Mirage Hotel sold for $1.075B

Hard Rock International to buy The Mirage Hotel & Casino from MGM

MGM Resorts International (MGM) announced an agreement with Hard Rock International to sell the operations of The Mirage Hotel & Casino (“The Mirage”). The deal, which is valued at $1.075 billion in cash. The deal is likely to be completed in the second half of 2022, subject to regulatory approvals.

The Mirage, which was opened in 1989, was acquired by MGM Resorts in 2000. Per the agreement, MGM Resorts will retain “The Mirage name and brand, licensing it to Hard Rock royalty-free for a maximum period of three years while it finalizes its plans to rebrand the property.”

MGM Resorts anticipates net cash proceeds following taxes and estimated fees to be nearly $815 million. 

Goldman Sachs

Goldman Sachs analyst Stephen Grambling notes that MGM Resorts (MGM) announced it has entered into an agreement to sell the operations of The Mirage to Hard Rock International for $1.075B in cash and $815M after taxes and estimated fees.

Concurrently, VICI Properties (VICI) announced that in connection with the deal, they have agreed to enter into a new separate lease with Hard Rock related to the operations of the Mirage with similar terms as the current MGM Master Lease, Grambling adds, highlighting that VICI has entered into an agreement to purchase MGP, of which MGM is a controlling shareholder.

The analyst believes the deal could be a strategic positive to MGM given the potential to drive deleveraging for the enterprise. He also notes the property had seen improving margins but decelerating growth pre-pandemic, and may require substantial capex to be reinvigorated. The deal therefore would allow MGM to focus on capital allocation elsewhere, the analyst argues. Grambling has a Neutral rating on MGM Resorts with a price target of $49.

CBRE

CBRE analyst John DeCree called this a “record multiple” as well as a “winner, winner, chicken dinner deal for all parties involved, plus some bystanders,” such as Wynn (WYNN) and Caesars (CZR), who have significant Las Vegas exposure.

Mirage sets a new bar for Las Vegas operating company valuation, which makes DeCree tell investors that he “can’t help but get excited about the prospects” for Caesars, which is planning to sell one of its Vegas resorts in early 2022, and Wynn, which “is sitting on what is arguably the most valuable casino resort in Las Vegas, if not the country,” according to the analyst. DeCree has Buy ratings on MGM, Caesars and Wynn shares.

MGM is up $1.26 to $41.60.

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Merger in the REIT space

Equity Commonwealth to acquire Monmouth Real Estate for $3.4B

Equity Commonwealth (EQC) and Monmouth Real Estate (MNR) announced that they have entered into a definitive merger agreement by which Equity Commonwealth will acquire Monmouth in an all-stock transaction, valued at approximately $3.4B, including the assumption of debt.

The combined company is expected to have a pro forma equity market capitalization of approximately $5.5B.

Under the terms of the agreement, Monmouth shareholders will receive 0.67 shares of Equity Commonwealth stock for every share of Monmouth stock they own.

Based on the closing price for Equity Commonwealth on May 4, this represents approximately $19.40 per Monmouth share.

The merger agreement provides for Monmouth to declare and pay one additional regular quarterly common stock dividend of 18c per share without Equity Commonwealth paying a corresponding common dividend to its shareholders.

Accordingly, the total consideration to be received by the Monmouth shareholders in the transaction is $19.58 per Monmouth share.

Equity Commonwealth and Monmouth shareholders are expected to own approximately 65% and 35%, respectively, of the pro forma company following the close of the transaction.

Monmouth’s portfolio is comprised of 120 properties totaling 24.5M square feet. In addition, Monmouth has six properties totaling 1.8M square feet under contract and leased to investment grade tenants.

Closings for these acquisitions are expected in 2021 and 2022.

The company will continue to be led by president and CEO David Helfand and the existing senior management team.

Upon closing, the number of trustees on Equity Commonwealth’s board will be expanded to 10, with two individuals designated by Monmouth’s board.

Sam Zell will remain the chairman of the board of trustees.

The transaction is expected to close during the second half of 2021, subject to customary closing conditions, including approval by the common shareholders of both Equity Commonwealth and Monmouth.

Sam Zell to become Chairman of the new company

The board of trustees of Equity Commonwealth and the board of directors of Monmouth Real Estate have each unanimously approved the transaction.

Equity Commonwealth ( EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States. EQC’s same property portfolio is comprised of 4 properties and 1.5 million square feet.

Monmouth Real Estate Investment specializes in single tenant, net-leased industrial properties, subject to long-term leases, primarily to investment-grade tenants. Monmouth Real Estate is a fully integrated and self-managed real estate company, whose property portfolio consists of 121 properties, containing a total of approximately 24.5 million rentable square feet, geographically diversified across 31 states. 

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Northview REIT sold for $4.8B

Northview REIT to be acquired by Starlight, KingSett for $36.25 per unit

Northview Apartment Real Estate Investment Trust (NPRUF) announced that it has entered into an arrangement agreement with affiliates of Starlight Group Property Holdings pursuant to which the Purchasers will acquire Northview, and the holders of Northview’s outstanding trust units will receive $36.25 per Unit in cash in a transaction valued at $4.8 billion including net debt.

Northview REIT sold for $4.8B, Stockwinners

Under the Arrangement Agreement, the Purchasers will acquire Northview, and the holders of Northview’s outstanding Units will receive $36.25 per Unit.

The Offer Price represents a total equity value of approximately $2.5 billion on a fully diluted basis and a total transaction value of approximately $4.8 billion including the assumption of net debt. The Transaction is not subject to a financing condition.

Unitholders will be able to elect to receive 100% of the Offer Price in the form of cash.

Starlight buys Northview REIT, Stockwinners

Alternatively, unitholders may elect to receive all or a portion of the Offer Price in units of a new, multi-residential fund that would own a geographically diverse portfolio of Northview properties located in six Canadian provinces and two territories.

The High Yield Fund will apply to list its units on a Canadian securities exchange concurrently with the close of the Transaction. The listing will be subject to the High Yield Fund fulfilling all of the initial listing requirements and conditions of the Exchange.

Further details with respect to the High Yield Fund will be provided in the management information circular to be mailed to Northview Unitholders. Elections to receive High Yield Fund units will be subject to proration.

All-Cash Elections will not be subject to proration. Unitholders not specifying an election will be deemed to have elected to receive the All-Cash Consideration.

Pursuant to the Arrangement Agreement, Northview has an initial 30-day go-shop period, beginning on February 19, 2020 and ending on March 20, 2020, during which it is permitted to actively solicit, evaluate and enter into negotiations with third parties that express an interest in acquiring Northview. Northview has the option to extend the Go-Shop Period by up to 30 days, in certain circumstances.

Mr. Daniel Drimmer, Chief Executive Officer and President of Starlight, has committed to vote the Units he beneficially owns, controls or directs in favour of, or tender his Units into, any all-cash superior proposal received during the Go-Shop Period, subject to certain terms and conditions, pursuant to a voting and support agreement.

The Arrangement Agreement also provides a two-tier termination fee structure such that if Northview is successful in completing a transaction pursuant to a superior proposal received during the Go-Shop Period, there will be a termination fee payable to the Purchasers of $37.7 million.

If a transaction is completed pursuant to a superior proposal received following the expiry of the Go-Shop Period, the Purchasers will be entitled to a termination fee of $88.0 million.

The Purchasers will have the right to match any superior proposals received either during or after the Go-Shop Period. The Transaction is structured as a statutory plan of arrangement under the Alberta Business Corporations Act.

Completion of the Transaction requires approval of at least 66 2/3% of the votes cast by unitholders and holders of special voting units, as well as the approval by a simple majority of votes cast by disinterested unitholders and holders of special voting units, excluding Starlight, its affiliates and any other unitholders required to be excluded under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.

The Transaction is also subject to approval of the Alberta Court of Queen’s Bench, regulatory approvals, consents and approvals from Canada Mortgage and Housing Corporation and certain of Northview’s lenders and the satisfaction of other customary closing conditions.

Northview expects to continue to pay a monthly distribution of $0.1358 per trust unit through closing of the Transaction. The Transaction is expected to close by Q3 of 2020.

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Liberty Property Trust sold for about $61 per share

Prologis to acquire Liberty Property for $12.6B

Prologis (PLD) and Liberty Property Trust (LPT) announced that the two companies have entered into a definitive merger agreement by which Prologis will acquire Liberty in an all-stock transaction, valued at approximately $12.6B, including the assumption of debt.

Prologis buys Liberty Property Trust, Stockwinners

The board of Prologis and the board of trustees of Liberty have each unanimously approved the transaction.

Warehouses and logistics facilities — Liberty’s specialty — have become a hot part of the real estate market as more shopping moves online and demand for the space increases. 

The acquisition gives Prologis a portfolio of 107 million square feet of logistics properties that’s owned or managed, as well as buildings under construction and land for future development. It also includes 4.9 million square feet of office space.

Prologis plans to dispose of approximately $3.5B of assets on a pro rata share basis. This includes $2.8B of non-strategic logistics properties and $700M of office properties.

This transaction is anticipated to create immediate cost synergies of approximately $120M from corporate general and administrative cost savings, operating leverage, lower interest expense and lease adjustments.

Initially, this transaction is expected to increase annual core funds from operations per share by 10c-12c. Upon stabilization of the acquired development assets, completion of the planned non-strategic asset sales and redeployment of the related proceeds, annual stabilized core FFO per share is forecasted to increase by an additional 4c per share for a total of 14c-16c.

Liberty holds mostly class A properties, Stockwinners

Further, there are future synergies with the potential to generate approximately $60M in annual savings, including $10M from revenue synergies and $50M from incremental development value creation.

“Liberty’s logistics assets are highly complementary to our U.S. portfolio, and this acquisition increases our holdings and growth potential in several key markets,” Prologis Chairman and Chief Executive Hamid R. Moghadam said in the statement.

Under the terms of the agreement, Liberty shareholders will receive 0.675x of a Prologis share for each Liberty share they own.

The transaction, which is currently expected to close in Q1 of 2020, is subject to the approval of Liberty shareholders and other customary closing conditions.

Liberty shares have risen 21% this year, compared with the 55% jump in Prologis shares. 

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Vail Resorts buys Peak Resorts for $11.00 per share

The deal is valued about $170 million

Peak Resorts (SKIS) announced that it has entered into a definitive merger agreement with Vail Resorts, Inc. (MTN) pursuant to which Vail Resorts will acquire all outstanding shares of common stock of Peak Resorts for $11.00 per share in cash.

Vail Resorts to buy Peak Resorts, Stockwinners

The transaction represents a 116% premium to Peak Resorts’ closing stock price on July 19, 2019.

The transaction is expected to close in fall 2019 and is subject to certain conditions, including a vote of Peak Resorts shareholders and antitrust clearance.

Vail Resorts buys Peak Resorts, shares jump. Stockwinners

The transaction was approved by the Boards of Directors of both companies. Peak Resorts’ Board of Directors also recommends that the Company’s shareholders approve the transaction.

Moelis & Company LLC is serving as financial advisor to Peak Resorts. Perkins Coie LLP, Sandberg Phoenix & von Gontard P.C. and Armstrong Teasdale LLP are serving as legal counsel to Peak Resorts.

About the Companies

Peak Resorts, Inc. owns, operates, and leases day and overnight drive ski resorts in the United States. Its resorts activities and amenities include skiing, snowboarding, terrain parks, tubing, dining, lodging, equipment rentals and sales, ski and snowboard instruction, golf, zip lines, mountain coasters, mountain biking, hiking, paint ball, and other summer activities. It operates 17 ski resorts primarily located in the Northeast, Mid-Atlantic, and Midwest.

Vail Resorts has been on a shopping spree, Stockwinners

Vail Resorts, Inc. operates mountain resorts and urban ski areas in the United States. The company operates through three segments: Mountain, Lodging, and Real Estate. The Mountain segment operates 11 mountain resorts, including Vail Mountain, Breckenridge Ski, Keystone, and Beaver Creek resorts in Colorado; Park City resort in Utah; Heavenly Mountain, Northstar, and Kirkwood Mountain resorts in the Lake Tahoe area of California and Nevada; Whistler Blackcomb in Canada; Stowe Mountain resort in Vermont; and Perisher in Australia, as well as 3 urban ski areas, such as Wilmot Mountain in Wisconsin, Afton Alps in Minnesota, and Mount Brighton in Michigan.

Vail Resorts expands its footprint by purchasing Peak Resorts, Stockwinners

Its resorts offer various winter and summer recreational activities. The Lodging segment owns and/or manages various luxury hotels and condominiums under the RockResorts brand, and other lodging properties; various condominiums located in proximity to the company’s mountain resorts; destination resorts; and golf courses, as well as offers resort ground transportation services. This segment operates approximately 5,400 owned and managed hotel and condominium units.

The Real Estate segment owns, develops, and sells real estate properties in and around the company’s resort communities. 

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Target reports on Wednesday

What to watch in Target’s earnings report

target

Target (TGT) is scheduled to report results of its third fiscal quarter before the market open on Wednesday, November 15, with a conference call scheduled for 8:00 am EDT.

What to watch for:

1. COMPETITION WITH ONLINE RETAILERS

Retailers like Target have been hurt by an in online shopping on sites like Amazon (AMZN) rather than at brick-and-mortar stores. Analysts and investors will be listening for Target executives to comment on Amazon’s acquisition of Whole Foods.

Earlier this month, Reuters said Target and other retailers are using legal rights in real estate agreements to limit the initiatives of Amazon’s Whole Foods Market in malls, adding that the retailers have legal rights that enable them to limit Amazon’s Whole Foods activity near their location and bans on Amazon lockers and delivery operations near Target stores in Illinois and Florida have already been established. Morgan Stanley analyst Kimberly Greenberger told investors that her firm’s latest apparel survey lends support to her belief that Amazon is quickly gaining traction at the expense of department stores and certain specialty retailers.

Target Chairman and CEO Brian Cornell said that the retail environment is “crowded” and the environment will continue to be challenging.

2. GUIDANCE

Following better than expected second quarter results, Target forecast third quarter adjusted EPS of 75c-95c and said both Q3 and Q4 comp growth will be within the range the company experienced in Q1 and Q2. The company expects FY17 comp sales growth to be around flat, plus or minus 1%.

Target again raised its FY17 adjusted EPS view to $4.34-$4.54 from $3.80-$4.20.

3. HOLIDAY SEASON UPDATE

Target recently announced plans for the holiday season, including free shipping and gifts under $15.

The company is also allowing customers to receive their orders in several ways, including visiting one of its 1,800 stores, ordering online for delivery from Target.com, using Order Pickup or using Target Restock.

Last month Target said it planned to hire about 100,000 team members across the country for the upcoming holiday season, up from the 70,000 employees it hired last year, and said it would hire 4,500 team members at the company’s distribution and fulfillment centers to replenish products to stores and fulfill digital sales throughout the season. Earlier this month, Target announced its nationwide expansion on Google Express (GOOG, GOOGL), including voice- activated shopping, as well as the addition of Target REDcard as a payment option in 2018.

4. STORE REMODELS, CLOSURES

Target is expanding its plans to remodel supercenters and open smaller stores in cities. Target will remodel over 55% of its current stores by year end 2020.

CEO Brian Cornell said sales have increased 2%-4% at recently remodeled stores.

In addition to the 110 stores remodeled in 2017, Target plans to fully renovate more than 325 in 2018, 350 in 2019 and 325 in 2020.

CNBC said Target is planning to close about a dozen underperforming stores in Michigan, Florida, Illinois, and Texas, with those locations closing in February of 2018.

“We have a rigorous process in place to evaluate the performance of every store on an annual basis, closing or relocating underperforming locations as needed,” a spokesperson said, adding that “Typically, a store is closed as a result of seeing several years of decreasing profitability.”

TGT last traded at $59.78. The issue has a 52-weeks trading range of $48.56 – $79.33.


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Monogram Residential Trust Sold for $3 Billion

Monogram Residential Trust sold for $12 per share in cash

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Monogram Residential Trust (MORE) announced that it has entered into a definitive merger agreement to be acquired by a newly formed perpetual life fund, Greystar Growth and Income Fund, in a transaction valued at approximately $3B, including debt to be assumed or refinanced.

Monogram Residential Trust, Inc. is an equity real estate investment trust. The trust invests in the real estate markets of United States. It engages in investment, development and operation of real estate assets. The trust’s portfolio comprises of high-quality multifamily communities, including conventional multifamily assets, such as mid-rise, high-rise, and garden-style properties; age-restricted residences and student housing

Under the terms of the merger agreement, which was unanimously approved by board, Monogram’s stockholders will receive $12.00 per share in cash.

This represents a premium of approximately 22% to Monogram’s unaffected closing stock price on July 3.

The $3B aggregate transaction value includes Monogram’s share of its two institutional co-investment joint ventures with PGGM and NPS.

The PGGM joint venture will be restructured, and the joint venture interests held by NPS will be purchased by Greystar pursuant to a separate assignable purchase and sale agreement for approximately $500 Million, subject to certain adjustments at closing, including payment of the NPS joint venture’s share of debt to be assumed or refinanced in connection with the transaction.

The transaction is expected to close in the second half of 2017 and is subject to approval by Monogram’s stockholders and other customary closing conditions.

The transaction is not contingent on receipt of financing by Greystar.

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