MGM Resorts International (MGM)

[eastunder]

MGM Urged to Pursue REIT, Hotel Split by Land & Buildings’ Litt
http://www.bloomberg.com/news/articles/2015-03-17/mgm-urged-to-pursue-reit-hotel-split-by-land-buildings-litt?cmpid=yhoo


7:40 AM MDT
March 17, 2015


(Bloomberg) -- MGM Resorts International should convert its properties into a real estate investment trust and spin off its hotels, said Jonathan Litt, the hedge-fund manager who runs Land & Buildings Investment Management. The shares jumped.

The moves would help the largest casino operator on the Las Vegas Strip cut its debt in half, and boost the valuation of the company, Litt said in a statement Tuesday. Land & Buildings also intends to nominate four director’s to MGM’s board.

“MGM’s high-quality real estate portfolio is substantially undervalued in the public markets,” Litt said. “We have been attempting to work collaboratively with MGM management to find an optimal corporate structure for the company.”




MGM rose 8.6 percent to $21.35 as of 9:37 a.m. in New York, after earlier rising as much as 9.4 percent for the biggest intraday gain since December 2012.

Litt said the value of the company is $33 a share a could be as much as $55 a share, according to the statement.

MGM said in February that it was evaluating options including a REIT structure.

“The concept of converting gaming assets to REITs is not a new one,” Chief Financial Officer Dan D’Arrigo said on a conference call at the time. “We look at this all the time. We believe that our assets are undervalued.”

Companies have announced a record number of spinoffs in the year through February, often under pressure from shareholders. The rationale behind spinoffs is that a unit tucked under a diverse company’s umbrella may be worth more if it were a separate publicly traded entity.

Litt has mounted other campaigns in the real-estate sector, including pushing for the sale of apartment-building manager Associated Estates Realty Corp. and shopping-mall owner Pennsylvania Real Estate Investment Trust.