MGM’s REIT Gamble Could Kickstart New Casino Trend
MGM Resorts' recent REIT announcement could be the start of a new strategic trend within the casino industry, Societe Generale head of US strategy Larry McDonald says.
"Companies are under pressure to do something," McDonald says of the pressure to combat declining revenues. "Once they see a company go, the other companies typically follow. That's the way we've seen inversions work over the last three or four years from sector to sector."
In 2014, REIT IPOs accounted for 72% of all real estate IPOs, an Ernst & Young report said, a number that's tripled since 2006.
For MGM, the REIT will function as a yield vehicle for investors so that the company can focus on debt and growth. Across the industry, gaming companies Penn National, Boyd, Pinnacle and Caesars have either completed or explored REIT spinoffs. [CNBC]
