The Company has aggregated its operating segments into the following reportable segments: Las Vegas Strip Resorts, Regional Operations and MGM China.
Las Vegas Strip Resorts. Las Vegas Strip Resorts consists of the following casino resorts: Aria (including Vdara), Bellagio, MGM Grand Las Vegas (including The Signature), Mandalay Bay (including Delano and Four Seasons), The Mirage, Luxor, New York-New York (including The Park), Excalibur, and Park MGM (including NoMad Las Vegas).
Regional Operations. Regional Operations consists of the following casino resorts: MGM Grand Detroit in Detroit, Michigan; Beau Rivage in Biloxi, Mississippi; Gold Strike Tunica in Tunica, Mississippi; Borgata in Atlantic City, New Jersey; MGM National Harbor in Prince George’s County, Maryland; MGM Springfield in Springfield, Massachusetts; Empire City in Yonkers, New York; and MGM Northfield Park in Northfield Park, Ohio.
MGM China. MGM China consists of MGM Macau and MGM Cotai.
The Company’s operations related to investments in unconsolidated affiliates and certain other corporate operations and management services have not been identified as separate reportable segments; therefore, these operations are included in “Corporate and other” in the following segment disclosures to reconcile to consolidated results.
Adjusted Property EBITDAR is the Company’s reportable segment GAAP measure, which management utilizes as the primary profit measure for its reportable segments and underlying operating segments. Adjusted Property EBITDAR is a measure defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, gain on REIT transactions, net, restructuring costs (which represents costs related to severance, accelerated stock compensation expense, and consulting fees directly related to the operating model component of the MGM 2020 Plan), rent expense associated with triple-net operating and ground leases, income from unconsolidated affiliates related to investments in real estate ventures, and property transactions, net, and also excludes gain on consolidation of CityCenter, net, gain related to CityCenter’s sale of Harmon land recorded within income from unconsolidated affiliates, and corporate expense (which includes CEO transition expense and October 1 litigation settlement) and stock compensation expense, which are not allocated to each operating segment, and rent expense related to the master lease with MGP that eliminates in consolidation.
The following tables present the Company’s segment information:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Net revenue | |||||||||||||||||||||||
| Las Vegas Strip Resorts | |||||||||||||||||||||||
| Casino | $ | 422,541 | $ | 189,358 | $ | 1,008,108 | $ | 527,059 | |||||||||||||||
| Rooms | 403,010 | 137,869 | 846,053 | 526,838 | |||||||||||||||||||
| Food and beverage | 308,522 | 81,429 | 614,572 | 391,218 | |||||||||||||||||||
| Entertainment, retail and other | 246,894 | 72,762 | 461,766 | 320,920 | |||||||||||||||||||
| 1,380,967 | 481,418 | 2,930,499 | 1,766,035 | ||||||||||||||||||||
| Regional Operations | |||||||||||||||||||||||
| Casino | 719,630 | 464,789 | 2,024,149 | 1,078,596 | |||||||||||||||||||
| Rooms | 70,766 | 34,782 | 160,269 | 94,842 | |||||||||||||||||||
| Food and beverage | 92,148 | 38,646 | 211,661 | 138,052 | |||||||||||||||||||
| Entertainment, retail and other | 42,579 | 18,609 | 96,677 | 60,260 | |||||||||||||||||||
| 925,123 | 556,826 | 2,492,756 | 1,371,750 | ||||||||||||||||||||
| MGM China | |||||||||||||||||||||||
| Casino | 252,445 | 35,297 | 784,984 | 298,995 | |||||||||||||||||||
| Rooms | 16,683 | 2,800 | 47,585 | 19,344 | |||||||||||||||||||
| Food and beverage | 15,808 | 6,240 | 50,323 | 23,451 | |||||||||||||||||||
| Entertainment, retail and other | 4,123 | 2,530 | 13,152 | 10,162 | |||||||||||||||||||
| 289,059 | 46,867 | 896,044 | 351,952 | ||||||||||||||||||||
| Reportable segment net revenues | 2,595,149 | 1,085,111 | 6,319,299 | 3,489,737 | |||||||||||||||||||
| Corporate and other | 112,390 | 40,809 | 303,949 | 178,809 | |||||||||||||||||||
| $ | 2,707,539 | $ | 1,125,920 | $ | 6,623,248 | $ | 3,668,546 | ||||||||||||||||
| Adjusted Property EBITDAR | |||||||||||||||||||||||
| Las Vegas Strip Resorts | $ | 534,548 | $ | 15,125 | $ | 1,039,472 | $ | 178,277 | |||||||||||||||
| Regional Operations | 348,234 | 145,734 | 908,564 | 185,369 | |||||||||||||||||||
| MGM China | 6,996 | (96,446) | 20,352 | (234,724) | |||||||||||||||||||
| Reportable segment Adjusted Property EBITDAR | 889,778 | 64,413 | 1,968,388 | 128,922 | |||||||||||||||||||
| Other operating income (expense) | |||||||||||||||||||||||
| Corporate and other, net | (124,745) | (113,190) | (368,713) | (374,769) |
| Preopening and start-up expenses | (1,547) | (11) | (1,642) | (51) | |||||||||||||||||||
| Property transactions, net | (3,677) | (4,116) | (842) | (85,440) | |||||||||||||||||||
| Depreciation and amortization | (279,403) | (294,363) | (853,579) | (911,859) | |||||||||||||||||||
| Gain on REIT transactions, net | — | — | — | 1,491,945 | |||||||||||||||||||
| Gain on consolidation of CityCenter, net | 1,562,329 | — | 1,562,329 | — | |||||||||||||||||||
| CEO transition expense | — | — | — | (44,401) | |||||||||||||||||||
| October 1 litigation settlement | — | — | — | (49,000) | |||||||||||||||||||
| Restructuring | — | — | — | (19,882) | |||||||||||||||||||
| Triple-net operating lease and ground lease rent expense | (191,622) | (189,602) | (570,851) | (521,087) | |||||||||||||||||||
| Gain related to sale of Harmon land - unconsolidated affiliate | — | — | 49,755 | — | |||||||||||||||||||
| Income from unconsolidated affiliates related to real estate ventures | 41,669 | 41,687 | 125,007 | 106,756 | |||||||||||||||||||
| Operating income (loss) | 1,892,782 | (495,182) | 1,909,852 | (278,866) | |||||||||||||||||||
| Non-operating income (expense) | |||||||||||||||||||||||
| Interest expense, net of amounts capitalized | (200,049) | (173,808) | (598,116) | (487,701) | |||||||||||||||||||
| Non-operating items from unconsolidated affiliates | (23,421) | (23,604) | (67,473) | (79,986) | |||||||||||||||||||
| Other, net | (49,241) | 13,889 | 70,302 | (102,054) | |||||||||||||||||||
| (272,711) | (183,523) | (595,287) | (669,741) | ||||||||||||||||||||
| Income (loss) before income taxes | 1,620,071 | (678,705) | 1,314,565 | (948,607) | |||||||||||||||||||
| Benefit (provision) for income taxes | (282,135) | 76,734 | (222,263) | 84,668 | |||||||||||||||||||
| Net income (loss) | 1,337,936 | (601,971) | 1,092,302 | (863,939) | |||||||||||||||||||
| Less: Net loss attributable to noncontrolling interests | 12,497 | 67,240 | 31,055 | 278,820 | |||||||||||||||||||
| Net income (loss) attributable to MGM Resorts International | $ | 1,350,433 | $ | (534,731) | $ | 1,123,357 | $ | (585,119) |
NOTE 13 — RELATED PARTY TRANSACTIONS
MGP
As further described in Note 1, pursuant to the master lease with MGP, the Company leases the real estate assets of The Mirage, Luxor, New York-New York, Park MGM, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata, Empire City, MGM National Harbor and MGM Northfield Park from MGP.
The annual rent payments under the MGP master lease for the sixth lease year, which commenced on April 1, 2021, increased to $843 million from $828 million, as a result of the fifth 2.0% fixed annual rent escalator that went into effect on April 1, 2021.
In March 2021, the Company delivered a notice of redemption covering approximately 37 million Operating Partnership units that it held which was satisfied with aggregate cash proceeds of approximately $1.2 billion. Refer to Note 11 for further discussion of such redemption.
In October 2021, MGP acquired the real estate assets of MGM Springfield from the Company for $400 million of cash consideration. MGM Springfield was added to the master lease between the Company and MGP. Following the closing of the transaction, the annual rent payment to MGP increased by $30 million, $27 million of which will be fixed and contractually grow at 2% per year with escalators subject to the tenant meeting an adjusted net revenue to rent ratio. Final regulatory approvals, which were not necessary for the transaction to close, are expected to be received within nine to twelve months following the close of the transaction. Until final regulatory approvals are obtained, the parties will be subject to a trust agreement, which provides for the property to go into a trust (or, at the Company’s option, be returned to the Company) during the interim period in the event that the regulator finds reasonable cause to believe that MGP may not be found suitable. The property will then remain in trust until a final determination regarding MGP’s suitability is made.
All intercompany transactions, including transactions under the MGP master lease, have been eliminated in the Company’s consolidation of MGP. The public ownership of MGP’s Class A shares is recognized as noncontrolling interests in the Company’s consolidated financial statements.
As further described in Note 1, in August 2021, the Company entered into an agreement with VICI and MGP whereby VICI will acquire MGP in a stock-for-stock transaction. Pursuant to the agreement, MGP Class A shareholders will receive 1.366 shares of newly issued VICI stock in exchange for each Class A share of MGP and the Company will receive 1.366 VICI OP units in exchange for each Operating Partnership unit that the Company holds. The fixed exchange ratio represents an agreed upon price of $43 per share of MGP Class A share to the five-day volume weighted average price of VICI stock as of the close of business on July 30, 2021. In connection with the exchange, VICI OP will redeem the majority of the Company’s VICI OP units for cash consideration of $4.4 billion, with the Company retaining an approximate $370 million ownership interest in VICI OP (based upon the close price of VICI stock as of August 3, 2021). MGP’s Class B share that is held by the Company will be cancelled. As part of the transaction, the Company will enter into an amended and restated master lease with VICI. The transaction is expected to close in the first half of 2022, subject to customary closing conditions, regulatory approvals, and approval by VICI stockholders (which was obtained on October 29, 2021).
Bellagio BREIT Venture
The Company has a 5% ownership interest in the Bellagio BREIT Venture, which owns the real estate assets of Bellagio and leases such assets to a subsidiary of the Company pursuant to a lease agreement. Refer to Note 8 for further information related to the Bellagio lease.
MGP BREIT Venture
MGP has a 50.1% ownership interest in the MGP BREIT Venture, which owns the real estate assets of Mandalay Bay and MGM Grand Las Vegas and leases such assets to a subsidiary of the Company pursuant to a lease agreement. Refer to Note 8 for further information related to the Mandalay Bay and MGM Grand Las Vegas lease.
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