Hard Rock International, the legendary hospitality and entertainment company, announced today that it has reached an agreement with MGM Resorts International to purchase the operations of The Mirage Hotel and Casino in Las Vegas, subject to regulatory approvals and other customary closing conditions.
Hard Rock wants to develop a distinctive Guitar-shaped hotel on the famous Las Vegas Strip as a result of the acquisition.
HRI will pay $1.075 billion in cash for The Mirage Hotel and Casino’s operating assets, subject to usual working capital adjustments. For the real estate site of The Mirage, the legendary hotel and entertainment brand will enter into a long-term leasing deal with VICI Properties Inc.
“We are honoured to welcome The Mirage’s 3,500 team members to the Hard Rock family,” said Jim Allen, Chairman of Hard Rock International. “When complete, Hard Rock Las Vegas will be a fully integrated resort welcoming meetings, groups, tourists and casino guests from around the world to its nearly 80 acre center-Strip location.”
Hard Rock International had no previous ties to the Hard Rock Hotel & Casino in Las Vegas prior to 2020. In May 2020, HRI obtained the license and naming rights for Hard Rock Hotel & Casino Las Vegas, vowing to bring the renowned brand to the Las Vegas Strip when the time was perfect.
“This transaction is a significant milestone for MGM Resorts, and for Las Vegas,” said Bill Hornbuckle, CEO & President, MGM Resorts International. “As part of the team that opened The Mirage in 1989, I know firsthand how special it is, and what a great opportunity it presents to the Hard Rock team. I want to thank all of our Mirage employees who have consistently delivered world-class gaming and entertainment experiences to our guests for more than three decades.”
“This announcement marks the culmination of a series of transformational transactions for MGM Resorts during the last several years,” said Paul Salem, Chairman of the Board of Directors, MGM Resorts International. “The monetization of our entire real property portfolio, together with the addition of CityCenter and our agreement to acquire The Cosmopolitan of Las Vegas, will position the Company with a fortress balance sheet, premier portfolio, and significant financial resources to pursue our strategic objectives.”
The Mirage reported $154 million in Adjusted Property EBITDAR for the year ended December 31, 2019. MGM Resorts’ master lease, which now covers The Mirage, will be altered at the closure of the merger to cut the yearly rent by $90 million. After taxes and expected expenses, the Company expects net cash proceeds to be around $815 million.
“This is a fantastic outcome for the Company, as we are able to re-prioritize future capital expenditures toward opportunities that will enhance the customer experience at our other locations in Las Vegas,” said Jonathan Halkyard, CFO & Treasurer, MGM Resorts International. “We appreciate VICI, as the real estate owner of The Mirage once its acquisition of MGM Growth Properties closes, working constructively with Hard Rock to facilitate a new lease agreement.”
Halkyard concluded, “As it relates to use of proceeds, we will remain disciplined allocators of our capital to maximize shareholder value. This consists of maintaining a strong balance sheet, returning cash to shareholders, and pursuing targeted growth opportunities that advance our vision to be the world’s premier gaming entertainment company.”
The Mirage first opened its doors in 1989, and MGM Resorts bought it in 2000. The landmark hotel, located in the middle of the Las Vegas Strip, is famous for its 90-foot Strip-side volcano and diverse entertainment options.
MGM Resorts will retain The Mirage name and brand, licensing it to Hard Rock royalty-free for a maximum of three years while it finalizes its plans to rebrand the hotel, according to the terms of the arrangement.