Land And Buildings Investment Management Expects MGM Growth Properties IPO To Be Priced $19.50

Land and Buildings Investment Management, LLC, which is a major shareholder of MGM Resorts International MGM, expects that MGM Growth Properties MGP IPO to be priced at $19.50 a share. According to the company, the price range is $18-$21 with the midpoint $19.50. The company expects gross proceeds of approximately $1 billion at mid-point.

The major shareholder, Land and Buildings Investment, has written a letter to the shareholders. Its founder and CIO, Jonathan Litt, said "From a strictly financial perspective, we believe the MGM REIT is superior to its peer Gaming and Leisure Properties GLPI." He said "MGM REIT rent is guaranteed by MGM Resorts, and as such the EBITDAR rent coverage ratio is vastly superior at 3.7x versus GLPI at 1.8x. Further, MGM REIT offers a higher dividend yield of 7.3% versus 7.1% for GLPI."

Litt further stated "On an EBITDA multiple basis, MGM REIT will trade around 13x, in-line with GLPI. Debt levels of both companies are comparable at approximately 6x debt to EBITDA. Rent growth is likely superior to GLPI as MGM REIT is guaranteed a 2% rent increase for the first six years while GLPI's 2% rent increases are subject to achieving a minimum level of rent coverage."

However, Land and Buildings founder said that MGM REIT is inferior to GLPI based on a corporate governance perspective.