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Citi-Led Group Stuck With Billions of Debt as MGM Offering Fails


Citigroup Inc. and Deutsche Bank AG are among lenders stuck with billions of dollars of debt backed by MGM Grand and Mandalay Bay properties in Las Vegas, with the coronavirus pandemic’s impact on casinos hampering the banks’ ability to syndicate the loan.

A joint venture of MGM Growth Properties LLC and Blackstone Real Estate Income Trust used $3 billion of financing to purchase the casinos last month, and Citigroup, Deutsche Bank, Barclays Plc and Societe Generale SA had planned to syndicate $1.9 billion of the total as commercial mortgage-backed securities. The efforts were met with tepid demand and the CMBS plans were put on hold, leaving the banks with the debt, according to people with knowledge of the matter.
Representatives for Citigroup, Deutsche Bank and Barclays declined to comment, while spokespeople for Societe General, MGM Growth Properties and Blackstone didn’t immediately respond to requests for comment. It’s not clear now much of the loan each bank holds.
MGM Resorts International, which continues to operate the MGM Grand and Mandalay Bay, has shuttered operations in Nevada and New Jersey to help stem the spread of the deadly virus. The CMBS facility has an initial term of 12 years, with an anticipated repayment date in March 2030, and bears an interest rate of 3.308% per year, according to filings.

Pricing of the CMBS was expected during the week of March 9, Bloomberg reported earlier this month.

If broad syndications are unsuccessful, banks typically retain loans on their balance sheets until market conditions improve and the deal can be brought back. However, it’s possible some banks may seek to reduce their exposure in off-market transactions.

It’s not the only casino financing presenting a headache on Wall Street. Banks involved in Eldorado Resorts Inc.’s acquisition of Caesars Entertainment Corp. face an uphill battle offloading associated debt to investors amid concerns about the pandemic’s long-term impact on the travel and leisure industry, Bloomberg has reported.


— With assistance by Davide Scigliuzzo, and Charles E Williams