MGM Growth Properties to buy Hard Rock gaming resort for $1.06 billion

(Reuters) - U.S. resorts owner MGM Growth Properties LLC (MGP.N) said on Thursday it would buy Hard Rock Rocksino Northfield Park, a gaming facility in Northfield, Ohio, for about $1.06 billion from Milstein Entertainment LLC.

MGM Growth Properties’ shares rose 2.7 percent to $26.75.

The property has more than 2,300 video lottery terminals and includes several retail, food and beverage outlets, as well as entertainment venues and a horse racetrack, said MGM Growth Properties, a unit of MGM Resorts International (MGM.N).

Rocksino is licensed and managed by Hard Rock International, which is the parent company of Hard Rock hotels, casinos and cafes.

MGM Growth Properties said it expected to ultimately sell the entities holding the licenses and operating assets to a third-party operator.

“We expect that MGP (MGM Growth Properties) will be able to garner interest from third parties given the attractive fundamentals at the property and in the broader (Ohio) market, with MGM as a back-up operator should attractive bids not surface,” Morgan Stanley analyst Thomas Allen wrote in a client note.

The company owns 12 properties including the Mirage, Mandalay Bay and Luxor Las Vegas.

MGM Growth Properties plans to fund the deal, which is expected to close in the second half of the year, with a mix of cash and debt, and expects annual rent of $50 million to $60 million.

Northfield Park Associates LLC, the operator of Hard Rock Rocksino, is owned by the Milstein family, which has invested in business ventures and commercial real estate projects through Milstein Entertainment.