LAS VEGAS—MGM Resorts International said Thursday it would create a REIT and contribute 10 of its casino resorts to the new entity, which it would then lease back. To be known as MGM Growth Properties LLC, the REIT will trade separately on the New York Stock Exchange and will assume about $4 billion of MGM Resorts debt that's expected to be refinanced with proceeds from debt and equity offerings.

Included in the MGP portfolio will be seven Las Vegas properties—Mandalay Bay, the Mirage, Monte Carlo, New York-New York, Luxor, Excalibur and the Park—along with two in Mississippi and one in Detroit. Not included will be MGM Resorts' Bellagio and MGM Grand Las Vegas flagship properties.

MGM Resorts will lease the MGP properties under a long-term, triple-net master lease with an initial 10-year term and four five-year extensions at its option, and will also continue to manage and operate them. The master lease is expected to provide MGP with a right of first offer with respect to MGM Resorts' development properties in Maryland and Massachusetts.

“This transaction provides MGM Resorts' shareholders numerous strategic and financial benefits, including delevering our balance sheet and enhancing long-term shareholder value,” says Jim Murren, chairman and CEO of MGM Resorts. “MGM Resorts is creating a new growth platform to allow it to more effectively execute its strategic initiatives, including portfolio diversification.” 

The move follows months of pressure on MGM Resorts' board by activist investor Jonathan Litt, founder and CIO of Land and Buildings, who has pushed for a REIT conversion. In his most recent letter to MGM Resorts shareholders last month, Litt called on the company to sell its 50% stake in the CityCenter project in Las Vegas, and to either bring in joint-venture partners on its three development projects in the US and Macau “or delay projects until the balance sheet is delveraged.” A Land and Buildings spokesman did not respond to GlobeSt.com's requests for additional comment by early Thursday afternoon.