Analysts believe MGM Growth Properties LLC (MGP) shares will continue to increase in value due to ‘aggressive growth strategy’ and steady ‘rent structure’. MGP, a real estate investment trust focused on the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts, owns the real estate of ten destination resorts operated by MGM Resorts International, with a property level earnings before interest, taxes, depreciation and amortization (EBITDA) of roughly US$1.01 billion (MOP8.11 billion), according to Deutsche Bank market research. MGM Resorts International – owner of 73 per cent of MGP – owns and operates MGM Macau in a joint venture with Pansy Ho, managing director of Sociedade de Turismo e Diversões de Macau, SA (STDM) and daughter of Macau magnate Stanley Ho. According to the analysts, MGP shares will garner greater appreciation as ‘the simplicity and healthy tenant coverage of the rental streams should reduce volatility, surprises, and risks’; MGP’s ‘aggressive growth strategy’, the group support by Las Vegas Strip ‘acreage comparisons’; a greater near term transaction accretion due to ‘lower relative current financial leverage and attractive costs of funds’; and an ‘attractive dividend yield’ providing ‘greater comfort in a turbulent domestic consumer market environment’. MGP raised US$1.05 billion in its U.S. initial public offering in April this year, registering at the New York Stock Exchange and pricing 57.5 million shares at US$21 per share, using the proceeds to repay transferred debt liabilities, according to Deutsche Bank. As of May 13, MGP’s shares closed at US$22.74, with a target price of US$26 analysts predicted.
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