MGM Growth Properties LLC (Form: 8-K, Received: 03/08/2019 06:08:28)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): March 7, 2019

MGM Growth Properties LLC

MGM Growth Properties Operating Partnership LP

(Exact name of registrant as specified in its charter)


DELAWARE (MGM Growth Properties LLC)	001-37733	47-5513237
DELAWARE (MGM Growth Properties Operating Partnership LP)	333-215571	81-1162318
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

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

(Address of principal executive offices – Zip Code)

(702) 669-1480

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

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. ☐

Item 1.01

Entry into a Material Definitive Agreement.

On March 7, 2019, MGP Lessor, LLC (the “Landlord”), a Delaware limited liability company and a subsidiary of MGM Growth Properties LLC (the “Company”), entered into a Fourth Amendment (the “Amendment”) to the Master Lease Agreement, dated as of April 25, 2016 between MGM Lessee, LLC (the “Tenant”), a Delaware limited liability company and a subsidiary of MGM Resorts International (“MGM Resorts”) (as amended, the “Master Lease”) with respect to the transactions related to the Park MGM and NoMad Las Vegas improvements (the “Improvements Transaction”). The Amendment provides that, among other things, the Rent (as defined in the Master Lease) under the Master Lease will be increased by $50 million, 90% of which shall be allocated to the Base Rent (as defined in the Master Lease) and 10% of which shall be allocated to the Percentage Rent (as defined in the Master Lease). This description of the Amendment is qualified in its entirety by reference to the full text of the Amendment attached hereto as Exhibit 10.1.

Item 3.02

Unregistered Sale of Equity Securities.

On March 7, 2019, the Company, MGM Resorts, Victoria Partners, a Nevada limited partnership and a subsidiary of MGM Resorts, MGM Growth Properties Operating Partnership LP (the “Operating Partnership”), Landlord and Tenant, amended the terms of the master transaction agreement to provide that 5% of the total $637.5 million of consideration for the Improvements Transaction, or approximately $31.9 million, would consist of the issuance of Operating Partnership Units, with the remaining $605.6 million paid in cash. In connection with the closing of the acquisition on March 7, 2019, the Operating Partnership issued 1,029,112 Operating Partnership units, which amount was determined based on a price per unit of $30.9733. The Operating Partnership units are exchangeable into the Company’s Class A shares on a one-to-one basis or cash at the fair value of a Class A share. The determination of settlement method is at the option of the Company’s independent conflicts committee.

The Operating Partnership units have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities law and may not be offered or sold in the United States or to any U.S. persons absent registration under the Securities Act, or pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Company offered and sold the Operating Partnership units to MGM Resorts in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder based on MGM Resort’s status as an accredited investor, as defined in the Securities Act. The Company has a pre-existing relationship with MGM Resorts.

Item 9.01

Financial Statements and Exhibits.

(a)	Not applicable.

(b)	Not applicable.

(c)	Not applicable.

(d)

Exhibits:


Exhibit No.		Description

10.1		Fourth Amendment to Master Lease Agreement, dated as of March 7, 2019, between MGP Lessor, LLC and MGM Lessee, LLC.

SIGNATURES

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


	MGM Growth Properties LLC

Date: March 8, 2019

	By:	/s/ Andrew Hagopian III
		Name: Andrew Hagopian III
		Title: Secretary

	MGM Growth Properties Operating Partnership LP

Date: March 8, 2019

	By:	/s/ Andrew Hagopian III
		Name: Andrew Hagopian III
		Title: Secretary

Exhibit 10.1

FOURTH AMENDMENT TO MASTER LEASE

This AMENDMENT TO MASTER LEASE (the “ Amendment ”) is entered into as of March 7 , 2019 (the “ Effective Date ”), by and between MGP Lessor, LLC, a Delaware limited liability company (together with its permitted successors and assigns, “ Landlord ”), and MGM Lessee, LLC, a Delaware limited liability company (together with its permitted successors and assigns, “ Tenant ”). Capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings set forth in the Master Lease (as hereinafter defined).

RECITALS

A. Landlord and Tenant have entered into that certain Master Lease dated as of April 25, 2016 (the “ Master Lease ”), as amended by that certain First Amendment to Master Lease dated as of August 1, 2016, as further amended by that certain Second Amendment to Master Lease dated as of October 5, 2017, and as further amended by that certain Third Amendment to Master Lease dated January 29, 2019 .

B. Tenant has requested that Landlord pay certain amounts in connection with certain Tenant Capital Improvements set forth on Schedule I attached hereto (collectively, the “ Park MGM Tenant Capital Improvements ”) on such arms-length terms and conditions as agreed to by Landlord and Tenant.

C. Landlord and Tenant desire to amend the Rent payable by Tenant under the Master Lease to account for Landlord paying such amounts in connection with the Park MGM Tenant Capital Improvements.

D. Landlord and Tenant have entered into a Master Transaction Agreement dated December 20, 2018 (the “ MTA ”), as amended by that certain First Amendment to Master Transaction Agreement dated March 7 , 2019, pursuant to which Tenant has received certain consideration for entering into this Amendment.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

Tenant Capital Improvements

1.1 Funding of Tenant Capital Improvements . Tenant has completed the Park MGM Tenant Capital Improvements prior to the execution of this Amendment.

1.2 Benefits of Ownership . Notwithstanding anything to the contrary set forth in the Master Lease, including, without limitation Section 11.1(b), at all times from and after the Effective Date, for all federal, state and local income tax purposes, the Park MGM Tenant Capital Improvements shall deemed to be the property of the Landlord and Landlord shall be entitled to all benefits of ownership of the Park MGM Tenant Capital Improvements, including depreciation.

1.3 Deconsolidation Growth Capital Improvements . For the avoidance of doubt, Landlord and Tenant acknowledge and agree that the Park MGM Capital Tenant Improvements shall be deemed for all purposes (i) to be Capital Improvements, and (ii) to not be Deconsolidation Growth Capital Improvements or Deconsolidation Maintenance Capital Improvements.

1.4 Award Distribution . Notwithstanding anything to the contrary set forth in the Master Lease, including, without limitation Section 15.2, the portion of any Award allocated to the Park MGM Tenant Capital Improvements shall belong to and be paid to Landlord.

ARTICLE II

Amendment

2.1 Base Rent . From and after the date of payment of the Park MGM Consideration (as defined in the MTA), the amount of Base Rent payable pursuant to the Master Lease shall be increased by an amount equal to Forty Five Million Dollars ($45,000,000). Such increase in Base Rent shall be prorated for any partial calendar month on a daily basis and Base Rent for the month in which this Amendment is signed will be payable on the Effective Date.

2.2 Percentage Rent . From and after the date of payment of the Park MGM Consideration, the amount of Percentage Rent payable pursuant to the Master Lease shall be increased by an amount equal to Five Million Dollars ($5,000,000) (the “ Percentage Rent Adjustment Amount ”). The Percentage Rent Adjustment Amount payable during any Lease Year or portion thereof consisting of more or less than twelve (12) calendar months shall be prorated on a monthly basis such that the Percentage Rent Adjustment Amount that in included within the Percentage Rent for each calendar month is equal to the Percentage Rent Adjustment Amount divided by twelve (12). In the event the month in which the Percentage Rent Adjustment Amount takes effect is a partial month, Tenant shall pay (i) Percentage Rent (calculated without application of the Percentage Rent Adjustment Amount) for such month in accordance with Section 3.1 of the Master Lease and (ii) a portion of the Percentage Rent Adjustment Amount which shall be prorated on a daily basis such that the Percentage Rent Adjustment Amount for such calendar month is equal to the monthly Percentage Rent Adjustment Amount divided by the actual number of days in such month and multiplied by the number of days for which the adjustment is applicable.

2.3 Park MGM . From and after the Effective date, all references in the Master Lease to “Monte Carlo Hotel and Casino” is hereby replaced with “Park MGM”.

ARTICLE III

Reaffirmation of Guaranty

3.1 Reaffirmation of Guaranty . By executing this Amendment, Guarantor acknowledges and agrees that Tenant’s obligations under the Master Lease have been modified by this Amendment and therefore Guarantor’s Obligations (as defined in the Guaranty) have been modified by this Amendment. Guarantor hereby reaffirms the Guaranty and Guarantor’s Obligations thereunder, as modified by this Amendment.

ARTICLE IV

Miscellaneous

4.1 No Further Amendment . The Master Lease shall remain in full force and effect, unmodified, except as expressly set forth in Articles I and II above.

4.2 Governing Law . Subject to Section 41.5 of the Master Lease, this Amendment shall be governed by, and construed and enforced in accordance with, the internal laws of the State of New York without regard to conflicts of laws principals.

4.3 Counterparts . This Amendment may be executed in any number of counterparts, each of which shall be a valid and binding original, but all of which together shall constitute one and the same instrument.

SIGNATURES ON FOLLOWING PAGE

IN WITNESS WHEREOF , this Amendment to Master Lease has been executed by Landlord and Tenant as of the date first written above.


LANDLORD :

MGP Lessor, LLC

By:		/s/ Andrew Hagopian III
		Name: Andrew Hagopian III
		Title: Secretary


TENANT :

MGM Lessee, LLC

By:		/s/ Andrew Hagopian III
		Name: Andrew Hagopian III
		Title: Assistant Secretary

Guarantor executes this Amendment solely for purposes of the acknowledgement and reaffirmation of Guaranty contained in Article 3 hereof.


GUARANTOR :

MGM Resorts International

By:		/s/ Andrew Hagopian III
		Name: Andrew Hagopian III
		Title: Chief Corporate Counsel and Assistant Secretary

SCHEDULE 1

TENANT CAPITAL IMPROVEMENTS

All Tenant Capital Improvements made to the Park MGM Property from the date of the Master Lease through the Effective Date, including, without limitation, the following:

1.	Room Renovations;

2.	Addition of Park Theatre;

3.	F&B Build Out; and

4.	Addition of NoMad Hotel.