MGM Resorts Reportedly Looking to Sell Two Properties

MGM Resorts International is currently exploring the potential sale of its casino operations situated at Ohio’s Northfield Park and in Springfield, Massachusetts. Individuals familiar with the situation confirmed the possibility, on condition of anonymity, to media outlet Bloomberg.

The company is collaborating with financial advisers on this matter. However, it's worth noting that these discussions are in their preliminary stages and may not lead to any definitive action.

Management at MGM has expressed frustration over the company's share price, which has seen minimal growth of less than 5% over the past two years, despite notable increases in sales and profits.

As the largest operator of casinos on the famed Las Vegas Strip, MGM has been actively seeking to expand its presence in both the domestic and international online gambling markets.

MGM’s Casino Portfolio and Operations

Located approximately 20 miles southeast of Cleveland, MGM Northfield Park combines a horse track with a casino facility. MGM began managing the property in 2019 after taking over from the former Hard Rock establishment.

In Springfield, Massachusetts, MGM secured a license to operate following the state's authorization of casino gambling. However, despite opening its doors in 2018, the Springfield casino has fallen short of expectations.

MGM's CEO, Bill Hornbuckle, acknowledged the miscalculation in the initial valuation of the Springfield market during discussions with local officials last year, emphasizing that the property's performance did not meet anticipated levels.

Key Facts About MGM’s Regional Properties:

• MGM Northfield Park integrates horse racing with gaming operations.

• Springfield casino underperformed compared to initial projections.

• Management continues reassessing regional market dynamics.

Financial Context and Market Performance

• MGM Springfield generated $278 million in gambling revenue in 2023 but did not meet projections.

• The real estate for both casinos is owned by Vici Properties Inc., a New York-based REIT.

• Vici acquired MGM Growth Properties, MGM's REIT affiliate, nearly two years ago.

However, a representative from Vici declined to comment regarding the ongoing sale talks.

Analyst Ratings and Market Outlook

Several equities research analysts have released reports on MGM shares:

• JPMorgan Chase & Co. raised their price target from $52.00 to $54.00, assigning an "overweight" rating.

• JMP Securities reiterated a "market outperform" rating and set a $57.00 target price.

• Analysts cite MGM’s asset optimization and global expansion strategy as key strengths.

Investor Insights:

• Analysts remain cautiously optimistic despite limited stock movement.

• Strong online growth offsets slower land-based performance.

• Strategic asset sales may improve valuation and liquidity.

Looking Ahead

As MGM continues evaluating its property portfolio and financial strategy, the potential sale of these casino operations may mark a pivotal shift in the company’s broader restructuring and market focus.