An all-cash deal
MGM Resorts International is selling the operations of the Gold Strike Tunica casino in Mississippi. The casino company announced the $450m cash sale on Tuesday to Cherokee Nation Entertainment Gaming Holdings, which is a subsidiary of Cherokee Nation Businesses.
due to close by Q1 next year
The transaction is due to close by Q1 next year. VICI Properties, which is a real estate investment trust (REIT) that owns the Gold Strike Tunica real estate, will work with Cherokee National Entertainment on a new lease agreement. Meanwhile, the annual rental amount MGM pays to VICI through its own master lease agreement will drop by $40m upon closure of the sale.
The deal sees the Cherokee Nation expanding its reach outside of reservation facilities and into commercial gaming opportunities, while MGM continues to expand its balance sheet at the same time as eyeing other projects.
Expanding its reach
Commenting on the purchase, Cherokee Nation Businesses chief executive officer Chuck Garrett said: “This acquisition will enable us to better serve our mission of growing the Cherokee Nation’s economy, while also having a significant positive impact on the local economies we serve.”
He also outlined how the deal will help the tribe execute on its strategic plan to expand outside of the Cherokee Nation Reservation. The casino contains 50,000 square feet of gaming space, as well as over 1,100 hotel rooms. It lies approximately 20 miles from Memphis.
In a press release, MGM Resorts CEO Bill Hornbuckle labeled the 32-story casino a wonderful property with a bright future. Suggesting reasons for the sale, he said: “We decided to narrow our focus in Mississippi to a single resort, Beau Rivage.”
Two different approaches
MGM Resorts has adopted a more asset-light approach to its business in recent times, preferring to enter lease agreements instead. As well as agreeing to sell the Gold Strike Tunica, it has announced the $1.07bn sale of the Mirage in Las Vegas, along with its Aria and Vdara resorts.
also has nine other casinos
Meanwhile, the Cherokee Nation is hoping to expand its gaming sphere. As well as already owning and operating the Hard Rock Hotel & Casino Tulsa, it also has nine other casinos. Other aspects of the operation include resort hotels, a horse racing track, golf courses, and various types of retail operations. In total, Cherokee Nation and its various businesses employ 11,000 people.