MGM Growth Properties Operating Partnership (MGP) 10-Q 2021 Q3 Quarterly report

UNITED STATES

SECURITIES & EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to           

Commission File No. 001-37733 (MGM Growth Properties LLC)

Commission File No. 333-215571 (MGM Growth Properties Operating Properties LP)

MGM Growth Properties LLC

MGM Growth Properties Operating Partnership LP

(Exact name of registrant as specified in its charter)

Delaware	(MGM Growth Properties LLC)	47-5513237
Delaware	(MGM Growth Properties Operating Partnership LP)	81-1162318
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1980 Festival Plaza Drive, Suite #750, Las Vegas, NV 89135

(Address of principal executive offices)

(702) 669-1480

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Shares, no par value	MGP	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    

MGM Growth Properties LLC     Yes  ☒    No  ☐

MGM Growth Properties Operating Partnership LP    Yes ☐    No  ☒

*As a voluntary filer not subject to reporting requirements, MGM Growth Properties Operating Partnership LP has filed all reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months that would have been required had it been subject to such requirements.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    

MGM Growth Properties LLC     Yes  ☒   No  ☐

MGM Growth Properties Operating Partnership LP     Yes  ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

MGM Growth Properties LLC

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ___

MGM Growth Properties Operating Partnership LP

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ___

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

MGM Growth Properties LLC     Yes ☐ No  ☒

MGM Growth Properties Operating Partnership LP      Yes ☐ No  ☒

As of November 1, 2021, 156,660,834 shares of MGM Growth Properties LLC Class A shares, no par value, and 1 share of MGM Growth Properties LLC Class B share, no par value, were outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2021, of MGM Growth Properties LLC, a Delaware limited liability corporation, and MGM Growth Properties Operating Partnership LP, a Delaware limited partnership. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “MGP” or “the Company” refer to MGM Growth Properties LLC together with its consolidated subsidiaries, including MGM Growth Properties Operating Partnership LP. Unless otherwise indicated or unless the context requires otherwise, all references to the “Operating Partnership” refer to MGM Growth Properties Operating Partnership LP together with its consolidated subsidiaries.

MGP is a real estate investment trust (“REIT”), and the owner of the sole general partner of the Operating Partnership. As of September 30, 2021, MGP owned approximately 58.4% of the Operating Partnership units, each such unit representing limited partnership interests in the Operating Partnership (“Operating Partnership units”). The remaining approximately 41.6% of the Operating Partnership’s units are owned by our parent, MGM Resorts International (“MGM”) and certain of its subsidiaries. As the owner of the sole general partner of the Operating Partnership, MGP has the full, exclusive and complete responsibility for the Operating Partnership’s day-to-day management and control.

We believe combining the quarterly reports on Form 10-Q of MGP and the Operating Partnership into this single report results in the following benefits:

•enhances investors’ understanding of MGP and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

•eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both MGP and the Operating Partnership, which we believe will assist investors in getting all relevant information on their investment in one place rather than having to access and review largely duplicative reports; and

•creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

There are a few differences between MGP and the Operating Partnership, which are reflected in the disclosures in this report. We believe it is important to understand the differences between MGP and the Operating Partnership in the context of how we operate as an interrelated consolidated company. MGP is a REIT, whose only material assets consist of Operating Partnership units and sole beneficial ownership of the general partner of the Operating Partnership. As a result, MGP does not conduct business itself, other than acting as the owner of the sole general partner of the Operating Partnership, but it may from time to time issue additional public equity in the form of Class A shares. The Operating Partnership holds all the assets of the Company. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from certain offerings of Class A shares by MGP, which were contributed to the Operating Partnership in exchange for Operating Partnership units, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s issuance of indebtedness or through the issuance of Operating Partnership units.

The presentation of noncontrolling interest, shareholders’ equity and partners’ capital are the main areas of difference between the condensed consolidated financial statements of MGP and those of the Operating Partnership. The Operating Partnership units held by subsidiaries of MGM are accounted for as partners’ capital in the Operating Partnership’s condensed consolidated financial statements and as noncontrolling interest within equity in MGP’s condensed consolidated financial statements. The Operating Partnership units held by MGP in the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s condensed consolidated financial statements and within Class A shareholders’ equity in MGP’s condensed consolidated financial statements. These differences in the presentations between shareholders’ equity in MGP’s condensed consolidated financial statements and partners’ capital in the Operating Partnership’s condensed consolidated financial statements therefore result from the differences in the equity and limited partnership interests issued at the MGP and Operating Partnership levels, respectively.

To help investors understand the significant differences between MGP and the Operating Partnership, this report presents the condensed consolidated financial statements separately for MGP and the Operating Partnership.

As the sole beneficial owner of MGM Growth Properties OP GP LLC, which is the sole general partner with control of the Operating Partnership, MGP consolidates the Operating Partnership for financial reporting purposes, and it does not have

any assets other than its investment in the Operating Partnership. Therefore, the assets and liabilities of MGP and the Operating Partnership are the same on their respective condensed consolidated financial statements. The separate discussions of MGP and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a condensed consolidated basis and how management operates the Company.

In order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and 18 U.S.C. §1350, this report also includes separate “Item 4. Controls and Procedures” sections and separate Exhibit 31 and 32 certifications for each of the Company and the Operating Partnership.

All other sections of this report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk, are presented together for MGP and the Operating Partnership.

MGM GROWTH PROPERTIES LLC

FORM 10-Q

I N D E X

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	MGM Growth Properties LLC:
	Condensed Consolidated Balance Sheets at September 30, 2021 and December 31, 2020	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and September 30, 2020	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2021 and September 30, 2020	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and September 30, 2020	4
	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2021 and September 30, 2020	5
	MGM Growth Properties Operating Partnership LP:
	Condensed Consolidated Balance Sheets at September 30, 2021 and December 31, 2020	7
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and September 30, 2020	8
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2021 and September 30, 2020	9
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and September 30, 2020	10
	Condensed Consolidated Statements of Partners’ Capital for the Three and Nine Months Ended September 30, 2021 and September 30, 2020	11
	Notes to Condensed Consolidated Financial Statements	13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION	33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits	39
SIGNATURES		41

Part I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

MGM GROWTH PROPERTIES LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

(unaudited)

	September 30, 2021		December 31, 2020
ASSETS
Real estate investments, net	$	8,147,627	$	8,310,737
Lease incentive asset	492,146		507,161
Investment in unconsolidated affiliate	815,399		810,066
Cash and cash equivalents	319,576		626,385
Prepaid expenses and other assets	23,873		25,525
Above market lease, asset	38,686		39,867
Operating lease right-of-use assets	280,988		280,565
Total assets	$	10,118,295	$	10,600,306
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Debt, net	$	4,164,898	$	4,168,959
Due to MGM Resorts International and affiliates	333		316
Accounts payable, accrued expenses and other liabilities	71,507		124,109
Accrued interest	52,007		48,505
Dividend and distribution payable	139,374		136,484
Deferred revenue	204,023		156,760
Deferred income taxes, net	33,298		33,298
Operating lease liabilities	340,270		341,133
Total liabilities	5,005,710		5,009,564
Commitments and contingencies (Note 11)	0		0
Shareholders' equity
Class A shares: no par value, 1,000,000,000 shares authorized, 156,653,604 and 131,459,651 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	—		—
Additional paid-in capital	3,562,123		3,114,331
Accumulated deficit	(507,469)		(422,897)
Accumulated other comprehensive loss	(47,730)		(51,197)
Total Class A shareholders' equity	3,006,924		2,640,237
Noncontrolling interest	2,105,661		2,950,505
Total shareholders' equity	5,112,585		5,590,742
Total liabilities and shareholders' equity	$	10,118,295	$	10,600,306

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

MGM GROWTH PROPERTIES LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues
Rental revenue	$	188,303	$	188,303	$	564,910	$	580,138
Ground lease	6,039		6,039		18,116		18,116
Total Revenues	194,342		194,342		583,026		598,254
Expenses
Depreciation	57,613		58,240		173,322		178,692
Property transactions, net	327		—		1,208		194,990
Ground lease expense	5,920		5,920		17,760		17,760
Acquisition-related expenses	6,287		—		6,565		980
General and administrative	3,895		3,476		11,860		12,089
Total Expenses	74,042		67,636		210,715		404,511
Other income (expense)
Income from unconsolidated affiliate	25,050		25,210		75,808		64,026
Interest income	139		533		537		3,903
Interest expense	(64,225)		(59,974)		(201,412)		(164,549)
Gain (loss) on unhedged interest rate swaps, net	4,411		7,701		33,015		(2,831)
Other	(181)		(36)		(1,103)		(18,817)
	(34,806)		(26,566)		(93,155)		(118,268)
Income before income taxes	85,494		100,140		279,156		75,475
Provision for income taxes	(2,396)		(2,732)		(6,952)		(6,364)
Net income	83,098		97,408		272,204		69,111
Less: Net income attributable to noncontrolling interest	(33,130)		(54,030)		(118,749)		(34,465)
Net income attributable to Class A shareholders	$	49,968	$	43,378	$	153,455	$	34,646
Weighted average Class A shares outstanding
Basic	156,799		131,567		149,037		128,788
Diluted	156,982		131,700		149,234		128,935
Earnings per Class A share
Basic	$	0.32	$	0.34	$	1.03	$	0.27
Diluted	$	0.32	$	0.34	$	1.03	$	0.27

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

MGM GROWTH PROPERTIES LLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	83,098	$	97,408	$	272,204	$	69,111
Unrealized gain (loss) on cash flow hedges	7,966		729		27,369		(101,982)
Comprehensive income (loss)	91,064		98,137		299,573		(32,871)
Less: Comprehensive (income) loss attributable to noncontrolling interests	(36,440)		(54,443)		(131,605)		27,291
Comprehensive income (loss) attributable to Class A shareholders	$	54,624	$	43,694	$	167,968	$	(5,580)

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

MGM GROWTH PROPERTIES LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities
Net income	$	272,204	$	69,111
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	173,322		178,692
Property transactions, net	1,208		194,990
Amortization of financing costs	8,587		7,314
Loss on retirement of debt	—		18,129
Non-cash ground lease, net	778		778
Deemed contributions - tax sharing agreement	6,952		6,364
Straight-line rental revenues, excluding amortization of lease incentive asset	48,396		38,046
Amortization of lease incentive asset	15,015		15,015
Amortization of deferred revenue on non-normal tenant improvements	(1,134)		(1,134)
Amortization of cash flow hedges	16,805		5,784
(Gain) loss on unhedged interest rate swaps, net	(33,015)		2,831
Share-based compensation	2,290		1,996
Income from unconsolidated affiliate	(75,808)		(64,026)
Distributions from unconsolidated affiliate	70,475		58,090
Change in operating assets and liabilities:
Prepaid expenses and other assets	(744)		(4,781)
Due to MGM Resorts International and affiliates	(500)		(499)
Accounts payable, accrued expenses and other liabilities	(11,179)		628
Accrued interest	3,502		7,849
Net cash provided by operating activities	497,154		535,177
Cash flows from investing activities
Proceeds from sale of Mandalay Bay real estate assets, net	—		58,615
Net cash provided by investing activities	—		58,615
Cash flows from financing activities
Net repayments under bank credit facility	(10,000)		(1,603,750)
Proceeds from issuance of bridge loan facility	—		1,304,625
Proceeds from issuance of debt	—		800,000
Deferred financing costs	—		(11,307)
Proceeds from issuance of Class A shares, net	792,852		524,616
Redemption of Operating Partnership units	(1,181,276)		(700,000)
Dividends and distributions paid	(405,539)		(453,778)
Other	—		(1,130)
Net cash used in financing activities	(803,963)		(140,724)
Cash and cash equivalents
Net increase (decrease) for the period	(306,809)		453,068
Balance, beginning of period	626,385		202,101
Balance, end of period	$	319,576	$	655,169
Supplemental cash flow disclosures
Interest paid	$	172,518	$	143,604
Non-cash investing and financing activities
Accrual of dividend and distribution payable to Class A shareholders and Operating Partnership unit holders	$	139,374	$	147,941
Investment in MGP BREIT Venture	$	—	$	802,000
MGP BREIT Venture assumption of bridge loan facility	$	—	$	1,304,625

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

MGM GROWTH PROPERTIES LLC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)

	Class A
	Shares	Par Value		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Class A Shareholders' Equity		Noncontrolling Interest		Total Shareholders' Equity
Balance at June 30, 2021	156,646	$	—	$	3,554,821	$	(475,978)	$	(52,385)	$	3,026,458	$	2,119,659	$	5,146,117
Net income	—	—		—		49,968		—		49,968		33,130		83,098
Issuance of Class A shares	8	—		231		—		(1)		230		53		283
Cash flow hedges	—	—		—		—		4,656		4,656		3,310		7,966
Share-based compensation	—	—		397		—		—		397		283		680
Deemed contribution - tax sharing agreement	—	—		—		—		—		—		2,396		2,396
Dividends and distributions declared ($0.5200 per Class A share)	—	—		—		(81,459)		—		(81,459)		(57,915)		(139,374)
Other	—	—		6,674		—		—		6,674		4,745		11,419
Balance at September 30, 2021	156,654	$	—	$	3,562,123	$	(507,469)	$	(47,730)	$	3,006,924	$	2,105,661	$	5,112,585

	Class A
	Shares	Par Value		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Class A Shareholders' Equity		Noncontrolling Interest		Total Shareholders' Equity
Balance at December 31, 2020	131,460	$	—	$	3,114,331	$	(422,897)	$	(51,197)	$	2,640,237	$	2,950,505	$	5,590,742
Net income	—	—		—		153,455		—		153,455		118,749		272,204
Issuance of Class A shares	25,102	—		660,533		—		(4,172)		656,361		136,491		792,852
Redemption of Operating Partnership units	—	—		(220,627)		—		(6,860)		(227,487)		(953,789)		(1,181,276)
Cash flow hedges	—	—		—		—		14,513		14,513		12,856		27,369
Share-based compensation	—	—		1,269		—		—		1,269		1,021		2,290
Deemed contribution - tax sharing agreement	—	—		—		—		—		—		6,952		6,952
Dividends and distributions declared ($1.5300 per Class A share)	—	—		—		(238,027)		—		(238,027)		(170,402)		(408,429)
Other	92	—		6,617		—		(14)		6,603		3,278		9,881
Balance at September 30, 2021	156,654	$	—	$	3,562,123	$	(507,469)	$	(47,730)	$	3,006,924	$	2,105,661	$	5,112,585

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

MGM GROWTH PROPERTIES LLC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)

	Class A
	Shares	Par Value		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Class A Shareholders' Equity		Noncontrolling Interest		Total Shareholders' Equity
Balance at June 30, 2020	131,455	$	—	$	2,987,682	$	(379,587)	$	(52,899)	$	2,555,196	$	3,114,250	$	5,669,446
Net income*	—	—		—		43,378		—		43,378		45,871		89,249
Reclassification and remeasurements of temporary equity*	—	—		(17,055)		—		—		(17,055)		13,575		(3,480)
Cash flow hedges*	—	—		—		—		316		316		308		624
Share-based compensation*	—	—		277		—		—		277		308		585
Deemed contribution - tax sharing agreement*	—	—		—		—		—		—		2,335		2,335
Dividends and distributions declared ($0.4875 per Class A share)*	—	—		—		(64,085)		—		(64,085)		(71,660)		(135,745)
Other*	—	—		1		—		—		1		1		2
Balance at September 30, 2020	131,455	$	—	$	2,970,905	$	(400,294)	$	(52,583)	$	2,518,028	$	3,104,988	$	5,623,016

(*) Excludes amounts attributable to redeemable noncontrolling interest. See Note 2.

	Class A
	Shares	Par Value		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Class A Shareholders' Equity		Noncontrolling Interest		Total Shareholders' Equity
Balance at December 31, 2019	113,807	$	—	$	2,766,325	$	(244,381)	$	(7,045)	$	2,514,899	$	4,383,113	$	6,898,012
Net income*	—	—		—		34,646		—		34,646		27,865		62,511
Issuance of Class A shares*	17,524	—		443,363		—		(646)		442,717		63,481		506,198
MGP BREIT Venture Transaction*	—	—		8,228		—		59		8,287		55,617		63,904
Partial redemption of temporary equity*	—	—		(15,260)		—		(4,772)		(20,032)		12,500		(7,532)
Reclassification and remeasurements of temporary equity*	—	—		(233,913)		—		—		(233,913)		(1,177,617)		(1,411,530)
Cash flow hedges*	—	—		—		—		(40,226)		(40,226)		(47,799)		(88,025)
Share-based compensation*	—	—		816		—		—		816		933		1,749
Deemed contribution - tax sharing agreement*	—	—		—		—		—		—		5,317		5,317
Dividends and distributions declared ($1.4500 per Class A share)*	—	—		—		(190,559)		—		(190,559)		(216,924)		(407,483)
Other*	124	—		1,346		—		47		1,393		(1,498)		(105)
Balance at September 30, 2020	131,455	$	—	$	2,970,905	$	(400,294)	$	(52,583)	$	2,518,028	$	3,104,988	$	5,623,016

(*) Excludes amounts attributable to redeemable noncontrolling interest. See Note 2.

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

MGM GROWTH PROPERTIES OPERATING PARTNERSHIP LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit amounts)

(unaudited)

	September 30, 2021		December 31, 2020
ASSETS
Real estate investments, net	$	8,147,627	$	8,310,737
Lease incentive asset	492,146		507,161
Investment in unconsolidated affiliate	815,399		810,066
Cash and cash equivalents	319,576		626,385
Prepaid expenses and other assets	23,873		25,525
Above market lease, asset	38,686		39,867
Operating lease right-of-use assets	280,988		280,565
Total assets	$	10,118,295	$	10,600,306
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Debt, net	$	4,164,898	$	4,168,959
Due to MGM Resorts International and affiliates	333		316
Accounts payable, accrued expenses and other liabilities	71,507		124,109
Accrued interest	52,007		48,505
Distribution payable	139,374		136,484
Deferred revenue	204,023		156,760
Deferred income taxes, net	33,298		33,298
Operating lease liabilities	340,270		341,133
Total liabilities	5,005,710		5,009,564
Commitments and contingencies (Note 11)	0		0
Partners’ capital
General partner	—		—
Limited partners: 268,026,361 and 279,966,531 Operating Partnership units issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.	5,112,585		5,590,742
Total partners’ capital	5,112,585		5,590,742
Total liabilities and partners’ capital	$	10,118,295	$	10,600,306

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

MGM GROWTH PROPERTIES OPERATING PARTNERSHIP LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit amounts)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues
Rental revenue	$	188,303	$	188,303	$	564,910	$	580,138
Ground lease	6,039		6,039		18,116		18,116
Total Revenues	194,342		194,342		583,026		598,254
Expenses
Depreciation	57,613		58,240		173,322		178,692
Property transactions, net	327		—		1,208		194,990
Ground lease expense	5,920		5,920		17,760		17,760
Acquisition-related expenses	6,287		—		6,565		980
General and administrative	3,895		3,476		11,860		12,089
Total Expenses	74,042		67,636		210,715		404,511
Other income (expense)
Income from unconsolidated affiliate	25,050		25,210		75,808		64,026
Interest income	139		533		537		3,903
Interest expense	(64,225)		(59,974)		(201,412)		(164,549)
Gain (loss) on unhedged interest rate swaps, net	4,411		7,701		33,015		(2,831)
Other	(181)		(36)		(1,103)		(18,817)
	(34,806)		(26,566)		(93,155)		(118,268)
Income before income taxes	85,494		100,140		279,156		75,475
Provision for income taxes	(2,396)		(2,732)		(6,952)		(6,364)
Net income	$	83,098	$	97,408	$	272,204	$	69,111
Weighted average units outstanding
Basic	268,172		303,580		270,171		315,642
Diluted	268,355		303,713		270,368		315,789
Earnings per unit
Basic	$	0.31	$	0.32	$	1.01	$	0.22
Diluted	$	0.31	$	0.32	$	1.01	$	0.22

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

MGM GROWTH PROPERTIES OPERATING PARTNERSHIP LP

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	83,098	$	97,408	$	272,204	$	69,111
Unrealized gain (loss) on cash flow hedges	7,966		729		27,369		(101,982)
Comprehensive income (loss)	$	91,064	$	98,137	$	299,573	$	(32,871)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MGM GROWTH PROPERTIES OPERATING PARTNERSHIP LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities
Net income	$	272,204	$	69,111
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	173,322		178,692
Property transactions, net	1,208		194,990
Amortization of financing costs	8,587		7,314
Loss on retirement of debt	—		18,129
Non-cash ground lease, net	778		778
Deemed contributions - tax sharing agreement	6,952		6,364
Straight-line rental revenues, excluding amortization of lease incentive asset	48,396		38,046
Amortization of lease incentive asset	15,015		15,015
Amortization of deferred revenue on non-normal tenant improvements	(1,134)		(1,134)
Amortization of cash flow hedges	16,805		5,784
(Gain) loss on unhedged interest rate swaps, net	(33,015)		2,831
Share-based compensation	2,290		1,996
Income from unconsolidated affiliate	(75,808)		(64,026)
Distributions from unconsolidated affiliate	70,475		58,090
Change in operating assets and liabilities:
Prepaid expenses and other assets	(744)		(4,781)
Due to MGM Resorts International and affiliates	(500)		(499)
Accounts payable, accrued expenses and other liabilities	(11,179)		628
Accrued interest	3,502		7,849
Net cash provided by operating activities	497,154		535,177
Cash flows from investing activities
Proceeds from sale of Mandalay Bay real estate assets, net	—		58,615
Net cash provided by investing activities	—		58,615
Cash flows from financing activities
Net repayments under bank credit facility	(10,000)		(1,603,750)
Proceeds from issuance of bridge loan facility	—		1,304,625
Proceeds from issuance of debt	—		800,000
Deferred financing costs	—		(11,307)
Proceeds from issuance of Class A shares by MGP	792,852		524,616
Redemption of Operating Partnership units	(1,181,276)		(700,000)
Distributions paid	(405,539)		(453,778)
Other	—		(1,130)
Net cash used in financing activities	(803,963)		(140,724)
Cash and cash equivalents
Net increase (decrease) for the period	(306,809)		453,068
Balance, beginning of period	626,385		202,101
Balance, end of period	$	319,576	$	655,169
Supplemental cash flow disclosures
Interest paid	$	172,518	$	143,604
Non-cash investing and financing activities
Accrual of distribution payable to Operating Partnership unit holders	$	139,374	$	147,941
Investment in MGP BREIT Venture	$	—	$	802,000
MGP BREIT Venture assumption of bridge loan facility	$	—	$	1,304,625

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MGM GROWTH PROPERTIES OPERATING PARTNERSHIP LP

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(in thousands)

(unaudited)

	General Partner		Limited Partners		Total Partners' Capital
Balance at June 30, 2021	$	—	$	5,146,117	$	5,146,117
Net income	—		83,098		83,098
Proceeds from issuance of Class A shares by MGP	—		283		283
Cash flow hedges	—		7,966		7,966
Share-based compensation	—		680		680
Deemed contribution - tax sharing agreement	—		2,396		2,396
Distributions declared ($0.5200 per unit)	—		(139,374)		(139,374)
Other	—		11,419		11,419
Balance at September 30, 2021	$	—	$	5,112,585	$	5,112,585

	General Partner		Limited Partners		Total Partners' Capital
Balance at December 31, 2020	$	—	$	5,590,742	$	5,590,742
Net income	—		272,204		272,204
Proceeds from issuance of Class A shares by MGP	—		792,852		792,852
Redemption of Operating Partnership units	—		(1,181,276)		(1,181,276)
Cash flow hedges	—		27,369		27,369
Share-based compensation	—		2,290		2,290
Deemed contribution - tax sharing agreement	—		6,952		6,952
Distributions declared ($1.5300 per unit)	—		(408,429)		(408,429)
Other	—		9,881		9,881
Balance at September 30, 2021	$	—	$	5,112,585	$	5,112,585

The accompanying notes are an integral part of these condensed consolidated financial statements.

11

MGM GROWTH PROPERTIES OPERATING PARTNERSHIP LP

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(in thousands)

(unaudited)

	General Partner		Limited Partners		Total Partners' Capital
Balance at June 30, 2020	$	—	$	5,669,446	$	5,669,446
Net income*	—		89,249		89,249
Reclassification and remeasurements of temporary equity*	—		(3,480)		(3,480)
Cash flow hedges*	—		624		624
Share-based compensation*	—		585		585
Deemed contribution - tax sharing agreement*	—		2,335		2,335
Distributions declared ($0.4875 per unit)*	—		(135,745)		(135,745)
Other*	—		2		2
Balance at September 30, 2020	$	—	$	5,623,016	$	5,623,016

(*) Excludes amounts attributable to redeemable capital. See Note 2.

	General Partner		Limited Partners		Total Partners' Capital
Balance at December 31, 2019	$	—	$	6,898,012	$	6,898,012
Net income*	—		62,511		62,511
Proceeds from issuance of Class A shares by MGP*	—		506,198		506,198
MGP BREIT Venture Transaction*	—		63,904		63,904
Partial redemption of temporary equity*	—		(7,532)		(7,532)
Reclassification and remeasurements of temporary equity*	—		(1,411,530)		(1,411,530)
Cash flow hedges*	—		(88,025)		(88,025)
Share-based compensation*	—		1,749		1,749
Deemed contribution - tax sharing agreement*	—		5,317		5,317
Distributions declared ($1.4500 per unit)*	—		(407,483)		(407,483)
Other*	—		(105)		(105)
Balance at September 30, 2020	$	—	$	5,623,016	$	5,623,016

(*) Excludes amounts attributable to redeemable capital. See Note 2.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MGM GROWTH PROPERTIES LLC AND MGM GROWTH PROPERTIES OPERATING PARTNERSHIP LP CONDENSED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 — BUSINESS

Organization. MGM Growth Properties LLC (“MGP” or the “Company”) is a limited liability company that was organized in Delaware in October 2015. MGP conducts its operations through MGM Growth Properties Operating Partnership LP (the “Operating Partnership”), a Delaware limited partnership that was formed in January 2016 and became a subsidiary of MGP in April 2016. The Company elected to be taxed as a real estate investment trust (“REIT”) commencing with its taxable year ended December 31, 2016.

MGP is a publicly traded REIT primarily engaged through its investment in the Operating Partnership which owns, acquires, leases and invests in large-scale destination entertainment and leisure properties, whose tenants generally offer casino gaming, hotel, convention, dining, entertainment and retail and other amenities. A wholly owned subsidiary of the Operating Partnership leases its real estate properties back to a wholly owned subsidiary of MGM under a master lease agreement (the “MGM-MGP Master Lease”). In February 2020, the Operating Partnership entered into certain transactions to form a venture owned 50.1% by the Operating Partnership and 49.9% by a subsidiary of Blackstone Real Estate Income Trust, Inc. (“BREIT”, such venture, the “MGP BREIT Venture”), which owns the real estate assets of MGM Grand Las Vegas and Mandalay Bay and leases such real estate properties back to a wholly owned subsidiary of MGM under a master lease agreement (the “MGP BREIT Venture lease”, such formation transaction, the “MGP BREIT Venture Transaction”).

As of September 30, 2021, there were approximately 268.0 million Operating Partnership units outstanding in the Operating Partnership, of which MGM owned approximately 111.4 million, or 41.6%, and MGP owned the remaining 58.4%. MGM’s Operating Partnership units are exchangeable into Class A shares of MGP on a 1-to-one basis, or cash at the Fair Market Value of a Class A share (as defined in the Operating Partnership’s partnership agreement). The determination of settlement method is at the option of MGP’s independent conflicts committee. MGM’s indirect ownership of these Operating Partnership units is recognized as a noncontrolling interest in MGP’s financial statements. A wholly owned subsidiary of MGP is the general partner of the Operating Partnership and operates and controls all of its business affairs. As a result, MGP consolidates the Operating Partnership and its subsidiaries. MGM also has ownership of MGP’s outstanding Class B share. The Class B share is a non-economic interest in MGP which does not provide its holder any rights to profits or losses or any rights to receive distributions from the operations of MGP or upon liquidation or winding up of MGP but which represents a majority of the voting power of MGP’s shares. As a result, MGP continues to be controlled by MGM through its majority voting rights and is consolidated by MGM.

In March 2021, certain subsidiaries of MGM delivered a notice of redemption to the Company covering approximately 37.1 million Operating Partnership units that they held that was satisfied with aggregate cash proceeds of approximately $1.2 billion using cash on hand together with the proceeds from the issuance of Class A shares. Refer to Note 8 for further discussion.

On August 4, 2021, the Company and the Operating Partnership entered into an agreement with VICI Properties, Inc. (“VICI”) and MGM whereby VICI will acquire the Company in a stock-for-stock transaction (such transaction, the “VICI Transaction”). Pursuant to the agreement, MGP Class A shareholders will have the right to receive 1.366 shares of newly issued VICI stock in exchange for each MGP Class A share outstanding and MGM will have the right to receive 1.366 units of the new VICI operating partnership (“VICI OP”) in exchange for each Operating Partnership unit held by MGM. The fixed exchange ratio represents an agreed upon price of $43 per share of MGP Class A share to the five-day volume weighted average price of VICI stock as of the close of business on July 30, 2021. In connection with the exchange, VICI OP will redeem the majority of MGM’s VICI OP units for cash consideration of $4.4 billion, with MGM retaining approximately 12.2 million VICI OP units. MGP’s Class B share that is held by MGM will be cancelled. The transaction is expected to close in the first half of 2022, subject to customary closing conditions, regulatory approvals, and approval by VICI stockholders (which was received on October 29, 2021).

Subsequent to quarter end, on October 29, 2021, the Company acquired the real estate assets of MGM Springfield from MGM for $400 million of cash consideration. MGM Springfield was added to the MGM-MGP Master Lease between the Company and MGM. Following the closing of the transaction, the annual rent payment under the MGM-MGP Master Lease increased by $30 million, $27.0 million of which is fixed and contractually grows at 2% per year with escalators subject to the tenant meeting an adjusted net revenue to rent ratio. Final regulatory approvals, which were not necessary for the transaction to close, are expected to be received within nine to twelve months following the close of the transaction. Until final regulatory approvals are obtained, the parties will be subject to a trust agreement, which will provide for the property to be placed into a trust (or, at MGM’s option, be returned to MGM) during the interim period in the event that the regulator finds reasonable

13

cause to believe that the Company may not be found suitable. The property will then remain in trust until a final determination regarding the Company’s suitability is made.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. All adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included.

The accompanying condensed consolidated financial statements and related notes should be read in conjunction with the audited financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K.

Reclassifications. Certain reclassifications have been made to conform the prior period presentation.

Principles of consolidation. The Company identifies entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIE”). A VIE is an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a VIE when it determines that it is its primary beneficiary. The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. The Company performs this analysis on an ongoing basis. The consolidated financial statements of MGP include the accounts of the Operating Partnership, a VIE of which the Company is the primary beneficiary, as well as its wholly owned and majority-owned subsidiaries, which represents all of MGP’s assets and liabilities. As MGP holds what is deemed a majority voting interest in the Operating Partnership through its ownership of the Operating Partnership’s sole general partner, it qualifies for the exemption from providing certain of the required disclosures associated with investments in VIEs. The consolidated financial statements of the Operating Partnership include the accounts of its wholly owned subsidiary, MGP Lessor LLC, which is the MGM-MGP Master Lease landlord, a VIE of which the Operating Partnership is the primary beneficiary. As of September 30, 2021, on a consolidated basis, MGP Lessor, LLC had total assets of $9.0 billion primarily related to its real estate investments, and total liabilities of $577.7 million primarily related to its deferred revenue and operating lease liabilities.

For entities determined not to be VIEs, the Company consolidates such entities in which the Company owns 100% of the equity. For entities in which the Company owns less than 100% of the equity interest, the Company consolidates the entity under the voting interest model if it has controlling financial interest based upon the terms of the respective entities’ ownership agreements. If the entity does not qualify for consolidation under the voting interest model and the Company has significant influence over the operating and financial decisions of the entity, the Company accounts for the entity under the equity method, such as the Company’s MGP BREIT Venture, which does not qualify for consolidation as the Company has joint control, given the entity is structured with substantive participating rights whereby both owners participate in the decision making process which prevents the Company from exerting a controlling financial interest, as defined in ASC 810.

Noncontrolling interest. MGP presents noncontrolling interest and classifies such interest as a component of consolidated shareholders’ equity, separate from the Company’s Class A shareholders’ equity. Noncontrolling interest in MGP represents Operating Partnership units currently held by subsidiaries of MGM. Comprehensive income or loss of the Operating Partnership is allocated to its noncontrolling interest based on the noncontrolling interest’s ownership percentage in the Operating Partnership except for income tax expenses. Ownership percentage is calculated by dividing the number of Operating Partnership units held by the noncontrolling interest by the total Operating Partnership units held by the noncontrolling interest and the Company. Issuance of additional Class A shares and Operating Partnership units changes the ownership interests of both the noncontrolling interest and the Company. Such transactions and the related proceeds are treated as capital transactions.

MGM may tender its Operating Partnership units for redemption in exchange for cash equal to the market price of MGP’s Class A shares at the time of redemption or for unregistered Class A shares on a 1-for-one basis. Such election to pay

14

cash or issue Class A shares to satisfy an Operating Partnership unitholder’s redemption request is solely within the control of MGP’s independent conflicts committee.

Redeemable noncontrolling interest and redeemable capital. On January 14, 2020 the Operating Partnership agreed to waive its right following the closing of the MGP BREIT Venture Transaction to issue MGP Class A shares, in lieu of cash, to settle redemptions of Operating Partnership units held by MGM up to a maximum cash redemption amount of $1.4 billion. In connection with the waiver, the Operating Partnership and the Company reclassified, from permanent equity to temporary equity, the carrying value of Operating Partnership units that could require cash redemption and remeasured the units to their redemption value. The Operating Partnership units that comprised the $1.4 billion redemption amount were determined based on a 3% discount to the ten-day average closing price prior to the date of determination.

At each subsequent reporting period, the carrying value of temporary equity was remeasured to the greater of: (1) the carrying value of the number of units then considered redeemable, inclusive of the comprehensive income and losses attributed based on a per unit or share basis in accordance with ASC 810 or (2) the redemption value of the number of units that are then redeemable based on the remaining aggregate cash redemption amount and the per share redemption value, except that decreases in the per unit or share redemption were limited to the amount of previous increases, with the differences between the carrying value and the remeasured value being recorded as an adjustment in additional paid-in capital (in lieu of retained earnings) or limited partners’ capital.

The $1.4 billion maximum cash redemption amount was completed by the $700 million redeemed on May 18, 2020 and the $700 million redeemed on December 2, 2020.

The components of equity that related to the Company’s redeemable noncontrolling interest and the Operating Partnership’s redeemable capital were as follows:

(in thousands)
As of June 30, 2020	$	700,000
Reclassification and remeasurement adjustments	3,480
Attribution of:
Net income	8,159
Cash flow hedges	105
Share-based compensation	54
Deemed contribution - tax sharing agreement	397
MGP dividends and Operating Partnership distributions declared	(12,196)
Other	1
As of September 30, 2020	$	700,000

(in thousands)
As of January 14, 2020	$	—
Reclassification and remeasurement adjustments	1,411,530
Attribution of:
Net loss	6,600
Partial redemption of temporary equity	(692,468)
Proceeds from the issuance of Class A shares by MGP	18,418
MGP BREIT Venture Transaction	16,136
Cash flow hedges	(13,957)
Share-based compensation	247
Deemed contribution - tax sharing agreement	1,047
MGP dividends and Operating Partnership distributions declared	(46,887)
Other	(666)
As of September 30, 2020	$	700,000

15

Property transactions, net. Property transactions, net are comprised of transactions related to long-lived assets, such as gains and losses on the disposition of assets.

Fair value measurements. Fair value measurements are utilized in the accounting and impairment assessments of the Company’s real estate investments, investment in unconsolidated affiliate, and certain of its financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured according to a hierarchy that includes: Level 1 inputs, such as quoted prices in an active market; Level 2 inputs, which are observable inputs for similar assets; or Level 3 inputs, which are unobservable inputs. The Company used the following inputs in its fair value measurements:

•Level 2 inputs for its debt fair value disclosures. See Note 6; and

•Level 2 inputs when measuring the fair value of its interest rate swaps. See Note 7.

Reportable segment. The Company’s operations consist of investments in real estate, both wholly-owned and through its investment in MGP BREIT Venture, for which all such real estate properties are similar to one another in that they consist of large-scale destination entertainment and leisure properties and related offerings, whose tenants generally offer casino gaming, hotel, convention, dining, entertainment and retail amenities, have similar economic characteristics and are governed by triple-net operating leases. The operating results of the Company’s wholly owned and equity method real estate investments are regularly reviewed, in the aggregate, by the chief operating decision maker. As such, the Company has 1 reportable segment.

Income tax provision. For interim income tax reporting, the Company estimates its annual effective tax rate and applies it to its year-to-date ordinary income. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur. The Company’s effective income tax rate was a provision of 2.8% and 2.5% for the three and nine months ended September 30, 2021, respectively, and 2.7% and 8.4% for the three and nine months ended September 30, 2020, respectively.

The Company and MGM join in the filing of a New Jersey consolidated corporation business tax return and have entered into a tax sharing agreement which provides for an allocation of taxes due in the consolidated New Jersey return. No amounts were due to MGM under the tax sharing agreement between the Company and MGM as of September 30, 2021 or December 31, 2020.

Recently issued accounting standards. In March 2020, the FASB issued ASC 848, “Reference Rate Reform (Topic 848)”. ASC 848 provides optional expedients for applying U.S. GAAP to reference rate reform related contracts, hedging relationships and other qualifying transactions. Application of these expedients preserve the presentation of derivative instruments consistent with past presentation. The guidance is optional and may be elected when or as reference rate reform activities occur. The Company is currently evaluating whether it will elect practical expedients if and when its hedging and related activities are impacted.

NOTE 3 — REAL ESTATE INVESTMENTS

The carrying value of real estate investments is as follows:

	September 30, 2021		December 31, 2020
	(in thousands)
Land	$	3,431,228	$	3,431,228
Buildings, building improvements, land improvements and integral equipment	7,462,120		7,426,110
	10,893,348		10,857,338
Less: Accumulated depreciation	(2,745,721)		(2,546,601)
	$	8,147,627	$	8,310,737

NOTE 4 — INVESTMENT IN UNCONSOLIDATED AFFILIATE

As of September 30, 2021, the Operating Partnership’s investment in unconsolidated affiliate was comprised of its 50.1% interest in MGP BREIT Venture. The Operating Partnership recorded its share of income as “Income from unconsolidated affiliate” in the condensed consolidated statements of operations. The Operating Partnership received $23.5 million and $70.5 million in distributions from MGP BREIT Venture during the three and nine months ended September 30, 2021, respectively, and $22.9 million and $58.1 million in distributions from MGP BREIT Venture during the three and nine months ended September 30, 2020, respectively.

16

Summarized results of operations of MGP BREIT Venture are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Net revenues	$	98,681	$	98,681	$	296,044	$	247,800
Net income	50,001		50,320		151,314		127,799

MGP BREIT Venture guarantee. The Operating Partnership provides a guarantee for losses incurred by the lenders of the $3.0 billion indebtedness of the MGP BREIT Venture arising out of certain bad acts by the Operating Partnership, its venture partner, or the venture, such as fraud or willful misconduct, based on the party’s percentage ownership of the MGP BREIT Venture, which guarantee is capped at 10% of the principal amount outstanding at the time of the loss. The Operating Partnership and its venture partner have separately indemnified each other for the other party’s share of the overall liability exposure, if at fault. The guarantee is accounted for under ASC 460 at fair value; such value is immaterial.

MGP BREIT Venture excess cash flow guarantee. The MGP BREIT Venture loan agreement requires that the tenant EBITDAR to MGP BREIT Venture cash interest ratio is maintained above a specified level. If this ratio is not met for two consecutive fiscal quarters, then the borrowers will be unable to distribute excess cash flows to the venture partners unless and until an excess cash flow guarantee is provided. The ratio was not met for the two consecutive quarters ended December 31, 2020, and, as a result, in April 2021, the Operating Partnership and an entity affiliated with BREIT each delivered an excess cash flow guarantee to the lenders covering all distributions since January 1, 2021. The guarantee provides that the MGP BREIT Venture may distribute an aggregate amount of cash not to exceed 9.9% of the principal amount of the MGP BREIT Venture’s outstanding indebtedness under the loan agreement, after which distributions must remain at the MGP BREIT Venture in a restricted cash account until such time as the tenant EBITDAR to MGP BREIT Venture cash interest ratio is met for two consecutive quarters. In addition, in the event of a default under the loan agreement while the ratio is not met, the Company may be required to return its respective share of distributions received during the period covered by the guarantee.

NOTE 5 — LEASES

MGM-MGP Master Lease. The MGM-MGP Master Lease is accounted for as an operating lease and has an initial lease term of ten years that began on April 25, 2016 (other than with respect to MGM National Harbor, as described below) with the potential to extend the term for 4 additional five-year terms thereafter at the option of the tenant. The lease provides that any extension of its term must apply to all of the real estate under the lease at the time of the extension. With respect to MGM National Harbor, the initial lease term ends on August 31, 2024. Thereafter, the initial term of the lease with respect to MGM National Harbor may be renewed at the option of the tenant for an initial renewal period lasting until the earlier of the end of the then-current term of the lease or the next renewal term (depending on whether MGM elects to renew the other properties under the lease in connection with the expiration of the initial ten-year term). If, however, the tenant chooses not to renew the lease with respect to MGM National Harbor after the initial MGM National Harbor term under the lease, the tenant would also lose the right to renew the lease with respect to the rest of the properties when the initial ten-year lease term ends related to the rest of the properties in 2026. The lease has a triple-net structure, which requires the tenant to pay substantially all costs associated with the lease, including real estate taxes, insurance, utilities and routine maintenance, in addition to the base rent. Additionally, the lease provides MGP with a right of first offer with respect to any future gaming development by MGM on the undeveloped land adjacent to Empire City, which MGP may exercise should MGM elect to sell such property in the future.

Rent under the lease consists of a “base rent” component and a “percentage rent” component. As of September 30, 2021, the base rent represents approximately 91% of the rent payments due under the lease and the percentage rent represents approximately 9% of the rent payments due under the lease. The base rent includes a fixed annual rent escalator of 2.0% for the second through the sixth lease years (as defined in the lease). Thereafter, beginning on April 1, 2022, the annual escalator of 2.0% will be subject to the tenant and, without duplication, the operating subsidiary sublessees of the tenant, collectively meeting an adjusted net revenue to rent ratio of 6.25:1.00 based on their net revenue from the leased properties subject to the lease (as determined in accordance with U.S. GAAP, adjusted to exclude net revenue attributable to certain scheduled subleases and, at the tenant’s option, reimbursed cost revenue). The percentage rent will initially be a fixed amount for approximately the first six years and will then be adjusted every five years based on the average annual adjusted net revenues of the tenant and, without duplication, the operating subtenants, from the leased properties subject to the lease at such time for the trailing five calendar-year period (calculated by multiplying the average annual adjusted net revenues, excluding net revenue attributable to

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certain scheduled subleases and, at the tenant’s option, reimbursed cost revenue, for the trailing five calendar-year period by 1.4%).

In connection with the commencement of the sixth lease year on April 1, 2021, and the corresponding 2.0% fixed annual rent escalator that went into effect on such date, the base rent under the MGM-MGP Master Lease increased to $764.9 million, resulting in total annual rent under the MGM-MGP Master Lease of $842.8 million.

Straight-line rental revenues from the MGM-MGP Master Lease, which includes lease incentive asset amortization, were $188.3 million and $564.9 million for the three and nine months ended September 30, 2021, respectively, and were $188.3 million and $580.1 million for the three and nine months ended September 30, 2020, respectively. The Company also recognized revenue related to ground lease and other of $6.0 million for both the three months ended September 30, 2021 and 2020 and $18.1 million for both the nine months ended September 30, 2021 and 2020.

Under the MGM-MGP Master Lease, future non-cancelable minimum cash rental payments, which are the payments under the initial 10-year term through April 30, 2026 and do not include the 4 five-year renewal options and, with respect to MGM National Harbor, through August 31, 2024, are as follows as of September 30, 2021 (and, accordingly, does not reflect the cash rental payments of $30 million annually related to MGM Springfield, for which the related transaction closed subsequent to September 30, 2021):

Year ending December 31,	(in thousands)
2021 (excluding the nine months ended September 30, 2021)	$	210,690
2022	784,336
2023	764,861
2024	733,161
2025	669,761
Thereafter	223,254
Total	$	3,386,063

NOTE 6 — DEBT

Debt consists of the following:

	September 30,		December 31,
	2021		2020
	(in thousands)
Senior secured revolving credit facility	$	—	$	10,000
5.625% senior notes, due 2024	1,050,000		1,050,000
4.625% senior notes, due 2025	800,000		800,000
4.50% senior notes, due 2026	500,000		500,000
5.75% senior notes, due 2027	750,000		750,000
4.50% senior notes, due 2028	350,000		350,000
3.875% senior notes, due 2029	750,000		750,000
	4,200,000		4,210,000
Less: Unamortized discount and debt issuance costs	(35,102)		(41,041)
	$	4,164,898	$	4,168,959

Operating Partnership credit agreement and bridge facility. At September 30, 2021, the Operating Partnership senior secured credit facility consisted of a $1.4 billion revolving credit facility. The Operating Partnership’s senior credit facility limits the amount of letters of credit that can be issued to $75 million. No letters of credit were outstanding under the Operating Partnership senior secured credit facility at September 30, 2021. The Operating Partnership was in compliance with its financial covenants at September 30, 2021.

Refer to Note 7 for further discussion of the Company’s interest rate swap agreements.

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Fair value of debt. The estimated fair value of the Operating Partnership’s debt was $4.6 billion at September 30, 2021 and $4.5 billion at December 31, 2020. Fair value was estimated using quoted market prices for the Operating Partnership’s senior notes and senior secured credit facility.

NOTE 7 — DERIVATIVES AND HEDGING ACTIVITIES

The Operating Partnership uses derivative instruments to mitigate the effects of interest rate volatility inherent in its variable rate senior credit facility and forecasted debt issuances for the duration and amount of its interest rate swap agreements, which such variable rate could unfavorably impact future earnings and forecasted cash flows. The Operating Partnership and the Company do not use derivative instruments for speculative or trading purposes.

In May 2021, the Operating Partnership terminated interest rate swap agreements with a notional amount of $1.2 billion which resulted in a loss of less than $0.1 million. Additionally, in June 2021, the Operating Partnership modified and extended certain of its existing interest rate swaps with a combined notional amount of $900 million, effective June 30, 2022. The weighted average fixed rate paid under the modified swap agreements is 1.940% and the variable rate received resets monthly to the one-month LIBOR with no minimum floor. The maturity dates were extended to June 30, 2027.

The interest rate swaps as of September 30, 2021 are summarized in the table below.

	Notional Amount		Weighted Average Fixed Rate		Fair Value Liability		Effective Date	Maturity Date
	(in thousands, except percentages)
Derivatives designated as hedges:
	$	900,000	1.940	%	$	(31,114)	June 30, 2022	June 30, 2027
	$	900,000			$	(31,114)
Derivatives not designated as hedges:
	$	300,000	1.158	%	$	(5,053)	September 6, 2019	December 31, 2024
	400,000		2.252	%	(28,291)		October 1, 2019	December 31, 2029
	$	700,000			$	(33,344)
					$	(64,458)

The interest rate swaps as of December 31, 2020 are summarized in the table below.

	Notional Amount		Weighted Average Fixed Rate		Fair Value Liability		Effective Date	Maturity Date
	(in thousands, except percentages)
Derivatives designated as hedges:
	$	900,000	1.801	%	$	(41,131)	November 30, 2021	December 31, 2024
	$	900,000			$	(41,131)
Derivatives not designated as hedges:
	$	1,200,000	1.844	%	$	(18,889)	May 3, 2017	November 30, 2021
	300,000		1.158	%	(10,451)		September 6, 2019	December 31, 2024
	400,000		2.252	%	(48,453)		October 1, 2019	December 31, 2029
	$	1,900,000			$	(77,793)
					$	(118,924)

As of September 30, 2021 and December 31, 2020, the Operating Partnership’s interest rate swaps that are in a liability position are recorded within “Accounts payable, accrued expenses, and other liabilities”.

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NOTE 8 — SHAREHOLDERS’ EQUITY AND PARTNERS’ CAPITAL

MGP shareholders

Issuance of Class A shares - March 2021. On March 15, 2021, the Company completed an offering of 21.9 million Class A shares in a registered public offering for net proceeds of approximately $676.0 million.

“At-the-market-offering” (“ATM”) Program. On May 12, 2021, the Company resumed its 2019 ATM program to offer and sell the remaining $117.7 million of Class A shares under the $300 million program through sales agents at prevailing market prices or agreed-upon prices. The Company issued less than 0.1 million and 3.3 million Class A shares for net proceeds of $0.3 million and $116.8 million during the three and nine months ended September 30, 2021, respectively, and completed its ATM program.

Operating Partnership capital

Proceeds from the issuance of Class A shares by MGP - March 2021. On March 15, 2021, in connection with the Company’s registered offering of Class A shares for net proceeds of approximately $676.0 million, such proceeds were used in connection with satisfying the Company’s obligations under the notice of redemption of Operating Partnership units from MGM, discussed below.

Redemption of Operating Partnership units - March 2021. In March 2021, certain subsidiaries of MGM delivered a notice of redemption to the Company covering approximately 37.1 million Operating Partnership units that they held in accordance with the terms of the Operating Partnership’s partnership agreement. In accordance with the terms of such agreement, upon receipt of the notice of redemption, the Company formed a conflicts committee to determine the mix of consideration that it would provide for the Operating Partnership units. The conflicts committee determined that the Company would redeem approximately 15.3 million Operating Partnership units for cash on March 12, 2021 (with such Operating Partnership units retired upon redemption) and would satisfy its remaining obligation under that notice covering the remaining 21.9 million Operating Partnership units using the proceeds, net of underwriters’ discount, from an offering of MGP’s Class A shares on March 15, 2021, for aggregate cash proceeds paid of approximately $1.2 billion. As a result of these collective transactions, MGP’s indirect ownership percentage in the Operating Partnership increased from 47.0% to 57.9%.

MGP Class A share issuance - ATM Program. During the three and nine months ended September 30, 2021, in connection with the Company’s issuance of Class A shares under the ATM program, which completed its ATM program, the Operating Partnership issued less than 0.1 million and 3.3 million Operating Partnership units to the Company, respectively. As a result of these issuances, and as of September 30, 2021, MGP’s ownership percentage in the Operating Partnership was 58.4%.

Accumulated Other Comprehensive Loss. Comprehensive income (loss) includes net income (loss) and all other non-shareholder changes in equity, or other comprehensive income (loss). Elements of the Company’s accumulated other comprehensive loss are reported in the accompanying condensed consolidated statement of shareholders’ equity. The following table summarizes the changes in accumulated other comprehensive loss by component:

	Cash Flow Hedges		Other		Total
	(in thousands)
Balance at June 30, 2021	$	(30,206)	$	(22,179)	$	(52,385)
Other comprehensive income before reclassifications	2,543		—		2,543
Amounts reclassified from accumulated other comprehensive loss to interest expense	5,423		—		5,423
Other comprehensive income	7,966		—		7,966
Other changes in accumulated other comprehensive loss:
Issuance of Class A shares	—		(1)		(1)
Changes in accumulated other comprehensive loss:	7,966		(1)		7,965
Less: Other comprehensive income attributable to noncontrolling interest	(3,310)		—		(3,310)
Balance at September 30, 2021	$	(25,550)	$	(22,180)	$	(47,730)

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Balance at December 31, 2020	$	(40,063)	$	(11,134)	$	(51,197)
Other comprehensive income before reclassifications	10,564		—		10,564
Amounts reclassified from accumulated other comprehensive loss to interest expense	16,805		—		16,805
Other comprehensive income	27,369		—		27,369
Other changes in accumulated other comprehensive loss:
Issuance of Class A shares	—		(4,172)		(4,172)
Redemption of Operating Partnership Units	—		(6,860)		(6,860)
Other	—		(14)		(14)
Changes in accumulated other comprehensive loss:	27,369		(11,046)		16,323
Less: Other comprehensive income attributable to noncontrolling interest	(12,856)		—		(12,856)
Balance at September 30, 2021	$	(25,550)	$	(22,180)	$	(47,730)

    MGP dividends and Operating Partnership distributions. The Operating Partnership declares and pays distributions. MGP pays its dividends with the receipt of its share of the Operating Partnership’s distributions.

On October 15, 2021, the Company paid a dividend of $0.5200 per Class A share upon receipt of its share of the Operating Partnership’s distribution of $0.5200 per unit made the same day.

NOTE 9 — EARNINGS PER CLASS A SHARE

The table below provides earnings and the number of Class A shares used in the computations of “basic” earnings per share, which utilizes the weighted-average number of Class A shares outstanding without regard to dilutive potential Class A shares, and “diluted” earnings per share, which includes all such shares. Diluted earnings per Class A share does not assume conversion of the Operating Partnership units held by MGM as such conversion would be antidilutive. Earnings per share has not been presented for the Class B shareholder as the Class B share is not entitled to any economic rights in the Company.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Numerator:
Net income	$	49,968	$	43,378	$	153,455	$	34,646
Less: Adjustment related to redeemable noncontrolling interests	—		1,232		—		—
Net income attributable to Class A shares - basic and diluted	$	49,968	$	44,610	$	153,455	$	34,646
Denominator:
Weighted average Class A shares outstanding — basic (1)	156,799		131,567		149,037		128,788
Effect of dilutive shares for diluted net income per Class A share (2)	183		133		197		147
Weighted average Class A shares outstanding — diluted (1)	156,982		131,700		149,234		128,935

(1) Includes weighted average deferred share units granted to certain members of the board of directors.

(2) Less than 0.1 million shares related to outstanding share-based compensation awards were excluded due to being antidilutive for the nine months ended September 30, 2021. There were no shares excluded due to being antidilutive for the three months ended September 30, 2021. Less than 0.1 million and 0.1 million shares related to outstanding share-based compensation awards were excluded due to being antidilutive for the three and nine months ended September 30, 2020, respectively.

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NOTE 10 — EARNINGS PER OPERATING PARTNERSHIP UNIT

The table below provides earnings and the number of Operating Partnership units used in the computations of “basic” earnings per Operating Partnership unit, which utilizes the weighted-average number of Operating Partnership units outstanding without regard to dilutive potential Operating Partnership units, and “diluted” earnings per Operating Partnership units, which includes all such Operating Partnership units.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Numerator:
Net income	$	83,098	$	97,408	$	272,204	$	69,111
Less: Adjustment related to redeemable capital	—		1,232		—		—
Net income attributable to unitholders - basic and diluted	$	83,098	$	98,640	$	272,204	$	69,111
Denominator:
Weighted average Operating Partnership units outstanding — basic (1)	268,172		303,580		270,171		315,642
Effect of dilutive shares for diluted net income per Operating Partnership unit (2)	183		133		197		147
Weighted average Operating Partnership units outstanding — diluted (1)	268,355		303,713		270,368		315,789

(1) Includes weighted average deferred share units granted to certain members of the board of directors.

(2) Less than 0.1 million units related to outstanding share-based compensation awards were excluded due to being antidilutive for the nine months ended September 30, 2021. There were no units excluded due to being antidilutive for the three months ended September 30, 2021. Less than 0.1 million units and 0.1 million units related to outstanding share-based compensation awards were excluded due to being antidilutive for the three and nine months ended September 30, 2020, respectively.

NOTE 11 — COMMITMENTS AND CONTINGENCIES

Litigation. In the ordinary course of business, from time to time, the Company expects to be subject to legal claims and administrative proceedings, none of which are currently outstanding, which the Company believes could have, individually or in the aggregate, a material adverse effect on its business, financial position, results of operations, or cash flows.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This management’s discussion and analysis of financial condition and results of operations contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” for a discussion of the uncertainties, risks, and assumptions that may cause our actual results to differ materially from those discussed in the forward-looking statements.

This discussion should be read in conjunction with our historical financial statements and related notes thereto and the other disclosures contained elsewhere in this quarterly report on Form 10-Q, and the audited consolidated financial statements and notes for the fiscal year ended December 31, 2020, which were included in our annual report on Form 10-K, filed with the SEC on February 23, 2021.

Executive Overview

MGP is one of the leading publicly traded REITs engaged in the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts, whose tenant generally offers diverse amenities including casino gaming, hotel, convention, dining, entertainment and retail amenities.

MGP is a limited liability company that was formed in Delaware in October 2015. MGP conducts its operations through the Operating Partnership, a Delaware limited partnership formed by MGM in January 2016, that became a subsidiary of MGP in April 2016. We elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2016.

As of September 30, 2021, we generate all of our revenues by leasing our real estate properties through a wholly owned subsidiary of the Operating Partnership to a subsidiary of MGM pursuant to the MGM-MGP Master Lease which requires the tenant to pay substantially all costs associated with each property, including real estate taxes, ground lease rent, insurance, utilities and routine maintenance, in addition to the base rent and the percentage rent, each as described below. The lease has an initial lease term of ten years that began on April 25, 2016 with the potential to extend the term for four additional five-year terms thereafter at the option of the tenant (other than with respect to MGM National Harbor, whose initial lease term ends on August 31, 2024; refer to Note 5 for further detail of the lease term). Additionally, the lease provides MGP with a right of first offer with respect to any future gaming development by MGM on the undeveloped land adjacent to Empire City, which MGP may exercise should MGM elect to sell such property in the future.

Following the formation transaction in February 2020 of the MGP BREIT Venture, owned 50.1% by the Operating Partnership and 49.9% by a subsidiary of BREIT, MGP BREIT Venture owns the real estate assets of MGM Grand Las Vegas and Mandalay Bay and leases such real estate properties back to a wholly owned subsidiary of MGM under the MGP BREIT Venture lease. The lease provides for a term of thirty years with two ten-year renewal options.

As of September 30, 2021, our portfolio, including properties owned by the MGP BREIT Venture, includes seven large-scale entertainment and gaming-related properties in Las Vegas: Mandalay Bay, MGM Grand Las Vegas, The Mirage, Park MGM, New York-New York, Luxor and Excalibur, and The Park, a dining and entertainment district located between New York-New York and Park MGM. Outside of Las Vegas, we also own five market-leading casino resort properties: MGM Grand Detroit in Detroit, Michigan, Beau Rivage and Gold Strike Tunica, both of which are located in Mississippi, Borgata in Atlantic City, New Jersey, and MGM National Harbor in Prince George’s County, Maryland. We also own the casino properties of MGM Northfield Park in Northfield, Ohio and Empire City in Yonkers, New York.

Additionally, we expect to grow our portfolio through acquisitions with third parties and with MGM. In pursuing external growth initiatives, we will generally seek to acquire properties that can generate stable rental revenue through long-term, triple-net leases with tenants with established operating histories, and we will consider various factors when evaluating acquisitions.

In March 2021, certain subsidiaries of MGM delivered a notice of redemption to us covering approximately 37.1 million Operating Partnership units that they held which was satisfied with aggregate cash proceeds of approximately $1.2 billion using cash on hand together with the proceeds from the issuance of Class A shares.

In August 2021, we entered into an agreement with VICI Properties, Inc. (“VICI”) and MGM whereby VICI will acquire us in a stock-for-stock transaction (such transaction, the “VICI Transaction”). Pursuant to the agreement, MGP Class A shareholders will have the right to receive 1.366 shares of newly issued VICI stock in exchange for each MGP Class A share outstanding and MGM will have the right to receive 1.366 units of the new VICI operating partnership (“VICI OP”) in

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exchange for each Operating Partnership unit held by MGM. The fixed exchange ratio represents an agreed upon price of $43 per share of MGP Class A share to the five-day volume weighted average price of VICI stock as of the close of business on July 30, 2021. In connection with the exchange, VICI OP will redeem the majority of MGM’s VICI OP units for cash consideration of $4.4 billion, with MGM retaining approximately 12.2 million VICI OP units. MGP’s Class B share that is held by MGM will be cancelled. The transaction is expected to close in the first half of 2022, subject to customary closing conditions, regulatory approvals, and approval by VICI stockholders (which was received on October 29, 2021).

Subsequent to quarter end, in October 2021, we acquired the real estate assets of MGM Springfield from MGM for $400 million of cash consideration. MGM Springfield was added to the MGM-MGP Master Lease between us and MGM and, the annual rent payment under the MGM-MGP Master Lease increased by $30 million, $27.0 million of which is fixed and contractually grows at 2% per year with escalators subject to the tenant meeting an adjusted net revenue to rent ratio. Final regulatory approvals, which were not necessary for the transaction to close, are expected to be received within nine to twelve months following the close of the transaction. Until final regulatory approvals are obtained, the parties will be subject to a trust agreement, which will provide for the property to be placed into a trust (or, at MGM’s option, be returned to MGM) during the interim period in the event that the regulator finds reasonable cause to believe that the Company may not be found suitable. The property will then remain in trust until a final determination regarding our suitability is made.

COVID-19 Update

The COVID-19 pandemic has not had a material impact on our operations; however, we cannot estimate the duration of the pandemic and potential impact on our business if our properties will be required to close or become subject to significant operating restrictions again, or if the tenant (or the guarantor) is otherwise unable or unwilling to make rental payments. For further information regarding the potential impact of COVID-19 on our operations, refer to “Liquidity and Capital Resources” below.

Combined Results of Operations for MGP and the Operating Partnership

Overview

The following table summarizes our financial results for the three and nine months ended September 30, 2021 and September 30, 2020:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Total Revenues	$	194,342	$	194,342	$	583,026	$	598,254
Total Expenses	74,042		67,636		210,715		404,511
Net income	83,098		97,408		272,204		69,111
Net income attributable to Class A shareholders	49,968		43,378		153,455		34,646

Revenues

Rental revenue. Rental revenues, including ground lease and other, for both the three months ended September 30, 2021 and 2020 were $194.3 million. Rental revenues, including ground lease and other, for the nine months ended September 30, 2021 and 2020 were $583.0 million and $598.3 million, respectively. The $15.2 million, or 2.5%, decrease for the year-to-date period was due primarily to a decrease in rental revenues as a result of the removal of Mandalay Bay from the MGM-MGP Master Lease relating to the MGP BREIT Venture Transaction in February 2020.

Expenses

Depreciation. Depreciation expense was $57.6 million and $58.2 million for the three months ended September 30, 2021 and 2020, respectively. Depreciation expense was $173.3 million and $178.7 million for the nine months ended September 30, 2021 and 2020, respectively. The $5.4 million, or 3.0%, decrease for the year-to-date period was primarily due to the contribution of Mandalay Bay to the MGP BREIT Venture in February 2020.

Property transactions, net. Property transactions, net for the three months ended September 30, 2021 were less than $0.1 million. There were no property transactions, net for the three months ended September 30, 2020. Property transactions, net for the nine months ended September 30, 2021 and 2020 were $1.2 million and $195.0 million, respectively. The prior year-to-date

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period included the difference between the carrying value of the Mandalay Bay real estate assets and the net consideration received that resulted in a loss on sale of the Mandalay Bay real estate assets of $193.1 million in February 2020.

Ground lease expense. Ground lease expense was $5.9 million for each of the three months ended September 30, 2021 and 2020. Ground lease expense was $17.8 million for each of the nine months ended September 30, 2021 and 2020.

Acquisition-related expenses. Acquisition-related expenses were $6.3 million and $6.6 million for the three and nine months ended September 30, 2021, which related to our agreement to acquire the real estate assets of MGM Springfield from MGM and the VICI Transaction. Acquisition expenses were $1.0 million for the nine months ended September 30, 2020, which related to the MGP BREIT Venture Transaction. There were no acquisition-related expenses for the three months ended September 30, 2020.

General and administrative expenses. General and administrative expenses were $3.9 million and $3.5 million for the three months ended September 30, 2021 and 2020, respectively. General and administrative expenses were $11.9 million and $12.1 million for the nine months ended September 30, 2021 and 2020, respectively.

Other Expenses

Income from unconsolidated affiliate. Income from unconsolidated affiliate was $25.1 million and $25.2 million for the three months ended September 30, 2021 and 2020, respectively, and $75.8 million and $64.0 million for the nine months ended September 30, 2021 and 2020, respectively. Our income from unconsolidated affiliate is entirely attributable to income from our investment in MGP BREIT Venture. The $11.8 million, or 18.4%, increase in the year-to-date period primarily reflects the timing of the MGP BREIT Venture formation in February 2020 and, accordingly, the current year-to-date period having a full nine months of income attributable to the venture.

Other expenses, excluding income from unconsolidated affiliate, were $59.9 million and $51.8 million for the three months ended September 30, 2021 and 2020, respectively. The $8.1 million, or 15.6%, increase for the quarterly period was primarily related to an increase in interest expense due to an increase in outstanding debt due to the issuance of $750 million 3.875% senior notes due 2029 in November 2020, as well as the $4.4 million net gain on unhedged interest rate swaps, net for the three months ended September 30, 2021 compared to the $7.7 million net gain on unhedged interest rate swaps for the three months ended September 30, 2020. Other expenses, excluding income from unconsolidated affiliate, were $169.0 million and $182.3 million for the nine months ended September 30, 2021 and 2020, respectively. The $13.3 million, or 7.3%, decrease for the year-to-date period was primarily related to the $33.0 million gain on unhedged interest rate swaps, net for the nine months ended September 30, 2021 compared to the $2.8 million loss on unhedged interest rate swaps, net, for the nine months ended September 30, 2020, in addition to the nine months ended September 30, 2020 containing a $18.1 million loss on retirement of debt relating to our repayment of the term loan A and term loan B facilities. This was partially offset by an increase in interest expense due to an increase in debt period over period relating to the issuance of the $800 million 4.625% senior notes due 2025 in June 2020 and the issuance of $750 million 3.875% senior notes due 2029 in November 2020.

Provision for Income Taxes

Our effective tax rate was a provision of 2.8% and 2.7% for the three months ended September 30, 2021 and 2020, respectively, and 2.5% and 8.4% for the nine months ended September 30, 2021 and 2020, respectively. The effective tax rate in the nine months ended September 30, 2020 was impacted by the loss resulting from the MGP BREIT Venture Transaction, which provides no federal or state income tax benefit due to our REIT status. Refer to Note 2 of the accompanying financial statements for additional discussion regarding income taxes.

Non-GAAP Measures

Funds From Operations (“FFO”) is net income (computed in accordance with U.S. GAAP), excluding gains and losses from sales or disposals of property (presented as property transactions, net), plus depreciation, as defined by the National Association of Real Estate Investment Trusts, plus our share of depreciation of our unconsolidated affiliate.

Adjusted Funds From Operations (“AFFO”) is FFO as adjusted for amortization of financing costs and cash flow hedges; our share of amortization of financing costs of our unconsolidated affiliate; non-cash compensation expense; straight-line rental revenue (which is defined as the difference between contractual rent and cash rent payments, excluding lease incentive asset amortization); our share of straight-line rental revenues of our unconsolidated affiliate; amortization of lease incentive asset and deferred revenue relating to non-normal tenant improvements; acquisition-related expenses; non-cash ground lease rent, net;

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other expenses; (gain) loss on unhedged interest rate swaps, net; our share of provision for income taxes of unconsolidated affiliate; and provision for income taxes.

Adjusted EBITDA is net income (computed in accordance with U.S. GAAP) as adjusted for gains and losses from sales or disposals of property (presented as property transactions, net); depreciation; our share of depreciation of our unconsolidated affiliate; amortization of financing costs and cash flow hedges; our share of amortization of financing costs of our unconsolidated affiliate; non-cash compensation expense; straight-line rental revenue; our share of straight-line rental revenues of our unconsolidated affiliate; amortization of lease incentive asset and deferred revenue relating to non-normal tenant improvements; acquisition-related expenses; non-cash ground lease rent, net; other expenses; (gain) loss on unhedged interest rate swaps, net; our share of provision for income taxes of unconsolidated affiliate; interest income; interest expense (including amortization of financing costs and cash flow hedges); our share of interest expense (including amortization of financing costs) of our unconsolidated affiliate; and provision for income taxes.

FFO, FFO per unit, AFFO, AFFO per unit and Adjusted EBITDA are supplemental performance measures that have not been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) that management believes are useful to investors in comparing operating and financial results between periods. Management believes that this is especially true since these measures exclude depreciation expense and management believes that real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time. The Company believes such a presentation also provides investors with a meaningful measure of the Company’s operating results in comparison to the operating results of other REITs. Adjusted EBITDA is useful to investors to further supplement AFFO and FFO and to provide investors a performance metric which excludes interest expense. In addition to non-cash items, the Company adjusts AFFO and Adjusted EBITDA for acquisition-related expenses. While we do not label these expenses as non-recurring, infrequent or unusual, management believes that it is helpful to adjust for these expenses when they do occur to allow for comparability of results between periods because each acquisition is (and will be) of varying size and complexity and may involve different types of expenses depending on the type of property being acquired and from whom.

FFO, FFO per unit, AFFO, AFFO per unit and Adjusted EBITDA do not represent cash flow from operations as defined by U.S. GAAP, should not be considered as an alternative to net income as defined by U.S. GAAP and are not indicative of cash available to fund all cash flow needs. Investors are also cautioned that FFO, FFO per unit, AFFO, AFFO per unit and Adjusted EBITDA as presented, may not be comparable to similarly titled measures reported by other REITs due to the fact that not all real estate companies use the same definitions.            

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The following table provides a reconciliation of the Company’s consolidated net income to FFO, AFFO and Adjusted EBITDA:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Net income	$	83,098	$	97,408	$	272,204	$	69,111
Depreciation (1)	57,613		58,240		173,322		178,692
Share of depreciation of unconsolidated affiliate	10,480		10,464		31,442		26,361
Property transactions, net	327		—		1,208		194,990
Funds From Operations	151,518		166,112		478,176		469,154
Amortization of financing costs and cash flow hedges	8,285		6,003		25,392		13,096
Share of amortization of financing costs of unconsolidated affiliate	65		65		192		162
Non-cash compensation expense	680		639		2,290		1,996
Straight-line rental revenues, excluding lease incentive asset	17,382		13,632		48,396		38,046
Share of straight-line rental revenues of unconsolidated affiliate	(12,135)		(12,866)		(36,893)		(32,084)
Amortization of lease incentive asset and deferred revenue on non-normal tenant improvements	4,627		4,627		13,881		13,881
Acquisition-related expenses	6,287		—		6,565		980
Non-cash ground lease rent, net	260		260		778		778
Other expenses	181		36		1,103		18,817
(Gain) loss on unhedged interest rate swaps, net	(4,411)		(7,701)		(33,015)		2,831
Provision for income taxes	2,396		2,732		6,952		6,364
Adjusted Funds From Operations	175,135		173,539		513,817		534,021
Interest income	(139)		(533)		(537)		(3,903)
Interest expense	64,225		59,974		201,412		164,549
Share of interest expense of unconsolidated affiliate	13,731		13,731		40,745		33,672
Amortization of financing costs and cash flow hedges	(8,285)		(6,003)		(25,392)		(13,096)
Share of amortization of financing costs of unconsolidated affiliate	(65)		(65)		(192)		(162)
Adjusted EBITDA	$	244,602	$	240,643	$	729,853	$	715,081

(1) Includes depreciation on Mandalay Bay real estate assets for the period of January 1, 2020 through February 14, 2020.

Guarantor Financial Information

As of September 30, 2021, all of our indebtedness is held by the Operating Partnership and MGP does not guarantee any of the Operating Partnership’s indebtedness. The Operating Partnership’s principal debt arrangements are guaranteed by each of its wholly owned subsidiaries except for MGP JV INVESTCO 1 LLC, the entity holding the 50.1% interest in the MGP BREIT Venture, and, with respect to the Operating Partnership’s senior notes, MGP Finance Co-Issuer, Inc., the co-issuer of the senior notes. The guarantees provided by the subsidiary guarantors rank senior in right of payment to any future subordinated debt of ours or such subsidiary guarantors, junior to any secured indebtedness to the extent of the value of the assets securing such debt and effectively subordinated to any indebtedness and other obligations of our subsidiaries that do not guaranty the principal indebtedness. In addition, the obligations of each subsidiary guarantor under its guarantee is limited so as not to constitute a fraudulent conveyance under applicable law, which may eliminate the subsidiary guarantor’s obligations or reduce such obligations to an amount that effectively makes the subsidiary guarantee lack value.

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The summarized financial information of the Operating Partnership and its guarantor subsidiaries, on a combined basis, is presented below:

	September 30, 2021		December 31, 2020
Balance Sheet	(in thousands)
Real estate investments, net	$	8,147,627	$	8,310,737
Other assets	1,155,269		1,479,503
Debt, net	4,164,898		4,168,959
Other liabilities	840,812		840,605

	Nine Months Ended
	September 30, 2021
Income Statement	(in thousands)
Total revenues	$	583,026
Net income	196,396

Liquidity and Capital Resources

Rental revenues received under the MGM-MGP Master Lease and distributions from the MGP BREIT Venture are our primary sources of cash from operations and are dependent on the tenant’s ability to pay rent and the MGP BREIT Venture’s ability to pay distributions. As of the date of this filing, all of the properties in our portfolio, including those held by the MGP BREIT Venture, that had temporarily closed during 2020 to the public pursuant to state and local government requirements as a result of the unprecedented public health crisis resulting from the COVID-19 pandemic, have re-opened in full. Beginning in the latter part of the first quarter of 2021 and continuing into the second quarter of 2021, jurisdictions eased and removed prior operating restrictions, including capacity and occupancy limits as well as social distancing policies. However, certain operations and amenities are limited or constrained due to available staffing and/or mid-week visitation levels.

Our properties may be subject to temporary, complete or partial shutdowns in the future due to COVID-19 related concerns, including due to the spread of COVID-19 variants. At this time, we cannot predict whether jurisdictions, states or the federal government will adopt similar or more restrictive measures in the future than in the past, including stay-at-home orders or the temporary closure of all or a portion of our tenant’s properties.

Despite the aforementioned uncertainties and as it relates to the impact of the COVID-19 pandemic, our and MGP BREIT Venture’s tenants continue to make rental payments in full and on time and we believe the tenants’ (and the guarantor’s) liquidity positions are sufficient to cover their expected rental obligations for the foreseeable future. Accordingly, while we do not anticipate an impact on our operations as a result of the COVID-19 pandemic, we cannot estimate the duration of the pandemic and potential impact on our business if our re-opened properties will be required to close again, or if the tenants (or guarantor) are otherwise unable or unwilling to make rental payments.

All of our indebtedness is held by the Operating Partnership and MGP does not guarantee any of the Operating Partnership's indebtedness. MGP's principal funding requirement is the payment of dividends and distributions on its Class A shares, and its principal source of funding for these dividends and distributions is the distributions it receives from the Operating Partnership. MGP's liquidity is therefore dependent upon the Operating Partnership's ability to make sufficient distributions to it, which distributions are primarily funded by rental payments received from the tenant and distributions from the MGP BREIT Venture. The Operating Partnership's primary uses of cash include payment of operating expenses, debt service, and distributions to MGP and MGM. We believe that the Operating Partnership currently has sufficient liquidity to satisfy all of its commitments, including its distributions to MGP, and in turn, that we currently have sufficient liquidity to satisfy all our commitments (including the completion in October 2021 of the acquisition of the real estate assets of MGM Springfield from MGM for $400 million, as discussed further in Note 1 to the accompanying financial statements) in the form of $319.6 million in cash and cash equivalents held by the Operating Partnership as of September 30, 2021, expected cash flows from operations, expected cash distributions from the MGP BREIT Venture, and $1.35 billion of borrowing capacity under the Operating Partnership’s revolving credit facility as of September 30, 2021. See Note 6 to the accompanying financial statements for a description of our principal debt arrangements and Note 4 to the accompanying financial statements for a description of our excess cash flow guarantee relating to the MGP BREIT Venture.

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Summary of Cash Flows

Net cash provided by operating activities for the nine months ended September 30, 2021 was $497.2 million compared to net cash provided by operating activities of $535.2 million for the nine months ended September 30, 2020. The change was primarily due to the decrease in annual cash rental payments of $133 million as a result of the removal of Mandalay Bay from the MGM-MGP Master Lease in February 2020 as well as an increase of $28.9 million in cash paid for interest, partially offset by the 2% fixed annual rent escalator at the beginning of the sixth lease year on April 1, 2021, which increased the annual cash rental payments by $15.0 million, and an increase in distributions from our unconsolidated affiliate which is attributable to the timing of the MGP BREIT Venture formation in February 2020.

There was no cash provided by or used in investing activities for the nine months ended September 30, 2021. There was $58.6 million of net cash provided by investing activities for the nine months ended September 30, 2020 which related to the net cash proceeds from the MGP BREIT Venture Transaction.

Net cash used in financing activities for the nine months ended September 30, 2021 was $804.0 million, which reflects our payments of $405.5 million of distributions and dividends, $10.0 million of repayments under the revolving credit facility, and the $1.2 billion of cash used to satisfy the notice of redemption of 37.1 million Operating Partnership units held by MGM, which was funded with cash on hand and with proceeds from the issuance of 21.9 million Class A shares for $676.0 million. In addition, we issued 3.3 million Class A shares under our ATM program for net proceeds of $116.8 million.

Net cash used in financing activities for the nine months ended September 30, 2020 was $140.7 million, which reflects our issuance of Class A shares to BREIT for $150.0 million and issuance of $800 million in aggregate principal amount of 4.625% senior notes due 2025, the proceeds of which were used to repay draws on our revolving credit facility with which we had funded the redemption of $700 million of Operating Partnership units held by MGM. This was offset by payments of $453.8 million of distributions and dividends and our $1.6 billion of net repayments under the bank credit facility, consisting of: the repayment of the Operating Partnership’s $1.3 billion outstanding term loan B facility with the proceeds from the bridge loan facility, which was then assumed by the MGP BREIT Venture, and the repayment of the Operating Partnership’s $399 million outstanding term loan A facility with the $374.6 million of net proceeds from the settlement of forward equity agreements, which were offset by a net draw of $100.0 million on the revolving credit facility.

Dividends and Distributions

The following table presents the distributions declared and paid by the Operating Partnership and the dividends declared by MGP within the nine months ended September 30, 2021 and September 30, 2020. MGP pays its dividends with the receipt of its share of the Operating Partnership’s distributions.

Declaration Date	Record Date	Distribution/ Dividend Per Unit/ Share		Payment Date
2021
March 15, 2021	March 31, 2021	$	0.4950	April 15, 2021
June 15, 2021	June 30, 2021	$	0.5150	July 15, 2021
September 15, 2021	September 30, 2021	$	0.5200	October 15, 2021
2020
March 13, 2020	March 31, 2020	$	0.4750	April 15, 2020
June 15, 2020	June 30, 2020	$	0.4875	July 15, 2020
September 15, 2020	September 30, 2020	$	0.4875	October 15, 2020

In order to maintain REIT status, U.S. federal income tax laws generally require that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay taxes at regular corporate income tax rates to the extent that it annually distributes less than 100% of its taxable income. Our annual distribution will not be less than 90% of our REIT taxable income on an annual basis, determined without regard to the dividends paid deduction and excluding any net capital gains.

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Application of Critical Accounting Policies and Estimates

A complete discussion of our critical accounting policies and estimates is included in our Form 10-K for the fiscal year ended December 31, 2020. There have been no significant changes in our critical accounting policies and estimates since year end.

Market Risk

Our primary market risk exposure is interest rate risk with respect to our existing variable rate indebtedness. An increase in interest rates could make the financing of any acquisition by us more costly as well as increase the costs of our variable rate debt obligations. Rising interest rates could also limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness.

To manage our exposure to changes in LIBOR rates, as of September 30, 2021, we have effective interest rate swap agreements where the Company pays a weighted average fixed rate of 1.783% on a total notional amount of $700 million. Additionally, we have $900 million of notional amount of forward starting swaps that are not currently effective.

We do not hold or issue financial instruments for trading purposes and do not enter into derivative transactions that would be considered speculative positions. As of September 30, 2021, we had no variable rate borrowings. The following table provides information about the maturities of our debt subject to changes in interest rates, excluding the effect of the interest rate swaps discussed above:

	Debt maturing in																		Fair Value September 30,
	2021		2022		2023		2024			2025			Thereafter			Total			2021
	(in millions)
Fixed rate	$	—	$	—	$	—	$	1,050.0		$	800.0		$	2,350.0		$	4,200.0		$	4,573.1
Average interest rate	N/A		N/A		N/A		5.625		%	4.625		%	4.699		%	4.917		%
Variable rate	$	—	$	—	$	—	$	—		$	—		$	—		$	—		$	—
Average interest rate	N/A		N/A		N/A		N/A			N/A			N/A			N/A

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Cautionary Statement Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. In particular, statements pertaining to our capital resources and the amount and frequency of future distributions contain forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “could,” “may,” “will,” “should,” “seeks,” “likely,” “intends,” “plans,” “pro forma,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Examples of forward-looking statements include, but are not limited to, statements we make regarding the closing of the VICI Transaction and any benefits the Company expects to receive from such transactions, the anticipated degree to which the COVID-19 pandemic will impact our results of operations, our expectations regarding our future liquidity position and the liquidity position of our tenant (and guarantor), the timing and amount of any future dividends and our ability to further grow our portfolio.

Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

•The fact that future increases in reported COVID-19 cases in the jurisdictions in which our tenant operates may result in such jurisdictions adopting policies and procedures further restricting the amenities that can be offered at our properties or require those properties to temporarily close to the public.

•We are dependent on MGM (including its subsidiaries) unless and until we substantially diversify our portfolio, and an event that has a significant adverse effect on MGM’s business, financial position or results of operations (including the continuing effects of the COVID-19 pandemic) could have a material adverse effect on our business, financial position, results of operations, or cash flows.

•We depend on our properties leased to MGM for substantially all of our anticipated cash flows (including the properties held by the MGP BREIT Venture).

•We, or the MGP BREIT Venture, as applicable, may not be able to re-lease the properties following the expiration or termination of the lease.

•MGP’s sole material assets are Operating Partnership units representing 58.4% of the ownership interests in the Operating Partnership, as of September 30, 2021, over which we have operating control through our ownership of its general partner, and our ownership interest in the general partner of the Operating Partnership.

•Our ability to sell our properties is restricted by the terms of the leases or may otherwise be limited.

•We will have future capital needs and may not be able to obtain additional financing on acceptable terms.

•Covenants in our debt agreements may limit our operational flexibility, and a covenant breach or default could materially adversely affect our business, financial position, results of operations, or cash flows.

•Covenants in the debt agreements at the MGP BREIT Venture may limit its ability to pay distributions to us, which could materially affect our business, financial position, results of operations, or cash flows.

•Rising expenses could reduce cash flow and funds available for future acquisitions and distributions.

•We are dependent on the gaming industry and may be susceptible to the risks associated with it, which could materially adversely affect our business, financial position, results of operations or cash flows.

•Because a significant number of our major gaming resorts are concentrated on the Las Vegas Strip, we are subject to greater risks than a company that is more geographically diversified.

•Our pursuit of investments in, and acquisitions or development of, additional properties (including our right of first offer with respect to any future gaming developments by MGM on the undeveloped land adjacent to Empire City) may be unsuccessful or fail to meet our expectations.

•We may face extensive regulation from gaming and other regulatory authorities, and our operating agreement provides that any of our shares held by investors who are found to be unsuitable by state gaming regulatory authorities are subject to redemption.

•Required regulatory approvals can delay or prohibit future leases or transfers of our gaming properties, which could result in periods in which we are unable to receive rent for such properties.

•Net leases may not result in fair market lease rates over time, which could negatively impact our income and reduce the amount of funds available to make distributions to shareholders.

•Our dividend yield could be reduced if we were to sell any of our properties in the future.

•There can be no assurance that we will be able to make distributions to our Operating Partnership unitholders and Class A shareholders or maintain our anticipated level of distributions over time.

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•An increase in market interest rates could increase our interest costs on existing and future debt and could adversely affect the price of our Class A shares.

•We are controlled by MGM, whose interests in our business may conflict with ours or yours.

•We are dependent on MGM for the provision of administration services to our operations and assets.

•MGM’s historical results may not be a reliable indicator of its future results.

•Our operating agreement contains provisions that reduce or eliminate duties (including fiduciary duties) of our directors, officers and others.

•If MGM engages in the same type of business we conduct, our ability to successfully operate and expand our business may be hampered.

•The MGM-MGP Master Lease and other agreements governing our relationship with MGM were not negotiated on an arm’s-length basis and the terms of those agreements may be less favorable to us than they might otherwise have been in an arm’s-length transaction.

•In the event of a bankruptcy of the MGM-MGP Master Lease’s tenant, a bankruptcy court may determine that the MGM-MGP Master Lease is not a single lease but rather multiple severable leases, each of which can be assumed or rejected independently, in which case underperforming leases related to properties we own that are subject to the MGM-MGP Master Lease could be rejected by the tenant while tenant-favorable leases are allowed to remain in place.

•MGM may undergo a change of control without the consent of us or of our shareholders.

•If MGP fails to remain qualified to be taxed as a REIT, it will be subject to U.S. federal income tax as a regular corporation and could face a substantial tax liability, which would have an adverse effect on our business, financial position, results of operations, or cash flows.

•Legislative or other actions affecting REITs could have a negative effect on us.

•The anticipated benefits of our prior, anticipated and future investments and acquisitions, including our investment in MGP BREIT Venture, may not be realized fully and may take longer to realize than expected.

•We may be unable to complete the VICI Transaction on the terms described herein or at all, and failure to complete the VICI Transaction may adversely affect our business and the price of our Class A shares.

•The VICI Transaction is subject to the satisfaction of closing conditions, including the receipt of regulatory approvals, which could delay or prevent the completion of the VICI Transaction.

•Potential litigation instituted against us, MGM, VICI or our respective directors challenging the VICI Transaction may prevent the VICI Transaction from becoming effective within the expected timeframe or at all.

•The VICI Transaction’s master transaction agreement subjects us to restrictions on our business activities during the pendency of the VICI Transaction.

•The announcement and pendency of the VICI Transaction may have an adverse effect on our business, operating results and price of our Class A shares.

•If VICI’s anticipated debt financing for the VICI Transaction becomes unavailable, the VICI Transaction may not be completed.

•The combined company will have substantial indebtedness following the completion of the VICI Transaction, which will increase the risks related to substantial indebtedness that we currently face.

While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Risk Factors.”

Any forward-looking statement made by us in this Form 10-Q speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. If we update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.

You should also be aware that while we from time to time communicate with securities analysts, we do not disclose to them any material non-public information, internal forecasts or other confidential business information. Therefore, you should not assume that we agree with any statement or report issued by any analyst, irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain projections, forecasts or opinions, those reports are not our responsibility and are not endorsed by us.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

We incorporate by reference the information appearing under “Market Risk” in Part I, Item 2 of this Form 10-Q.

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Item 4.    Controls and Procedures

Controls and Procedures with respect to MGP

Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) have concluded that our disclosure controls and procedures (as such term is defined in Rules 13(a)-15(e) and 15d-15(e) under the Exchange Act) were effective as of September 30, 2021 to provide reasonable assurance that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and regulations and to provide that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures. This conclusion is based on an evaluation as required by Rule 13a-15(b) under the Exchange Act conducted under the supervision and participation of the principal executive officer and principal financial officer along with company management.

Controls and Procedures with respect to the Operating Partnership

In this “Controls and Procedures with respect to the Operating Partnership” section, the terms “we,” “our” and “us” refer to the Operating Partnership together with its consolidated subsidiaries, and “management,” “principal executive officer” and “principal financial officer” refers to the management, principal executive officer and principal financial officer of the Operating Partnership and of the Operating Partnership’s general partner.

Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) have concluded that our disclosure controls and procedures (as such term is defined in Rules 13(a)-15(e) and 15d-15(e) under the Exchange Act) were effective as of September 30, 2021 to provide reasonable assurance that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and regulations and to provide that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures. This conclusion is based on an evaluation as required by Rule 13a-15(b) under the Exchange Act conducted under the supervision and participation of the principal executive officer and principal financial officer along with company management.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2021, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II.    OTHER INFORMATION

Item 1.    Legal Proceedings

See discussion of legal proceedings in Note 11 in the accompanying consolidated financial statements.

Item 1A. Risk Factors

A description of certain factors that may affect our future results and risk factors is set forth in our Annual Report on Form 10-K for the year ended December 31, 2020. Except as discussed below, there have been no material changes from the risk factors previously disclosed in our 2020 Annual Report on Form 10-K.

Covenants in our debt agreements may limit our operational flexibility, and a covenant breach or default could materially adversely affect our business, financial position or results of operations. The agreements governing our indebtedness contain customary covenants, including restrictions on the Operating Partnership’s ability to grant liens on the Operating Partnership’s assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations and pay certain distributions and other restricted payments. In addition, the Operating Partnership is required to comply with certain financial covenants. These restrictions may limit our operational flexibility. Covenants that limit our operational flexibility as well as defaults under the Operating Partnership’s debt instruments could have a material adverse effect on our business, financial position or results of operations.

In addition, covenants in the MGP BREIT Venture’s loan agreement may limit its ability to pay distributions to us. In particular, the MGP BREIT Venture loan agreement requires that the tenant EBITDAR to MGP BREIT Venture cash interest ratio is maintained above a specified level. If this ratio is not met for two consecutive fiscal quarters, then the borrowers will be unable to distribute excess cash flows to us unless and until we provide an excess cash flow guarantee (the “ECF Guaranty”).

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As of December 31, 2020, the ratio was not met for two consecutive quarters and, as a result, in April 2021, the Operating Partnership and an entity affiliated with BREIT each delivered an ECF Guaranty to the lenders covering all distributions since January 1, 2021. The ECF Guaranty provides that the MGP BREIT Venture may distribute an aggregate amount of cash not to exceed 9.9% of the principal amount of the MGP BREIT Venture’s outstanding indebtedness under the loan agreement, after which distributions must remain at the MGP BREIT Venture in a restricted cash account until such time as the tenant EBITDAR to MGP BREIT Venture cash interest ratio is met for two consecutive quarters. In addition, in the event of a default under the loan agreement during this period, we will be required to return our share of amounts distributed to us while the ratio was not met. Any limits on the MGP BREIT Venture’s ability to distribute cash to us, or any requirement for us to return the cash distributed to us from the MGP BREIT Venture during the period of non-compliance, could adversely affect our business, results of operations, or cash flows.

We may be unable to complete the VICI Transaction on the terms described herein or at all, and failure to complete the VICI Transaction may adversely affect our business and the price of our Class A shares. Completion of the VICI Transaction remains subject to a number of conditions, including approval by VICI’s shareholders and receipt of certain gaming regulatory approvals, and no assurance can be given that such closing conditions will be satisfied or otherwise waived. See “—The VICI Transaction is subject to the satisfaction of closing conditions, including the receipt of regulatory approvals, which could delay or prevent the completion of the VICI Transaction.” As a result, the possible timing of the VICI Transaction and the likelihood of the completion of the VICI Transaction are uncertain, and there can be no assurance that the VICI Transaction will be completed on the expected terms contemplated by the master transaction agreement, on the currently anticipated timing, or at all.

If the transactions contemplated by the master transaction agreement are not completed, or are not completed on a timely basis, our business may be adversely affected and, without realizing any of the benefits of having completed the VICI Transaction, we may be subject to additional risks, costs and expenses, including, but not limited to, the following:

•we will be required to pay our costs relating to the VICI Transaction, such as legal, accounting, financial advisory and printing fees, whether or not the VICI Transaction is completed;

•the diversion of time and resources committed by our management to matters relating to the VICI Transaction could otherwise have been devoted to pursuing other beneficial opportunities;

•we may be subject to negative publicity or be negatively perceived by the investment or business communities as a result of the failure to consummate the VICI Transaction;

•under the master transaction agreement, we are subject to certain restrictions on the conduct of our business prior to consummating the VICI Transaction, which may affect our ability to execute certain of our business strategies or respond effectively to competitive pressures and industry developments while the master transaction agreement remains in effect;

•if our board of directors seeks an alternative transaction to the VICI Transaction, a potential third-party acquiror or merger partner may propose to pay a lower price to our shareholders as a result of the applicable termination fee under the master transaction agreement;

•the price of our Class A shares may decline to the extent that the current market price of Class A shares reflects a higher price than it otherwise would have based on the assumption that the VICI Transaction will be consummated;

•we would have incurred significant expenses relating to the VICI Transaction that we may be unable to recover; and

•we may be subject to litigation related to the failure to consummate the VICI Transaction or to perform our obligations under the master transaction agreement.

In addition, the master transaction agreement includes customary termination rights for each party, and if the master transaction agreement is terminated under certain circumstances, including but not limited to the breach, violation or failure to perform by us any of our representations, warranties, covenants or agreements in the master transaction agreement, we may be required to pay VICI a termination fee as a result of such termination.

Furthermore, any increased costs associated with the delay or abandonment of the VICI Transaction, in addition to the continuing impact of COVID-19 on our tenant (and guarantor), may adversely impact our ability to remain in compliance with our covenants contained in the agreements governing our indebtedness, and our liquidity.

The VICI Transaction is subject to the satisfaction of closing conditions, including the receipt of regulatory approvals, which could delay or prevent the completion of the VICI Transaction. Completion of the VICI Transaction remains subject to the receipt of gaming regulatory approvals in the jurisdictions in which we and VICI own property. There can be no assurance that any required gaming approvals will be obtained. In addition, the regulatory authorities from which

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approvals are required may impose conditions on the consummation of the VICI Transaction or require changes to the terms of the VICI Transaction or agreements to be entered into in connection with the VICI Transaction. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying or impeding the completion of the VICI Transaction, imposing additional costs or limitations on the combined company following the completion of the VICI Transaction, or limiting the revenue of the combined company following the completion of the VICI Transaction, any of which might reduce the anticipated benefits to us of the VICI Transaction or have an adverse effect on our business, financial condition and results of operations.

Completion of the VICI Transaction is also subject to the satisfaction of additional closing conditions, including, among others, (i) receipt of approval of VICI’s shareholders (which was received on October 29, 2021), (ii) the absence of any restraining order, injunction or other judgment, order or decree from any applicable governmental authority prohibiting the consummation of the VICI Transaction, (iii) the effectiveness of the registration statement for VICI’s shares to be issued in the VICI Transaction and the authorization for listing of those shares on the New York Stock Exchange, (iv) the absence of a material adverse effect on the parties to the master transaction agreement, (v) the accuracy of each party’s representations and warranties in the master transaction agreement, subject to customary materiality standards, and (vi) compliance of each party with its respective covenants under the master transaction agreement.

No assurance can be given that these or any other required conditions to closing will be satisfied. If the conditions precedent to the VICI Transaction are not satisfied, the VICI Transaction will not be completed unless such conditions are validly waived. Such conditions may jeopardize or delay the completion of the VICI Transaction or may reduce the anticipated benefits of the VICI Transaction.

Potential litigation instituted against us, MGM, VICI or our respective directors challenging the VICI Transaction may prevent the VICI Transaction from becoming effective within the expected timeframe or at all. Potential litigation related to the VICI Transaction may result in injunctive or other relief prohibiting, delaying or otherwise adversely affecting the parties’ ability to complete the VICI Transaction. One of the conditions to the VICI Transaction under the master transaction agreement is that no temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any governmental authority of competent jurisdiction prohibiting consummation of the VICI Transaction or any other transactions contemplated by the master transaction agreement shall be in effect. Accordingly, any such injunctive or other relief may prevent the VICI Transaction from becoming effective within the expected timeframe or at all. In addition, defending against such claims may be expensive and divert management’s attention and resources, which could adversely affect the respective businesses of us, MGM and VICI.

The VICI Transaction’s master transaction agreement subjects us to restrictions on our business activities during the pendency of the VICI Transaction. The master transaction agreement subjects us to restrictions on our business activities and generally obligates us to operate our businesses in the ordinary course and in a manner consistent with past practice in all material respects during the pendency of the VICI Transaction, absent VICI’s prior written consent and subject to certain other limited exceptions. These restrictions could prevent us from pursuing attractive business opportunities or responding effectively to competitive pressures and industry developments that arise prior to the consummation of the VICI Transaction or termination of the master transaction agreement and that are outside the ordinary course of business. In particular, the master transaction agreement restricts us from entering into certain material contracts, making certain acquisitions and dispositions or taking other specified actions absent VICI’s prior written consent. If we are unable to take actions we believe are beneficial, such restrictions could have an adverse effect on our business, financial condition and results of operations prior to the completion of the VICI Transaction.

The announcement and pendency of the VICI Transaction may have an adverse effect on our business, operating results and price of our Class A shares. We are subject to risks in connection with the announcement and pendency of the VICI Transaction, including, but not limited to:

•market reaction to the announcement and pendency of the VICI Transaction;

•changes in our business, our operating results, the market price of our Class A shares and our prospects generally;

•market assessments of the likelihood that the VICI Transaction will be consummated;

•the amount of consideration offered per share is based on a fixed exchange ratio, and will not be adjusted to account for changes in our or VICI’s respective business, assets, liabilities, prospects, outlook, financial condition or results of operations, or any other changes, during the pendency of the VICI Transaction, including any change in the market price of, analyst estimates of, or projections relating to, our Class A shares or VICI’s shares;

•potential adverse effects on our relationships with any current or potential business partners due to uncertainties about the VICI Transaction;

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•we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the VICI Transaction, and many of these fees and costs are payable by us regardless of whether the VICI Transaction is completed;

•we may incur additional or unexpected costs, liabilities or delays in connection with or with respect to the VICI Transaction;

•potential adverse effects to our ability to raise capital during the pendency of the VICI Transaction, or the impact of the VICI Transaction on our or VICI’s existing or future indebtedness;

•the pendency and outcome of any legal proceedings that may be instituted against us, our directors, executive officers and others relating to the transactions contemplated by the master transaction agreement;

•the inherent risks, costs and uncertainties associated with integrating the businesses successfully and risks of not achieving all or any of the anticipated benefits of the VICI Transaction, or the risk that the anticipated benefits of the VICI Transaction may not be fully realized or take longer to realize than expected;

•competitive pressures in the markets in which we and VICI operate;

•potential restrictions on the conduct of our business prior to the completion of the VICI Transaction pursuant to the terms of the master transaction agreement;

•our ability or the ability of our shareholders to realize the anticipated benefits of the VICI Transaction;

•the occurrence of any event, change or other circumstances that could give rise to the termination of the master transaction agreement; and

•the possibility of disruption to our business, including increased costs and diversion of management time and resources that could otherwise have been devoted to other opportunities that may have been beneficial to us.

If VICI’s anticipated debt financing for the VICI Transaction becomes unavailable, the VICI Transaction may not be completed. Pursuant to the master transaction agreement, it is contemplated that VICI will finance all or a portion of the cash component of the VICI Transaction consideration with financing. Contemporaneously with the execution of the master transaction agreement, VICI entered into a commitment letter (the “Commitment Letter”) with certain lenders (collectively, the “Debt Financing Lenders”) pursuant to which the Debt Financing Lenders provided a financing commitment to fund the VICI Transaction.

The obligations of the Debt Financing Lenders under the Commitment Letter are subject to certain conditions, and there can be no assurance that such conditions will be satisfied or waived as anticipated to facilitate the VICI Transaction. In the event that the financing contemplated by the Commitment Letter is not available or is available in less than the full amount, other necessary financing may not be available on acceptable terms, in a timely manner or at all. Although the completion of the VICI Transaction and the obligations of VICI under the master transaction agreement are not contingent on the availability of debt financing, if other financing becomes necessary and VICI is unable to obtain such additional financing, the VICI Transaction may not be completed.

The combined company will have substantial indebtedness following the completion of the VICI Transaction, which will increase the risks related to substantial indebtedness that we currently face. As of September 30, 2021, we and VICI have substantial indebtedness. The combined company will incur debt to finance the VICI Transaction, further increasing the amount of indebtedness outstanding. The substantial indebtedness of the combined company following the VICI Transaction will cause the combined company to be subject to increased risks associated with debt financing, including an increased risk that cash flows are insufficient to meet required payments on indebtedness.

This amount of leverage could have important consequences, including to holders of the combined company’s shares, including, but not limited to, the following:

•the combined company may be required to use a substantial portion of its cash flow from operations to make interest and principal payments on its debt, which will reduce funds available for operations, future business opportunities and dividends;

•the combined company may have limited flexibility to react to changes in its business and its industry;

•it may be more difficult for the combined company to satisfy its other obligations;

•the combined company may have a limited ability to borrow additional funds or to sell assets to raise funds if needed for working capital, capital expenditures, acquisitions or other purposes, and it may have a limited ability to refinance any of the combined indebtedness on commercially reasonable terms or at all;

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•the combined company may become more vulnerable to general adverse economic and industry conditions and changes in interest rates, including changes in interest rates resulting from the discontinuation of LIBOR; and

•the combined may be at a disadvantage compared to its competitors that have less debt.

If the combined company cannot generate sufficient cash from operations to meet its debt service obligations, the combined company may need to reduce or delay capital expenditures, the development of its business generally and any acquisitions or reduce its dividends. If the combined company is unable to meet its debt service and repayment obligations (or those of its subsidiaries following the VICI Transaction), the obligor under such indebtedness would be in default under the terms of the applicable credit agreement or indenture, which would allow its lenders or noteholders to declare all outstanding indebtedness thereunder to be due and payable and terminate any commitments to lend thereunder. If the amounts outstanding under any of the credit facilities or indentures at the combined company were to be accelerated, we cannot assure you that the assets of the combined company would be sufficient to repay in full the money owed.

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Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

In connection with the registered offerings of less than 0.1 million Class A shares under the Company’s ATM program for the three months ended September 30, 2021, the Operating Partnership issued an equal amount of Operating Partnership units to the Company pursuant to an applicable exemption form, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.

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Item 6.    Exhibits

2.1	Master Transaction Agreement, by and among MGM Resorts International, MGM Growth Properties LLC, MGM Growth Properties Operating Partnership LP, VICI Properties Inc., Venus Sub LLC, VICI Properties L.P. and VICI Properties OP LLC, dated as of August 4, 2021* (incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed with the Commission on August 5, 2021)
4.1	Seventh Supplemental Indenture, dated as of September 23, 2021, to the Indenture dated as of April 20, 2016, by and among MGM Growth Properties Operating Partnership LP, MGP Finance Co-Issuer, Inc., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K filed with the Commission on September 27, 2021)
4.2	Seventh Supplemental Indenture, dated as of September 23, 2021, to the Indenture dated as of August 12, 2016, by and among MGM Growth Properties Operating Partnership LP, MGP Finance Co-Issuer, Inc., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 of our Current Report on Form 8-K filed with the Commission on September 27, 2021)
4.3	Seventh Supplemental Indenture, dated as of September 23, 2021, to the Indenture dated as of September 21, 2017, by and among MGM Growth Properties Operating Partnership LP, MGP Finance Co-Issuer, Inc., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.3 of our Current Report on Form 8-K filed with the Commission on September 27, 2021)
4.4	Seventh Supplemental Indenture, dated as of September 23, 2021, to the Indenture dated as of January 25, 2019, by and among MGM Growth Properties Operating Partnership LP, MGP Finance Co-Issuer, Inc., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.4 of our Current Report on Form 8-K filed with the Commission on September 27, 2021)
4.5	First Supplemental Indenture, dated as of September 23, 2021, to the Indenture dated as of June 5, 2020, by and among MGM Growth Properties Operating Partnership LP, MGP Finance Co-Issuer, Inc., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.5 of our Current Report on Form 8-K filed with the Commission on September 27, 2021)
4.6	First Supplemental Indenture, dated as of September 23, 2021, to the Indenture dated as of November 19, 2020, by and among MGM Growth Properties Operating Partnership LP, MGP Finance Co-Issuer, Inc., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.6 of our Current Report on Form 8-K filed with the Commission on September 27, 2021)
22.1	Subsidiary Guarantors
31.1	Certification of Chief Executive Officer of MGM Growth Properties LLC pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Executive Officer of MGM Growth Properties Operating Partnership LP pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3	Certification of Chief Financial Officer of MGM Growth Properties LLC pursuant to Rule 13a-14(a) and15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.4	Certification of Chief Financial Officer of MGM Growth Properties Operating Partnership LP pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer of MGM Growth Properties LLC pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2	Certification of Chief Executive Officer of MGM Growth Properties Operating Partnership LP pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

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32.3		Certification of Chief Financial Officer of MGM Growth Properties LLC pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.4		Certification of Chief Financial Officer of MGM Growth Properties Operating Partnership LP pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		The cover page from this Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 has been formatted in Inline XBRL.
*	Exhibits 32.1, 32.2, 32.3 and 32.4 shall not be deemed filed with the SEC, nor shall they be deemed incorporated by reference in any filing with the SEC under the Exchange Act or the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MGM Growth Properties LLC
Date: November 3, 2021	By:	/s/ JAMES C. STEWART
		James C. Stewart
		Chief Executive Officer (Principal Executive Officer)
Date: November 3, 2021		/s/ ANDY H. CHIEN
		Andy H. Chien
		Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MGM Growth Properties Operating Partnership LP
	By: MGM Growth Properties OP GP LLC, its general partner
Date: November 3, 2021	By:	/s/ JAMES C. STEWART
		James C. Stewart
		Chief Executive Officer (Principal Executive Officer)
Date: November 3, 2021		/s/ ANDY H. CHIEN
		Andy H. Chien
		Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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