MGM Resorts International is working to sell its MGM Grand property on the Strip in the same way it moved its flagship Bellagio resort.
The company's real estate sale of Bellagio was the first of what could be several similar transactions to execute the company's "asset-light" strategy to grow the company, invest in new opportunities and give more money to investors, the company's executives said Wednesday.
MGM Chairman and CEO Jim Murren said in a conference call with investors announcing third-quarter earnings as a similar property sale for the MGM Grand is likely to be announced before the end of the year.
Other similar deals involving Aria, Vdara, MGM Springfield in Massachusetts and even the company's associated MGM Growth Properties real estate investment are being considered, using $ 4.2 billion sale of Bellagio property Oct. 1
According to the Bel lagio deal, MGM has a 5 percent stake in the property, will pay $ 245 million annually in rent and will continue to maintain and operate the resort.
Murren discussed Bellagio sales as well as $ 825 million sale of Circus Circus to TI owner Phil Ruffin in Wednesday's call.
& # 39; Blueprint for the future & # 39;
"These transactions were important steps, but by no means the end of our journey," Murren said. “The Bellagio real estate transaction represents more to us than a smart financial deal. It provides a likely blueprint for the future. In fact, a process to make money on MGM Grand Las Vegas-related properties is well underway, and we expect to share more of it with you before the end of this year. "
The sale was an important part of MGM's" asset-light "strategy to focus on the company's future.
" For MGM, asset-light means separating ownership of capital-intensive, lower return assets and recycling that capital into high returns. (return on investment), "Murren said." The recently announced sale of Bellagio's property to Blackstone and Circus Circus to Mr. Ruffin are important milestones for that purpose. "
Murren said Blackstone was not the only real estate company that MGM spoke to
"The web was quite wide and it zeroed in to half a dozen or so extremely well-known, very sophisticated, deep-pocketed property owners," he said, "but we concluded that the best course of action was to focus on Blackstone to try to get the most precise execution, and I think we did. ”
Focus on Sports Betting, Japan
Savings from implementing MGM's strategy are expected to be dedicated to strengthening the company's nationwide rollout of sports betting and focus on developing an integrated resort in Osaka, Japan.
Earlier this week, MGM announced a new partnership with Yahoo Sports to help expand sports betting nationwide. The company already has an agreement with Buffalo Wild Wings in a sports partnership.
While the execution of the sale of Bellagio and Circus Circus is an outline for MGM's future, it also put a plus in the company's earnings in the third quarter.  The company reported a loss of $ 37.1 million, $ 0.10 per share, on revenue of $ 3.314 billion in the quarter ended September 30. The bulk of the loss is attributed to a one-time $ 219 million non-cash contribution from the sale of Circus Circus, the 5-acre Adventuredome theme park, a 10-acre parking lot and a 37-acre festival site in front of Sahara Avenue and Las Vegas Boulevard to Ruffin.
Revenue was 9.4 percent higher than $ 3.029 billion generated in the third quarter of 2018. In that quarter, the company reported net income of $ 142.9 million, 26 cents per share.
Murren called the quarterly results "solid" and in line with the company's estimates, although they did not live up to analysts' expectations. A survey of 13 analysts on average projected earnings of 29 cents per share. Without impairment, MGM would have produced 26 cents per share. And 15 analysts projected an average revenue of $ 3.33 billion, compared to $ 3.314 billion collected.
Murren: Future is bright
Murren said that the economic outlook is bright for MGM in Las Vegas with a robust conference calendar for the remainder of the fourth quarter into 2020, which will include the massive ConExpo trade show selection -Con / Agg once every three years, as well as the city hosting the National Football League Draft in April.
Entertainment offers should also fill MGM arenas with Lady Gaga and Aerosmith performing, the new Cirque du Soleil “RUN” show starting at Luxor and the Vegas Golden Knights for a good NHL season at MGM-owned T-Mobile Arena .
One of the few serious factors was the poor performance of baccarat in the casino. The company reported a 3 percent drop in gaming revenue year-on-year and a 11 percent decline in table game winnings, driven primarily by a decline in the Baccarat game in the East.
MGM shares traded on the New York Stock Exchange Wednesday closed up 10 cents, 0.3 percent, trading just below the daily average. After hours, stocks fell by 3 cents, 0.1 percent, to close at $ 28.60 a share.
Contact Richard N. Velotta at email@example.com or 702-477-3893. Follow @RickVelotta on Twitter.