MGM growth properties grow

By Charlotte Lee Updated
Massachusetts’ casinos bounce back but recovery laboured

Count MGM Growth Properties among the companies not allowing the coronavirus pandemic to stand in the way of dividend growth.

The gaming real estate investment trust said on Friday that it is increasing its quarterly by half a cent to 47.5 cents a share, or $1.90 per year.

Based on the Friday close of $23.21, MGP would yield 8.18 per cent, up from 8.10 per cent, when account for the new higher payout.

This is the 10th dividend increase since MGP’s initial public offering in April 2016.

The dividend will be payable on April 15, 2020 to shareholders of record as of the close of business on March 31, 2020.

Although MGP’s dividend hike is of the modest variety, it comes at a time when Wall Street is growing pensive about companies’ access to capital should be coronavirus pandemic cause a recession.

Against the coronavirus backdrop, prevailing sentiment in the investment community is a preference for firms with ample cash on their balance sheets and strong credit ratings.

This week, MGP’s primary tenant – MGM Resorts International – said it’s scrapping a $1.25 billion share repurchase scheme, citing adverse market conditions.

As the coronavirus outbreak has taken hold in the United States, gaming REITs, such as MGP, are following their operator tenants to the downside.

For example, shares of MGP are lower by 31.15 per cent this month and that’s with the benefit of Friday’s 20.32 per cent gain, one accrued on more than triple the average daily volume.

That’s still a dismal month-to-date performance, but one that’s far less bad than MGM’s 54.13 per cent decline since March 1.

MGP’s dividend increase is useful for the cash-generating efforts of the former parent company because MGM owns a 55 per cent stake in the real estate company.

MGP generates about 40 per cent of its lease income from the Las Vegas Strip where it owns the property assets of Excalibur, Luxor, Mandalay Bay, MGM Grand, Mirage and New York New York.

Those properties, among other Sin City venues, have been beset by cancellations, closed venues and postponement since the coronavirus hit the United States.

MGP also owns the real estate of Empire City in Yonkers, New York, MGM Springfield in Massachusetts and MGM Northfield Park in Ohio, all of which have been temporarily shuttered due to the coronavirus pandemic.

However, due to the nature of gaming REITs’ business models, temporary closures should have minimal to no effects on the companies’ revenue because tenants must pay their leases regardless of the broader economic environment.

At the end of last year, MGP had $100.7 million in free cash.

The company paid $533.47 million in dividends in 2019.

MGM sued over data breach

US casino operator MGM Resorts International has been sued over a data breach last year, which the company confirmed earlier this week and which reportedly involved details of more than 10.6 million hotel guests.

CRN reports that the lawsuit, filed by Morgan & Morgan, whose lawyer John Yanchunis has also represented some Yahoo users in a breach of 3 billion accounts between 2013 and 2016.

MGM Resorts said on Thursday that last summer it “discovered unauthorised access to a cloud server that contained a limited amount of information for certain previous guests.”

The majority of information exposed related to the names of guests and their phone numbers, a company spokesman had said, without confirming the exact number of guests affected.

Technology website ZDNet reported that the personal details of more than 10.6 million guests who stayed at MGM Resorts hotels were published on a hacking forum this week.

The details in the leaked files reportedly included information on celebrities, chief executives of technology companies, reporters and government officials.

Morgan & Morgan filed its lawsuit last Friday as a “complaint of damages” and “injunctive relief”, according to the filing at the US District Court for the District of Nevada.

Yanchunis has previously been associated with several other data breach lawsuits, including against credit reporting agency Equifax over its 2017 breach of nearly 150 million Americans and against Facebook and political consulting firm Cambridge Analytica for obtaining information belonging to millions of Facebook users without permission.

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