Market Overview

Gaming Stocks Pop After MGM Hires REIT Advisor

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Gaming Stocks Pop After MGM Hires REIT Advisor

Shares of casino operators are surging today after MGM Resorts International (NYSE: MGM) announced the release of an investor presentation in connection with the company’s upcoming annual shareholder meeting in May. MGM’s press release included language suggesting that it is seriously considering a potential real estate investment trust (REIT) conversion, a topic of heated debate over the past month.

Evercore Advising

Many investors believe that a REIT conversion would be a positive catalyst for MGM’s stock, and the market has shown a positive reaction to the news that, as of this morning, MGM management seems to be more open to the idea than it has been in recent weeks.

This morning’s press release included the following announcement: “The Company also announced that Evercore Group L.L.C has been added as an independent advisor to its team if existing advisors to assist MGM and its Board of Directors in its continuous process of actively evaluating all strategic initiatives for the Company, including a potential REIT conversion.”

Related Link: Why Are Casino Companies Exploring Opco/Propco Restructuring?

Market Reacts

The market seems to like the explicit mention of a REIT conversion in MGM’s press release. Shares of MGM’s stock, as well as the stocks of major casino operators Las Vegas Sands Corp (NYSE: LVS), Wynn Resorts Ltd (NASDAQ: WYNN), and Melco Crown Entertainment Ltd (NASDAQ: MPEL), are all trading up more than 2.0 percent on Monday morning.

Land And Buildings’ influence

Today’s announcement of the addition of Evercore to MGM’s advisory team is likely a direct response to pressure from activist hedge fund Land and Buildings. Earlier this month, Land and Buildings, which has been an outspoken advocate of REIT conversion, wrote a letter to MGM urging them to hire an independent financial advisor to look into such a conversion.

Disclosure: the author owns shares of Melco Crown Entertainment.

Posted-In: casino stocks gaming stocks MGM REITNews Events Movers Best of Benzinga

 

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