| Item 1.01 | Entry into a Material Definitive Agreement. |
On January 29, 2019, MGP Lessor, LLC (the “Landlord”), a Delaware limited liability company and a subsidiary of MGM Growth Properties LLC (the “Company”), entered into a Third Amendment (the “Amendment”) to the Master Lease Agreement, dated as of April 25, 2016 between MGM Lessee, LLC (the “Tenant”), a Delaware limited liability company and a subsidiary of MGM Resorts International (“MGM Resorts”), (as amended, the “Master Lease”) with respect to the developed real property associated with the Empire City Casino (“Empire City”) in Yonkers, New York. The Amendment provides that, among other things, the initial rent under the Master Lease will be increased by $50 million, 90% of which shall be allocated to the Base Rent (as defined in the Master Lease) and 10% of which shall be allocated to the Percentage Rent (as defined in the Master Lease). As a result of the foregoing, following the closing of the acquisition, the rent under the Master Lease will be $820.3 million, with Base Rent of $740.8 million and Percentage Rent of $79.5 million. In addition, the Amendment provides the Landlord with a right of first offer with respect to certain undeveloped land adjacent to the property to the extent MGM Resorts or any of its affiliates develops additional gaming facilities and chooses to sell or transfer the property in the future. This description of the Amendment is qualified in its entirety by reference to the full text of the Amendment attached hereto as Exhibit 10.1.
Item 3.02 Unregistered Sale of Equity Securities.
On January 29, 2019, the Company, MGM Resorts, MGM Growth Properties Operating Partnership LP (the “Operating Partnership”), Landlord and Tenant, closed the transactions contemplated by the previously disclosed master transaction agreement entered into on May 28, 2018 (the “Master Transaction Agreement”). Pursuant to the terms of the Master Transaction Agreement, the Landlord acquired the interests in a newly acquired subsidiary (the “Acquisition”) that holds the developed real estate assets related to Empire City from a subsidiary of MGM Resorts. In connection with the Acquisition, the Company issued 12,901,634 Operating Partnership units, which amount was determined based on a price per unit of $29.38 (the last closing price of the Class A common shares prior to announcement). The Operating Partnership units are exchangeable into the Company’s Class A shares on aone-to-one basis or cash at the fair value of a Class A share. The determination of settlement method is at the option of the Company’s independent conflicts committee.
The Operating Partnership units have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities law and may not be offered or sold in the United States or to any U.S. persons absent registration under the Securities Act, or pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Company offered and sold the Shares to MGM Resorts in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder based on MGM Resort’s status as an accredited investor, as defined in the Securities Act. The Company has apre-existing relationship with MGM Resorts.
Item 9.01 Financial Statements and Exhibits.
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