UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE 14C

INFORMATION

Information Statement Pursuant to Section 14(c) of the

Securities Exchange Act of 1934

 

 

 

Check the appropriate box:
☐		Preliminary Information Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
☒		Definitive Information Statement

MGM GROWTH PROPERTIES LLC

(Name of Registrant As Specified In Its Charter)

 

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		(1)		Title of each class of securities to which transaction applies:
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PROXY STATEMENT/INFORMATION STATEMENT/PROSPECTUS

NOTICE OF ACTION BY WRITTEN CONSENT AND INFORMATION STATEMENT

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

To the MGP Shareholders:

This notice of action by written consent and the accompanying proxy statement/information statement/prospectus are being furnished to holders of class A common shares, no par value, of MGM Growth Properties LLC, a Delaware limited liability company (“MGP,” and such shares, “MGP Class A Common Shares”).

On August 4, 2021, MGP entered into a Master Transaction Agreement (the “Master Transaction Agreement”) by and among MGM Growth Properties Operating Partnership LP, a Delaware limited partnership (“MGP OP”), VICI Properties Inc., a Maryland corporation (“VICI”), Venus Sub LLC, a Delaware limited liability company (“REIT Merger Sub”), VICI Properties L.P., a Delaware limited partnership (“Existing VICI OP”), VICI Properties OP LLC, a Delaware limited liability company (“New VICI Operating Company”) and MGM Resorts International, a Delaware corporation (“MGM”). The Master Transaction Agreement provides that, on or prior to the closing date, among other things, (i) MGP will merge with and into REIT Merger Sub (the “REIT Merger”), with REIT Merger Sub continuing as the surviving entity (“REIT Surviving Entity”), and (ii) immediately thereafter and subject to certain conditions, REIT Surviving Entity will merge with and into MGP OP (the “Partnership Merger” and, together with the REIT Merger, the “Mergers”), with MGP OP continuing as the surviving entity and as a subsidiary of VICI. Following the Partnership Merger, New VICI Operating Company will redeem a majority of New VICI Operating Company units held by MGM and/or its subsidiaries for an aggregate cash amount equal to $4.404 billion (the “Partial Redemption”). The Mergers and the other transactions contemplated by the Master Transaction Agreement are collectively referred to herein as the “Transactions.” A copy of the Master Transaction Agreement is included as Annex A to the proxy statement/information statement/prospectus.

Pursuant to the terms and subject to the conditions and limitations set forth in the Master Transaction Agreement: (A) at the effective time of the REIT Merger, (i) the Class B common share, no par value per share, of MGP owned by MGM will automatically be cancelled for no consideration, (ii) each MGP Class A Common Share issued and outstanding immediately prior to the effective time of the REIT Merger will be automatically cancelled and retired and converted into the right to receive 1.366 shares of common stock, par value $0.01 per share, of VICI (the “VICI Common Stock”) plus cash in lieu of fractional shares less any applicable tax withholdings (the “REIT Merger Consideration”), (iii) each of MGP’s deferred restricted stock units (“MGP DSUs”) that are outstanding immediately prior to the effective time of the REIT Merger will be cancelled and converted into the right to receive, with respect to each MGP Class A Common Share subject to such MGP DSU, the REIT Merger Consideration, less any applicable tax or other withholdings, (iv) each of MGP’s restricted stock units (“MGP RSUs”) that are outstanding immediately prior to the effective time of the REIT Merger will be accelerated, vest and be cancelled and converted into the right to receive, with respect to each MGP Class A Common Share subject to such MGP RSU, the REIT Merger Consideration, less any applicable tax or other withholdings and (v) each of MGP’s performance stock units (“MGP PSUs”) that are outstanding immediately prior to effective time of the REIT Merger will (1) be accelerated and become vested with respect to the number of the MGP Class A Common Shares subject to such MGP PSUs that would vest based on the achievement of the greater of (x) the applicable target level of performance and (y) the actual level of performance as of the closing date of the Transactions, based on the achievement of the applicable performance metrics with respect to the performance period during which the effective time of the REIT Merger occurs and as determined in good faith

by the board of directors of MGP (the “MGP Board”) and (2) be cancelled and converted into the right to receive, with respect to each MGP Class A Common Share subject to such MGP PSU determined in accordance with the immediately preceding clause (1), the REIT Merger Consideration, less any applicable tax or other withholdings, (B) at the effective time of the Partnership Merger, each limited partnership unit of MGP OP (other than the limited partnership units in MGP OP held by REIT Merger Sub or any subsidiary of MGP OP) held by MGM and/or certain of its subsidiaries will automatically be cancelled, retired and converted into the right to receive 1.366 units in New VICI Operating Company and (C) upon the consummation of the Partial Redemption, a certain number of New VICI Operating Company units held by MGM and/or its subsidiaries will be redeemed for an aggregate redemption price of $4.404 billion resulting in MGM retaining an approximate 1% interest in New VICI Operating Company.

If the Transactions are completed, you will be entitled to receive 1.366 shares of VICI Common Stock for each MGP Class A Common Share owned by you plus any Fractional Share Consideration less any applicable tax withholdings.

The Conflicts Committee (as defined in the Amended and Restated Limited Liability Company Agreement of MGP (as amended, the “MGP LLC Agreement”)) of the MGP Board has, in its sole and absolute discretion, unanimously (a) determined that the Master Transaction Agreement, the REIT Merger and the other Transactions are in the best interests of MGP and in the best interests of the holders of the MGP Class A Common Shares, (b) approved, and recommended that the MGP Board approve, the Master Transaction Agreement, the REIT Merger and the other Transactions, (c) recommended that the MGP Board direct that the Master Transaction Agreement, the REIT Merger and the other Transactions be submitted to a vote or for the consent of the Members (as defined in the MGP LLC Agreement) and (d) resolved, and recommended that the MGP Board resolve, to recommend that the Members approve the Master Transaction Agreement, the REIT Merger and the other Transactions.

The MGP Board, acting upon the recommendation of the Conflicts Committee, has (a) approved the Master Transaction Agreement, the REIT Merger and the other Transactions, (b) directed that the Master Transaction Agreement, the REIT Merger and the other Transactions be submitted to the Members and (c) resolved to recommend that the Members approve the Master Transaction Agreement, the REIT Merger and the other Transactions.

On August 4, 2021 and in accordance with the MGP LLC Agreement, MGM approved the Master Transaction Agreement, the REIT Merger and the other Transactions by delivery of a written consent (the “MGM Written Consent”). As of August 4, 2021, MGM held the majority of the voting power of the Outstanding Voting Shares (as defined in the MGP LLC Agreement). Therefore, the delivery of the MGM Written Consent satisfied the requirement in the MGP LLC Agreement that the affirmative vote of the holders of at least a majority of the voting power of the Outstanding Voting Shares approve the Master Transaction Agreement, the REIT Merger and the other Transactions. No additional approval of the shareholders of MGP is required to approve the Master Transaction Agreement, the REIT Merger and the other Transactions. As a result, MGP has not solicited and will not be soliciting your vote for the approval of the Master Transaction Agreement, the REIT Merger and the other Transactions and does not intend to call a meeting of shareholders for purposes of voting on the adoption of the Master Transaction Agreement, the REIT Merger and the other Transactions.

This notice of action by written consent and the proxy statement/information statement/prospectus shall constitute notice to you from MGP that the Master Transaction Agreement, the REIT Merger and the other Transactions have been approved by majority of the voting power of the Outstanding Voting Shares of MGP by written consent in lieu of a meeting in accordance with the MGP LLC Agreement and Section 18-302 of the Limited Liability Company Act of the State of Delaware.

The proxy statement/information statement/prospectus accompanying this letter provides you with more specific information concerning the Master Transaction Agreement and the Transactions contemplated thereby. We encourage you to carefully read the proxy statement/information statement/prospectus and the copy of the Master Transaction Agreement included as Annex A to the proxy statement/information statement/prospectus.

Please do not surrender or send in your MGP Class A Common Shares at this time. If the Transactions are completed, you will receive instructions regarding the surrender of your MGP Class A Common Shares and receipt of consideration for your MGP Class A Common Shares.

 

James C. Stewart

Chief Executive Officer

Las Vegas, Nevada

September 23, 2021

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

September 23, 2021

To the Stockholders of VICI Properties Inc.:

The board of directors of VICI Properties Inc. (the “VICI Board”), a Maryland corporation (“VICI”), approved a Master Transaction Agreement, dated as of August 4, 2021 (as amended from time to time, the “Master Transaction Agreement”), by and among MGM Growth Properties LLC (“MGP”), MGM Growth Properties Operating Partnership LP (“MGP OP”), VICI, Venus Sub LLC (“REIT Merger Sub”), VICI Properties L.P. (the “Existing VICI OP”), VICI Properties OP LLC (“New VICI Operating Company”), and MGM Resorts International (“MGM”). Pursuant to the Master Transaction Agreement, among other things, (i) MGP will merge with and into REIT Merger Sub (the “REIT Merger”), with REIT Merger Sub continuing as the surviving entity (“REIT Surviving Entity”), (ii) immediately thereafter and subject to certain conditions, REIT Surviving Entity will merge with and into MGP OP (the “Partnership Merger” and, together with the REIT Merger, the “Mergers”), with MGP OP continuing as the surviving entity and as a wholly-owned subsidiary of New VICI Operating Company and (iii) New VICI Operating Company will redeem a majority of New VICI Operating Company units held by MGM and/or its subsidiaries for an aggregate cash amount equal to $4.404 billion (the “Partial Redemption”). The Mergers and the other transactions contemplated by the Master Transaction Agreement are collectively referred to herein as the “Transactions.”

The combined company will retain the name “VICI Properties Inc.” and shares of VICI common stock, par value $0.01 per share (the “VICI Common Stock”), will continue to trade on the New York Stock Exchange (the “NYSE”) under the symbol “VICI.” There are no anticipated changes to the VICI Board or senior management team in connection with the Transactions. The obligations of VICI and MGP to effect the Transactions are subject to the satisfaction or waiver of certain conditions set forth in the Master Transaction Agreement.

Pursuant to the terms and subject to the conditions and limitations set forth in the Master Transaction Agreement: (A) at the effective time of the REIT Merger, (i) the Class B common share, no par value per share, of MGP owned by MGM, will automatically be cancelled for no consideration, (ii) each Class A common share, no par value per share, of MGP (“MGP Class A Common Share”) issued and outstanding immediately prior to the effective time of the REIT Merger will be automatically cancelled and retired and converted into the right to receive 1.366 shares (the “Exchange Ratio”) of VICI Common Stock plus cash in lieu of fractional shares less any applicable tax withholdings (the “REIT Merger Consideration”), (iii) each of the MGP deferred restricted stock units (“MGP DSUs”) that are outstanding immediately prior to the effective time of the REIT Merger will be cancelled and converted into the right to receive, with respect to each MGP Class A Common Share subject to such MGP DSU, the REIT Merger Consideration, less any applicable tax or other withholdings, (iv) each of MGP’s restricted stock units (“MGP RSUs”) that are outstanding immediately prior to the effective time of the REIT Merger will be accelerated, vest and be cancelled and converted into the right to receive, with respect to each MGP Class A Common Share subject to such MGP RSU, the REIT Merger Consideration, less any applicable tax or other withholdings and (v) each of MGP’s performance stock units (“MGP PSUs”) that are outstanding immediately prior to effective time of the REIT Merger will (1) be accelerated and become vested with respect to the number of the MGP Class A Common Shares subject to such MGP PSUs that would vest based on the achievement of the greater of (x) the applicable target level of performance and (y) the actual level of performance as of the closing date of the Transactions, based on the achievement of the applicable performance metrics with respect to the performance period during which the effective time of the REIT Merger occurs and as determined in good faith by the board of directors of MGP and (2) be cancelled and converted into the right to receive, with respect to each MGP Class A Common Share subject to such MGP PSU determined in accordance with the immediately preceding clause (1), the REIT Merger Consideration, less any applicable tax or other withholdings, (B) at the effective time of the Partnership Merger, each limited partnership unit of MGP OP (other than the limited partnership units in MGP OP held by REIT Merger Sub or any subsidiary of MGP OP) held by MGM and certain of its subsidiaries will automatically be cancelled, retired and converted into the right to receive 1.366 units in New VICI Operating Company and (C) upon the consummation of the Partial Redemption, a certain number of New VICI Operating Company units held by MGM and/or its subsidiaries will be redeemed for an aggregate redemption price of $4.404 billion, resulting in MGM retaining an approximate 1% interest in New VICI Operating Company.

The Exchange Ratio is fixed, other than certain customary adjustments, and will not be adjusted in the event of any change in the stock price of either VICI or MGP. For example, based on the range of closing prices of VICI Common Stock during the period from August 3, 2021, the last trading day before public announcement of the Transactions, through September 17, 2021, the latest practicable date before the date of this proxy statement/information statement/prospectus, the Exchange Ratio of 1.366 shares of VICI Common Stock per MGP Class A Common Share represented a market value ranging from a low of $39.98 to a high of $43.75 per MGP Class A Common Share. The value of the REIT Merger Consideration will fluctuate with changes in the market prices of shares of VICI Common Stock. We urge you to obtain current market quotations of shares of VICI Common Stock and MGP Class A Common Shares. Shares of VICI Common Stock and MGP Class A Common Shares are each traded on the NYSE under the ticker symbols “VICI” and “MGP,” respectively.

We expect approximately 214.5 million shares of VICI Common Stock will be issued in connection with the REIT Merger (based on the number of MGP Class A Common Shares outstanding as of June 30, 2021). Upon completion of the transactions contemplated by the unaudited pro forma financial statements included in this proxy statement/information statement/prospectus, including the Transactions, the Venetian Acquisition, the September 2021 Equity Offering, and the settlement of the March 2021 Forward Sale Agreement and September 2021 Forward Sale Agreements (each as defined in this proxy statement/information statement/prospectus), the continuing VICI stockholders are expected to own approximately 78% of the common stock of the Combined Company, and the former MGP shareholders are expected to own the remaining 22%.

VICI will be holding a special meeting of stockholders in connection with the Mergers (the “VICI Special Meeting”) to which this proxy statement/information statement/prospectus relates. At the VICI Special Meeting, VICI’s stockholders will be asked to vote on (i) a proposal to approve the issuance of shares of VICI Common Stock to the MGP shareholders in connection with the Transactions (the “VICI Stock Issuance Proposal”) and (ii) a proposal to approve one or more adjournments of the VICI Special Meeting, if necessary or appropriate in the view of the VICI Board, to permit, among other things, further solicitation of proxies, if necessary or appropriate in the view of the VICI Board, in favor of the VICI Stock Issuance Proposal if there are not sufficient votes at the time of such adjournment to approve the VICI Stock Issuance Proposal (the “VICI Adjournment Proposal”). Approval of the VICI Stock Issuance Proposal requires the affirmative vote of the majority of the votes cast by VICI stockholders on the VICI Stock Issuance Proposal, assuming a quorum is present at the VICI Special Meeting. Pursuant to the Master Transaction Agreement, approval of the VICI Stock Issuance Proposal is a condition to the consummation of the Mergers. If the VICI Stock Issuance Proposal is not approved, the Mergers will not be completed.

VICI has fixed the close of business on September 21, 2021 as the record date for determining holders of issued and outstanding VICI Common Stock entitled to notice of, and to vote at, the VICI Special Meeting.

The VICI Board has determined that the issuance of shares of VICI Common Stock pursuant to the Master Transaction Agreement is in the best interests of VICI and its stockholders and has unanimously approved such proposal. The VICI Board has also determined that adjourning the VICI Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the VICI Stock Issuance Proposal is in the best interests of VICI and its stockholders and has unanimously approved such proposal. The VICI Board unanimously recommends that holders of VICI Common Stock vote “FOR” the VICI Stock Issuance Proposal and “FOR” the VICI Adjournment Proposal.

In addition to being a proxy statement, this document is also a prospectus for shares of VICI Common Stock that will be issued to MGP shareholders as REIT Merger Consideration pursuant to the Master Transaction Agreement.

This proxy statement/information statement/prospectus contains important information about VICI, MGP, the Master Transaction Agreement, the Transactions and the VICI Special Meeting. We encourage you to read this proxy statement/information statement/prospectus carefully before voting, including “Risk Factors” beginning on page 28.

Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the VICI Special Meeting, please submit a proxy to vote your shares as promptly as possible to make sure that your shares are represented at the VICI Special Meeting. Please note that for purposes of the VICI Stock Issuance Proposal, the failure to return your proxy card and other shares not voted (whether by broker non-vote or otherwise) will not be considered present for the purpose of determining the presence of a quorum and will have no effect on the VICI Stock Issuance Proposal. Under NYSE rules, abstentions will be considered as votes cast and, accordingly, will have the same effect as votes “AGAINST” the VICI Stock Issuance Proposal.

Sincerely,

 

Edward B. Pitoniak

Chief Executive Officer

VICI Properties Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with this proxy statement/information statement/prospectus or passed upon the adequacy or accuracy of this proxy statement/information statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/information statement/prospectus is dated September 23, 2021, and is first being mailed to VICI stockholders on or about September 23, 2021.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF VICI PROPERTIES INC.

TO BE HELD ON OCTOBER 29, 2021

To Our Stockholders:

You are cordially invited to attend a special meeting of stockholders (the “VICI Special Meeting”) of VICI Properties Inc. (“VICI”) on Friday, October 29, 2021, at 10:00 a.m., Eastern Time, which will be held solely by means of remote communication in a virtual meeting format and conducted via live audio webcast due to the ongoing public health impact of the coronavirus pandemic and in consideration of the health and well-being of our stockholders and other meeting participants.

You can attend the VICI Special Meeting via the Internet at www.virtualshareholdermeeting.com/VICI2021SM by using the 16-digit control number that appears on your proxy card and the voting instruction form that accompanied your proxy materials. During this virtual meeting, you may ask questions and will be able to vote your shares electronically. You may submit a question in advance of the meeting at www.proxyvote.com after logging in with your control number found on your proxy card or voting instruction form. You will also have the ability to submit questions in advance of the VICI Special Meeting via the meeting website. VICI will respond to as many inquiries at the VICI Special Meeting as time allows, although questions may be limited on a per stockholder basis due to time constraints. At the VICI Special Meeting, you will be asked to consider and vote upon the following matters:

 

1.

A proposal to approve the issuance of common stock, $0.01 par value per share, of VICI (“VICI Common Stock”) in connection with the transactions contemplated by the Master Transaction Agreement, dated as of August 4, 2021 (as amended from time to time, the “Master Transaction Agreement”), by and among MGM Growth Properties LLC (“MGP”), MGM Growth Properties Operating Partnership LP (“MGP OP”), VICI, Venus Sub LLC (“REIT Merger Sub”), VICI Properties L.P. (the “Existing VICI OP”), VICI Properties OP LLC (“New VICI Operating Company”), and MGM Resorts International (“MGM”), pursuant to which, among other things, (i) MGP will merge with and into REIT Merger Sub (the “REIT Merger”), with REIT Merger Sub continuing as the surviving entity (“REIT Surviving Entity”), and (ii) immediately thereafter and subject to certain conditions, REIT Surviving Entity will merge with and into MGP OP (the “Partnership Merger” and, together with the REIT Merger, the “Mergers”), with MGP OP continuing as the surviving entity and as a subsidiary of VICI (the “VICI Stock Issuance Proposal”); and

 

2.

A proposal to approve one or more adjournments of the VICI Special Meeting, if necessary or appropriate, to solicit additional proxies in favor of the VICI Stock Issuance Proposal if there are insufficient votes at the time of such adjournment to approve such proposal (the “VICI Adjournment Proposal”).

VICI will transact no other business at the VICI Special Meeting or any adjournment or postponement thereof. Please refer to the attached proxy statement/information statement/prospectus for further information with respect to the business to be transacted at the VICI Special Meeting.

Holders of record of shares of VICI Common Stock at the close of business on September 21, 2021 are entitled to notice of, and to vote at, the VICI Special Meeting and any adjournments or postponements of the VICI Special Meeting.

The approval by VICI stockholders of the VICI Stock Issuance Proposal is a condition to the completion of the Mergers and the other transactions contemplated by the Master Transaction Agreement. The VICI Stock Issuance Proposal requires the affirmative vote of the majority of the votes cast by VICI stockholders on the

VICI Stock Issuance Proposal at the VICI Special Meeting, assuming a quorum is present. The VICI Adjournment Proposal requires the affirmative vote of a majority of the votes cast by VICI stockholders on the VICI Adjournment Proposal at the VICI Special Meeting, assuming a quorum is present.

The VICI Board of Directors unanimously recommends that VICI stockholders vote “FOR” the VICI Stock Issuance Proposal and “FOR” the VICI Adjournment Proposal.

Your vote is important. Whether or not you expect to attend the VICI Special Meeting, we urge you to authorize a proxy to vote your shares as promptly as possible by: (1) accessing the Internet at www.proxyvote.com; (2) calling the toll-free number specified on your proxy card; or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided so that your shares may be represented and voted at the VICI Special Meeting. Properly executed proxy cards with no instructions indicated on the proxy card will be voted “FOR” the VICI Stock Issuance Proposal and “FOR” the VICI Adjournment Proposal. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by the record holder.

By Order of the Board of Directors,

 

Samantha S. Gallagher

Executive Vice President, General Counsel and Secretary

New York, New York

September 23, 2021

ADDITIONAL INFORMATION

This proxy statement/information statement/prospectus incorporates by reference important business and financial information about VICI and MGP from other documents that are not included in or delivered with this proxy statement/information statement/prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference into this proxy statement/information statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

VICI Properties Inc. 535 Madison Avenue, 20th Floor New York, New York 10022 (646) 949-4631 Attention: Secretary   or   Georgeson LLC 1290 Avenue of the Americas, 9th Floor New York, NY 10104 Toll-Free: 888-219-8320 Email: viciproperties@georgeson.com		MGM Growth Properties LLC 1980 Festival Plaza Drive, Suite 750 Las Vegas, Nevada 89135 (702) 669-1480 Attention: Secretary

Investors may also consult the websites of VICI or MGP for more information concerning the Mergers and the other transactions described in this proxy statement/information statement/prospectus. The website of VICI is www.viciproperties.com and the website of MGP is www.mgmgrowthproperties.com. Each company’s public filings are also available at www.sec.gov. The information contained on VICI’s and MGP’s websites is not incorporated by reference into this proxy statement/information statement/prospectus.

If you would like to request any documents that are incorporated by reference into this proxy statement/information statement/prospectus, please do so by October 22, 2021 in order to receive them before the VICI Special Meeting.

For more information, see “Where You Can Find More Information and Incorporation by Reference” beginning on page 206.

ABOUT THIS DOCUMENT

This proxy statement/information statement/prospectus, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by VICI (File No. 333-259386), constitutes a prospectus of VICI under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the VICI Common Stock to be issued in connection with the Mergers. This document also constitutes a proxy statement of VICI under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and a notice of meeting with respect to the VICI Special Meeting, at which VICI stockholders will be asked to vote upon certain proposals in connection with the Mergers. This document also serves as an information statement of MGP under Section 14(c) of the Exchange Act.

You should rely only on the information contained or incorporated by reference into this proxy statement/information statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/information statement/prospectus. This proxy statement/information statement/prospectus is dated September 23, 2021. You should not assume that the information contained in, or incorporated by reference into, this proxy statement/information statement/prospectus is accurate as of any date other than the date on the front cover of those documents. Neither the mailing of this proxy statement/information statement/prospectus to VICI stockholders or MGP shareholders nor the issuance of VICI Common Stock in connection with the Mergers will create any implication to the contrary.

This proxy statement/information statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this proxy statement/information statement/prospectus regarding VICI has been provided by VICI, information contained in this proxy statement/information statement/prospectus regarding MGP has been provided by MGP and information contained in this proxy statement/information statement/prospectus regarding MGM has been provided by MGM.

TABLE OF CONTENTS

 

		Page
SELECTED DEFINITIONS			1
QUESTIONS AND ANSWERS			6
SUMMARY			15
The Companies			15
Risk Factors			17
The Transactions			18
Expense Reimbursement Agreement			19
Recommendations of the VICI Board and Its Reasons for the Transactions			19
Recommendations of the MGP Conflicts Committee and MGP Board and Their Reasons for the Transactions			19
The VICI Special Meeting			19
Opinion of VICI’s Financial Advisor			20
Opinion of the MGP Conflicts Committee’s Financial Advisor			21
Treatment of MGP Equity Awards			21
Directors and Management of the Combined Company after the Transactions			22
Interests of VICI’s Directors and Executive Officers in the Transactions			22
Interests of MGP’s Directors and Executive Officers in the Transactions			22
Regulatory Approvals Required for the Transactions			22
Material U.S. Federal Income Tax Consequences			23
Accounting Treatment of the Transactions			23
No Appraisal or Dissenters’ Rights			23
Listing of VICI Common Stock			23
Delisting and Deregistration of MGP Class A Common Shares			24
Comparison of Rights of VICI Stockholders and MGP Shareholders			24
Debt Commitment Letter			24
Tax Protection Agreement			24
MGM Master Lease and BREIT JV Lease			24
Non-Solicitation			25
Specific Performance			25
Termination of the Master Transaction Agreement			25
Termination Fees and Expenses			26
Conditions to Complete the Transactions			27
Comparative Per Share Market Prices			27
Litigation Relating to the Mergers			27
RISK FACTORS			28
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			41
THE COMPANIES			43
THE VICI SPECIAL MEETING			47
PROPOSALS SUBMITTED TO THE VICI STOCKHOLDERS			51
THE TRANSACTIONS			52
The Mergers			52
The Partial Redemption			52
MGM Master Lease and BREIT JV Lease			52
Tax Protection Agreement			53
Expense Reimbursement Agreement			53
Description of Debt Financing Transactions			53
Bridge Financing Commitment Letter			54
Background of the Transactions			55
Recommendations of the VICI Board and Its Reasons for the Transactions			69
Recommendations of the MGP Conflicts Committee and MGP Board and Their Reasons for the Transactions			73

 

i

		Page
Opinion of VICI’s Financial Advisor			80
Opinion of the MGP Conflicts Committee’s Financial Advisor			91
Certain VICI Unaudited Prospective Financial Information			102
VICI Projections			104
VICI Adjusted MGP Projections			105
Certain MGP Unaudited Prospective Financial Information			106
MGP Projections			107
MGP Adjusted VICI Projections			108
Directors and Management of the Combined Company after the Transactions			109
Interests of VICI’s Directors and Executive Officers in the Transactions			109
Interests of MGP’s Directors and Executive Officers in the Transactions			109
Regulatory Approvals Required for the Transactions			112
Material U.S. Federal Income Tax Consequences			113
Accounting Treatment of the Transactions			114
No Appraisal or Dissenters’ Rights			114
Exchange of Shares			114
Dividends			114
Listing of VICI Common Stock			114
Delisting and Deregistration of MGP Class A Common Shares			115
Charter Amendment to Increase Authorized Shares of VICI Common Stock			115
Litigation Relating to the Mergers			115
THE MASTER TRANSACTION AGREEMENT			116
The Mergers			116
Debt Commitment Letter			117
The Partial Redemption			117
Closing; Effective Time of the Transactions			118
Organizational Documents			118
Consideration for the REIT Merger			118
Tax Withholding			119
No Rights of Objection or Appraisal			119
Exchange Procedures			119
Representations and Warranties			120
Material Adverse Effect			124
Conduct of Business by MGP and MGP OP Pending the Transactions			125
Conduct of Business by VICI, Existing VICI OP and the New VICI Operating Company Pending the Transactions			127
Shareholder Meetings			129
Shareholder Voting			129
Non-Solicitation			129
Acquisition Proposals; Change in Recommendation			130
Directors’ and Officers’ Indemnification and Insurance			133
Other Covenants			134
Conditions to Complete the Transactions			135
Termination of the Master Transaction Agreement			137
Termination Fees and Expenses			138
Alternative Transaction Structure			138
Amendment and Waiver			139
Specific Performance			139
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES			140
COMPARATIVE MARKET PRICES AND DIVIDEND INFORMATION			167
Comparative Per Share Market Prices			167

 

ii

		Page
Dividends			167
DESCRIPTION OF VICI CAPITAL STOCK			169
General			169
Common Stock			169
Power to Reclassify and Issue Stock			170
Preferred Stock			170
Series A Preferred Stock			170
Restrictions on Ownership and Transfer			171
Redemption of Securities Owned or Controlled by an Unsuitable Person or Affiliate			173
Transfer Agent and Registrar			174
Certain Provisions of Maryland Law and VICI’s Charter and Bylaws			174
Limitation of Liability and Indemnification of Directors and Officers			179
Indemnification Agreements			180
COMPARISON OF RIGHTS OF VICI STOCKHOLDERS AND MGP SHAREHOLDERS			181
LEGAL MATTERS			202
EXPERTS			202
SHAREHOLDER PROPOSALS			203
MULTIPLE SHAREHOLDERS SHARING ONE ADDRESS			205
WHERE YOU CAN FIND MORE INFORMATION AND INCORPORATION BY REFERENCE			206
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS			F-1

MASTER TRANSACTION AGREEMENT			ANNEX A
OPINION OF MORGAN STANLEY			ANNEX B
OPINION OF EVERCORE			ANNEX C

 

iii

SELECTED DEFINITIONS

Unless stated otherwise, all references in this proxy statement/information statement/prospectus to:

 

•

“2025 Notes” refers to $750.0 million aggregate principal amount of 3.500% senior unsecured notes due 2025 issued by Existing VICI OP and VICI Note Co. Inc., as co-issuer, in February 2020.

 

•

“2027 Notes” refers to $750.0 million aggregate principal amount of 3.750% senior unsecured notes due 2027 issued by Existing VICI OP and VICI Note Co. Inc., as co-issuer, in February 2020.

 

•

“2030 Notes” refers to $1.0 billion aggregate principal amount of 4.125% senior unsecured notes due 2030 issued by Existing VICI OP and VICI Note Co. Inc., as co-issuer, in February 2020.

 

•

“Caesars Lease Agreements” refer collectively to (i) prior to the consummation of the Eldorado Transaction, the CPLV Lease Agreement, the Non-CPLV Lease Agreement, the Joliet Lease Agreement and the HLV Lease Agreement, and (ii) from and after the consummation of the Eldorado Transaction, the Las Vegas Master Lease Agreement, the Regional Master Lease Agreement and the Joliet Lease Agreement, in each case, unless the context otherwise requires.

 

•

“Caesars Southern Indiana” refers to the real estate assets associated with the Caesars Southern Indiana facility, located in Elizabeth, Indiana.

 

•

“Cancelled Shares” refers to each MGP Class A Common Share held in treasury by MGP or owned by any of MGP’s wholly-owned subsidiaries and the MGP Class B Common Share.

 

•

“Closing” refers to the closing of the Mergers.

 

•

“Code” refers to the Internal Revenue Code of 1986, as amended.

 

•

“Combined Company” refers to VICI and its subsidiaries after the Closing.

 

•

“CPLV Additional Rent Acquisition” refers to an amendment to increase the annual rent payable to VICI under the Las Vegas Master Lease Agreement associated with Caesars Palace Las Vegas by $83.5 million.

 

•

“CPLV Lease Agreement” refers to the lease agreement for Caesars Palace Las Vegas, as amended from time to time, which was combined with the HLV Lease Agreement into the Las Vegas Master Lease Agreement upon the consummation of the Eldorado Transaction.

 

•

“Debt Commitment Letter” refers to the letter under which the Lenders have agreed to provide Existing VICI OP a 364-day first lien secured bridge facility in an aggregate principal amount of up to $9.250 billion in the aggregate (the “Bridge Facility”), consisting of up to $5.008 billion in funding under Tranche 1 of the Bridge Facility which can be used for the Redemption Consideration and to pay transaction costs and up to $4.242 billion in funding under Tranche 2 of the Bridge Facility which can be used to fund the Change of Control Offers (the “Offer to Purchase Consideration”).

 

•

“DLLCA” refers to the Delaware Limited Liability Company Act.

 

•

“DRULPA” refers to the Delaware Revised Uniform Limited Partnership Act.

 

•

“Eldorado” refers to Eldorado Resorts, Inc., a Nevada corporation, and, as the context requires, its subsidiaries. Following the consummation of the Eldorado/Caesars Merger on July 20, 2020, Eldorado converted to a Delaware corporation and changed its name to Caesars Entertainment, Inc.

 

•

“Eldorado Transaction” refers to a series of transactions between VICI and Eldorado in connection with the Eldorado/Caesars Merger, including the acquisition of the Harrah’s New Orleans, Harrah’s Atlantic City and Harrah’s Laughlin properties, modifications to the Caesars Lease Agreements, and rights of first refusal.

 

1

•

“Eldorado/Caesars Merger” refers to the merger consummated on July 20, 2020 under an Agreement and Plan of Merger pursuant to which a subsidiary of Eldorado merged with and into Caesars Entertainment Corporation, with Caesars Entertainment Corporation surviving as a wholly-owned subsidiary of Caesars (which changed its name from Eldorado in connection with the closing of the Eldorado/Caesars Merger).

 

•

“Exchange Ratio” refers to 1.366 shares of VICI Common Stock per MGP Common Share, other than the Cancelled Shares, plus the right, if any, to receive the Fractional Share Consideration pursuant to the terms and subject to the conditions set forth in the Master Transaction Agreement.

 

•

“Exclusivity Agreement” refers to the exclusivity agreement between VICI and MGM executed July 29, 2021.

 

•

“Existing VICI OP” means VICI Properties L.P., a Delaware limited partnership.

 

•

“Existing VICI OP Units” refers to the common limited partnership units in Existing VICI OP.

 

•

“February 2020 Senior Unsecured Notes” refers collectively to the 2025 Notes, the 2027 Notes and the 2030 Notes.

 

•

“Fractional Share Consideration” refers to cash in lieu of any fractional shares of VICI Common Stock (equal to such fractional part of a share of VICI Common Stock to which the holder would otherwise be entitled to receive in exchange for MGP Class A Common Shares held by such holder immediately prior to the REIT Merger Effective Time multiplied by the volume weighted average price of VICI Common Stock for the ten trading days immediately prior to the date of the Closing).

 

•

“GAAP” refers to the accounting principles generally accepted in the United States.

 

•

“Great Wolf Mezzanine Loan” refers to a mezzanine loan agreement entered into with an affiliate of Great Wolf Resorts, Inc. (“Great Wolf”) to provide up to $79.5 million in financing to partially fund the development of the Great Wolf Lodge Maryland.

 

•

“HLV Additional Rent Acquisition” refers to an amendment to increase the annual rent payable to VICI under the Las Vegas Master Lease Agreement associated with Harrah’s Las Vegas property by $15.0 million.

 

•

“HLV Lease Agreement” refers to the lease agreement for the Harrah’s Las Vegas facilities, as amended from time to time, which was combined with the CPLV Lease Agreement into the Las Vegas Master Lease Agreement upon the consummation of the Eldorado Transaction.

 

•

“Joliet Lease Agreement” refers to the lease agreement for the facility in Joliet, Illinois, as amended from time to time.

 

•

“June 2020 Forward Sale Agreement” refers to a primary follow-on offering by VICI of 29,900,000 shares of VICI Common Stock with an aggregate public offering price of $662.3 million, all of which were subject to a forward sale agreement with Morgan Stanley & Co. LLC dated June 16, 2020, which was partially settled on September 28, 2020 by delivering 3,000,000 shares of VICI Common Stock to the forward purchaser in exchange for total net proceeds of approximately $63.0 million and fully settled on September 9, 2021 by delivering the remaining 26,900,000 shares of VICI Common Stock to the forward purchaser in exchange for total net proceeds of approximately $526.9 million.

 

•

“Las Vegas Master Lease Agreement” refers to the lease agreement for Caesars Palace Las Vegas and the Harrah’s Las Vegas facilities, as amended from time to time, from and after the consummation of the Eldorado Transaction.

 

•

“Lenders” refers to Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A. and Citigroup Global Markets Inc. and any other lenders that become a party to the Debt Commitment Letter.

 

•

“March 2021 Forward Sale Agreement” refers to a primary follow-on offering by VICI of 69,000,000 shares of VICI Common Stock (inclusive of 9,000,000 shares sold pursuant to the exercise in full of the

 

2

underwriters’ option to purchase additional common stock) at a public offering price of $29.00 per share for an aggregate offering value of $2,001.0 million, all of which are subject to forward sale agreements, which require settlement by March 4, 2022.

 

•

“Master Transaction Agreement” refers to the Master Transaction Agreement, dated as of August 4, 2021, by and among MGP, MGP OP, VICI, REIT Merger Sub, Existing VICI OP, New VICI Operating Company and MGM, as it may be amended or modified from time to time, a copy of which is attached as Annex A to this proxy statement/information statement/prospectus.

 

•

“Mergers” refers to the Partnership Merger and the REIT Merger.

 

•

“MGP” refers to MGM Growth Properties LLC, a Delaware limited liability company.

 

•

“MGP Board” refers to the board of directors of MGP.

 

•

“MGP Class A Common Shares” refers to the Class A common shares, no par value per share, of MGP.

 

•

“MGP Class A Common Shareholders” refers to the holders of MGP Class A Common Shares.

 

•

“MGP Class B Common Share” refers to the single Class B common share, no par value per share, of MGP held by MGM.

 

•

“MGP Common Shares” refers to the MGP Class A Common Shares and the MGP Class B Common Share, as the context requires.

 

•

“MGP Conflicts Committee” refers to the conflicts committee of the MGP Board.

 

•

“MGP LLC Agreement” refers to the Amended and Restated Limited Liability Company Agreement of MGP, as amended.

 

•

“MGP OP” refers to MGM Growth Properties Operating Partnership LP, a Delaware limited partnership.

 

•

“MGP OP Units” refers to outstanding partnership units in MGP OP.

 

•

“MGM” refers to MGM Resorts International, a Delaware corporation.

 

•

“MGM Master Lease” refers to the form of amended and restated triple-net master lease to be entered into by VICI and MGM with respect to certain properties that will be owned by consolidated subsidiaries of VICI following Closing.

 

•

“MTA Properties Acquisitions” refers to the acquisition by VICI of all of the land and real estate assets associated with Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City for an aggregate purchase price of $1,823.5 million.

 

•

“New VICI Operating Company” means VICI Properties OP LLC, a Delaware limited liability company.

 

•

“New VICI Operating Company Units” refers to the units representing a fractional, undivided share of the membership interests of the members of New VICI Operating Company.

 

•

“Non-CPLV Lease Agreement” refers to the lease agreement for regional properties (other than the facility in Joliet, Illinois) leased to Caesars Entertainment Corporation prior to the consummation of the Eldorado Transaction, as amended from time to time, which was replaced by the Regional Master Lease Agreement upon the consummation of the Eldorado Transaction.

 

•

“NYSE” refers to the New York Stock Exchange.

 

•

“Outside Date” refers to the fifteen month anniversary of the date of the Master Transaction Agreement.

 

•

“Partial Redemption” refers to the distribution by New VICI Operating Company to MGM and/or its applicable subsidiaries an amount equal to the Redemption Consideration in cash in redemption of the Redeemed Units held by MGM and/or its subsidiaries, as applicable.

 

3

•

“Partnership Merger” refers to the merger, following the REIT Merger, of REIT Surviving Entity with and into MGP OP, with MGP OP surviving.

 

•

“Partnership Merger Effective Time” refers to the time when the certificate of merger with respect to the Partnership Merger has been duly filed with the Delaware Secretary of State in accordance with the DRULPA, or such later time which the parties have agreed upon in writing and set forth in such Certificate of Merger in accordance with the DRULPA.

 

•

“Partnership Surviving Entity” refers to MGP OP, the surviving entity of the Partnership Merger.

 

•

“Redeemed Units” refers to a number of outstanding New VICI Operating Company Units held by MGM immediately prior to the Partial Redemption equal to (rounded down to the nearest whole unit) (i) (A) the Redemption Consideration divided by (B) $43.00, multiplied by (ii) the Exchange Ratio.

 

•

“Redemption Consideration” refers to a $4,404,000,000 payment in connection with the Partial Redemption.

 

•

“Regional Master Lease Agreement” refers to the lease agreement for the regional properties (other than the facilities in Joliet, Illinois) leased to Caesars, as amended from time to time, from and after the consummation of the Eldorado Transaction.

 

•

“REIT” refers to a real estate investment trust.

 

•

“REIT Merger” refers to the merger of MGP with and into REIT Merger Sub, with REIT Merger Sub surviving as a wholly-owned subsidiary of Existing VICI OP.

 

•

“REIT Merger Consideration” refers to the right to receive the following in exchange for each outstanding share of MGP Class A Common Share, other than Cancelled Shares, immediately prior to the REIT Merger Effective Time: (i) 1.366 shares of VICI Common Stock and (ii) the Fractional Share Consideration.

 

•

“REIT Merger Effective Time” refers to the time when the Certificate of Merger with respect to the REIT Merger has been duly filed with the Delaware Secretary of State, or such later time which the parties have agreed upon in writing and set forth in such Certificate of Merger in accordance with the DLLCA.

 

•

“REIT Merger Sub” refers to Venus Sub LLC, a Delaware limited liability company, a wholly-owned subsidiary of Existing VICI OP.

 

•

“REIT Surviving Entity” refers to REIT Merger Sub, the surviving entity in the REIT Merger.

 

•

“Revolving Credit Facility” refers to the five-year first lien revolving credit facility entered into by VICI Properties 1 LLC, as amended from time to time.

 

•

“September 2021 Equity Offering” refers to a primary follow-on offering by VICI on September 14, 2021 of 65,000,000 shares of VICI Common Stock at a public offering price of $29.50 per share for an aggregate offering value of approximately $1,859 million.

 

•

“September 2021 Forward Sale Agreements” refers to a primary follow-on offering by VICI of 50,000,000 shares of VICI Common Stock at a forward sale price of $28.615 per share for an aggregate offering value of approximately $1,431 million, all of which are subject to forward sale agreements, which require settlement by September 9, 2022.

 

•

“Term Loan B Facility” refers to the seven-year senior secured first lien term loan B facility entered into by VICI Properties 1 LLC in December 2017, as amended from time to time, including on January 24, 2020 to reduce the applicable interest rate from LIBOR plus 2.00% to LIBOR plus 1.75%. The Term Loan B Facility was repaid in full on September 15, 2021.

 

4

•

“Venetian Acquisition” refers to the pending acquisition by Existing VICI OP of the land and real estate assets associated with the Venetian Resort Las Vegas and the Venetian Expo (formerly known as the Sands Expo and Convention Center), located in Las Vegas, Nevada (collectively, the “Venetian Resort”) and the acquisition of an affiliate of certain funds managed by affiliates of Apollo Global Management, Inc. of the operating assets and liabilities of the Venetian Resort from Las Vegas Sands Corp. pursuant to definitive agreements dated March 2, 2021.

 

•

“Venetian Acquisition Bridge Facility” refers to the 364-day first lien secured bridge facility of up to $4.0 billion in the aggregate, pursuant to a commitment letter among VICI Properties 1 LLC, Deutsche Bank Securities Inc., Deutsche Bank AG Cayman Islands Branch and Morgan Stanley Senior Funding, Inc.

 

•

“Venetian Lease” refers to a triple-net lease agreement for the Venetian Resort.

 

•

“VICI” refers to VICI Properties Inc., a Maryland corporation.

 

•

“VICI Adjournment Proposal” refers to the proposal to approve one or more adjournments of the VICI Special Meeting, if necessary or appropriate, for the purpose of soliciting additional votes for the approval of the VICI Stock Issuance Proposal.

 

•

“VICI Board” refers to the board of directors of VICI.

 

•

“VICI Common Stock” refers to the common stock, par value $0.01 per share, of VICI.

 

•

“VICI GP” refers to VICI Properties GP LLC, a Delaware limited partnership, as the sole general partner of Existing VICI OP.

 

•

“VICI OP Contribution” refers to VICI’s contribution to VICI OP Holdco, and VICI OP Holdco’s contribution to New VICI Operating Company, of 100% of the limited partnership interests in Existing VICI OP in exchange for the issuance to VICI OP Holdco of New VICI Operating Company Units.

 

•

“VICI OP Holdco” refers to VICI Properties Holdco LLC, a Delaware limited liability company and a wholly-owned subsidiary of VICI.

 

•

“VICI Stock Issuance” refers to the issuance of shares of VICI Common Stock to holders of MGP Common Shares, as contemplated by the Master Transaction Agreement.

 

•

“VICI Stock Issuance Proposal” refers to the proposal to approve the VICI Stock Issuance.

 

•

“Written Consent” refers to the consent delivered by MGM to VICI, in its capacity as the holder of the MGP Class B Common Share, which represents a majority of the voting power of the Outstanding Voting Shares of MGP (as defined in the MGP LLC Agreement), pursuant to which MGM approved the Master Transaction Agreement, the REIT Merger and the other transactions contemplated by the Master Transaction Agreement, which written consent is irrevocable except under specified circumstances set forth in the Master Transaction Agreement.

 

5

QUESTIONS AND ANSWERS

The following questions and answers are intended to briefly address some commonly asked questions regarding the Merger Transaction Agreement, the Transactions (as defined below) and the VICI Special Meeting. These questions and answers do not address all questions that may be important to you as a shareholder or stockholder, as applicable. Please refer to the “Summary” beginning on page 15 and the more detailed information contained elsewhere in this proxy statement/information statement/prospectus and the annexes to this proxy statement/information statement/prospectus, which you should read carefully.

Q: What is the proposed transaction for which I am being asked to vote?

A: The VICI stockholders are being asked to approve the VICI Stock Issuance Proposal in connection with the REIT Merger. The approval of the VICI Stock Issuance Proposal by the VICI stockholders is a condition to the completion of the Mergers.

MGM has approved the Master Transaction Agreement, the REIT Merger and the other Transactions on behalf of MGP. Accordingly, no separate vote or consent of holders of the MGP Class A Common Shares is required nor requested to approve the Master Transaction Agreement and complete the Transactions.

Q: Why are VICI and MGP proposing the Transactions?

A: The VICI Board, the MGP Conflicts Committee and the MGP Board believe that the Transactions will provide a number of significant potential strategic opportunities and benefits that will be in the best interests of their respective stockholders and shareholders. To review the reasons for the Transactions, see “The Transactions—Recommendations of the VICI Board and Its Reasons for the Transactions” beginning on page 69 of this proxy statement/information statement/prospectus and “The Transactions—Recommendations of the MGP Conflicts Committee and MGP Board and Their Reasons for the Transactions” beginning on page 73 of this proxy statement/information statement/prospectus.

Q: Why am I receiving this proxy statement/information statement/prospectus?

A: We are delivering this document to you because it is (i) a proxy statement being used by the VICI Board to solicit proxies of VICI stockholders in connection with approval of the issuance of shares of VICI Common Stock pursuant to the Master Transaction Agreement in order to accomplish the REIT Merger and the other Transactions and (ii) an information statement being used by the MGP Board to provide MGP shareholders with material information concerning the actions taken in connection with the Written Consent. This document is also a prospectus that is being delivered to MGP shareholders because, in connection with the Transactions, VICI will be issuing to MGP shareholders shares of VICI Common Stock as REIT Merger Consideration.

For MGP shareholders, this proxy statement/information statement/prospectus contains important information about the Transactions and the other actions taken in connection with the Written Consent. MGP is not asking you for a proxy and you are not requested to send MGP a proxy.

Q: Were appraisals or valuations performed on the assets and liabilities of VICI and MGP in connection with the Transactions?

A: No third-party appraisals or valuations on the assets and liabilities of VICI and MGP were obtained in connection with the Transactions.

 

6

Q: What happens if the market prices of VICI Common Stock or MGP Class A Common Shares change before the closing of the REIT Merger?

A: Changes in the market price of VICI Common Stock or the market price of MGP Class A Common Shares at or prior to the REIT Merger Effective Time will not change the number of shares of VICI Common Stock that holders of MGP Class A Common Shares will receive because the Exchange Ratio is fixed at 1.366 shares of VICI Common Stock per MGP Class A Common Share. The MGP Class B Common Share owned by MGM will automatically be cancelled for no consideration. The value of the REIT Merger Consideration will fluctuate with changes in the market prices of shares of VICI Common Stock.

Q: Are there any conditions to completion of the Transactions?

A: Yes. In addition to the approval of the VICI stockholders, as described herein, there are a number of conditions that must be satisfied or waived for the Transactions to be consummated. For a description of all of the conditions to the Transaction, see “The Master Transaction Agreement—Conditions to Complete the Transactions” beginning on page 135.

Q: What is the amount of debt to be incurred by VICI in connection with the Transactions?

A: VICI has obtained financing commitments for a 364-day first lien secured Bridge Facility of up to $9.250 billion in the aggregate for the purpose of providing a portion of the financing necessary to fund the consideration to be paid in connection with the Partial Redemption pursuant to the terms of the Master Transaction Agreement, amounts to be paid in connection with offers to repurchase certain senior notes of MGP OP pursuant to their respective indentures if the assumption of such notes by the Existing VICI OP in the Mergers is unsuccessful and related fees and expenses. VICI may raise long-term debt in lieu of, or to refinance, the Bridge Facility. See “The Master Transaction Agreement—Debt Commitment Letter” beginning on page 117.

Q: When are the Transactions expected to be completed?

A: If the VICI stockholders approve the VICI Stock Issuance Proposal, and if the other conditions to closing the Transactions are satisfied or waived, VICI and MGP expect that the Transactions will be completed in the first half of 2022. However, there is no assurance that the conditions to the Transactions will be satisfied or waived or that the Transactions will close on the anticipated timeline or at all.

Q: Do I need to do anything with my book-entry shares now?

A: No. You should not submit or attempt to exchange your book-entry shares at this time. After the REIT Merger is completed, if you held MGP Common Shares, the exchange agent will send you a statement reflecting VICI Common Stock received by you pursuant to the terms of the Master Transaction Agreement. The value of any fractional shares of VICI Common Stock to which a holder would otherwise be entitled will be paid in cash. See “The Master Transaction Agreement—Exchange Procedures” beginning on page 119.

If you are a VICI stockholder, you are not required to take any action with respect to your shares of VICI Common Stock. Such shares will continue to represent shares of VICI Common Stock after the REIT Merger.

Q: What happens if I sell my shares of VICI Common Stock before the VICI Special Meeting or my MGP Common Shares before the closing of the Transactions?

A: The record date for the VICI Special Meeting is earlier than the date of the VICI Special Meeting and the date that the Transactions are expected to be completed. If you sell your shares after the record date for the VICI Special Meeting but prior to the date of the VICI Special Meeting, you will retain any right to vote at the VICI Special Meeting. If you are an MGP shareholder and transfer your shares prior to the closing of the Transactions,

 

7

you will have transferred your right to receive the REIT Merger Consideration. If you are an MGP shareholder, you must hold your MGP Class A Common Shares through completion of the REIT Merger in order to receive the REIT Merger Consideration.

Q: What are the anticipated U.S. federal income tax consequences to me of the proposed Transactions?

A: The REIT Merger is intended to qualify as a reorganization within the meaning of Section 368(a) of the Code. It is a condition to the consummation of the Mergers that VICI and MGP receive opinions from Hogan Lovells US LLP (“Hogan Lovells”) and Weil, Gotshal & Manges LLP (“Weil”), respectively, to the effect that, for U.S. federal income tax purposes, the REIT Merger will constitute a reorganization within the meaning of Section 368(a) of the Code. Assuming that the REIT Merger qualifies as a reorganization, U.S. holders (as defined below) of MGP Common Shares generally will not recognize gain or loss for U.S. federal income tax purposes upon the receipt of VICI Common Stock in exchange for MGP Common Shares in connection with the REIT Merger, except with respect to the Fractional Share Consideration. Holders of MGP Common Shares should read the discussion in “Material U.S. Federal Income Tax Consequences” beginning on page 140 and consult their tax advisors to determine the tax consequences to them (including the application and effect of any state, local or non-U.S. income and other tax laws) of the Mergers and the ownership of VICI Common Stock in their particular circumstances.

Q: What happens if the Mergers are not completed?

A: If the Mergers and the other Transactions are not completed for any reason, shareholders of MGP Class A Common Shares will not have their MGP Class A Common Shares exchanged for the REIT Merger Consideration. Instead, each of VICI and MGP would remain a separate company.

Q: Are there any risks associated with the Transactions that I should consider in deciding how to vote?

A: Yes. There are a number of risks related to the Transactions that are discussed in this proxy statement/information statement/prospectus and described in “Risk Factors” beginning on page 28.

Q: Will VICI and MGP continue to pay dividends or distributions prior to the REIT Merger Effective Times?

A: Yes. The Master Transaction Agreement permits VICI to continue to pay regular quarterly distributions in an amount not to exceed $1.44 per share/per unit (on an annualized basis) (subject to VICI’s right to increase its quarterly dividend beginning with the third quarter of 2022 consistent with past practice), and MGP is permitted to declare and pay quarterly distributions in an amount not to exceed $2.06 per share/per unit (on an annualized basis) (subject to MGP’s right to make certain limited quarterly increases in such dividend). In addition, the Master Transaction Agreement permits each of VICI and MGP to declare and pay a dividend and to make other distributions necessary in order for VICI or MGP, as applicable, to maintain its status as a REIT and to avoid or reduce the imposition of any entity-level income or excise taxes under the Code. The timing of the pre-closing dividends of VICI and MGP will be coordinated such that, if one set of stockholders or shareholders receives their dividend for a particular quarter prior to the Closing, the other set of stockholders or shareholders will also receive their dividend for such quarter prior to the Closing.

The following questions and answers apply to VICI stockholders only:

Q: When and where is the VICI Special Meeting?

A: The VICI Special Meeting will be held virtually at www.virtualshareholdermeeting.com/VICI2021SM at 10:00 a.m., Eastern Time, on October 29, 2021.

 

8

Q: What matters will be voted on at the VICI special meeting?

A: You will be asked to consider and vote on the following proposals:

 

•

the VICI Stock Issuance Proposal; and

 

•

the VICI Adjournment Proposal.

Q: How does the VICI Board recommend that I vote on the proposals?

A: After careful consideration, the VICI Board has unanimously:

 

•

determined that the Mergers, the Partial Redemption and the other Transactions are advisable and in the best interests of VICI and the VICI stockholders;

 

•

authorized, approved and adopted the Master Transaction Agreement, the Mergers, the Partial Redemption and the other Transactions; and

 

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recommended that the VICI stockholders vote “FOR” the VICI Stock Issuance Proposal and “FOR” the VICI Adjournment Proposal.

For a more complete description of the recommendation of the VICI Board, see “The Transactions—Recommendations of the VICI Board and Its Reasons for the Transactions” beginning on page 69.

Q: How do I vote?

A: Whether you hold shares of VICI Common Stock directly in your name as the holder of record or in the name of a broker, bank or nominee, you may virtually vote your shares at the virtual VICI Special Meeting via the VICI Special Meeting website at www.virtualshareholdermeeting.com/VICI2021SM. You will need the 16-digit control number included on your proxy card or voting instruction form in order to access and vote at the VICI Special Meeting.

In addition, if you are a stockholder of record, you may instruct the proxy holders named in the proxy card how to vote your shares of VICI Common Stock in one of the following ways:

 

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Vote by Internet. In order to vote via the Internet, you must go to www.proxyvote.com, have your proxy card or voting instruction form in hand and follow the instructions. If you vote via the Internet, you do not need to return your proxy card. Proxies submitted via the Internet must be received by 11:59 p.m., Eastern Time, on October 28, 2021, the day prior to the VICI Special Meeting.

 

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Vote by Phone. In order to vote by telephone, you must call the toll-free number listed on your proxy card, have your proxy card or voting instruction form in hand and follow the instructions. If you vote by telephone, you do not need to return your proxy card. Proxies submitted by telephone must be received by 11:59 p.m., Eastern Time, on October 28, 2021, the day prior to the VICI Special Meeting.

 

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Vote by Mail. To vote by mail, sign, date and mail the proxy card in the postage-paid envelope provided. Properly signed and returned proxies will be voted in accordance with the instructions contained therein. Proxies submitted by mail must be received by 11:59 p.m., Eastern Time, on October 28, 2021, the day prior to the VICI Special Meeting.

If you are the beneficial owner of shares of VICI Common Stock held in “street name” (that is, through a bank, broker or other nominee), then you should follow the instructions provided to you by your broker, bank or other nominee.

 

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Q: Can I change my vote after I have returned a proxy or voting instruction card?

A: Yes. You can change your vote at any time before your proxy is exercised at the VICI Special Meeting. You can do this in one of three ways:

 

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Notifying VICI’s Secretary in writing that you would like to revoke your proxy;

 

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Completing a proxy card on the Internet, by telephone or by mail with a later date prior to 11:59 p.m., Eastern Time, on October 28, 2021, the day prior to the VICI Special Meeting; or

 

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Attending the VICI Special Meeting (virtually) and following the instructions available on the meeting website during the meeting.

Any written notice of revocation or subsequent proxy card should be sent to Attention: Secretary, VICI Properties Inc., 535 Madison Avenue, 20th Floor, New York, New York 10022.

If your shares of VICI Common Stock are held on your behalf by a broker, bank or other nominee, you must contact them to receive instructions as to how you may revoke your proxy voting instructions.

Q: What if I have technical difficulties or trouble accessing the virtual meeting website?

A: If you have difficulty accessing the VICI Special Meeting, technicians will be available to assist you via the toll free phone number listed at www.virtualshareholdermeeting.com/VICI2021SM.

Q: What constitutes a quorum for the VICI special meeting?

A: The presence in person (virtually) or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast on any matter at the VICI Special Meeting as of September 21, 2021 will constitute a quorum, permitting the stockholders to conduct business at the VICI Special Meeting. If you have returned valid proxy instructions or if you hold your shares of VICI Common Stock in your own name as a holder of record and attend the VICI Special Meeting (virtually), your shares will be counted for the purpose of determining whether there is a quorum. As of the record date, there were 628,944,887 shares of VICI Common Stock outstanding.

For purposes of the VICI Stock Issuance Proposal, the failure to return your proxy card and other shares not voted (whether by broker non-vote or otherwise) will not be considered present for the purpose of determining the presence of a quorum and will have no effect on the VICI Stock Issuance Proposal. Under NYSE rules, abstentions will be considered as votes cast and, accordingly, will have the same effect as votes “AGAINST” the VICI Stock Issuance Proposal. Abstentions and the failure to return a proxy card will have no effect on the outcome of the VICI Adjournment Proposal provided a quorum is otherwise present at the VICI Special Meeting.

Broker non-votes occur when nominees, such as banks and brokers holding shares in “street name” on behalf of beneficial owners, do not receive voting instructions from the beneficial owners on how their shares should be voted. If that happens, the nominees may vote those shares of common stock only on matters deemed “routine” by the NYSE, the exchange on which VICI Common Stock is listed. On “non-routine” matters, nominees holding shares for a beneficial owner cannot vote without instructions from the beneficial owner, resulting in a so-called ”broker non-vote.” As each of the proposals to be voted upon at the VICI Special Meeting is considered “non-routine,” such organizations do not have discretion to vote on any of the proposals. As a result, if you fail to provide your broker, bank or other nominee with any instructions regarding how to vote your shares of VICI Common Stock, your shares of VICI Common Stock will not be considered present at the VICI Special Meeting and will not be voted on any of the proposals.

Q: What vote is required for VICI stockholders to approve the VICI Stock Issuance Proposal?

A: Approval of the VICI Stock Issuance Proposal requires the affirmative vote of the majority of the votes cast by VICI stockholders on the VICI Stock Issuance Proposal at the VICI Special Meeting, assuming a quorum is present.

 

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Q: What vote is required for VICI shareholders to approve the VICI Adjournment Proposal?

A: The approval of the VICI Adjournment Proposal requires the affirmative vote of a majority of the votes cast by VICI stockholders on the VICI Adjournment Proposal at the VICI Special Meeting, assuming a quorum is present.

Q: How are votes counted?

A: For the VICI Stock Issuance Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Failure to return your proxy card and other shares not voted (whether by broker non-vote or otherwise) will not be considered present for the purpose of determining the presence of a quorum and will have no effect on the VICI Stock Issuance Proposal. Abstentions will be considered as votes cast and, accordingly, will have the same effect as votes “AGAINST” the VICI Stock Issuance Proposal. Under NYSE rules, abstentions will be considered as votes cast and, accordingly, will have the same effect as votes “AGAINST” the VICI Stock Issuance Proposal.

For the VICI Adjournment Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions and other shares not voted (whether by broker non-votes or otherwise) will not have an effect on the VICI Adjournment Proposal, provided that a quorum is otherwise present.

Properly executed proxy cards with no instructions indicated on the proxy card will be voted “FOR” the VICI Stock Issuance Proposal and “FOR” the VICI Adjournment Proposal.

In addition, banks, brokers and other nominees that hold their customers’ shares in street name may not vote their customers’ shares on “non-routine” matters without instructions from their customers. As each of the proposals to be voted upon at the VICI Special Meeting is considered “non-routine,” such organizations do not have discretion to vote on any of the proposals. As a result, if you fail to provide your broker, bank or other nominee with any instructions regarding how to vote your VICI Common Stock, your VICI Common Stock will not be considered present at the VICI Special Meeting and will not be voted on any of the proposals.

Q: Who is entitled to vote at the VICI special meeting?

A: All holders of VICI Common Stock as of the close of business on September 21, 2021, the record date for the VICI Special Meeting, are entitled to vote at the VICI Special Meeting, unless a new record date is fixed for any adjournment or postponement of the VICI Special Meeting. As of the record date, there were 628,944,887 issued and outstanding shares of VICI Common Stock. Each holder of record of VICI Common Stock on the record date is entitled to one vote per share.

Q: How will VICI stockholders be affected by the Transactions and the VICI Stock Issuance?

A: After the Transactions, each VICI stockholder will continue to own the shares of VICI Common Stock that such stockholder held immediately prior to the consummation of the Transactions. As a result, each VICI stockholder will continue to own common shares in the Combined Company, which will be a larger company with more assets. However, because VICI will be issuing new shares of VICI Common Stock to holders of MGP Class A Common Shares in the REIT Merger, and because following the Partial Redemption, MGM will own approximately 12 million New VICI Operating Company Units, which will represent approximately 1% of the total New VICI Operating Company Units, each outstanding share of VICI Common Stock immediately prior to the consummation of the Transactions will represent a smaller percentage of the aggregate number of shares of VICI Common Stock outstanding after the Transactions on a fully diluted basis.

 

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Q: Who can answer my questions?

A: If you have any questions about the Transactions, the VICI Special Meeting or the proposals to be voted on at the VICI Special Meeting or how to submit your proxy or if you need additional copies of this proxy statement/information statement/prospectus, the enclosed proxy card or voting instructions, you should contact:

VICI Properties Inc.

535 Madison Avenue, 20^th Floor

New York, NY 10022

(646) 949-4631

Attention: Investor Relations

Georgeson LLC

1290 Avenue of the Americas, 9th Floor

New York, NY 10104

Toll-Free: 888-219-8320

Email: viciproperties@georgeson.com

The following questions and answers apply to MGP shareholders only:

Q: As a shareholder of MGP, what will I receive in the REIT Merger?

A: If the Mergers are completed, each MGP Class A Common Share issued and outstanding immediately prior to the REIT Merger Effective Time will be automatically cancelled and retired and converted into the right to receive 1.366 shares of VICI Common Stock plus the Fractional Share Consideration, less any applicable tax withholdings.

Q: Why did the MGP Board approve the Transactions?

A: To review the reasons for certain factors considered by the MGP Board in reaching their decision to authorize and approve the Transactions, see “The Transactions—Recommendations of the MGP Conflicts Committee and MGP Board and Their Reasons for the Transactions” beginning on page 73.

Q: Is the approval of MGP shareholders necessary to adopt the Master Transaction Agreement? Why am I not being asked to vote on the Master Transaction Agreement?

A: On August 4, 2021 and in accordance with the MGP LLC Agreement, MGM approved the Master Transaction Agreement, the REIT Merger and the other Transactions by delivery of the Written Consent. As of August 4, 2021, MGM held the majority of the voting power of the Outstanding Voting Shares (as defined in the MGP LLC Agreement). Therefore, the delivery of the Written Consent satisfied the requirement in the MGP LLC Agreement that the affirmative vote of the holders of at least a majority of the voting power of the Outstanding Voting Shares approve the Master Transaction Agreement, the REIT Merger and the other Transactions. No additional approval of the shareholders of MGP is required to approve the Master Transaction Agreement, the REIT Merger and the other Transactions. As a result, MGP has not solicited and will not be soliciting your vote for the approval of the Master Transaction Agreement, the REIT Merger and the other Transactions and does not intend to call a meeting of shareholders for purposes of voting on the adoption of the Master Transaction Agreement, the REIT Merger and the other Transactions.

Q: What will happen to outstanding MGP equity awards in the Mergers?

A: MGP DSUs. At the REIT Merger Effective Time, each of MGP’s deferred restricted stock units (“MGP DSUs”) that are outstanding immediately prior to the REIT Merger Effective Time will be cancelled and converted into the right to receive, with respect to each MGP Class A Common Share subject to such MGP DSU, the REIT Merger Consideration, less any applicable tax or other withholdings.

 

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MGP RSUs. At the REIT Merger Effective Time, each of MGP’s restricted stock units (“MGP RSUs”) that are outstanding immediately prior to the REIT Merger Effective Time will be accelerated, vest and be cancelled and converted into the right to receive, with respect to each MGP Class A Common Share subject to such MGP RSU, the REIT Merger Consideration, less any applicable tax or other withholdings.

MGP PSUs. At the REIT Merger Effective Time, each of MGP’s performance share units (“MGP PSUs,” together with the MGP DSUs and MGP RSUs, the “MGP Equity Awards”) that are outstanding immediately prior to the REIT Merger Effective Time will (1) automatically be accelerated and become vested with respect to the number of MGP Class A Common Shares subject to such MGP PSU that would vest based on the achievement of the greater of (x) the applicable target level of performance and (y) the actual level of performance as of the closing date of the Transactions, based on the achievement of the applicable performance metrics with respect to the performance period during which the REIT Merger Effective Time occurs and as determined in good faith by the MGP Board and (2) be cancelled and converted into the right to receive, with respect to each MGP Class A Common Share subject to such MGP PSU determined in accordance with the immediately preceding clause (1), the REIT Merger Consideration less any applicable tax or other withholdings.

Q: Do any of MGP’s directors or executive officers have any interests in the merger that are different from, or in addition to, my interests as a MGP shareholder?

A: MGP’s shareholders should be aware that certain directors and executive officers of MGP have certain interests in the Transactions that may be different from, or in addition to, the interests of MGP shareholders generally and that may present actual or potential conflicts of interests. For additional information, see “The Transactions—Interests of MGP’s Directors and Executive Officers in the Transactions” beginning on page 100.

Q: Are MGP shareholders entitled to appraisal rights in connection with the Mergers?

A: No, MGP shareholders are not entitled to appraisal rights in connection with the Mergers or other Transactions.

Q: What happens if a third party makes an offer to acquire MGP before the Mergers are completed?

A: Prior to receipt of the VICI stockholder approval, MGP may, subject to certain requirements and rights of VICI, terminate the Master Transaction Agreement to enter into an alternative acquisition agreement with respect to a superior proposal in accordance with the Master Transaction Agreement; provided, however, that the Master Transaction Agreement may not be so terminated unless the payment required under the Master Transaction Agreement is made in full to VICI substantially concurrently with the occurrence of such termination and the entry into an agreement in connection with such unsolicited superior proposal.

Q: How does the REIT Merger Consideration compare to the market price of the MGP Class A Common Shares prior to the execution of the Master Transaction Agreement?

A: The REIT Merger Consideration represents an approximate 16% premium to the $37.09 closing price per MGP Class A Common Share on August 3, 2021, the last trading day before public announcement of the Mergers.

Q: What do I need to do now?

A: You don’t need to do anything prior to the Closing. Promptly after the Closing, you should follow the instructions in the letter of transmittal regarding the surrender of your MGP Class A Common Shares for the REIT Merger Consideration.

 

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Q: Who can help answer my questions?

A: If you have any questions about the Transactions after reading this proxy statement/information statement/prospectus, please contact MGP by phone at (702) 669-1480 or by mail to MGM Growth Properties LLC, 6385 S. Rainbow Boulevard, Suite 500, Las Vegas, Nevada 89118, Attention: Shareholder Communications.

 

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RISK FACTORS

In addition to the other information included in this proxy statement/information statement/prospectus, including the matters addressed in the section entitled “Forward-Looking Statements,” you should carefully consider the following risks before deciding how to vote your shares of VICI Common Stock at the VICI Special Meeting. In addition, you should read and consider the risks associated with each of the businesses of VICI and MGP because these risks will also affect VICI following the Mergers. These risks can be found in Item 1A: “Risk Factors” in each of the VICI Annual Report on Form 10-K for the year ended December 31, 2020 and the MGP Annual Report on Form 10-K for the year ended December 31, 2020 and subsequent Quarterly Reports on Form 10-Q of VICI and MGP, each of which is filed with the SEC and incorporated by reference into this proxy statement/information statement/prospectus. You should also read and consider the other information in this proxy statement/ information statement/prospectus and the other documents incorporated by reference into this proxy statement/ information statement/prospectus. See “Where You Can Find More Information and Incorporation by Reference” beginning on page 206.

Risks Related to the Mergers

Failure to complete the Mergers in a timely manner or at all could adversely affect VICI’s or MGP’s business and operations and negatively affect VICI’s or MGP’s stock price.

Under the Master Transaction Agreement, VICI and MGP are subject to certain restrictions on the conduct of their respective businesses prior to completing the Mergers. These restrictions, the waiver of which are subject to the written consent of the other party, and subject to certain exceptions and qualifications, may prevent VICI or MGP from pursuing certain strategic transactions, acquiring and disposing of assets, undertaking certain capital expenditure projects, undertaking certain financing transactions and otherwise pursuing other actions that are not in the ordinary course of business, even if such actions could prove beneficial. Additionally, the pendency of the Mergers may cause distractions from VICI’s and MGP’s respective strategies and day-to-day operations for employees and management.

Delays in completing the Mergers or the failure to complete the Mergers at all could adversely affect VICI’s and MGP’s respective businesses and operations, and, in that event, the market price of shares of VICI Common Stock or MGP Class A Common Shares may decline significantly, particularly to the extent that the current market price reflects a market assumption that the Mergers will be completed. If the Mergers are not completed for any reason, VICI will not achieve the expected benefits thereof and MGP shareholders will not receive the REIT Merger Consideration. In addition, VICI and MGP will be required to pay certain costs relating to the Mergers, whether or not the Mergers are completed.

The Exchange Ratio is fixed and will not be adjusted in the event of any change in the stock price of either VICI or MGP.

At the REIT Merger Effective Time, each outstanding MGP Class A Common Share (other than shares held by MGP or any wholly-owned subsidiary of MGP) will be converted into the right to receive the REIT Merger Consideration, consisting of 1.366 shares of VICI Common Stock and the Fractional Share Consideration.

The Exchange Ratio of 1.366 shares of VICI Common Stock per MGP Class A Common Share was fixed in the Master Transaction Agreement and, except for certain adjustments on account of changes in the capitalization of VICI or MGP, or the payment of certain dividends by VICI or MGP that are necessary to maintain their respective status as a REIT, will not be adjusted for changes in the market prices of VICI Common Stock or MGP Class A Common Shares. Changes in the market price of shares of VICI Common Stock prior to the Mergers will affect the market value of the REIT Merger Consideration that MGP shareholders will be entitled to receive on the closing date of the Mergers. Stock price changes may result from a variety of factors (many of which are beyond the control of VICI and MGP), including the following:

 

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changes in the respective businesses, operations, assets, liabilities and prospects of VICI and MGP;

 

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changes in market assessments of the business, operations, financial position and prospects of VICI or MGP;

 

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market assessments of the likelihood that the Mergers will be completed;

 

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interest rates, general market and economic conditions and other factors generally affecting the market prices of VICI Common Stock and MGP Class A Common Shares;

 

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federal, state and local legislation, governmental regulation and legal developments in the business in which VICI and MGP operate; and

 

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other factors, including those described or referred to elsewhere under this heading “Risk Factors.”

The market price of VICI Common Stock at the Closing may vary from its price on the date the Master Transaction Agreement was executed, on the date of this proxy statement/information statement/prospectus and on the date of the VICI Special Meeting and may be greater than, less than or the same as the price per share of VICI Common Stock at each of the aforementioned times. As a result, the market value of the REIT Merger Consideration represented by the Exchange Ratio will also vary. For example, based on the range of closing prices of VICI Common Stock during the period from August 3, 2021, the last trading day before public announcement of the Mergers, through September 17, 2021, the latest practicable date before the date of this proxy statement/information statement/prospectus, the Exchange Ratio of 1.366 shares of VICI Common Stock per MGP Class A Common Share represented a market value ranging from a low of $39.98 to a high of $43.75 per MGP Class A Common Share.

Because the Mergers will be completed after the date of the VICI Special Meeting, at the time of the VICI Special Meeting, MGP shareholders will not know the exact market value of the VICI Common Stock that they will receive upon completion of the Mergers. MGP shareholders should consider, among other things:

 

•

if the price of VICI Common Stock increases between the date the Master Transaction Agreement was signed and the Closing, MGP shareholders will receive shares of VICI Common Stock that have a market value upon completion of the Mergers that is greater than the market value of such shares calculated pursuant to the Exchange Ratio on the date the Master Transaction Agreement was signed; and

 

•

if the price of VICI Common Stock declines between the date the Master Transaction Agreement was signed and the Closing, MGP shareholders will receive shares of VICI Common Stock that have a market value upon the completion of the Mergers that is less than the market value of such shares calculated pursuant to the Exchange Ratio on the date the Master Transaction Agreement was signed.

Therefore, while the number of shares of VICI Common Stock to be issued per MGP Class A Common Share is fixed, MGP shareholders and VICI stockholders cannot be sure of the market value of the REIT Merger Consideration that MGP shareholders will receive upon the Closing. The market price of VICI Common Stock is subject to general price fluctuations in the market for publicly traded equity securities and has experienced volatility in the past. You should obtain current market price quotations for VICI’s Common Stock; however, as noted above, the prices at the REIT Merger Effective Time may be greater than, the same as or less than such price quotations.

There may be unexpected delays in the completion of the Mergers or the Mergers may not be completed at all.

The Mergers are currently expected to close in the first half of 2022, assuming that all of the conditions in the Master Transaction Agreement are either satisfied or waived. The Master Transaction Agreement provides that either VICI or MGP may terminate the Master Transaction Agreement, subject to certain conditions set forth in the Master Transaction Agreement, if the Mergers have not occurred on or before the Outside Date, which is

 

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November 4, 2022. Certain events may delay the completion of the Mergers or result in a termination of the Master Transaction Agreement. Some of these events are outside the control of VICI and MGP. In particular, completion of the Mergers requires the affirmative vote on the VICI Stock Issuance Proposal of the majority of the votes cast by VICI stockholders on the VICI Stock Issuance Proposal at the VICI Special Meeting, assuming a quorum is present. If the requisite shareholder approval is not obtained at the VICI Special Meeting (including any postponement or adjournment thereof), either VICI or MGP may terminate the Master Transaction Agreement.

VICI and MGP may incur significant additional costs in connection with any delay in completing the Mergers or the termination of the Master Transaction Agreement, in addition to significant transaction costs, including legal, financial advisory, accounting and other costs VICI and MGP have already incurred. In addition, if the Mergers are terminated under certain circumstances specified in the Master Transaction Agreement, VICI will be required to pay to MGP a termination fee of up to $709 million and if the Mergers are terminated under certain circumstances specified in the Master Transaction Agreement, MGP will be required to pay VICI a termination fee of up to $421 million. Neither VICI nor MGP can assure you that the conditions to the completion of the Master Transaction Agreement will be satisfied or waived or that any adverse change, effect, event, circumstance, occurrence or state of facts that could give rise to the termination of the Master Transaction Agreement will not occur.

VICI stockholders and MGP shareholders will have a substantially smaller ownership and voting interest in VICI upon completion of the Mergers, compared to their respective ownership and voting interest in VICI and MGP, respectively, prior to the Mergers.

Upon completion of the Mergers, each MGP shareholder will become a VICI stockholder with a percentage ownership of VICI that is substantially smaller than the shareholder’s current percentage ownership of MGP. Upon completion of the Mergers, based on the number of MGP Class A Common Shares and shares of VICI Common Stock outstanding on September 17, 2021, the latest practicable date prior to the filing of this proxy statement/information statement/prospectus, VICI estimates that, after giving effect to the settlement of the March 2021 Forward Sale Agreement and the September 2021 Forward Sale Agreements, continuing VICI stockholders will own approximately 78% of the issued and outstanding VICI Common Stock, and former MGP shareholders will own approximately 22% of the issued and outstanding VICI Common Stock. Accordingly, the current VICI and former MGP shareholders will exercise significantly less influence over VICI after the Mergers relative to their respective influence over VICI and MGP prior to the Mergers, and thus will have a less significant impact on the approval or rejection of future VICI proposals submitted to a stockholder vote.

There can be no assurance that VICI will be able to secure the financing in connection with the Partial Redemption on acceptable terms, in a timely manner, or at all, and therefore may be compelled to consummate the Transactions without obtaining financing on attractive terms.

VICI is required to finance the cash required in connection with the Partial Redemption with long-term debt financing or proceeds from the Bridge Facility in accordance with the terms of the Debt Commitment Letter. The Debt Commitment Letter provides for funding to Existing VICI OP of up to $9.250 billion, consisting of up to $5.008 billion in funding under Tranche 1 of the Bridge Facility, which can be used to fund the Partial Redemption and pay transaction costs, and up to $4.242 billion in funding under Tranche 2 of the Bridge Facility, which can be used to fund the Change of Control Offers. Additionally, VICI may continue to evaluate alternative financing structures and amounts based on its needs and capital markets conditions. The availability of the borrowings under the Bridge Facility is subject to the satisfaction of certain customary conditions, including the substantially concurrent consummation of the Mergers. For a more detailed discussion of the Bridge Facility and Debt Commitment Letter, see “The Transactions—Bridge Financing Commitment Letter” beginning on page 54 and “The Master Transaction Agreement—Debt Commitment Letter” beginning on page 117.

 

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The consummation of the Transactions is not conditioned on VICI’s ability to obtain financing or the consummation of the transactions contemplated by the Debt Commitment Letter. If VICI is unable to obtain funding contemplated by the Debt Commitment Letter from its financing sources for the cash required in connection with the Partial Redemption, VICI may be compelled to specifically perform its obligations to consummate the Transactions with financing that is not on attractive terms or could otherwise be subject to claims under the Master Transaction Agreement, each of which could have a material adverse effect on VICI.

The Master Transaction Agreement contains provisions that could discourage a potential competing acquirer of either MGP or VICI from making a favorable proposal, could result in any such competing proposal being at a lower price than it might otherwise be and, in specified circumstances, could require MGP to make a substantial termination payment to VICI or could require VICI to make a substantial termination payment to MGP.

Pursuant to the Master Transaction Agreement, MGP and VICI have, subject to certain exceptions, agreed not to (i) solicit proposals relating to certain alternative transactions, (ii) enter into discussions or negotiations or provide non-public information concerning proposals relating to an alternative business combination transaction, (iii) approve or recommend any agreements providing for any such alternative business combination transaction, (iv) enter into any letter of intent, agreement in principle, merger agreement or other similar definitive agreements related to alternative business combination transaction, (v) grant any waiver, amendment or release of any standstill under any standstill or confidentiality agreement or any takeover statute, or (vi) agree to do any of the foregoing. Notwithstanding such “no-shop” restrictions, prior to obtaining VICI stockholder approval of the VICI Stock Issuance Proposal, under certain specified circumstances and in accordance with their respective duties as directors under applicable law, the MGP Conflicts Committee and the MGP Board may change the MGP Conflicts Committee and MGP Board recommendations, respectively, and the VICI Board may change the VICI Board recommendation and terminate the Master Transaction Agreement to accept a Superior Proposal upon payment of the respective termination fees described below.

The Master Transaction Agreement also provides that, in connection with the termination of the Master Transaction Agreement by VICI under certain specified circumstances, VICI will be required to pay to MGP a termination fee of up to $709 million and in connection with the termination of the Master Transaction Agreement by MGP under certain specified circumstances, MGP will be required to pay VICI a termination fee of up to $421 million. See “The Master Transaction Agreement—Acquisition Proposals; Change in Recommendation” beginning on page 130 and “The Master Transaction Agreement—Termination Fees and Expenses” beginning on page 138.

These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of MGP or VICI from considering or proposing such an acquisition, even if the potential competing acquirer was prepared to pay consideration with a higher per share value than the value proposed to be received or realized in the Mergers, or might result in a potential competing acquirer proposing to pay a lower per share value than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances under the Master Transaction Agreement.

If the Mergers are not consummated by the Outside Date, either VICI or MGP may terminate the Master Transaction Agreement.

Either VICI or MGP may terminate the Master Transaction Agreement if the Mergers have not been consummated by the Outside Date, which is November 4, 2022. However, this termination right will not be available to a party if that party’s failure to comply with any provision of the Master Transaction Agreement has been the principal cause of, or resulted in, the failure of the Mergers to occur by the Outside Date. See “The Master Transaction Agreement—Termination of the Master Transaction Agreement” beginning on page 137. In the event the Master Transaction Agreement is terminated by either party due to the failure of the Mergers to close by the Outside Date, VICI and MGP will have incurred significant costs and will have diverted significant management focus and resources from other strategic opportunities without realizing the anticipated benefits of the Mergers.

 

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Gaming regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or cannot be met.

Consummation of the Mergers is conditioned on the receipt of approvals from a number of gaming regulatory authorities, including, among others, the Illinois Gaming Control Board, the Indiana Gaming Commission, the Louisiana Gaming Control Board, the Maryland Lottery and Gaming Control Agency, the Maryland Lottery and Gaming Control Commission, the Massachusetts Gaming Commission, the Michigan Gaming Control Board, the Mississippi Gaming Commission, the Missouri Gaming Commission, the Nevada Gaming Commission, the Nevada Gaming Control Board, the New Jersey Casino Control Commission, the New Jersey Division of Gaming Enforcement, the New York State Gaming Commission, the Ohio Casino Control Commission, the Ohio Lottery Commission, the Ohio State Racing Commission, the Pennsylvania Gaming Control Board and the Pennsylvania Racing Commission. In some instances, these approvals may also include findings of suitability for VICI’s officers and members of the VICI Board. These approvals and findings may not be received at all, may not be received in a timely fashion and/or may contain conditions on the consummation of the Mergers. In addition, these regulatory bodies may impose conditions on the granting of such approvals and findings. Such conditions and the process of obtaining such regulatory approvals could have the effect of delaying or impeding consummation of the Mergers or of imposing additional costs or limitations on VICI following the Mergers. In addition, to the extent any officer of VICI is found unsuitable, VICI would need to find a replacement, which may take time and could adversely impact VICI’s financial and operational performance, including VICI’s ability to successfully consummate the Mergers and integrate MGP into VICI. Any such finding of unsuitability by regulatory authorities and resulting resignation or removal of an officer of VICI or a member of the VICI Board could also impact the governance structure of VICI following the Mergers.

The directors and named executive officers of MGP have interests in the Transactions that are different from, or in addition to, those of the other MGP shareholders.

The directors and named executive officers of MGP have arrangements that provide them with interests in the Transactions that are different from, or in addition to, those of the MGP shareholders, generally. The MGP Conflicts Committee and MGP Board were aware of and considered those interests, among other matters, in reaching their respective decisions to approve and recommend the Master Transaction Agreement, the REIT Merger and the other Transactions. These interests, among others, may influence or may have influenced the directors and named executive officers of MGP to approve and recommend the Master Transaction Agreement, the REIT Merger and the other Transactions. See “The Transactions—Interests of MGP’s Directors and Executive Officers in the Transactions” beginning on page 109.

An adverse judgment in any litigation challenging the Mergers may prevent the Mergers from becoming effective or from becoming effective within the expected timeframe.

Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into merger agreements or other agreements similar to the Master Transaction Agreement. As of the date of this proxy statement/information statement/prospectus, one lawsuit has been filed by a purported MGP shareholder challenging the disclosures made in the registration statement in connection with the Mergers. The complaint alleges that the registration statement fails to disclose certain allegedly material information in violation of Sections 14(a) and 20(a) of the Exchange Act. Additional lawsuits arising out of the Transactions may be filed in the future. For a more detailed description of this litigation, see “The Transactions—Litigation Relating to the Mergers” beginning on page 115 of this proxy statement/information statement/prospectus.

Neither VICI nor MGP can assure you as to the outcome of these lawsuits or any other lawsuit that may be filed, including the amount of costs associated with defending these claims or any other liabilities that may be incurred in connection with the litigation of these claims. If plaintiffs are successful in obtaining an injunction prohibiting the parties from completing the Transactions on the agreed-upon terms, such an injunction may delay the consummation of the Transactions in the expected timeframe, or could indefinitely enjoin the Transactions from being consummated altogether. Whether or not any plaintiff’s claim is successful, this type of litigation may result in significant costs and divert management’s attention and resources, which could adversely affect the operation of VICI’s or MGP’s business.

 

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If the REIT Merger does not qualify as a reorganization there may be adverse tax consequences.

The parties intend that the REIT Merger will be treated as a reorganization within the meaning of Section 368(a) of the Code, and it is a condition to the consummation of the Mergers that VICI and MGP receive opinions from Hogan Lovells and Weil, respectively, to the effect that, for U.S. federal income tax purposes, the REIT Merger will constitute a reorganization within the meaning of Section 368(a) of the Code. These tax opinions represent the legal judgment of counsel rendering the opinion and are not binding on the Internal Revenue Service (the “IRS”) or the courts. If the REIT Merger were to fail to qualify as a reorganization, U.S. holders of MGP Common Shares generally would recognize gain or loss, as applicable, equal to the difference between (i) the sum of the fair market value of the VICI Common Stock and the Fractional Share Consideration received by such holder in the REIT Merger; and (ii) such holder’s adjusted tax basis in its MGP Common Shares. See “Material U.S. Federal Income Tax Consequences” beginning on page 140.

Risks Related to VICI Following the Transactions

VICI expects to incur substantial expenses related to the Transactions.

VICI expects to incur substantial expenses in completing the Transactions and integrating the business, operations, systems, technologies, policies and procedures of MGP with those of VICI. While VICI has assumed that a certain level of expenses would be incurred, there are a number of factors beyond its control that could affect the total amount or the timing of the expenses relating to the completion of the Transactions and the integration of VICI’s and MGP’s operations. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. As a result, the expenses associated with the Transactions could, particularly in the near term, reduce the savings that VICI expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings following the completion of the Transactions and impact VICI’s business and operations and the market price of VICI Common Stock.

Following the Mergers, VICI may be unable to integrate the current operations of MGP and VICI successfully and realize the anticipated synergies and other benefits of the Mergers or do so within the anticipated timeframe.

The Mergers involve the combination of two companies which currently operate as independent public companies. VICI is expected to benefit from the elimination of duplicative costs associated with general and administrative expenses, including those related to supporting a public company platform and the leveraging of technology and systems. However, VICI will be required to devote significant management attention and resources to integrating the business practices and operations of MGP into VICI. Potential difficulties VICI may encounter in the integration process include, among others, the following:

 

•

the inability to successfully combine the operations of VICI and MGP in a manner that permits VICI to achieve the cost savings anticipated to result from the Mergers, which would result in the anticipated benefits of the Mergers not being realized in the timeframe currently anticipated or at all;

 

•

the additional complexities of increasing the number of properties owned by VICI and the additional tenants, including additional time and attention required by management;

 

•

potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the Mergers;

 

•

failure to retain key employees of either VICI or MGP; and

 

•

additional complexities of combining two companies with different histories, regulatory restrictions, markets and tenants.

For all these reasons, you should be aware that it is possible that the integration process could result in the distraction of VICI’s management, the disruption of VICI’s ongoing business or inconsistencies in VICI’s

 

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operations, services, standards, controls, procedures and policies, any of which could adversely affect the ability of VICI to maintain relationships with tenants, customers, vendors and employees or to achieve the anticipated benefits of the Mergers, or could otherwise adversely affect VICI’s business and financial results.

VICI’s anticipated level of indebtedness will increase upon completion of the Transactions and will increase the related risks VICI now faces.

Contemporaneously with the execution of the Master Transaction Agreement, VICI entered into the Debt Commitment Letter with the Lenders (as defined below) pursuant to which the Lenders have committed to provide Existing VICI OP with bridge financing for the Transactions in the amount of $9.250 billion. VICI will also assume and/or refinance certain indebtedness of MGP in connection with the Transactions and will be subject to increased risks associated with debt financing, including an increased risk that VICI’s cash flow could be insufficient to meet required payments on its debt. On June 30, 2021, VICI had indebtedness of approximately $6.9 billion. After giving effect to the Mergers, the incurrence of approximately $4.4 billion in debt in connection with the Partial Redemption and approximately $4.2 billion in debt in connection with the closing of the offers for exchange and approximately $600.0 million in debt in connection with the Venetian Acquisition, and the repayment of the Term Loan B Facility, VICI’s total pro forma consolidated indebtedness will increase to approximately $14.0 billion.

VICI’s increased indebtedness could have important consequences to holders of its common stock, including:

 

•

increasing VICI’s vulnerability to general adverse economic and industry conditions;

 

•

limiting VICI’s ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements;

 

•

with respect to floating rate indebtedness, risks associated with increases in interest rates;

 

•

requiring the use of a substantial portion of VICI’s cash flow from operations for the payment of principal and interest on its indebtedness, thereby reducing its ability to use its cash flow to fund working capital, acquisitions, capital expenditures and general corporate requirements;

 

•

limiting VICI’s ability to pay dividends to its stockholders;

 

•

limiting VICI’s flexibility in planning for, or reacting to, changes in its business and its industry; and

 

•

putting VICI at a disadvantage compared to its competitors with less indebtedness.

Counterparties to certain significant agreements with MGP may exercise contractual rights under such agreements in connection with the Mergers.

MGP is a party to certain agreements that give the applicable counterparty certain rights following a “change in control.” In certain of these agreements, such rights may be triggered upon the Closing and may trigger a consent or the right to terminate the agreement. It is not a condition to completion of the Mergers that the counterparties consent to the Mergers or waive their contractual rights. Certain counterparties may also require modifications to their respective agreements or the execution of new agreements as a condition to granting a waiver or consent under their agreement. The pursuit of such rights by the counterparties may result in VICI suffering a loss of potential future revenue or incurring liabilities and may result in the loss or modification of rights that are material to VICI’s business. There can be no assurances that such counterparties will not exercise their rights under these agreements, including termination rights where available, or that the exercise of any such rights under, or modification of, these agreements will not adversely affect VICI’s business or operations.

 

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VICI depends on key senior executives and employees for its future success, and the loss of key personnel or inability to attract and retain key personnel could significantly harm VICI’s business.

VICI’s ability to maintain its competitive position depends on the efforts and abilities of its senior executives and employees. Finding suitable replacements for senior executives and other key employees can be difficult, time consuming and expensive. Losing the services of one or more of these senior executives or key employees following consummation of the Mergers could adversely affect VICI’s business, results of operations, strategic relationships, including relationships with tenants, joint venture partners and vendors, and limit VICI’s ability to execute its business strategies.

VICI is and will always be significantly dependent on its tenants for its revenues, including MGM following the Transactions, and unless or until VICI substantially diversifies its portfolio an event that has a material adverse effect on any of VICI’s significant tenants’ businesses, financial condition, liquidity, results of operations or prospects could have a material adverse effect on VICI’s business, financial condition, liquidity, results of operations and prospects.

VICI depends on its tenants to operate the properties that it owns in a manner that generates revenues sufficient to allow the tenants to meet their obligations to VICI. Currently, a substantial majority of VICI’s revenue comes from VICI’s leases with subsidiaries of Caesars, Penn National, Hard Rock, JACK Entertainment, Century Casinos and EBCI, with the most significant percentage of our revenues coming from Caesars. Following the completion of the Transactions, MGM will also become a significant tenant of VICI, with Caesars representing approximately 41% of total estimated annualized cash rent and MGM representing approximately 40% of total estimated annualized cash rent. Accordingly, the risks to VICI described under the Risk Factor “We are and will always be significantly dependent on our tenants for our revenues, and unless or until we substantially diversify our portfolio an event that has a material adverse effect on any of our tenants’ businesses, financial condition, liquidity, results of operations or prospects could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.” in VICI’s Annual Report on Form 10-K for the year ended December 31, 2020, which is incorporated herein by reference, will also apply with respect to MGM following the completion of the Transactions, and an event that has a material adverse effect on MGM’s businesses, financial condition, liquidity, results of operations or prospects could have a material adverse effect on VICI’s business, financial condition, liquidity, results of operations and prospects.

Risks Related to an Investment in VICI Following the Transactions

The market price and trading volume of VICI Common Stock may be volatile.

The United States stock markets, including the NYSE, on which VICI Common Stock will continue to be listed under the symbol “VICI” after the Mergers, have experienced significant price and volume fluctuations. As a result, the market price of shares of VICI Common Stock is likely to be similarly volatile, and investors in shares of VICI Common Stock may experience a decrease in the value of their shares, including decreases unrelated to VICI’s operating performance or prospects. Neither VICI nor MGP can assure you that the market price of VICI Common Stock will not fluctuate or decline significantly in the future.

In addition to the risks listed in this “Risk Factors” section, a number of factors could negatively affect VICI’s share price or result in fluctuations in the price or trading volume of VICI Common Stock, including:

 

•

the annual yield from distributions on VICI Common Stock as compared to yields on other financial instruments;

 

•

equity issuances by VICI, or future sales of substantial amounts of VICI Common Stock by its existing or future stockholders, or the perception that such issuances or future sales may occur;

 

•

increases in market interest rates or a decrease in VICI’s distributions to stockholders that lead purchasers of VICI Common Stock to demand a higher yield;

 

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•

changes in market valuations of similar companies;

 

•

fluctuations in stock market prices and volumes;

 

•

additions or departures of executive officers or other key employees;

 

•

VICI’s operating performance and the performance of other similar companies;

 

•

actual or anticipated differences in VICI’s quarterly operating results;

 

•

changes in expectations of future financial performance or changes in estimates of securities analysts;

 

•

publication of research reports about VICI or its industry by securities analysts;

 

•

failure to qualify as a REIT for U.S. federal income tax purposes;

 

•

adverse market reaction to any indebtedness VICI incurs in the future;

 

•

strategic decisions by VICI or its competitors, such as acquisitions, divestments, spin-offs, joint ventures, strategic investments or changes in business strategy;

 

•

legislative or other regulatory developments that adversely affect VICI or its industry;

 

•

speculation in the press or investment community;

 

•

changes in VICI’s earnings;

 

•

failure to satisfy the listing requirements of the NYSE;

 

•

failure to comply with the requirements of Sarbanes Oxley Act of 2002, as amended;

 

•

actions by institutional stockholders of VICI;

 

•

changes in accounting principles; and

 

•

general economic and/or market conditions, including factors unrelated to VICI’s performance.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their common stock. This type of litigation could result in substantial costs and divert VICI’s management’s attention and resources, which could have a material adverse effect on VICI’s cash flows, its ability to execute its business strategy and VICI’s ability to make distributions to VICI stockholders.

The market price of shares of VICI Common Stock following the Transactions may be affected by factors different from those affecting the price of shares of VICI Common Stock before the Transactions.

The results of operations of VICI, as well as the market price of VICI Common Stock, after the Transactions may be affected by factors different from those currently affecting VICI’s results of operations and the market prices of VICI Common Stock. These factors include:

 

•

a greater number of shares of VICI Common Stock outstanding;

 

•

different stockholders in VICI; and

 

•

VICI owning new assets with different tenants and capitalization structures.

Accordingly, the historical market prices and financial results of VICI and MGP may not be indicative of these matters for VICI after the Transactions.

The market price of VICI Common Stock may decline as a result of the Transactions.

The market price of VICI Common Stock may decline as a result of the Transactions if VICI does not achieve the perceived benefits of the Transactions as rapidly or to the extent anticipated by financial or industry

 

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analysts, or the effect of the Transactions on VICI’s financial results is not consistent with the expectations of financial or industry analysts.

In addition, upon consummation of the Transactions, MGP shareholders and VICI stockholders will own interests in a company operating an expanded business with a different mix of properties, risks and liabilities. Current MGP shareholders and VICI stockholders may not wish to continue to invest in VICI, or for other reasons may wish to dispose of some or all of their shares of VICI Common Stock. If, following the closing of the Transactions, significant amounts of VICI Common Stock are sold, the price of VICI Common Stock could decline.

The VICI Stock Issuance may cause the market price of VICI Common Stock to decline.

In connection with the consummation of the Mergers, based on the number of MGP Class A Common Shares outstanding on September 17, 2021, VICI expects to issue approximately 214.5 million shares of VICI Common Stock, which, after giving effect to the settlement of the March 2021 Forward Sale Agreement and the September 2021 Forward Sale Agreements, will represent approximately 29% of the issued and outstanding shares of VICI Common Stock prior to the consummation of the Mergers and approximately 22% of the issued and outstanding shares of VICI Common Stock after consummation of the Mergers. VICI expects that some MGP shareholders who receive shares of VICI Common Stock are likely to sell such shares promptly after the consummation of the Mergers. Both the issuance of this amount of new shares and any subsequent sales of these shares may cause the market price of VICI Common Stock to decline.

After the Closing, MGP shareholders who receive shares of VICI Common Stock in the Mergers will have different rights that may be less favorable than their current rights as MGP shareholders.

After the Closing, MGP shareholders who receive shares of VICI Common Stock in the Mergers will have different rights than they currently have as MGP shareholders, which may be less favorable than their current rights. For a detailed discussion of the similarities and material differences between the current rights of MGP shareholders and the rights of VICI stockholders, see “Comparison of Rights of VICI Stockholders and MGP Shareholders” beginning on page 181.

Following the Transactions, VICI may not continue to pay dividends at or above the rate currently paid by VICI or MGP.

Following the Transactions, the stockholders of VICI may not receive dividends at the same rate they received dividends as MGP shareholders and as VICI stockholders prior to the Transactions for various reasons, including the following:

 

•

VICI may not have enough cash to pay such dividends due to changes in VICI’s cash requirements, capital spending plans, cash flow or financial position;

 

•

decisions on whether, when and in which amounts to make any future distributions will remain at all times entirely at the discretion of the VICI Board, which reserves the right to change VICI’s current dividend practices at any time and for any reason;

 

•

VICI may desire to retain cash to maintain or improve its credit ratings; and

 

•

the amount of dividends that VICI’s subsidiaries may distribute to VICI may be subject to restrictions imposed by state law and restrictions imposed by the terms of any current or future indebtedness that these subsidiaries may incur.

Stockholders of VICI will have no contractual or other legal right to dividends that have not been declared by the VICI Board.

 

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VICI may need to incur additional indebtedness in the future.

In connection with executing VICI’s business strategies following the Transactions, VICI expects to continue to evaluate additional acquisitions and other strategic investment opportunities, and VICI may elect to finance these endeavors by incurring additional indebtedness. For example, VICI expects to incur additional long-term indebtedness in connection with the pending Venetian Acquisition. The amount of such indebtedness could have material adverse consequences for VICI, including:

 

•

hindering VICI’s ability to adjust to changing market, industry or economic conditions;

 

•

limiting VICI’s ability to access the capital markets to refinance maturing debt or to fund acquisitions or emerging businesses;

 

•

limiting the amount of free cash flow available for future operations, acquisitions, dividends, stock repurchases or other uses;

 

•

making VICI more vulnerable to economic or industry downturns, including interest rate increases; and

 

•

placing VICI at a competitive disadvantage compared to less leveraged competitors.

The impact of any of these potential adverse consequences could have a material adverse effect on VICI’s results of operations, financial condition and liquidity.

The unaudited pro forma financial statements included in this proxy statement/information statement/prospectus are presented for illustrative purposes only and may not be an indication of VICI’s financial condition or results of operations after the Transactions.

The unaudited pro forma financial statements contained in this proxy statement/information statement/prospectus are presented for illustrative purposes only, are based on various adjustments, assumptions and preliminary estimates and may not be an indication of VICI’s future financial condition or results of operations resulting from the Transactions. The actual financial condition and results of operations of VICI following the Transactions may not be consistent with, or evident from, these unaudited pro forma financial statements. In addition, the assumptions used in preparing the unaudited pro forma financial statements may not prove to be accurate, and other factors may affect VICI’s financial condition or results of operations following the Transactions. Any potential decline in VICI’s financial condition or results of operations may cause significant variations in the market price of VICI Common Stock following the Transactions.

Risks Related to Taxes Following the Transactions

The Tax Protection Agreement, during its term, imposes certain limits on VICI’s operations and could require New VICI Operating Company to indemnify MGM for certain tax liabilities.

VICI has agreed with MGM to enter into a tax protection agreement (the “Tax Protection Agreement”) pursuant to which New VICI Operating Company will agree, subject to certain exceptions, to indemnify the Protected Parties for certain tax liabilities resulting from, during the Protected Period, (1) the sale, transfer, exchange or other disposition of certain property owned directly or indirectly by MGP OP immediately prior to the closing date of the Mergers (each, a “Protected Property”), (2) a merger, consolidation, or transfer of all of the assets of, or certain other transactions undertaken by, New VICI Operating Company pursuant to which the ownership interests of the Protected Parties in New VICI Operating Company are required to be exchanged in whole or in part for cash or other property, (3) the failure of New VICI Operating Company to maintain approximately $8.5 billion of nonrecourse indebtedness allocable to the Protected Parties, which amount may be reduced over time in accordance with the Tax Protection Agreement, and (4) the failure of New VICI Operating Company or VICI to comply with certain tax covenants that would impact the tax liabilities of the Protected Parties. In the event that New VICI Operating Company or VICI breaches restrictions in the Tax Protection Agreement, New VICI Operating Company will be liable for grossed-up tax amounts (based on an assumed effective tax rate) associated with the income or gain recognized as a result of such breach. In addition, the

 

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BREIT JV previously entered into a tax protection agreement with MGM with respect to built-in gain and debt maintenance related to MGM Grand Las Vegas and Mandalay Bay, which is effective through mid-2029 and by acquiring MGP, VICI will bear MGP’s approximate 50.1% proportionate share in the BREIT JV of any indemnity under this existing tax protection agreement.

Therefore, although it may be in the VICI stockholders’ best interests for VICI to sell a Protected Property, enter into certain significant transactions involving New VICI Operating Company, reduce nonrecourse indebtedness of New VICI Operating Company allocable to MGM or otherwise not comply with certain tax covenants, it may be economically prohibitive for VICI to do so during the Protected Period because of these indemnity obligations.

VICI may incur adverse tax consequences if VICI has failed or fails, or if MGP has failed, to qualify as a REIT for U.S. federal income tax purposes.

Each of VICI and MGP has operated in a manner that it believes has allowed it to qualify as a REIT for U.S. federal income tax purposes under the Code and intends to continue to do so through the time of the REIT Merger. VICI intends to operate in a manner that it believes allows it to qualify as a REIT after the REIT Merger. Neither VICI nor MGP has requested or plans to request a ruling from the IRS that it qualifies as a REIT. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The complexity of these provisions and of the applicable Treasury Regulations (as defined below) that have been promulgated under the Code is greater in the case of a REIT that holds its assets through a partnership (such as VICI will after the Mergers). The determination of various factual matters and circumstances not entirely within the control of VICI or MGP may affect its ability to qualify as a REIT. In order to qualify as a REIT, each of VICI and MGP must satisfy a number of requirements, including requirements regarding the ownership of its stock and the composition of its gross income and assets. Also, a REIT must make distributions to stockholders aggregating annually at least 90% of its net taxable income, excluding any net capital gains.

If VICI loses its REIT status, or is determined to have lost its REIT status in a prior year, it will face material tax consequences that would substantially reduce its cash available for distribution, including cash available to pay dividends to its stockholders, because:

 

•

it would be subject to U.S. federal income tax and state and local income taxes on its net income at regular corporate rates for the years it did not qualify for taxation as a REIT (and, for such years, would not be allowed a deduction for dividends paid to stockholders in computing its taxable income);

 

•

unless it is entitled to relief under applicable statutory provisions, neither it nor any “successor” corporation, trust or association could elect to be taxed as a REIT until the fifth taxable year following the year during which it was disqualified;

 

•

if it were to re-elect REIT status, it would have to distribute all earnings and profits from non-REIT years before the end of the first new REIT taxable year;

 

•

for the five years following re-election of REIT status, upon a taxable disposition of an asset owned as of such re-election, it would be subject to corporate-level tax with respect to any built-in gain inherent in such asset at the time of re-election.

Even if VICI retains its REIT status, if MGP loses its REIT status for a taxable year ending on or before the REIT Merger Effective Time, VICI would be subject to adverse tax consequences that would substantially reduce its cash available for distribution, including cash available to pay dividends to its stockholders, because:

 

•

unless it is entitled to relief under applicable statutory provisions, VICI, as the “successor” to MGP, could not elect to be taxed as a REIT until the fifth taxable year following the year during which MGP was disqualified;

 

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•

VICI, as the successor by merger to MGP for U.S. federal income tax purposes, would be subject to any corporate income tax liabilities of MGP, including penalties and interest;

 

•

assuming that VICI otherwise maintained its REIT qualification, VICI would be subject to corporate-level tax on the built-in gain in each asset of MGP existing at the time of the REIT Merger if VICI were to dispose of such MGP asset during the five-year period following the REIT Merger; and

 

•

assuming that VICI otherwise maintained its REIT qualification, VICI would succeed to any earnings and profits accumulated by MGP for taxable periods that it did not qualify as a REIT, and VICI would have to pay a special dividend and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate such earnings and profits (or if VICI does not timely distribute those earnings and profits, it could fail to qualify as a REIT).

In addition, if there is an adjustment to MGP’s taxable income or dividends paid deductions, VICI could elect to use the deficiency dividend procedure in order to maintain MGP’s REIT status. That deficiency dividend procedure could require VICI to make significant distributions to its shareholders and to pay significant interest to the IRS.

As a result of these factors, VICI’s failure (before or after the REIT Merger) or MGP’s failure (before the REIT Merger) to qualify as a REIT could impair VICI’s ability after the REIT Merger to expand its business and raise capital, and would materially adversely affect the market value of VICI Common Stock.

Other Risk Factors

VICI and MGP face other risks.

The foregoing risks are not exhaustive, and you should be aware that, following the Transactions, VICI will face various other risks, including those discussed in reports filed by VICI and MGP with the SEC. See “Where You Can Find More Information and Incorporation by Reference” beginning on page 206.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The registration statement on Form S-4, of which this proxy statement/information statement/prospectus forms a part, and the documents filed with the SEC by VICI and MGP that are incorporated by reference herein, as well as oral statements made or to be made by VICI and MGP contain certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act with respect to the Transactions described herein, including statements regarding the anticipated benefits of the transaction, the anticipated timing of the Transactions and the markets of each company. These forward-looking statements generally are identified by the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Currently, one of the most significant factors that could cause actual outcomes to differ materially from VICI and MGP’s forward-looking statements is the impact of the COVID-19 pandemic on VICI’s, MGP’s and each company’s respective tenants’ financial condition, results of operations, cash flows and performance. The extent to which the COVID-19 pandemic continues to adversely affect each company’s tenants, and ultimately impacts each company’s business and financial condition, depends on future developments which cannot be predicted with confidence. Some of the factors that may affect outcomes and results include, but are not limited to, those set forth under “Risk Factors” beginning on page 28 as well as the following:

 

•

risks associated with the ability or failure to complete the Transactions;

 

•

risks associated with the failure to realize the anticipated benefits of the Transactions, including as a result of delay in completing the Transactions;

 

•

risks associated with the fixed Exchange Ratio;

 

•

risks associated with the dilution of VICI stockholders and MGP shareholders in the Mergers;

 

•

risks associated with provisions in the Master Transaction Agreement that could discourage a potential competing acquiror of either VICI or MGP;

 

•

risks associated with the pendency of the Mergers adversely affecting the business of VICI and MGP;

 

•

risks associated with the different interests in the Transactions of certain directors and executive officers of VICI and MGP;

 

•

risks associated with the ability of VICI and MGP to terminate the Mergers if the Mergers are not consummated by the fifteen month anniversary of the Master Transaction Agreement;

 

•

risks associated with the failure of the REIT Merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code;

 

•

risks relating to approval of the VICI Stock Issuance Proposal by VICI stockholders;

 

•

risks relating to the adverse outcome in any litigation or other legal proceedings relating to the Master Transaction Agreement or the Transactions;

 

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risks relating to the incurrence of substantial expenses in the Transactions;

 

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risks relating to the failure to integrate the businesses of VICI and MGP;

 

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risks relating to the inability of VICI to retain key employees after the Mergers;

 

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risks relating to the inability of VICI to attract and retain key personnel;

 

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risks relating to the ability of VICI to effectively manage its expanded operations following the Transactions;

 

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risks relating to certain contractual rights of counterparties to agreements with VICI or MGP;

 

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risks relating to potential adverse reactions by tenants or other business partners or changes to business relationships, including joint ventures, resulting from the announcement or completion of the Transactions;

 

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risks relating to an increase in VICI’s anticipated level of indebtedness upon completion of the Transactions;

 

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risks relating to the failure of VICI or MGP to qualify as a REIT;

 

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risks relating to a decline in the market price of VICI Common Stock as a result of the Transactions;

 

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risks relating to a difference in rights of stockholders of VICI and shareholders of MGP;

 

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risks relating to the use of pro forma financial information;

 

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risks relating to the volatility of VICI Common Stock;

 

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risks relating to the impact of public health crises, such as pandemics (including the COVID-19 pandemic) and epidemics and any related company or government policies and actions intended to protect the health and safety of individuals or government policies or actions intended to maintain the functioning of national or global economies and markets; and

 

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general economic and market developments and conditions.

The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the businesses of VICI and MGP described in the “Risk Factors” section of their respective Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed by either of them from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Investors are cautioned to interpret many of the risks identified in the “Risk Factors” section of these filings as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and VICI and MGP assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. Neither VICI nor MGP gives any assurance that either company will achieve its expectations.

 

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THE COMPANIES

VICI Properties Inc.

535 Madison Avenue, 20th Floor

New York, New York 10022

(646) 949-4631

VICI is a Maryland corporation that is primarily engaged in the business of owning and acquiring gaming, hospitality and entertainment destinations, subject to long-term triple net leases. VICI’s national, geographically diverse real estate portfolio currently consists of 28 market-leading properties, including Caesars Palace Las Vegas and Harrah’s Las Vegas, two of the most iconic entertainment facilities on the Las Vegas Strip. VICI’s entertainment facilities are leased to leading brands that seek to drive consumer loyalty and value with guests through superior services, experiences, products and continuous innovation. Across over 47 million square feet, VICI’s well-maintained properties are currently located across urban, destination and drive-to markets in twelve states, contain approximately 17,800 hotel rooms and feature over 200 restaurants, bars and nightclubs.

VICI’s portfolio also includes four real estate debt investments and one mezzanine loan that VICI has originated for strategic reasons in connection with transactions that may provide the potential to convert VICI’s investment into the ownership of certain of the underlying real estate in the future. In addition, VICI owns approximately 34 acres of undeveloped or underdeveloped land on and adjacent to the Las Vegas Strip that is leased to Caesars Entertainment, Inc. (“Caesars”), which VICI may look to monetize as appropriate. VICI also owns and operates four championship golf courses located near certain of its properties, two of which are in close proximity to the Las Vegas Strip.

On September 3, 2021, VICI announced the closing of the previously announced acquisition of the operations of Caesars Southern Indiana from Caesars by the Eastern Band of Cherokee Indians, a federally recognized Tribe located in western North Carolina (“EBCI”). In connection with the closing, VICI entered into a triple-net lease agreement with a subsidiary of EBCI with respect to the real property associated with Caesars Southern Indiana (the “EBCI Lease Agreement”). Initial total annual rent under the EBCI Lease Agreement is $32.5 million, with an initial term of 15 years, with four 5-year tenant renewal options. Rent under the EBCI Lease Agreement will escalate annually by 1.5% beginning in lease year 2 through lease year 5 and the greater of 2.0% or CPI beginning in lease year 6. The tenant’s obligations under the lease will be guaranteed by EBCI. Upon completion of the acquisition and entry into the EBCI Lease Agreement, annual base rent payments under the Regional Master Lease Agreement with Caesars were reduced by $32.5 million. The property is expected to retain the Caesars brand name and to continue to be a part of the Caesars Rewards loyalty program in accordance with the terms of a licensing agreement negotiated between EBCI and Caesars. In addition, as part of the transaction, VICI, EBCI and Caesars entered into a right of first refusal agreement for VICI on the real property associated with the development of a new casino resort in Danville, Virginia.

VICI leases its properties to subsidiaries of Caesars, Penn National Gaming, Inc. (“Penn National”), Hard Rock International (“Hard Rock”), Century Casinos, Inc. (“Century Casinos”), JACK Ohio LLC (“JACK Entertainment”) and EBCI, with Caesars being its largest tenant. VICI believes it has a mutually beneficial relationship with each of Caesars, Penn National, Hard Rock, Century Casinos, JACK Entertainment and EBCI, all of which are leading owners and operators of gaming, entertainment and leisure properties. VICI’s long-term triple-net lease agreements with subsidiaries of its operators provide it with a highly predictable revenue stream with embedded growth potential. VICI believes its geographic diversification limits the effect of changes in any one market on its overall performance. VICI is focused on driving long-term total returns through managing experiential asset growth and allocating capital diligently, maintaining a highly productive tenant base, and optimizing its capital structure to support external growth. As a growth focused public REIT with long-term investments, VICI expects its relationship with its partners will position it for the acquisition of additional

 

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properties across leisure and hospitality over the long-term. Despite the ongoing impact and uncertainty of the COVID-19 pandemic, VICI continues to evaluate and may opportunistically pursue accretive acquisitions or investments that may arise in the market.

VICI conducts its operations as a REIT for U.S. federal income tax purposes. VICI generally will not be subject to U.S. federal income taxes on its taxable income to the extent that it annually distributes all of its net taxable income to stockholders and maintains its qualification as a REIT. VICI believes its election of REIT status, combined with the income generated from the Lease Agreements, will enhance its ability to make distributions to its stockholders, providing investors with current income as well as long-term growth, subject to the current macroeconomic impact of the COVID-19 pandemic and market conditions more broadly. VICI conducts its real property business through Existing VICI OP, which is its wholly-owned subsidiary, and its golf course business through a taxable REIT subsidiary, VICI Golf LLC.

VICI Common Stock is listed on the NYSE under the symbol “VICI.”

VICI’s principal executive offices are located at 535 Madison Avenue, 20^th Floor, New York, New York 10022 and its main telephone number is (646) 949-4631. VICI’s website address is www.viciproperties.com. None of the information on, or accessible through, VICI’s website is incorporated in, or constitutes a part of, this proxy statement/information statement/prospectus, and the inclusion of its website address in this proxy statement/information statement/prospectus is an inactive textual reference only.

Additional information about VICI is included in documents incorporated by reference into this proxy statement/information statement/prospectus. For a list of documents that are incorporated by reference into this proxy statement/information statement/prospectus, see “Where You Can Find More Information and Incorporation by Reference” beginning on page 206 of this proxy statement/information statement/prospectus.

VICI Properties L.P.

535 Madison Avenue, 20th Floor

New York, New York 10022

(646) 949-4631

Existing VICI OP is a Delaware limited partnership and a wholly-owned subsidiary of VICI. VICI conducts its real property business through Existing VICI OP.

Venus Sub LLC

535 Madison Avenue, 20th Floor

New York, New York 10022

(646) 949-4631

REIT Merger Sub, a Delaware limited liability company and a wholly-owned subsidiary of Existing VICI OP, was formed on August 2, 2021 solely for the purposes of engaging in the Transactions. REIT Merger Sub has not conducted any activities to date, except for activities incidental to its formation and activities undertaken in connection with the Transactions.

VICI Properties OP LLC

535 Madison Avenue, 20th Floor

New York, New York 10022

(646) 949-4631

 

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New VICI Operating Company, a Delaware limited liability company, was formed on August 2, 2021 solely for the purposes of engaging in the Transactions. New VICI Operating Company has not conducted any activities to date, except for activities incidental to its formation and activities undertaken in connection with the Transactions.

MGM Growth Properties LLC

1980 Festival Plaza Drive, Suite 750

Las Vegas, Nevada 89135

(702) 669-1480

MGP is a Delaware limited liability company formed in 2015. MGP is a leading publicly traded REIT engaged in the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts, whose tenants generally offer diverse amenities including casino gaming, hotel, convention, dining, entertainment and retail offerings. MGP is also the owner of the sole general partner of MGP OP.

MGP has elected to be taxed as a REIT for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2016. MGP is organized in an umbrella partnership REIT (commonly referred to as an “UPREIT”) structure in which MGP owns substantially all of its assets and conducts substantially all of its business through MGP OP. As of June 30, 2021, MGP owned approximately 58.4% of the MGP OP Units. The remaining approximately 41.6% of MGP OP Units are owned by MGM and certain of its subsidiaries. As the owner of the sole general partner of MGP OP, MGP has the full, exclusive and complete responsibility for MGP OP’s day-to-day management and control. MGP’s only material assets consist of MGP OP Units and all of the limited liability company interests in the general partner of MGP OP. As a result, MGP does not conduct business itself, other than acting as the owner of the sole general partner of MGP OP, but it may from time to time issue additional public equity in the form of MGP Class A Common Shares.

MGP’s portfolio, including properties owned by the BREIT JV, includes seven large-scale entertainment and gaming-related properties located on the Las Vegas Strip: Mandalay Bay, MGM Grand Las Vegas, The Mirage, Park MGM, New York-New York, Luxor and Excalibur, and The Park, a dining and entertainment district located between New York-New York and Park MGM. Outside of Las Vegas, MGP also owns five market-leading casino resort properties: MGM Grand Detroit in Detroit, Michigan, Beau Rivage and Gold Strike Tunica, both of which are located in Mississippi, Borgata in Atlantic City, New Jersey, and MGM National Harbor in Prince George’s County, Maryland. MGP also owns MGM Northfield Park in Northfield, Ohio and Empire City in Yonkers, New York.

MGP’s principal executive offices are located at 1980 Festival Plaza Drive, Suite 750, Las Vegas Nevada 89135 and its main telephone number is 702-669-1480. MGP’s website address is www.mgmgrowthproperties.com. None of the information on, or accessible through, MGP’s website is incorporated in, or constitutes a part of, this proxy statement/information statement/prospectus, and the inclusion of its website address in this proxy statement/information statement/prospectus is an inactive textual reference only.

Additional information about MGP is included in documents incorporated by reference into this proxy statement/information statement/prospectus. For a list of documents that are incorporated by reference into this proxy statement/information statement/prospectus, see “Where You Can Find More Information and Incorporation by Reference” beginning on page 206 of this proxy statement/information statement/prospectus.

MGM Growth Properties Operating Partnership LP

1980 Festival Plaza Drive, Suite 750

Las Vegas, Nevada 89135

(702) 669-1480

 

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MGP OP is a Delaware limited partnership that was formed in January 2016 and became a subsidiary of MGP in April 2016. MGP is the sole beneficial owner of MGM Growth Properties OP GP LLC (“MGP GP”), which is the sole general partner of MGP OP and controls MGP OP. MGP conducts its business through MGP OP.

The Combined Company

The Combined Company will retain the name “VICI” and will continue to be a Maryland corporation, which has elected to be taxed as a REIT under the Code. The Combined Company will primarily be engaged in the business of owning and acquiring gaming, hospitality and entertainment destinations. The Combined Company is expected to have a pro forma equity market capitalization of approximately $28.5 billion and a total enterprise value of approximately $42.8 billion based on VICI’s closing price of $29.57 per share on September 17, 2021. The business of the Combined Company will be operated through New VICI Operating Company and its subsidiaries, which will include MGP OP and its subsidiaries.

The Combined Company’s principal executive offices will be located 535 Madison Avenue, 20th Floor, New York, New York 10022 and its main telephone number will be (646) 949-4631.

 

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THE VICI SPECIAL MEETING

This proxy statement/information statement/prospectus is being furnished in connection with the solicitation of proxies from VICI’s stockholders for use at the VICI Special Meeting. This proxy statement/information statement/prospectus and accompanying form of proxy are first being mailed to VICI’s stockholders on or about September 23, 2021.

Date, Time, Place and Purpose of the VICI Special Meeting

The VICI Special Meeting will be held virtually at www.virtualshareholdermeeting.com/VICI2021SM at 10:00 a.m., Eastern Time, on October 29, 2021.

At the VICI Special Meeting, VICI stockholders will be asked to consider and vote upon the following matters:

 

•

the VICI Stock Issuance Proposal; and

 

•

the VICI Adjournment Proposal.

Only business within the purposes described in the Notice of Special Meeting of VICI’s stockholders may be conducted at the VICI Special Meeting. Any action may be taken on the items of business described above at the VICI Special Meeting on the date specified above, or on any date or dates to which the VICI Special Meeting may be postponed or to which, by original or later adjournment, the VICI Special Meeting may be adjourned.

Recommendation of the VICI Board of Directors

The VICI Board has determined that the issuance of shares of VICI Common Stock pursuant to the Master Transaction Agreement is in the best interests of VICI and its stockholders and has unanimously approved such proposal.     

The VICI Board has determined that adjourning the VICI Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the VICI Stock Issuance Proposal is in the best interests of VICI and its stockholders and has unanimously approved such proposal.

The VICI Board unanimously recommends that holders of VICI Common Stock vote “FOR” the VICI Stock Issuance Proposal and “FOR” the VICI Adjournment Proposal.

Record Date; Voting Rights; Proxies

VICI has fixed the close of business on September 21, 2021 as the record date for determining holders of issued and outstanding VICI Common Stock entitled to notice of, and to vote at, the VICI Special Meeting. Only holders of issued and outstanding VICI Common Stock at the close of business on the record date will be entitled to notice of, and to vote at, the VICI Special Meeting, unless a new record date is set in connection with any adjournment or postponement of the VICI Special Meeting. As of the record date, there were 628,944,887 issued and outstanding shares of VICI Common Stock. Each holder of record of VICI Common Stock on the record date is entitled to one vote per share. As of the record date, the issued and outstanding VICI Common Stock were held by approximately 237,000 beneficial owners. You may submit your proxy either via the Internet, by telephone or by mailing the enclosed proxy card, or you may vote virtually at the VICI Special Meeting.

Directors and Executive Officers of VICI

On the record date, less than 1% of the outstanding shares of VICI Common Stock were held by VICI directors and executive officers and their respective affiliates. VICI currently expects that the directors and

 

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executive officers of VICI will vote their shares in favor of the VICI Stock Issuance Proposal and the VICI Adjournment Proposal, although none has entered into any agreements obligating them to do so.

Attending the VICI Special Meeting

In consideration of public health concerns relating to COVID-19, the VICI Special Meeting will be held virtually. VICI stockholders will not be able to attend the VICI Special Meeting in person. You are entitled to participate in the VICI Special Meeting if you were a stockholder as of the close of business on September 21, 2021, the record date for the VICI Special Meeting.

 

•

Attending the VICI Special Meeting. To attend the VICI Special Meeting, visit www.virtualshareholdermeeting.com/VICI2021SM. You will be asked to enter the 16-digit control number found on the proxy card and the voting instruction form that accompanied your proxy materials.

 

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Voting During the VICI Special Meeting. If you are a stockholder as of the record date, you may vote during the VICI Special Meeting by following the instructions available on the meeting website during the meeting.

 

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Technical Support for the VICI Special Meeting. If you have difficulty accessing the VICI Special Meeting, technicians will be available to assist you via the toll free phone number listed at www.virtualshareholdermeeting.com/VICI2021SM.

Whether or not you plan to attend the VICI Special Meeting, we urge you to vote and submit your proxy in advance of the meeting.

Manner of Submitting Proxies

Each copy of this proxy statement/information statement/prospectus mailed to VICI stockholders is accompanied by a form of proxy card with instructions for voting. If you are a stockholder of record, you may instruct the proxy holders named in the proxy card how to vote your shares of VICI Common Stock in one of the following ways:

 

•

Vote by Internet. In order to vote via the Internet, you must go to www.proxyvote.com, have your proxy card or voting instruction form in hand and follow the instructions. If you vote via the Internet, you do not need to return your proxy card. Proxies submitted via the Internet must be received by 11:59 p.m., Eastern Time, on October 28, 2021, the day prior to the VICI Special Meeting.

 

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Vote by Phone. In order to vote by telephone, you must call the toll-free number listed on your proxy card, have your proxy card or voting instruction form in hand and follow the instructions. If you vote by telephone, you do not need to return your proxy card. Proxies submitted by telephone must be received by 11:59 p.m., Eastern Time, on October 28, 2021, the day prior to the VICI Special Meeting.

 

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Vote by Mail. To vote by mail, sign, date and mail the proxy card in the postage-paid envelope provided. Properly signed and returned proxies will be voted in accordance with the instructions contained therein. Proxies submitted by mail must be received by 11:59 p.m. Eastern Time, on October 28, 2021, the day prior to the VICI Special Meeting.

If you are the beneficial owner of shares of VICI Common Stock held in “street name” (that is, through a bank, broker or other nominee), then you should follow the instructions provided to you by your broker, bank or other nominee.

All shares of VICI Common Stock that are entitled to vote and are represented at the VICI Special Meeting by properly executed proxies received before or at the VICI Special Meeting and not revoked, will be voted at

 

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such special meeting in accordance with the instructions indicated on the proxies. If no instructions are given on a timely and properly executed proxy card, your shares will be voted:

 

•

“FOR” the VICI Stock Issuance Proposal; and

 

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“FOR” the VICI Adjournment Proposal.

Revocability of Proxies or Voting Instructions

You may revoke a previously granted proxy at any time before it is exercised by any of the following actions:

 

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Notifying VICI’s Secretary in writing that you would like to revoke your proxy;

 

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Completing a proxy card on the Internet, by telephone or by mail with a later date prior to 11:59 p.m., Eastern Time, on October 28, 2021, the day prior to the VICI Special Meeting; or

 

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Attending the VICI Special Meeting (virtually) and following the instructions available on the meeting website during the meeting.

Any written notice of revocation or subsequent proxy card should be sent to Attention: Secretary, VICI Properties Inc., 535 Madison Avenue, 20^th Floor, New York, New York 10022.

If your shares of VICI Common Stock are held on your behalf by a broker, bank or other nominee, you must contact them to receive instructions as to how you may revoke your proxy voting instructions.

Solicitation of Proxies

VICI is soliciting proxies on behalf of the VICI Board. VICI will bear the costs of soliciting proxies. Brokerage houses, fiduciaries, nominees and others will be reimbursed for their out-of-pocket expenses in forwarding proxy materials to owners of shares of VICI Common Stock held in their names. In addition to the solicitation of proxies via the Internet or by mail, VICI directors, officers and employees may also solicit proxies in person, by telephone, electronically, by mail or other means, but they will not be specifically compensated for these services. VICI has retained Georgeson LLC (“Georgeson”) to solicit, and for advice and assistance in connection with the solicitation of, proxies for the VICI Special Meeting at a cost of approximately $20,000, plus out-of-pocket expenses. No portion of the amount that VICI has agreed to pay to Georgeson is contingent upon the Closing. Any questions or requests for assistance regarding this proxy statement/information statement/prospectus and related proxy materials may be directed to Georgeson by telephone at 888-219-8320.

Quorum; Abstentions and Broker Non-Votes

The presence in person (virtually) or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast on any matter at the VICI Special Meeting as of September 21, 2021 will constitute a quorum, permitting the stockholders to conduct business at the VICI Special Meeting. If you have returned valid proxy instructions or if you hold your shares of VICI Common Stock in your own name as a holder of record and attend the VICI Special Meeting (virtually), your shares will be counted for the purpose of determining whether there is a quorum. For purposes of the VICI Stock Issuance Proposal, the failure to return your proxy card and other shares not voted (whether by broker non-vote or otherwise) will not be considered present for the purpose of determining the presence of a quorum and will have no effect on the VICI Stock Issuance Proposal. Under NYSE rules, abstentions will be considered as votes cast and, accordingly, will have the same effect as votes “AGAINST” the VICI Stock Issuance Proposal. Abstentions and the failure to return a proxy card will have no effect on the outcome of the VICI Adjournment Proposal provided a quorum is otherwise present at the VICI Special Meeting.

 

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Broker non-votes occur when nominees, such as banks and brokers holding shares in “street name” on behalf of beneficial owners, do not receive voting instructions from the beneficial owners on how their shares should be voted. If that happens, the nominees may vote those shares of common stock only on matters deemed “routine” by the NYSE, the exchange on which VICI Common Stock is listed. On “non-routine” matters, nominees holding shares for a beneficial owner cannot vote without instructions from the beneficial owner, resulting in a so-called “broker non-vote.” As each of the proposals to be voted upon at the VICI Special Meeting is considered “non-routine,” such organizations do not have discretion to vote on any of the proposals. As a result, if you fail to provide your broker, bank or other nominee with any instructions regarding how to vote your shares of VICI Common Stock, your shares of VICI Common Stock will not be considered present at the VICI Special Meeting and will not be voted on any of the proposals.

Required Vote

The approval of the VICI Stock Issuance Proposal requires the affirmative vote of the majority of the votes cast by VICI stockholders on the VICI Stock Issuance Proposal at the VICI Special Meeting, assuming a quorum is present.

The approval of the VICI Adjournment Proposal requires the affirmative vote of a majority of the votes cast by VICI stockholders on the VICI Adjournment Proposal at the VICI Special Meeting, assuming a quorum is present.

Regardless of the number of shares of VICI Common Stock you own, your vote is important. Please complete, sign, date and promptly return the enclosed proxy card today or vote via the Internet or by phone.

 

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PROPOSALS SUBMITTED TO THE VICI STOCKHOLDERS

VICI Proposal 1: The VICI Stock Issuance Proposal

VICI’s stockholders are being asked to approve the issuance of shares of VICI Common Stock to the MGP shareholders pursuant to the Master Transaction Agreement. For a summary and detailed information regarding this proposal, see the information about the Transactions and the Master Transaction Agreement throughout this proxy statement/information statement/prospectus, including the information set forth in sections entitled “The Transactions” beginning on page 52 and “The Master Transaction Agreement” beginning on page 116. A copy of the Master Transaction Agreement is attached as Annex A to this proxy statement/information statement/prospectus.

Pursuant to the Master Transaction Agreement, approval of the VICI Stock Issuance Proposal is a condition to the consummation of the Mergers. If the VICI Stock Issuance Proposal is not approved, the Mergers will not be completed.

Approval of the VICI Stock Issuance Proposal requires the affirmative vote of the majority of the votes cast by VICI stockholders on the VICI Stock Issuance Proposal at the VICI Special Meeting, assuming a quorum is present.

The VICI Board unanimously recommends that VICI’s stockholders vote “FOR” the VICI Stock Issuance Proposal.

VICI Proposal 2: The VICI Adjournment Proposal

The VICI Special Meeting may be adjourned one or more times to another time or place, if necessary or appropriate in the view of the VICI Board, to permit, among other things, further solicitation of proxies, if necessary or appropriate in the view of the VICI Board, in favor of the VICI Stock Issuance Proposal if there are not sufficient votes at the time of such adjournment to approve such proposal.

VICI is asking VICI’s stockholders to approve the adjournment of the VICI Special Meeting, if necessary or appropriate, to solicit additional proxies in favor of the VICI Stock Issuance Proposal if there are not sufficient votes at the time of such adjournment to approve such proposal.

Approval of the VICI Adjournment Proposal requires the affirmative vote of the majority of the votes cast by VICI stockholders on the VICI Adjournment Proposal at the VICI Special Meeting, assuming a quorum is present.

VICI does not intend to call a vote on the VICI Adjournment Proposal if the VICI Stock Issuance Proposal considered at the VICI Special Meeting has been approved at the VICI Special Meeting.

The VICI Board unanimously recommends that VICI’s stockholders vote “FOR” the VICI Adjournment Proposal.

Other Business

At this time, VICI does not intend to bring any other matters before the VICI Special Meeting, and VICI does not know of any matters to be brought before the VICI Special Meeting by others. If, however, any other matters properly come before the VICI Special Meeting, the persons named in the enclosed proxy, or their duly constituted substitutes, acting at the VICI Special Meeting or any adjournment or postponement thereof will be deemed authorized to vote shares of VICI Common Stock represented thereby in accordance with the judgment of management on any such matter.

 

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THE TRANSACTIONS

The following is a summary of the material terms of the Transactions. This summary does not purport to be complete and may not contain all of the information about the Transactions that is important to you. The summary of the material terms of the Transactions below and elsewhere in this proxy statement/information statement/prospectus is qualified in its entirety by reference to the Master Transaction Agreement, a copy of which is attached to this proxy statement/information statement/prospectus as Annex A, and is incorporated by reference into this proxy statement/information statement/prospectus in its entirety. You are urged to read this proxy statement/information statement/prospectus, including the Master Transaction Agreement, carefully and in its entirety for a more complete understanding of the Transactions.

The Mergers

Each of the VICI Board, the MGP Conflicts Committee and the MGP Board has approved the Master Transaction Agreement, the REIT Merger and the other Transactions. Subject to the terms and conditions of the Master Transaction Agreement, on or prior to the closing date of the Transactions, VICI will contribute its interest in Existing VICI OP to New VICI Operating Company, which will serve as a new operating company for VICI and hold substantially all of the assets of VICI following the Transactions. Following the contribution transaction, MGP will merge with and into REIT Merger Sub, with REIT Merger Sub surviving as a wholly-owned subsidiary of Existing VICI OP. The Master Transaction Agreement also provides for the Partnership Merger pursuant to which, immediately following the REIT Merger and subject to certain conditions, the REIT Surviving Entity will merge with and into MGP OP, with MGP OP as the surviving entity and a wholly-owned subsidiary of Existing VICI OP. MGP shareholders will receive the merger consideration described below under “The Master Transaction Agreement—Consideration for the REIT Merger” beginning on page 118.

The Partial Redemption

At the effective time of the Partnership Merger, each MGP OP Unit (other than the MGP OP Units held by REIT Merger Sub or any subsidiary of MGP OP) held by MGM and/or certain of its subsidiaries, will be converted into the right to receive a number of New VICI Operating Company Units equal to the Exchange Ratio. Following the Partnership Merger and upon consummation of the Partial Redemption, New VICI Operating Company will redeem a majority of the New VICI Operating Company Units received by MGM and/or its subsidiaries in the Partnership Merger for the Redemption Consideration of $4,404,000,000 in cash using the proceeds of long-term debt financing or, if unavailable, borrowings under the Bridge Facility on the closing date of the Mergers. Following the Partial Redemption, MGM and/or its subsidiaries will own approximately 12 million New VICI Operating Company Units, which will represent approximately 1% of the total outstanding New VICI Operating Company Units.

MGM Master Lease and BREIT JV Lease

Simultaneous with the Closing, VICI and MGM will enter into the MGM Master Lease. The MGM Master Lease will have an initial term of 25 years, with three 10-year tenant renewal options and, subject to the closing of the Springfield Transaction, will have an initial total annual rent of $860.0 million. The Springfield Transaction is expected to close prior to the Closing. However, in the event the Springfield Transaction does not close prior to the Closing, the MGM Master Lease will have an initial total annual rent of $830.0 million. Rent under the MGM Master Lease will escalate at a rate of 2.0% per annum for the first 10 years and thereafter at the greater of 2.0% per annum or the CPI subject to a 3.0% cap.

Additionally, VICI will retain MGP’s existing 50.1% ownership stake in the BREIT JV, which owns the real estate assets of MGM Grand Las Vegas and Mandalay Bay. The BREIT JV Lease will remain unchanged and provides for current total annual base rent of approximately $298.0 million and an initial term of 30 years with two 10-year tenant renewal options. Rent under the BREIT JV Lease escalates at a rate of 2.0% per annum for the first fifteen years and thereafter at the greater of 2.0% per annum or CPI, subject to a 3.0% cap.

 

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Tax Protection Agreement

VICI has agreed with MGM to enter into the Tax Protection Agreement pursuant to which New VICI Operating Company will agree, subject to certain exceptions, to indemnify the Protected Parties for certain tax liabilities resulting from, during the Protected Period, (1) the sale, transfer, exchange or other disposition of a Protected Property, (2) a merger, consolidation, or transfer of all of the assets of, or certain other transactions undertaken by, New VICI Operating Company pursuant to which the ownership interests of the Protected Parties in New VICI Operating Company are required to be exchanged in whole or in part for cash or other property, (3) the failure of New VICI Operating Company to maintain a certain amount of nonrecourse indebtedness allocable to the Protected Parties, which amount may be reduced over time in accordance with the Tax Protection Agreement, and (4) the failure of New VICI Operating Company or VICI to comply with certain tax covenants that would impact the tax liabilities of the Protected Parties. In the event that New VICI Operating Company or VICI breaches restrictions in the Tax Protection Agreement, New VICI Operating Company will be liable for grossed-up tax amounts (based on an assumed effective tax rate) associated with the income or gain recognized as a result of such breach. In addition, the BREIT JV previously entered into a tax protection agreement with MGM with respect to built-in gain and debt maintenance related to MGM Grand Las Vegas and Mandalay Bay, which is effective through mid-2029 and by acquiring MGP, VICI will bear MGP’s approximate 50.1% proportionate share in the BREIT JV of any indemnity under this existing tax protection agreement.

Expense Reimbursement Agreement

In connection with the Transactions, MGM and MGP OP entered into an Expense Reimbursement Agreement whereby MGP OP agreed to reimburse MGM for 50% of MGM’s legal fees and 58% of MGM’s financial advisory fees, in each case incurred in connection with the negotiation, execution and consummation of the Master Transaction Agreement and the consummation of the Mergers and the other Transactions, with a maximum amount of reimbursable out-of-pocket costs and expenses incurred by MGM not to exceed $65 million in the aggregate.

Description of Debt Financing Transactions

VICI’s obligation to complete the Transactions is not contingent on the receipt by VICI of any financing. VICI estimates that, in addition to the VICI Stock Issuance that will be used to issue the REIT Merger Consideration, it will need up to approximately $9.250 billion to fund (i) the Redemption Consideration, (ii) amounts to be paid in connection with offers to repurchase (the “Change of Control Offers”) certain of the MGP Notes (as defined below) pursuant to their respective indentures if the Exchange Offers and Consent Solicitations, each as defined and described in more detail below, are unsuccessful and (iii) related fees and expenses. VICI anticipates that the funds needed to pay the foregoing amount will be derived from (i) the proceeds from the sale of long-term debt securities, (ii) borrowings under the Bridge Facility described below, (iii) proceeds of borrowings of incremental term loans under its existing credit facility or a syndicated term loan credit facility, (iv) with respect to the Change of Control Offers and related fees and expenses, cash on hand or (v) any combination of the foregoing.

On September 13, 2021, VICI announced that Existing VICI OP and VICI Note Co. Inc. (together with Existing VICI OP, the “VICI Issuers”), commenced private exchange offers to certain eligible holders (such transactions, collectively, the “MGP Exchange Offers”) for (i) any and all outstanding 5.625% Senior Notes due 2024 issued by MGP OP and MGP Finance Co-Issuer, Inc. (together with MGP OP, the “MGP Issuers”) (the “MGP 2024 Notes”) for up to an aggregate principal amount of $1,050.0 million of new 5.625% Senior Notes due 2024 issued by the VICI Issuers, (ii) any and all outstanding 4.625% Senior Notes due 2025 issued by the MGP Issuers (the “MGP 2025 Notes”) for up to an aggregate principal amount of $800.0 million of new 4.625% Senior Notes due 2025 issued by the VICI Issuers, (iii) any and all outstanding 4.500% Senior Notes due 2026 issued by the MGP Issuers (the “MGP 2025 Notes”) for up to an aggregate principal amount of $500.0 million of new 4.500% Senior Notes due 2026 issued by the VICI Issuers, (iv) any and all outstanding 5.750% Senior Notes due 2027 issued by the MGP Issuers (the “MGP 2027 Notes”) for up to an aggregate principal amount of

 

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$750.0 million of new 5.750% Senior Notes due 2027 issued by the VICI Issuers, (v) any and all outstanding 4.500% Senior Notes due 2028 issued by the MGP Issuers (the “MGP 2028 Notes”) for up to an aggregate principal amount of $350.0 million of new 4.500% Senior Notes due 2028 issued by the VICI Issuers and (vi) any and all outstanding 3.875% Senior Notes due 2029 issued by the MGP Issuers (the “MGP 2029 Notes” and, together with the MGP 2024 Notes, MGP 2025 Notes, MGP 2026 Notes, MGP 2027 Notes and MGP 2028 Notes, the “MGP Notes”) for up to an aggregate principal amount of $750.0 million of new 3.875% Senior Notes due 2029 issued by the VICI Issuers. Concurrently with the MGP Exchange Offers, the VICI Issuers are soliciting consents with respect to each series of MGP Notes (such transactions collectively, the “MGP Consent Solicitations”) to eliminate or modify certain of the covenants, restrictions, provisions and events of default in each of the indentures governing the MGP Notes. In the event that the MGP Exchange Offers and MGP Consent Solicitations are not successful, VICI will be required to make an offer to repurchase certain of the MGP Notes pursuant to the Change of Control Offers. This proxy statement/information statement/prospectus does not constitute an offer to sell or the solicitation of an offer to buy any debt securities of VICI, the VICI Issuers, MGP or the MGP Issuers. It does not constitute a prospectus or prospectus equivalent document for any such securities. No offering of any debt securities of VICI or the VICI Issuers shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act or an exemption therefrom.

If the MGP Exchange Offers are not successful, VICI may, in its sole discretion, elect that, in lieu of the Partnership Merger, Existing VICI OP will merge with and into MGP OP, with MGP OP surviving (the “Alternative Partnership Merger”). If VICI elects the Alternative Partnership Merger, MGP OP, as the surviving entity in the Alternative Partnership Merger, will enter into supplemental indentures to the outstanding indentures of Existing VICI OP, assuming the obligations of Existing VICI OP thereunder.

Bridge Financing Commitment Letter

In connection with the entry into the Master Transaction Agreement, VICI and Existing VICI OP received the Debt Commitment Letter from the Lenders, pursuant to which the Lenders have agreed to provide Existing VICI OP a 364-day first lien secured Bridge Facility in an aggregate principal amount of up to $9.250 billion, consisting of up to $5.008 billion in funding under Tranche 1 of the Bridge Facility, which can be used for the Redemption Consideration and to pay transaction costs, and up to $4.242 billion in funding under Tranche 2 of the Bridge Facility, which can be used to fund the Change of Control Offers.

Existing VICI OP expects to incur long-term debt financing or, if unavailable, borrowings under the Bridge Facility and/or borrowings of incremental term loans under VICI’s existing credit facility or borrowing of term loans under a syndicated term loan facility, to pay the Redemption Consideration and transaction-related fees and expenses thereunder. If VICI uses the Bridge Facility to fund the Redemption Consideration, funding is contingent on the satisfaction of certain customary conditions, including, among others, the execution and delivery of definitive documentation with respect to the Bridge Facility and the consummation of the Transactions in accordance with the definitive agreements related to the Mergers.

In order to pay the Offer to Purchase Consideration, if applicable, VICI expects to incur long-term debt financing. If long-term debt financing is not available, Existing VICI OP will borrow under the Bridge Facility to pay the Offer to Purchase Consideration. If Existing VICI OP uses the Bridge Facility to pay the Offer to Purchase Consideration, funding is contingent on the satisfaction of certain customary conditions.

Although Existing VICI OP does not currently expect to make any borrowings under the Bridge Facility, there can be no assurance that such borrowings will not be made or that Existing VICI OP will be able to incur alternative long-term debt financing in lieu of borrowings under the Bridge Facility.

Borrowings under the Bridge Facility, if any, will bear interest at a floating rate based on LIBOR or the Base Rate (as defined in the Bridge Facility) that varies depending on the duration of the loans thereunder. In

 

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addition, duration fees are payable the amount of which is dependent on the duration of the loans. The Bridge Facility, if funded, will contain restrictive covenants and events of default substantially similar to those contained in agreements governing certain of VICI’s existing indebtedness. If Existing VICI OP draws upon the Bridge Facility, there can be no assurances that we would be able to refinance the Bridge Facility on terms satisfactory to us, or at all. The Bridge Facility will be guaranteed by the material domestic subsidiaries of Existing VICI OP. In addition, the Bridge Facility will be secured by a pledge of the equity of Existing VICI OP and a lien on all or substantially all of the assets of Existing VICI OP and its material domestic subsidiaries.

Background of the Transactions

As part of its ongoing review of MGP’s business, the MGP Board, together with MGP senior management and its controlling shareholder, MGM, regularly reviews and assesses MGP’s strategic business plans, including its strategies and opportunities to increase shareholder value.

The VICI Board, in consultation with members of VICI’s management team, periodically and in the ordinary course of business reviews and assesses VICI’s performance, business, strategic direction, competitive position and prospects in light of the current business and economic environment and in consideration of its long-term business strategy to enhance value for its stockholders. These reviews have included, among other things, consideration, from time to time, of potential strategic options, including strategic acquisitions and business combination transactions.

In early January 2021, MGM received an unsolicited proposal from a publicly-traded REIT (“Party A”) regarding an “at market” transaction with MGP in which the holders of MGP Class A Common Shares (the “MGP Class A Common Shareholders”) would receive stock consideration and MGM would receive cash in exchange for the partial redemption of its ownership interest in MGP OP and a retained interest in the surviving company’s operating partnership. In addition, under Party A’s proposal, MGM would be required to guarantee a portion of the indebtedness incurred by the surviving company’s operating partnership. MGM determined not to proceed with such a transaction given Party A’s requirement that MGM provide a debt guarantee.

On March 15, 2021, MGM engaged J.P. Morgan to evaluate strategic alternatives with respect to MGM’s ownership interest in MGP OP. Following the engagement of J.P. Morgan, MGM worked with J.P. Morgan and its other advisors to evaluate strategic alternatives with respect to monetizing MGM’s ownership interest in MGP OP in a tax efficient manner to MGM. Subsequently, in mid-April 2021, MGM authorized J.P. Morgan to reach out to four potential bidders – VICI, Party A and two private equity firms with a focus on real estate (“Party B” and “Party C,” respectively) – to gauge their interest in a potential transaction involving MGM’s ownership interest in MGP OP.

On April 19, 2021, J.P. Morgan provided VICI a draft non-disclosure agreement (the “VICI NDA”).

On April 21, 2021, after discussion and negotiations regarding the terms of the VICI NDA, MGM and VICI executed the VICI NDA. Also, on April 21, 2021, MGM executed a non-disclosure agreement with Party C.

On May 5, 2021, at a regularly scheduled meeting of the MGP Board, MGM informed MGP management and the MGP Board that MGM had engaged J.P. Morgan to evaluate strategic alternatives with respect to monetizing MGM’s ownership interest in MGP OP in a tax efficient manner to MGM and that it would not proceed with any transaction that would result in a sale of control of MGP absent review by an MGP conflicts committee.

Also, on May 5, 2021, MGM executed a non-disclosure agreement with Party A.

On May 7, 2021, representatives of J.P. Morgan and members of VICI’s management team held a call to discuss preliminary matters relating to the structure of the potential transaction.

 

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On May 11, 2021, MGM executed a non-disclosure agreement with Party B.

On May 13, 2021, each of VICI, Party A, Party B and Party C were provided with access to an online virtual data room (the “virtual data room”).

Also on May 13, 2021, members of MGP’s management team and representatives of J.P. Morgan, Weil, counsel to MGM and Ernst & Young LLP, tax advisor to MGM, held a call with members of VICI’s management team and representatives of Hogan Lovells, counsel to VICI, and KPMG LLP, tax advisor to VICI, to discuss certain structure matters.

On May 22, 2021, representatives of J.P. Morgan and members of VICI’s management team held a call to discuss mutual non-disclosure obligations between the parties.

As of May 23, 2021, VICI engaged Morgan Stanley as its financial advisor with respect to a potential transaction with MGM.

On May 24, 2021, the VICI Board held a meeting by video conference with members of VICI’s management team and representatives of Morgan Stanley in attendance. At the meeting, members of VICI’s management team discussed the strategic rationale for a potential transaction with MGM, methods of financing the potential transaction and the initial bid process. Representatives of Morgan Stanley reviewed the valuation process underlying illustrative offer prices. The VICI Board authorized VICI’s management team to continue to evaluate the potential transaction with MGM.

On May 24, 2021, J.P. Morgan delivered a process letter to VICI, Party A, Party B and Party C, outlining, among other things, that interested parties should each submit a written, non-binding indication of interest with respect to a potential transaction involving a majority of MGM’s ownership interest in MGP OP by Noon Eastern Time on June 3, 2021. The parties were also advised that a potential transaction could involve an acquisition of MGP and accordingly, for illustrative purposes only, they were asked to also provide their proposed purchase price per share for the MGP Class A Common Shares, as well as the proposed form (or forms) of consideration. The process letter outlined a proposed structure that included MGM retaining approximately $400 million of its ownership interest in MGP OP, or in the successor operating partnership of the bidder.

Also, on May 24, 2021, MGM and VICI executed an amendment to the VICI NDA to provide for mutual non-disclosure obligations between the parties.

On June 2, 2021, representatives of J.P. Morgan held a call with representatives of Party C in which Party C indicated that it was prepared to consider a no premium transaction for the MGP Class A Common Shares and MGM’s ownership interest in MGP OP.

Also, on June 2, 2021, the VICI Board held a meeting by video conference with members of VICI’s management team and representatives of Morgan Stanley and Hogan Lovells in attendance. At the meeting, the VICI Board was updated on the status of discussions with representatives of MGM. Representatives of Morgan Stanley reviewed a financial analysis of an acquisition of MGP Class A Common Shares and MGP OP Units at a price equal to $39.00 per unit and an exchange ratio per MGP Class A Common Share based on such price. The VICI Board then discussed the potential transaction, including a proposed structure, with members of VICI’s management team and representatives of Hogan Lovells. Following discussion, the VICI Board authorized VICI’s management to continue to engage in discussions with MGM and submit an initial proposal to acquire the outstanding MGP Class A Common Shares and redeem a portion of MGM’s ownership interest in MGP OP.

On June 3, 2021, Party B indicated verbally to representatives of J.P. Morgan that they were willing to redeem a portion of MGM’s ownership interest in MGP OP at a price equal to between $40.00 - $42.00 per unit in cash.

 

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On June 3, 2021, VICI delivered to representatives of J.P. Morgan an initial proposal for a transaction in which VICI would cause the successor operating partnership to redeem a portion of MGM’s ownership interest in MGP OP at a price equal to $39.00 per unit in cash, with MGM retaining units in the successor operating partnership valued at approximately $400 million and, for illustrative purposes, indicated that VICI was prepared to acquire the outstanding MGP Class A Common Shares for an exchange ratio of 1.227 shares of VICI Common Stock for each MGP Class A Common Share (which implied a value of $39.00 per MGP Class A Common Share as of June 2, 2021 based on VICI’s closing share price on such date).

On June 4, 2021, Party A delivered to representatives of J.P. Morgan an initial proposal for a transaction in which Party A would cause the successor operating partnership to redeem a portion of MGM’s ownership interest in MGP OP at a price equal to $38.50 per unit in cash, for $3.26 billion in total cash consideration, with MGM retaining $1.03 billion in units of the successor operating partnership. Party A’s proposal stated that, subject to a discussion with the MGP Board, Party A anticipated offering a similar value per share in a 100% stock-for-stock exchange based on a to be agreed fixed exchange ratio for the MGP Class A Common Shares.

Also, on June 4, 2021, Party B delivered to representatives of J.P. Morgan an initial proposal for a transaction in which Party B would cause MGP OP to redeem a portion of MGM’s ownership interest in MGP OP at a price equal to $42.00 per unit in cash, for a total cash consideration of $4.678 billion, and with MGM keeping a retained interest of $400 million in MGP OP and, for illustrative purposes, Party B noted that it was prepared to acquire the outstanding MGP Class A Common Shares for the same per unit cash consideration offered to MGM for the partial redemption of its ownership interest in MGP OP, which would be conditioned on approval from the MGP Board.

Additionally, on June 4, 2021, after considering the proposals received by the four bidders, at the direction of MGM, representatives of J.P. Morgan spoke with representatives of VICI, Party A and Party B and asked that VICI, Party A and Party B submit revised proposals by June 8, 2021.

On June 7, 2021, representatives of MGM updated the MGP Board that MGM was continuing to work with J.P. Morgan to explore strategic alternatives with respect to MGM’s ownership interest in MGP OP and that MGM was continuing to engage with bidders with respect to a potential transaction.

Also, on June 7, 2021, Party A delivered to representatives of J.P. Morgan a revised proposal for a transaction in which Party A would cause the successor operating partnership to redeem a portion of MGM’s ownership interest in MGP OP at a price equal to $41.50 per unit in cash, for $4.23 billion in total cash consideration, with MGM retaining $400 million in units of the successor operating partnership. Party A’s revised proposal also stated that, subject to a discussion with the MGP Board, Party A anticipated offering a similar value per share in a 100% stock-for-stock exchange based on a to be agreed fixed exchange ratio for the MGP Class A Common Shares.

On June 8, 2021, the VICI Board held a meeting by video conference with members of VICI’s management team and representatives of Morgan Stanley and Hogan Lovells in attendance. At the meeting, the VICI Board was updated on the status of discussions with representatives of MGM following VICI’s submission of the initial proposal. Representatives of Morgan Stanley reviewed a financial analysis of an acquisition of MGP Class A Common Shares and MGP OP Units at a price equal to $41.00 per unit and an exchange ratio per MGP Class A Common Share based on such price. The VICI Board then discussed the potential transaction, including the submission of a revised proposal, with members of VICI’s management team and representatives of Hogan Lovells. Following discussion, the VICI Board authorized VICI’s management to continue to engage in discussions with MGM and submit a revised proposal to acquire the outstanding MGP Class A Common Shares and redeem a portion of MGM’s ownership interest in MGP OP at a price equal to $41.00 per unit and an exchange ratio per MGP Class A Common Share based on such price.

Also on June 8, 2021, VICI delivered to representatives of J.P. Morgan a revised proposal for a transaction in which VICI would cause the successor operating partnership to redeem a portion of MGM’s ownership

 

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interest in MGP OP at a price equal to $41.00 per unit in cash, with MGM retaining units in the successor operating partnership valued at approximately $400 million and, for illustrative purposes, indicated that VICI was prepared to acquire the outstanding MGP Class A Common Shares for an exchange ratio of 1.237 shares of VICI Common Stock for each MGP Class A Common Share (which implied a value of $41.00 per MGP Class A Common Share as of June 8, 2021 based on VICI’s closing share price on such date).

In addition, on June 8, 2021, Party B verbally indicated to J.P. Morgan that it would not be submitting a revised proposal and directed J.P. Morgan to refer to its initial proposal.

On June 10, 2021, MGM reviewed the proposals received in response to the process letter with J.P. Morgan, including the revised proposals received from VICI and Party A, and decided to invite VICI, Party A and Party B to the next phase of the process.

On June 15, 2021, the VICI Board held a meeting by video conference with members of VICI’s management team in attendance to consider the review and approval of an unrelated transaction. During such meeting, the VICI Board also received an update from VICI management with respect to the bid process and the potential transaction with MGM.

On June 23, 2021, following additional due diligence, Party B informed J.P. Morgan that it was no longer interested in pursuing the potential transaction due to the size of the equity commitment that would be required in a potential transaction as well as Party B’s perspective on its own ability to compete on value.

On June 24, 2021, representatives of MGM updated the MGP Board that MGM was continuing to work with J.P. Morgan to explore strategic alternatives with respect to MGM’s ownership interest in MGP OP and that MGM was engaging in discussions with two bidders with respect to a potential transaction. On June 26, 2021, J.P. Morgan delivered to VICI and Party A initial drafts of the Master Transaction Agreement and Tax Protection Agreement. The initial draft of the Master Transaction Agreement delivered to bidders included a proposed structure that contemplated an acquisition of MGP by the bidder and a leveraged partial redemption of MGM’s ownership interest in MGP OP and reciprocal representations and warranties and interim operating covenants to be given by MGP and the bidder. The Master Transaction Agreement left open the amount of the termination fee that would be payable by MGP or the bidder in certain circumstances, and provided that the Written Consent would not be delivered until after the bidder had received approval of its shareholders. Additionally, the Master Transaction Agreement provided that, upon the closing of the potential transaction, MGP would reimburse MGM for its reasonable and documented out-of-pocket costs and expenses incurred in negotiating, executing and consummating the potential transaction.

On June 28, 2021, members of Party A’s management team met with members of MGM’s management team to discuss the current operations of MGP’s business and Party A’s proposal.

Also, on June 28, 2021, in view of the potential conflicts of interest associated with a potential transaction pursuant to which MGP may be acquired by a third party (the “Potential Transaction”) and pursuant to resolutions approved by the MGP Board, the MGP Board authorized and empowered the MGP Conflicts Committee to (i) review and evaluate the terms and conditions of the Potential Transaction on behalf of MGP, (ii) negotiate, or delegate to any person or persons the ability to negotiate, the terms and conditions of the Potential Transaction, and (iii) determine whether or not to approve and recommend for approval to the MGP Board the Potential Transaction, any such approval of the Potential Transaction to constitute Special Approval pursuant to Section 7.9(b) of the MGP LLCA. The MGP Conflicts Committee consisted of Kathryn Coleman, Charles Irving and Thomas Roberts, each of whom satisfied the independence standards set forth in the MGP LLCA for service on the MGP Conflicts Committee.

The MGP Conflicts Committee engaged Potter Anderson & Corroon LLP (“Potter Anderson”) as its independent legal counsel, based upon, among other things, Potter Anderson’s experience representing the MGP

 

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Conflicts Committee on prior assignments, its experience and expertise with respect to transactions raising potential conflicts of interest under Delaware law and serving as an independent legal advisor to committees of the board of directors, and its independence with respect to MGP, MGM, VICI and Party A.

On June 29, 2021, the MGP Conflicts Committee held a meeting by video conference with representatives of Potter Anderson in attendance. At the meeting, the MGP Conflicts Committee and representatives of Potter Anderson discussed, generally, the Potential Transaction and the engagement of a financial advisor to the MGP Conflicts Committee, including an outreach to Evercore which had advised the MGP Conflicts Committee on a recent transaction in 2021, to discuss the potential engagement of Evercore as financial advisor to the MGP Conflicts Committee and to ask Evercore to provide a fee proposal and a relationship disclosure letter describing Evercore’s relationships with respect to certain identified relevant parties. The MGP Conflicts Committee and representatives of Potter Anderson also discussed certain process related considerations for the MGP Conflicts Committee in connection with the Potential Transaction.

Also, on June 29, 2021, following VICI’s receipt of the Master Transaction Agreement and Tax Protection Agreement, representatives of Hogan Lovells and representatives of Weil held a conference call in which they discussed the structure of the Potential Transaction, as well as certain points that Hogan Lovells raised with respect to the Master Transaction Agreement, including that the Written Consent would not be delivered until after the VICI Shareholder Approval was obtained and the reciprocal representations and warranties and interim operating covenants. Later that evening, representatives of Weil and representatives of Hogan Lovells held a second conference call to discuss in more detail the structure proposed in the Master Transaction Agreement, which representatives of Hogan Lovells communicated would pose some potential issues with respect to integrating VICI’s and MGP’s existing debt. The parties agreed to further discuss the optimal structure for the Potential Transaction, taking into account MGM’s desire to pursue a tax efficient structure, as well as VICI’s anticipated debt financing.

On June 30, 2021, J.P. Morgan delivered a second-round process letter and an initial draft of the MGM Master Lease (together with the Master Transaction Agreement and the Tax Protection Agreement, the “Transaction Documents”) to VICI and Party A. The second-round process letter outlined, among other things, that interested parties should each submit a fully-financed, binding offer and ready-to-sign transaction documentation on a basis that such parties were prepared to execute, no later than 5:00 p.m. Eastern Time on July 15, 2021.

On July 1, 2021, members of MGP’s and VICI’s respective management teams and representatives of Weil and Hogan Lovells held a call to discuss the structure of the Potential Transaction.

On July 2, 2021, representatives of Party A reached out to representatives of J.P. Morgan and requested the ability to speak with five potential equity financing sources. Party A indicated that its intent was to secure a third-party equity commitment between $750 million and $1 billion in connection with the Potential Transaction. The following week, MGM approved Party A to speak with four of the five financing sources.

Between late June and mid-July, representatives of MGM and its advisors held several diligence sessions with each of VICI and Party A and their respective advisors to discuss various financial, operational and structuring aspects of the Potential Transaction. In addition, during this time period, Party C expressed interest to representatives of J.P. Morgan regarding a potential willingness to participate in a limited manner in a transaction involving MGM and MGP but not in the manner contemplated by the process letter provided by J.P. Morgan to the bidders.

Following conversations between Potter Anderson and Evercore, on July 5, 2021, Evercore provided the MGP Conflicts Committee with a relationship disclosure letter describing Evercore’s relationships with certain identified relevant parties, including MGM, MGP, VICI and Party A since January 1, 2018. Evercore also delivered a fee proposal to the MGP Conflicts Committee on that date.

 

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On July 6, 2021, the MGP Conflicts Committee held a telephonic meeting with representatives of Potter Anderson in attendance. At the meeting, representatives of Potter Anderson discussed the resolutions adopted by the MGP Board on June 28, 2021 that delegated authority to the MGP Conflicts Committee to review the Potential Transaction and provided an overview of the MGP Conflicts Committee’s duties under the MGP LLCA and applicable law. The MGP Conflicts Committee and representatives of Potter Anderson also discussed the Potential Transaction and certain conflicts of interest that could arise in connection with the Potential Transaction, including, among other things, that MGM could receive a different form of consideration and additional benefits in the Potential Transaction than the MGP Class A Common Shareholders. The MGP Conflicts Committee and representatives of Potter Anderson also discussed a potential engagement of Evercore, including, among other things, the relationship disclosure letter and fee proposal that Evercore delivered to the MGP Conflicts Committee on July 5, 2021. The MGP Conflicts Committee also authorized representatives of Potter Anderson to contact representatives of Weil regarding additional details and background information on the Potential Transaction.

On July 8, 2021, representatives of J.P. Morgan, Weil, Morgan Stanley and Hogan Lovells and members of VICI’s and MGP’s respective management teams held a call to discuss the structure of the Potential Transaction and considerations regarding VICI’s debt financing of the partial redemption of MGM’s ownership interest in MGP OP.

On July 8, 2021 and July 9, 2021, representatives of Potter Anderson and Weil held telephonic meetings to discuss certain preliminary matters with respect to the Potential Transaction, including the engagement of an outside legal advisor for MGP and the draft documentation for, and structure of, the Potential Transaction.

On July 9, 2021, representatives of Weil provided representatives of Potter Anderson with the bid draft Transaction Documents that J.P. Morgan had previously provided to VICI and Party A.

On July 9, 2021 and July 13, 2021, the MGP Conflicts Committee, Mr. James C. Stewart, Chief Executive Officer of MGP, and representatives of Potter Anderson held telephonic meetings with representatives of three law firms for the purpose of interviewing such legal advisors to serve as outside legal counsel to MGP in connection with the Potential Transaction. After a discussion of these interviews and upon the recommendation of the MGP Conflicts Committee, MGP determined to engage Baker Botts L.L.P. (“Baker Botts”) as outside legal counsel to MGP, based upon, among other things, its experience serving as company counsel to REITs and its experience serving as company counsel to alternative entities in connection with M&A transactions involving potential conflicts of interest and independent committees of the boards of directors. An engagement letter detailing the terms of Baker Botts’ engagement was subsequently executed.

At the July 9, 2021 meeting, the MGP Conflicts Committee discussed, with only representatives of Potter Anderson and Mr. Stewart in attendance, the possibility that MGM could receive a different form of consideration as compared to the MGP Class A Common Shareholders in a Potential Transaction and the rationale for such differential consideration.

At the July 13, 2021 meeting, the MGP Conflicts Committee discussed, with only representatives of Potter Anderson and Mr. Stewart in attendance, a Potential Transaction and the engagement of Evercore to serve as the MGP Conflicts Committee’s financial advisor. Following such discussion, the MGP Conflicts Committee determined to pursue the engagement of Evercore as its financial advisor, subject to negotiation of terms of engagement and a mutually acceptable engagement letter and the completion of an independence review. The determination was based on, among other things, Evercore’s qualifications and experience in the real estate and REIT space, its experience with serving as a financial advisor to independent committees in conflict transactions, its reputation and familiarity with MGP, including Evercore’s prior engagement on behalf of the MGP Conflicts Committee and its lack of material relationships with MGP, MGM, VICI and Party A. Prior to such determination, the MGP Conflicts Committee reviewed the relationship disclosure letter from Evercore, discussed the matters described therein, and concluded that the disclosure letter did not reflect any information

 

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that would preclude Evercore from serving as an independent financial advisor to the MGP Conflicts Committee. The MGP Conflicts Committee authorized representatives of Potter Anderson to contact Evercore and begin negotiations with respect to a draft engagement letter.

On July 14, 2021, the VICI Board held a meeting by video conference with members of VICI’s management team and representatives of Morgan Stanley and Hogan Lovells in attendance. VICI’s management provided the VICI Board with an update regarding the business, financial, legal, tax and accounting diligence review of MGP. VICI’s management also reviewed the material terms of the Transaction Documents with the VICI Board. Representatives of Morgan Stanley reviewed the strategic rationale for the Potential Transaction, the pro forma portfolio that would result from the Potential Transaction, the proposed transaction structure and its valuation analysis. The VICI Board discussed the Potential Transaction and directed management to submit VICI’s final proposal described below.

On July 15, 2021, Party A delivered a final proposal to representatives of J.P. Morgan for a transaction in which Party A would cause the successor partnership to redeem a portion of MGM’s ownership interest in MGP OP at a price equal to $40.00 per unit, comprised of $4.05 billion in cash, with MGM retaining $400 million in units of the successor operating partnership. Party A’s final proposal also included that the MGP Class A Common Shares would be exchanged for common shares in Party A on a fixed exchange ratio reflecting a value per share equivalent to the per-unit consideration provided to MGM for the partial redemption of its ownership interest in MGP OP and that it would finance the transaction through a combination of equity and debt financing with MGM having the potential to make an equity investment in Party A at the Party A stock price used to determine the exchange ratio. Party A provided mark-ups of the Transaction Documents with its final proposal.

Also on July 15, 2021, VICI delivered a final proposal to representatives of J.P. Morgan for a transaction in which VICI would cause the successor partnership to redeem a portion of MGM’s ownership interest in MGP OP at a price equal to $43.00 per unit, which would be paid in cash, except for any units that MGM decided to retain in the successor operating partnership (estimated to be worth approximately $400 million in value). VICI’s final proposal included that VICI was prepared to acquire the MGP Class A Common Shares at a price of $43.00 per share, which would be exchanged for VICI Common Stock at an exchange ratio equal to VICI’s 5-day volume weighted average price (which implied an exchange ratio as of July 14, 2021 of 1.359 shares of VICI Common Stock for each MGP Class A Common Share). VICI provided mark-ups of the Transaction Documents with its final proposal, as well as an initial draft of the Debt Commitment Letter. VICI’s final proposal indicated that the proposal was not subject to a financing contingency, and that fully executed bridge financing commitment letters would be delivered at the signing of the definitive Master Transaction Agreement. Additionally, VICI’s final proposal confirmed that VICI’s due diligence review was substantially complete.

On July 16, 2021, after reviewing the final proposals submitted by VICI and Party A, MGM determined to continue negotiations with VICI. Later that day, representatives of Potter Anderson and Weil held a telephonic meeting to discuss MGM’s receipt of VICI’s final proposal. Representatives of Weil subsequently sent VICI’s final proposal and the draft Transaction Documents and Debt Commitment Letter delivered by VICI to representatives of Potter Anderson on July 16, 2021, which in turn distributed the VICI proposal and the draft Transaction Documents and Debt Commitment Letter to representatives of Baker Botts on the same date.

Between July 16, 2021 and July 22, 2021, MGM, J.P. Morgan and Weil negotiated certain points on the Transaction Documents with representatives of VICI, Morgan Stanley, Hogan Lovells and Kramer Levin Naftalis & Frankel LLP, counsel to VICI (“Kramer Levin”), including: (i) in respect of the MGM Master Lease, the rent, financial covenant escalator test, ability to sublease and other key economic provisions; (ii) in respect of the Tax Protection Agreement (A) whether MGM would be indemnified for certain taxes incurred as a result of an election under section 754 of the Code or arising from certain transactions related to BREIT JV, (B) early termination provisions and (C) certain restrictions on the use of capital raised by the successor operating partnership; and (iii) in respect of the Master Transaction Agreement, certain provisions related to the proposed debt financing structure.

 

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On July 19, 2021, representatives of Weil distributed reverse due diligence materials to representatives of Potter Anderson, which in turn distributed such materials to representatives of Baker Botts.

Beginning on July 20, 2021 and through August 3, 2021, representatives of Weil, Potter Anderson, Baker Botts, management of MGM and management of MGP held a series of telephonic meetings to discuss the draft Transaction Documents and certain due diligence and reverse due diligence matters with respect to the Transactions. Representatives of J.P. Morgan and Evercore also attended certain of these meetings.

On July 20, 2021, representatives of Weil held a call with representatives of Potter Anderson and representatives of Baker Botts to provide additional background on the Transactions. Representatives of Weil also sent representatives of Potter Anderson and Baker Botts revised drafts of the Master Transaction Agreement and the MGM Master Lease, along with materials for MGP’s disclosures schedules and reverse due diligence materials that had been prepared by Weil regarding VICI.

Also, on July 20, 2021, the MGP Conflicts Committee held a telephonic meeting with representatives of Potter Anderson and Mr. Stewart in attendance. At the meeting, the MGP Conflicts Committee, representatives of Potter Anderson and Mr. Stewart discussed the final VICI proposal, the status of the negotiation of the draft Transaction Documents, the due diligence and reverse due diligence processes, and the negotiation of Evercore’s engagement letter. The MGP Conflicts Committee and representatives of Potter Anderson also discussed certain potential tax benefits for MGM in the Transactions and the different form of consideration that MGM was contemplated to receive in the Transactions. Following a discussion, the MGP Conflicts Committee authorized certain members of the MGP Conflicts Committee, with the assistance of Potter Anderson, to finalize the fee negotiations and certain other terms of Evercore’s engagement letter.

On July 21, 2021, representatives of Potter Anderson and Baker Botts sent a revised draft of the Master Transaction Agreement to representatives of Weil.

Also, on July 21, 2021, representatives of MGM, MGP, Weil, Baker Botts, Potter Anderson, and Evercore held a telephonic meeting to discuss the contemplated changes in the MGM Master Lease compared to the Master Lease, by and between MGP Lessor, LLC (“MGP Landlord”) and MGM Lessee, LLC (“MGM Tenant”), dated as of April 25, 2016 (as amended, the “Existing Master Lease”). Representatives of MGM, MGP, Weil, Baker Botts, Potter Anderson, and Evercore also held a telephonic meeting to discuss the proposed terms of the draft Tax Protection Agreement.

On July 22, 2021, the MGP Conflicts Committee held a telephonic meeting with representatives of Potter Anderson in attendance. Representatives of Evercore and Fried, Frank, Harris, Shriver & Jacobson LLP (“Fried Frank”), outside legal advisor to Evercore, also attended a portion of the meeting. At the meeting, the MGP Conflicts Committee, meeting only with representatives of Potter Anderson, discussed the status of Evercore’s engagement letter and its fee proposal. With representatives of Evercore and Fried Frank in attendance, the MGP Conflicts Committee and representatives of Potter Anderson discussed the scope of Evercore’s work with respect to the Transactions, including the due diligence and reverse due diligence Evercore would conduct for purposes of its financial analyses as well as the potential process and negotiation of the Transactions. The MGP Conflicts Committee, following the excusal of representatives of Evercore and Fried Frank from the meeting, met with representatives of Potter Anderson to further discuss Evercore’s proposed fee structure and amount. After discussion, certain members of the MGP Conflicts Committee, pursuant to the earlier authorization, stated that they would reach out to representatives of Evercore to finalize their fee proposal. An engagement letter documenting Evercore’s engagement on behalf of the MGP Conflicts Committee was subsequently executed.

Also, on July 22, 2021, representatives of Weil delivered to representatives of Hogan Lovells revised drafts of the Master Transaction Agreement and Debt Commitment Letter, which, among other things, removed the ability of VICI to have a “marketing period” for its debt financing, added covenants to establish that the MGM Master Lease would be characterized as a “true lease” for tax purposes and deleted VICI’s proposal that a

 

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termination fee payable by Parent or MGP would equal 3.9% of such party’s market capitalization. With respect to the termination fee, representatives of Weil communicated to representatives of Hogan Lovells that such amount remained subject to input from the MGP Conflicts Committee and its advisors.

Additionally, on July 22, 2021, representatives of Evercore distributed an updated reverse due diligence list on VICI to representatives of Weil for purposes of an upcoming reverse due diligence meeting.

Later that evening, on July 22, 2021, representatives of Morgan Stanley reached out to representatives of J.P. Morgan to request that MGP enter into an exclusivity arrangement with VICI. That day, representatives of J.P. Morgan communicated to representatives of Party A that they were no longer part of the process.

On July 23, 2021, representatives of Weil delivered to representatives of Kramer Levin a revised draft of the MGM Master Lease, in which they continued to negotiate the points outlined above. Representatives of Weil also delivered to representatives of Hogan Lovells a revised draft of the Tax Protection Agreement, in which they continued to negotiate the points outlined above.

Also, on July 23, 2021, representatives of Evercore, Potter Anderson, Weil and Baker Botts held a telephonic meeting to discuss certain tax structuring and due diligence matters related to the Transactions.

Additionally, on July 23, 2021, representatives of J.P. Morgan and Morgan Stanley held a telephonic meeting to discuss the proposed timing of the Transactions and the reverse diligence process.

On July 25, 2021, representatives of Weil, Baker Botts, Potter Anderson and MGM held a telephonic meeting to discuss certain finance diligence matters. Representatives of Weil, Baker Botts, Potter Anderson and MGM also held a telephonic meeting on this date to discuss certain environmental and real estate diligence matters.

Also, on July 25, 2021, representatives of Weil and representatives of Kramer Levin held a conference call to discuss the MGM Master Lease. Representatives of Weil and representatives of Hogan Lovells also held a conference call to discuss the Master Transaction Agreement as well as VICI’s request for exclusivity.

Additionally, on July 25, 2021, representatives of Weil delivered to representatives of Hogan Lovells an initial draft of MGP’s disclosure letter relating to the Master Transaction Agreement.

On July 26, 2021, representatives of Hogan Lovells delivered to representatives of Weil a revised draft of the Master Transaction Agreement, which, among other things, re-inserted the ability of VICI to have a “marketing period” for its debt financing. Between July 26 and August 4, 2021, representatives of VICI, MGM, Morgan Stanley, J.P. Morgan, Hogan Lovells, Weil, Baker Botts, Kramer Levin and Potter Anderson worked towards finalizing the Transaction Documents.

Also, on July 26, 2021, representatives of Weil, Potter Anderson, Baker Botts, Evercore, and J.P. Morgan held a telephonic meeting to receive a report from representatives of J.P. Morgan on the process run by MGM and its outside advisors with respect to the Transactions. Representatives of Weil also delivered a draft of the form of Written Consent to representatives of Potter Anderson and Baker Botts. Representatives of Evercore also distributed a revised due diligence list, reflecting comments from Baker Botts and Evercore, to J.P. Morgan regarding the upcoming reverse due diligence session with VICI.

Also, on July 26, 2021, representatives of Hogan Lovells delivered to representatives of Weil a revised draft of the Tax Protection Agreement and representatives of Kramer Levin delivered to representatives of Weil a revised draft of the MGM Master Lease.

Additionally, on July 26, 2021, MGP signed a joinder to the VICI NDA and began its reverse due diligence review of VICI after receiving access to VICI’s virtual data room. Later that day, representatives of Evercore held a due diligence call with representatives of VICI to discuss certain business, financial, operations, legal,

 

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accounting and tax questions regarding VICI, which was also attended by representatives of MGP, J.P. Morgan, Baker Botts, Potter Anderson, Weil, Morgan Stanley, Kramer Levin and Hogan Lovells.

On July 27, 2021, representatives of Weil delivered to representatives of Hogan Lovells a draft of the Exclusivity Agreement, which provided that MGM and its subsidiaries (excluding MGP) would not solicit or engage in discussions or negotiations with any party other than VICI and its representatives involving a transaction with respect to MGM’s ownership interest in MGP OP prior to 11:59 p.m. Eastern Time on August 3, 2021. Between July 27, 2021 and July 29, 2021, representatives of Hogan Lovells and representatives of Weil exchanged revised drafts of the Exclusivity Agreement. On the afternoon of July 29, 2021, MGM and VICI executed the Exclusivity Agreement, which provided that, among other things, MGM and its subsidiaries and representatives would not solicit or engage in discussions or negotiations regarding a transaction resulting in the acquisition of MGP or a transaction with respect to MGM’s ownership interest in MGP OP with any party other than VICI and its representatives until the earlier of 9:30 a.m. Eastern Time on August 4, 2021 and the execution of the Master Transaction Agreement.

Also, on July 27, 2021 (before which time representatives of Hogan Lovells expressed that the expense reimbursement provisions set forth in the bid draft originally provided to VICI should be set forth in a separate agreement between MGP and MGM rather than in the Master Transaction Agreement), representatives of Weil informed representatives of Baker Botts and Potter Anderson of their conversations with representatives of Hogan Lovells on these negotiations and MGM’s agreement to Hogan Lovells’ proposal and delivered to representatives of Baker Botts and Potter Anderson a draft Expense Reimbursement Agreement, which included the expense reimbursement provisions set forth in the bid draft of the Master Transaction Agreement other than the reimbursement of certain tax advisory fees being incurred related to the partial redemption of MGP OP Units.

Additionally, on July 27, 2021, the MGP Conflicts Committee held a telephonic meeting with representatives of Potter Anderson in attendance. Representatives of Baker Botts, as well as Messrs. Stewart and Andy H. Chien, Chief Financial Officer of MGP, attended portions of the meeting. At the meeting, Messrs. Stewart and Chien reported on MGP management’s perspective of the Transactions, including the benefits and considerations of engaging in the Transactions and MGP management’s recommendation in support of engaging in the Transactions. Representatives of Potter Anderson provided an overview of the bid solicitation and negotiation process to date, including negotiations between MGM and the potential counterparties for a transaction. Representatives of Potter Anderson and Baker Botts also discussed the ongoing negotiations with respect to the draft Transaction Documents and summarized the key terms set forth in the latest drafts of the Transaction Documents, including, among other things, the tax benefits to MGM through the draft Tax Protection Agreement and the impact to the Combined Company as a result of such agreement. Representatives of Potter Anderson also reported that MGM’s advisors had informed them that MGM would not be engaging in the Transactions if it had to recognize gain on the sale of its interests. Representatives of Potter Anderson and Baker Botts also summarized key changes to the Master Lease, as reflected in the latest draft of the MGM Master Lease, and provided an overview of the due diligence and reverse due diligence process to date.

Between July 27, 2021 and August 2, 2021, representatives of VICI and MGM held multiple telephonic meetings to discuss accounting, finance and tax considerations in the Transaction Documents, the timing for the Transactions and open business items, including the “marketing period” for VICI’s debt financing under the Master Transaction Agreement, the payment of dividends between signing and closing and certain terms of the Tax Protection Agreement and the MGM Master Lease.

On July 28, 2021, in connection with its due diligence review of VICI, representatives of Baker Botts held a due diligence call with representatives of VICI to discuss certain accounting, tax and legal diligence items related to VICI, which was attended by representatives of J.P. Morgan, Baker Botts, Potter Anderson, Weil, MGP and MGM, as well as Morgan Stanley, Evercore and Hogan Lovells.

Also, on July 28, 2021, representatives of Potter Anderson delivered a revised draft of the Written Consent to representatives of Weil.

 

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On the afternoon of July 28, 2021, MGP management and representatives of Weil and Baker Botts held a telephonic meeting to discuss further the interim operating covenants and certain exceptions thereto.

Additionally, on July 28, 2021, representatives of Weil sent representatives of Kramer Levin a revised draft of the MGM Master Lease.

On July 29, 2021, representatives of Potter Anderson, Baker Botts, Evercore and MGP management held a reverse due diligence session by video/telephonic conference with members of VICI management to discuss certain financial information and the strategic rationale for the Transactions.

Also, on July 29, 2021, the MGP Conflicts Committee held a meeting by video conference with representatives of Potter Anderson and Evercore in attendance. At the meeting, representatives of Evercore discussed with the MGP Conflicts Committee the process that had been undertaken by J.P. Morgan to date, Evercore’s due diligence process, the potential strategic rationale for the Transactions and background information regarding each of MGP, MGM and VICI. Representatives of Evercore also provided the MGP Conflicts Committee an overview of Evercore’s preliminary financial analysis of the final VICI proposal. Representatives of Evercore and the MGP Conflicts Committee discussed that, in light of the fixed Exchange Ratio contemplated by the VICI proposal, price fluctuations to the trading price of the VICI Common Stock between signing and closing would impact the trading value as of the closing of the consideration to be received by the MGP Class A Common Shareholders. Representatives of Evercore then presented potential improvements that could be sought by the MGP Conflicts Committee, including a $4.00 price protection for the MGP Class A Common Shareholders by means of either MGM making a cash payment of up to $4.00 per share to the MGP Class A Common Shareholders or VICI making an upward adjustment to the Exchange Ratio, in the event the trading value of the VICI Common Stock at closing was such that, at the Exchange Ratio, MGP Class A Common Shareholders would receive consideration at closing with a then trading value of less than $43.00 per share. The MGP Conflicts Committee and its advisors also discussed whether the MGP Conflicts Committee should request that MGM pay for its own fees in connection with the Transactions. Following a discussion, the MGP Conflicts Committee authorized representatives of Evercore to contact J.P. Morgan to request price protection of up to $4.00 per share for the MGP Class A Common Shareholders with respect to the Exchange Ratio by means of either MGM making a cash payment or VICI making an upward adjustment to the Exchange Ratio. The MGP Conflicts Committee also authorized Potter Anderson to request that MGM pay its own fees in connection with the Transactions. Subsequent to the meeting, on July 30, 2021, the MGP Conflicts Committee also asked that a member of the MGP Conflicts Committee contact the Chairman of the MGM Board to discuss the MGP Conflicts Committee’s requests.

On July 30, 2021, representatives of Weil delivered to representatives of Hogan Lovells a revised draft of the Master Transaction Agreement, which, among other things, made certain changes with respect to the VICI debt financing, including providing for a twenty (20) consecutive day marketing period and provided that, upon the closing of that certain agreement by and among MGM, MGP, MGP OP, Blue Tarp ReDevelopment, LLC, MGP Lessor Holdings, LLC, MGP Landlord, and MGM Tenant, with respect to MGP’s pending acquisition of the Springfield property, the Springfield property will be included in the MGM Master Lease.

Also, on July 30, 2021, representatives of Evercore contacted representatives of J.P. Morgan to communicate the MGP Conflicts Committee’s request for a price protection of up to $4.00 per share for the MGP Class A Common Shareholders, to the extent that the fixed Exchange Ratio implied a trading value less than $43.00 per share at closing, by means of either MGM providing MGP Class A Common Shareholders with up to $4.00 per share in cash or VICI making an upward adjustment to the Exchange Ratio.

Following its meeting with Evercore, representatives of J.P. Morgan communicated the MGP Conflicts Committee’s request to each of MGM and Morgan Stanley. After Evercore and J.P. Morgan’s meeting, representatives of Potter Anderson and Weil held a telephonic meeting to discuss the MGP Conflicts Committee’s requests for price protection for the MGP Class A Common Shareholders and that MGM pay its

 

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own fees in connection with the Transactions. Separately, a member of the MGP Conflicts Committee and the Chairman of the MGM Board discussed the MGP Conflicts Committee’s requests.

Additionally, on July 30, 2021, representatives of each of J.P. Morgan, on behalf of MGM, and Morgan Stanley, on behalf of VICI, discussed the Exchange Ratio in the Master Transaction Agreement and agreed to use Bloomberg’s 5-trading day volume weighted average price as of July 30, 2021, which resulted in a fixed Exchange Ratio of 1.366. Later that day, J.P. Morgan, on behalf of MGM, responded to Evercore that MGM was unwilling to provide price protection by means of a cash payment and that evening, representatives of Morgan Stanley, on behalf of VICI, responded to J.P. Morgan, who in turn responded to Evercore, that VICI would not be willing to provide price protection for MGP Class A Common Shareholders through an upside adjustment to the Exchange Ratio.

On August 1, 2021, representatives of Hogan Lovells delivered a revised draft of the Master Transaction Agreement to representatives of Weil, which, among other things, provided for a thirty (30) consecutive day marketing period.

Also, on August 1, 2021, representatives of Weil delivered to representatives of Hogan Lovells a revised draft of the Master Transaction Agreement, which, among other things, kept open the number of days for which VICI would have a “marketing period”. Also on August 1, 2021, representatives of Hogan Lovells delivered to representatives of Weil a revised draft of the MGP disclosure letter and a draft of the VICI disclosure letter.

Additionally, on August 1, 2021, representatives of Potter Anderson, Baker Botts and Weil held a telephonic meeting, where representatives of Weil confirmed that MGM’s position continued to be that it would have its expenses reimbursed, as outlined in the Expense Reimbursement Agreement, and would not pay for its own fees in connection with the Transactions (other than as previously excluded).

Further, on August 1, 2021, members of VICI’s management team and representatives of Hogan Lovells held a call with members of MGP’s and MGM’s respective management teams to discuss open diligence items.

Also, on August 1, 2021, the MGP Conflicts Committee held a telephonic meeting with representatives of Potter Anderson in attendance. At the meeting, the MGP Conflicts Committee and representatives of Potter Anderson reported on a number of separate discussions between (i) the member of the MGP Conflicts Committee and the Chairman of the MGM Board, (ii) Potter Anderson and Weil, and (iii) J.P. Morgan and Evercore, regarding the MGP Conflict Committee’s requests for price protection for the MGP Class A Common Shareholders and that MGM pay its own fees in connection with the Transactions. After reviewing these discussions and holding further discussions on next steps, the MGP Conflicts Committee authorized an additional outreach by a member of the MGP Conflicts Committee to the Chairman of the MGM Board in order to address the MGP Conflicts Committee’s request for price protection for the MGP Class A Common Shareholders and for the opportunity to hold a discussion with senior management of VICI regarding the Transactions and expectations for the Combined Company.

Following the MGP Conflicts Committee meeting on August 1, 2021, a member of the MGP Conflicts Committee contacted the Chairman of the MGM Board in order to address the MGP Conflicts Committee’s request for price protection for the MGP Class A Common Shareholders and also asked for the opportunity for the MGP Conflicts Committee to hold a discussion with senior management of VICI regarding the Transactions. During a meeting between the member of the MGP Conflicts Committee and the Chairman of the MGM Board, the Chairman of the MGM Board stated that MGM was not willing to fund any downside price protection for the MGP Class A Common Shareholders as part of the Transactions. The Chairman of the MGM Board then facilitated a meeting between senior management of VICI and the MGP Conflicts Committee and conversations with Weil, J.P. Morgan and VICI regarding whether VICI would be willing to fund any downside price protection. In those conversations, VICI stated that it was also unwilling to fund any downside price protection. The MGP Conflicts Committee members conferred several times during the day regarding the earlier meeting between the member of the MGP Conflicts Committee and the Chairman of the MGM Board and each agreed that they were comfortable proceeding with the Transactions without any price protection for the MGP Class A

 

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Common Shareholders, subject to the MGP Conflicts Committee having a satisfactory discussion with senior management of VICI regarding the Transactions and expectations for the Combined Company.

On August 2, 2021, the MGP Conflicts Committee held a meeting by video conference, with representatives of Potter Anderson, Evercore and members of senior management of VICI in attendance. At the meeting, members of senior management of VICI provided an overview of VICI’s strategic rationale for an acquisition of MGP, including VICI senior management’s views on the performance and future growth opportunities for the Combined Company, how the Combined Company would compare against the other gaming triple net REITs and other triple net REITs in the market, the tax-free nature of the Transactions to the MGP Class A Common Shareholders by virtue of their receipt of VICI Common Stock in the REIT Merger, and that the combination of VICI and MGP would help address certain identified deficiencies in MGP’s investor profile, including improving certain corporate governance considerations and allowing the former MGP Class A Common Shareholders to be a part of an entity that could access index funds, which were otherwise prohibited from investing in MGP due to its entity structure. The MGP Conflicts Committee members engaged in a general question and answer session with members of senior management of VICI.

On August 2, 2021, the VICI Board held a meeting by video conference with members of VICI’s management team and representatives of Morgan Stanley and Hogan Lovells in attendance. Prior to Morgan Stanley joining the meeting, representatives of Hogan Lovells reviewed the VICI Board’s fiduciary duties under Maryland law. Representatives of Morgan Stanley then joined the meeting and VICI’s management team provided the VICI Board with an update regarding the status of negotiations and financing for the Transactions. Representatives of Morgan Stanley reviewed Morgan Stanley’s financial analyses of the Transactions and its valuation of VICI and MGP. Representatives of Hogan Lovells then reviewed the material terms of the Transaction Documents with the VICI Board, including, among other things, material changes from the last meeting held to discuss such documents. After discussion, representatives of Morgan Stanley and Hogan Lovells and members of VICI’s management team responded to questions from the VICI Board.

On August 2, 2021 and August 3, 2021, representatives of MGM, MGP, VICI, Weil, Baker Botts, Potter Anderson, Hogan Lovells and Kramer Levin continued to finalize the Master Transaction Agreement and other Transaction Documents, including with respect to the termination fees, the date of the outside date, and the amount of per share dividend that MGP could make between signing of the Master Transaction Agreement and the REIT Merger Effective Time. With respect to the termination fees, at the recommendation of the MGP Conflicts Committee and its counsel, representatives of Weil proposed a termination fee of 3.0% of each company’s market capitalization. On August 2, 2021, representatives of Hogan Lovells delivered a draft of the Master Transaction Agreement, which included a termination fee of 3.75% of each company’s market capitalization. Representatives of Weil provided a revised draft of the Master Transaction Agreement to representatives of Hogan Lovells in the early morning of August 3, 2021, which included a termination fee proposal of 3.5% of each company’s market capitalization that had been recommended by the MGP Conflicts Committee and its counsel. Subsequently, representatives of Hogan Lovells proposed a termination fee of 3.65% of each company’s market capitalization, which the MGP Conflicts Committee accepted. The parties also resolved the dividend increase negotiation point by capping dividends payable by MGP to $2.06 per share/per unit (on an annualized basis), with quarterly increases not to exceed $0.02 per share/ per unit and an aggregate overall cap of $2.14 per share/per unit (on an annualized basis). The parties also reached an agreement on an outside date that was fifteen months from the execution of the Master Transaction Agreement.

On August 3, 2021, representatives of management of MGM discussed the Expense Reimbursement Agreement with representatives of management of VICI, and agreed that VICI would be willing to reimburse, through MGP, 50% of MGM’s legal fees and 58% of MGM’s financial advisory fees, in each case incurred in connection with the Transactions, with a maximum amount of out-of-pocket costs and expenses incurred by MGM not to exceed $65 million.

Also, on August 3, 2021, the MGP Conflicts Committee held a meeting by video conference with representatives of Potter Anderson and Mr. Stewart in attendance, and for a portion of the meeting with representatives of Baker Botts

 

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and Evercore in attendance. At the meeting, the MGP Conflicts Committee received reports from Potter Anderson and Baker Botts on the most recent drafts of the Transaction Documents, including, among other things, any material changes to the Transaction Documents from the last meeting held to discuss such documents. Representatives of Evercore presented their financial analysis and rendered to the MGP Conflicts Committee Evercore’s oral opinion, subsequently confirmed by delivery of a written opinion dated August 4, 2021, to the effect that as of the date of such opinion and based upon and subject to the assumptions, limitations, qualifications and conditions described in Evercore’s written opinion, the Exchange Ratio pursuant to the Master Transaction Agreement was fair, from a financial point of view, to the holders of the MGP Class A Common Shares other than holders of Cancelled Shares and MGP Class A Common Shares held by MGM and its affiliates, as more fully described below in the section entitled “The Transactions—Opinion of Evercore Group L.L.C.” beginning on page 90. The MGP Conflicts Committee discussed its satisfaction with the discussions had between the MGP Conflicts Committee and senior management of VICI regarding the Transactions and expectations for the Combined Company. Mr. Stewart also provided a report on MGP management’s perspective on the strategic rationale for the Transactions, including, among other things, the benefits to be received by the MGP Class A Common Shareholders. The MGP Conflicts Committee members also discussed their reasons for why they believed that the Transactions were in the best interests of MGP and in the best interests of the MGP Class A Common Shareholders. After discussion, the MGP Conflicts Committee, in its sole and absolute discretion, unanimously: (i) determined that the Master Transaction Agreement, the REIT Merger and the other Transactions are in the best interests of MGP and in the best interests of the holders of the MGP Class A Common Shares, (ii) approved, and recommended that the MGP Board approve, the Master Transaction Agreement, the REIT Merger and the other Transactions, (iii) recommended that the MGP Board direct that the Master Transaction Agreement, the REIT Merger and the other Transactions be submitted to a vote or for the consent of the Members (as defined in the MGP LLCA), and (iv) resolved, and recommended that the MGP Board resolve, to recommend that the Members approve the Master Transaction Agreement, the REIT Merger and the other Transactions. See “Recommendations of the MGP Conflicts Committee and MGP Board and Their Reasons for the Transactions.”

Following the MGP Conflicts Committee meeting, the MGP Board held a meeting by video conference, with representatives of Potter Anderson, Evercore, Baker Botts, MGP management and certain members of MGM in attendance for all or a portion of the meeting. Five of the seven members of the MGP Board, including all three of the members who were also members of the MGP Conflicts Committee, were present. At the meeting, the MGP Board received a report from the MGP Conflicts Committee and its advisors and considered the Transactions. At the request of the MGP Conflicts Committee, Evercore’s fairness opinion was provided for the benefit of the MGP Board (in its capacity as such) in connection with its evaluation of the Transactions. After discussion, all three members of the MGP Board who were also members of the MGP Conflicts Committee voted to (a) approve the Master Transaction Agreement, the REIT Merger and the other Transactions, (b) direct that the Master Transaction Agreement, the REIT Merger and the other Transactions be submitted to the Members (as defined in the MGP LLCA) and (c) resolve to recommend that the Members approve the Master Transaction Agreement, the REIT Merger and the other Transactions. The two members of the MGP Board present who were not members of the MGP Conflicts Committee abstained from voting.

Additionally, on August 3, 2021, the VICI Board held a meeting by video conference with members of VICI’s management team and representatives of Morgan Stanley and Hogan Lovells in attendance. Prior to Morgan Stanley joining the meeting, representatives of Hogan Lovells reviewed the VICI Board’s fiduciary duties under Maryland law. Representatives of Morgan Stanley then joined the meeting and VICI’s management team and representatives of Hogan Lovells provided an update on the most recent drafts of the Transaction Documents, including, among other things, any material changes to the Transaction Documents from the last meeting held to discuss such documents. During the meeting, representatives of Morgan Stanley delivered to the VICI Board its oral opinion, later confirmed by delivery of a written opinion dated August 3, 2021, that, as of that date, and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in its written opinion, the Transaction Consideration pursuant to the Master Transaction Agreement was fair, from a financial point of view, to VICI. The opinion of Morgan Stanley is more fully described in the section entitled “The

 

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Transactions—Opinion of VICI’s Financial Advisor” beginning on page 80. The VICI Board, with the advice and assistance of its financial advisors and outside legal counsel and VICI’s management, evaluated and discussed the terms of the Transaction Documents and the transactions contemplated thereby, taking into consideration a variety of factors, including those described in the section entitled “The Transactions—Recommendations of the VICI Board and Its Reasons for the Transactions” beginning on page 69, unanimously determined that the terms of the Mergers, the Partial Redemption and the other Transactions are advisable and in the best interests of VICI and its stockholders, authorized, approved and adopted the Master Transaction Agreement, the Mergers, the Partial Redemption and the other Transactions and recommended that VICI’s stockholders vote in favor of approval of the VICI Stock Issuance.

Following the meetings of the VICI Board, the MGP Conflicts Committee and the MGP Board, the parties and their respective advisors worked to finalize and, early in the morning of August 4, 2021, execute the Master Transaction Agreement (and the related VICI disclosure letter and the MGP disclosure letter) and the Debt Commitment Letter from VICI. Shortly following receipt of the executed Master Transaction Agreement, MGM delivered the Written Consent to VICI, which satisfied MGM’s requirement under the Master Transaction Agreement to provide the executed Written Consent within twenty-four hours of execution of the Master Transaction Agreement.

On the morning of August 4, 2021, prior to the opening of trading of MGP Class A Common Shares and VICI Common Stock on the NYSE, MGP and VICI issued a joint press release announcing the execution of the Master Transaction Agreement.

Recommendations of the VICI Board and Its Reasons for the Transactions

At its meeting on August 3, 2021, after careful consideration, the VICI Board unanimously (i) determined that the Mergers, the Partial Redemption and the other Transactions are advisable and in the best interests of VICI and its stockholders, (ii) authorized and approved the Mergers, the Partial Redemption and the other Transactions, and (iii) authorized, approved, and adopted the Master Transaction Agreement.

In reaching its determination, the VICI Board consulted with VICI’s senior management and outside legal and financial advisors and carefully considered numerous factors that the VICI Board viewed as supporting its decision, including the following material factors:

 

•

the belief that the Transactions will strengthen VICI’s position as a leader in gaming and experiential real estate and solidify it as the largest triple-net lease REIT by Adjusted EBITDA and generally one of the largest REITs in the United States, with an equity market capitalization of approximately $30 billion and a total enterprise value of approximately $45 billion, based on the closing price of VICI Common Stock on August 3, 2021, the last trading day before the VICI Board approved the Transactions. The VICI Board believed that this broader reach and scale would provide a strong foundation for VICI to drive additional, accretive growth in its business, enabling it to pursue larger transactions and potentially resulting in lower cost of capital, thereby driving higher net income to VICI stockholders;

 

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the belief that the Mergers will result in an overall upgrade of VICI’s portfolio; following the Mergers, VICI will have 43 properties in 15 states with 58,000 hotel rooms, 63,000 gaming units and 6.7 million square feet of convention space;

 

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the belief that MGP’s existing portfolio consists of large-scale, top-quality assets in their respective geographic locations and in the triple-net REIT sector, most of which are market leaders in gross gaming revenues in their respective geographic locations, and will be acquired at a significant (estimated 30-40%) discount to replacement cost and at an attractive capitalization rate;

 

•

the belief that MGP’s properties will realize increased valuations and improved capitalization rates as a result of inclusion in VICI’s management and governance platform, as well as the potential for additional value appreciation resulting from capitalization rate compression in the gaming sector;

 

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the belief that there are no other near-term opportunities to acquire a portfolio of a similar scale and quality;

 

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the expectation that, following the Transactions, VICI’s real estate portfolio will be more diversified by tenant base, by adding a significant, high-quality and iconic global operator that will meaningfully decrease VICI’s top tenant concentration, on a pro forma basis taking into account (i) the closing of the Venetian Acquisition and (ii) the pending acquisition by the Eastern Band of Cherokee Indians of the operations of Caesars Southern Indiana from Caesars Entertainment, from 68% to 41%; following the Mergers, three of VICI’s tenants, Caesars, Penn National and MGM, representing a combined 84% of its total estimated 2021 annualized cash rent, will be included in the S&P 500;

 

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the expectation that, following the Transactions, VICI’s real estate portfolio will be more diversified by geographic scope, resulting in approximately 55% of VICI’s rent base being generated by regional assets and 45% being generated by assets located on the Las Vegas Strip, assuming the rent under the Amended and Restated Master Lease Agreement is allocated among VICI’s Las Vegas and regional properties based on pro rata 2019 Adjusted EBITDAR performance;

 

•

the expectation that, on a pro forma basis giving effect to the Transactions and the Venetian Acquisition, VICI’s estimated pro forma 2021 cash rent on an annualized basis will be $2.6 billion, a meaningful increase from an estimated 2021 cash rent of $1.5 billion on an annualized basis prior to the completion of the Transactions and the Venetian Acquisition, and the weighted average lease term will be 43.5 years (inclusive of all tenant renewal options);

 

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the expectation that, following the Transactions, there will be significant incremental equity index demand for shares of VICI Common Stock beyond the demand for the standalone companies, particularly because shares of MGP’s Class A Common Stock have generally not been (and often are prevented from being) included in major benchmark equity indices due to MGP’s controlled-company and limited liability company status, which will provide VICI with an increased opportunity for eventual inclusion in the S&P 500 index and increased weighting in other major benchmark equity indices and further grow the trading liquidity of shares of VICI Common Stock;

 

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the expectation that, following the Mergers, VICI will be strongly positioned to pursue additional opportunities within the gaming industry, as well as in broader categories across adjacent experiential industries, as a result of its enhanced scale, diversification, credit profile, investor base and cost of capital;

 

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the belief that the Transactions will provide VICI an opportunity to strengthen its overall credit profile through added scale, diversity and portfolio quality, which will provide VICI an accelerated pathway to achieving an investment grade credit rating, which should lower the Combined Company’s overall debt costs;

 

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the belief that the businesses of VICI and MGP are highly complementary and that the integration of the two companies will be completed in a timely and efficient manner without disruption to tenants and employees;

 

•

the fact that the Exchange Ratio is fixed and will not fluctuate as a result of changes in the price of VICI Common Stock or MGP Class A Common Shares, which limits the impact of external factors on the Transactions;

 

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the VICI Board’s and management’s strong understanding of the business, operations, financial condition, earnings and prospects of VICI and MGP, taking into account the results of VICI’s due diligence review of MGP, as well as of the current and prospective environment in which VICI and MGP operate, including economic and market conditions, and the VICI Board’s belief that this information supported its expectations as to the value of the Mergers, the Partial Redemption and the other Transactions. The VICI Board also considered VICI management’s depth of experience in real estate operations and proven track record of successfully executing VICI’s growth plans;

 

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the VICI Board’s views on economic and industry trends related to gaming and other experiential real estate, including the positive outlook of Las Vegas and regional gaming markets following the impact of the COVID-19 pandemic;

 

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the knowledge that, following the Transactions, VICI will continue to be led by the existing VICI senior management team;

 

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the Master Transaction Agreement’s provisions requiring MGP to pay VICI a termination fee of $421 million if the Mergers are terminated under certain circumstances, as further described in “The Master Transaction Agreement—Termination Fees and Expenses” beginning on page 138;

 

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the historical and then-current trading prices and volumes of each of VICI’s Common Stock and MGP’s Class A Common Shares;

 

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the fact that, following the Transactions, VICI will have entered into a new 55-year MGM Master Lease, inclusive of tenant renewal options, with an anticipated initial total annual rent of $860.0 million with a fixed escalator for the first 10 years and with inflation protection through a CPI kicker and a corporate guarantee from MGM, an S&P 500 global entertainment company with national and international locations;

 

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the fact that VICI will retain MGP’s existing 50.1% ownership stake in the BREIT JV, which owns the real estate assets of MGM Grand Las Vegas and Mandalay Bay, and which lease will remain unchanged;

 

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the financial analyses performed by Morgan Stanley in connection with its oral opinion and the preparation of its written opinion letter to the VICI Board dated August 3, 2021. For more information, see “The Transactions—Opinion of VICI’s Financial Advisor” beginning on page 80; and

 

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the belief that the Transactions will be completed in a timely and efficient manner with minimal disruption to tenants and other stakeholders, given the highly complementary businesses of VICI and MGP.

The VICI Board also considered a number of risks and other potentially negative factors identified in its deliberations on the Mergers and other Transactions, including the following:

 

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the risk of not capturing all of the anticipated estimated savings and synergies, and the risk that other anticipated benefits of the Mergers and other Transactions might not be realized on the expected timeframe or at all;

 

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the restrictions on the conduct of VICI’s business during the period between execution of the Master Transaction Agreement and the consummation of the Transactions, and the costs and distractions to VICI’s management in connection with the consummation of the Transactions;

 

•

the possibility that the Mergers may not be completed, or that completion may be unduly delayed, including for reasons beyond the control of VICI or MGP;

 

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the amount of cash required in connection with the Partial Redemption and other Transactions and the risk that VICI will not be able to secure financing for such amount on acceptable terms, in a timely manner, or at all, and may be required to borrow under the Bridge;

 

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the significant anticipated increase in VICI’s level of indebtedness following the completion of the Transactions;

 

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the risk that if Existing VICI OP and VICI Note Co. Inc. are unable to successfully complete one or more exchange offers with respect to MGP OP’s outstanding debt securities and MGP OP and MGP Finance Co-Issuer, Inc. are unable to successfully complete one or more consent solicitations with respect to MGP OP’s outstanding debt securities, VICI will be required to make the Change of Control Offers, may elect the Alternative Partnership Merger and would be required to comply with the terms of the indentures governing any such debt securities that remain outstanding, which could increase VICI’s administrative costs going forward;

 

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the risk that the VICI stockholders may fail to approve the VICI Stock Issuance Proposal;

 

•

the challenges of combining VICI with MGP following the Mergers, including technical, operational, accounting and other challenges;

 

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the substantial costs to be incurred in connection with the Transactions, including costs to be incurred in connection with the financing for the Partial Redemption and Transactions;

 

•

the risk that the COVID-19 pandemic, or similar pandemics, may decrease demand for gaming or other experiential real estate or materially and adversely impact the credit of VICI’s tenants or MGM;

 

•

the ownership dilution of existing VICI stockholders;

 

•

the Master Transaction Agreement’s provisions imposing restrictions on VICI from soliciting acquisition proposals and requiring VICI to pay MGP a termination fee of $709 million if the Mergers are terminated under certain circumstances, as further described in “The Master Transaction Agreement—Termination Fees and Expenses” beginning on page 138;

 

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the Master Transaction Agreement’s provisions permitting MGP to terminate the Master Transaction Agreement in order to enter into a Superior Proposal (subject to compliance with the provisions of the Master Transaction Agreement regarding non-solicitation of acquisition proposals), upon payment by MGP to VICI of a termination fee of $421 million, as further described in “The Master Transaction Agreement—Termination Fees and Expenses” beginning on page 138;

 

•

the risk that the agreed termination fee payable by MGP to VICI if the Master Transaction Agreement is terminated under certain circumstances may not be sufficient to fully compensate VICI for its losses in such circumstances;

 

•

the risk that failure to complete the Mergers or other Transactions could negatively affect the price of VICI Common Stock and future business and financial results of VICI;

 

•

the risks associated with the covenants undertaken by VICI and its affiliates in the Tax Protection Agreement, which for fifteen years following the closing of the Transactions, require VICI to take certain actions or restrict VICI from taking certain actions that could be beneficial to VICI, including that:

 

•

VICI will not dispose of the property acquired from MGP in the Transactions in taxable transactions or in a manner that otherwise would result in taxable gain recognition by MGM and its affiliates; and

 

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VICI will maintain approximately $8.5 billion of debt assumed or otherwise incurred in connection with the Transactions and will refinance that debt as it matures;

 

•

the risk that if VICI or its affiliates breach the Tax Protection Agreement, VICI would be required to pay material indemnity payments to MGM or its affiliates;

 

•

the risk that VICI will be significantly dependent on MGM for a substantial portion of its revenues, and unless or until VICI further substantially diversifies its portfolio an event that has a material adverse effect on MGM’s businesses, financial condition, liquidity, results of operations or prospects could have a material adverse effect on VICI’s business, financial condition, liquidity, results of operations and prospects;

 

•

the risk that MGM is required to pay a significant portion of their cash flow from operations to VICI pursuant to the Amended and Restated Master Lease Agreement, which could adversely affect MGM’s ability to satisfy its obligations to VICI;

 

•

the risk that MGM’s level of indebtedness, and the fact that a significant portion of its cash flow is used to make interest payments on such indebtedness, could adversely affect its ability to satisfy its obligations to VICI;

 

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•

the potential risk of diverting management focus and resources from operational matters and other strategic opportunities while working to implement the Mergers and other Transactions; and

 

•

other matters described under the caption “Risk Factors.”

In addition to considering the factors described above, the VICI Board considered the fact that some of VICI’s directors and executive officers have interests in the Transactions that may be different from, or in addition to, the interests of VICI’s stockholders generally and that these interests may present actual or potential conflicts of interests as discussed herein under “The Transactions—Interests of VICI’s Directors and Executive Officers in the Transactions” beginning on page 109.

The VICI Board concluded that the potentially negative factors associated with the Mergers and other Transactions were outweighed by the potential benefits that it expected the VICI stockholders would achieve as a result of the Mergers and other Transactions. The foregoing discussion of the factors considered by the VICI Board is not intended to be exhaustive, but, rather, includes certain material factors considered by the VICI Board. In reaching its decision to approve the Master Transaction Agreement and the Transactions, including the Mergers, the VICI Board did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The VICI Board considered all these factors as a whole, including discussions with, and questioning of, VICI’s management and VICI’s financial and legal advisors, and overall considered the factors to be favorable to, and supportive of, its determination.

This explanation of VICI’s Board reasons for the Transactions and other information presented in this section are forward-looking in nature and should be read in light of the sections herein entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

For the reasons set forth above, the VICI Board determined that the Mergers, the Partial Redemption and the other Transactions are advisable and in the best interests of VICI and its stockholders, authorized and approved the Mergers, the Partial Redemption and the other Transactions and authorized, approved and adopted the Master Transaction Agreement. The VICI Board recommends to VICI’s stockholders that they vote “FOR” the VICI Stock Issuance Proposal.

Recommendations of the MGP Conflicts Committee and MGP Board and Their Reasons for the Transactions

The MGP Conflicts Committee

The MGP Conflicts Committee consists of three directors, each of whom (i) is not a director, officer or employee of MGM, (ii) is not a director, officer, or employee of any affiliate of MGM (other than MGP and its subsidiaries treated as a single consolidated entity), (iii) is not a holder of any ownership interest in MGM, other than an ownership interest in the publicly traded common stock of MGM with an aggregate value of up to one percent of the MGP Conflicts Committee member’s net worth as of the date of formation of the MGP Conflicts Committee (as determined by the MGP Board in good faith), and (iv) has been determined by the MGP Board to be independent under the independence standards required for directors who serve on an audit committee of a board of directors established by the Exchange Act, and the rules and regulations of the SEC thereunder and by the NYSE, and thus meet the independence qualifications under the MGP LLCA, for membership on the MGP Conflicts Committee. The MGP Conflicts Committee members are Thomas Roberts, Kathryn Coleman and Charles Irving.

In resolutions approved by the MGP Board on June 28, 2021, the MGP Board formed the MGP Conflicts Committee to consider a potential transaction pursuant to which MGP may be acquired by a third party (the “Potential Transaction”). The MGP Board authorized and empowered the MGP Conflicts Committee to, among other things, (i) review and evaluate the terms and conditions of the Potential Transaction on behalf of MGP, (ii) negotiate, or delegate to any person or persons the ability to negotiate, the terms and conditions of the

 

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Potential Transaction and (iii) determine whether or not to approve, and recommend for approval to the MGP Board, the Potential Transaction, any such approval of the Potential Transaction to constitute “Special Approval” pursuant to Section 7.9(b) of the MGP LLCA.

The MGP Conflicts Committee retained Potter Anderson & Corroon LLP (“Potter Anderson”) as its independent legal counsel and Evercore as its independent financial advisor. The MGP Conflicts Committee conducted a review and evaluation of the Master Transaction Agreement, the REIT Merger and the other Transactions and negotiated with VICI, MGM and their respective representatives with respect to the Master Transaction Agreement, the REIT Merger and the other Transactions.

On August 3, 2021, the MGP Conflicts Committee, in its sole and absolute discretion, unanimously (i) determined that the Master Transaction Agreement, the REIT Merger and the other Transactions are in the best interests of MGP and in the best interests of the holders of MGP Class A Common Shares, (ii) approved, and recommended that the MGP Board approve, the Master Transaction Agreement, the REIT Merger and the other Transactions, (iii) recommended that the MGP Board direct that the Master Transaction Agreement, the REIT Merger and the other Transactions be submitted to a vote or for the consent of the Members (as defined in the MGP LLCA) and (iv) resolved, and recommended that the MGP Board resolve, to recommend that the Members approve the Master Transaction Agreement, the REIT Merger and the other Transactions.

Reasons for Recommending the Transactions

The MGP Conflicts Committee consulted with its financial and legal advisors and considered both positive and negative factors in making its determination and approvals, and the related recommendation to the MGP Board.

The MGP Conflicts Committee considered the following factors to be generally positive or favorable in making its determination and approvals, and the related recommendation to the MGP Board:

 

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The MGP Conflicts Committee, after considering the status quo, determined that the Master Transaction Agreement, the REIT Merger and the other Transactions present an opportunity to maximize value for the MGP Class A Common Shareholders.

 

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The MGP Conflicts Committee considered the financial presentations and the oral opinion of Evercore rendered on August 3, 2021, subsequently confirmed in Evercore’s written opinion dated as of August 4, 2021, that as of the date of such opinion and based upon and subject to the assumptions, limitations, qualifications and conditions described in Evercore’s written opinion, the Exchange Ratio pursuant to the Master Transaction Agreement was fair, from a financial point of view, to the holders of the MGP Class A Common Shares other than holders of Cancelled Shares and MGP Class A Common Shares held by MGM and its affiliates, as more fully described below in the section entitled “—Opinion of Evercore Group L.L.C.” beginning on page 90;

 

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The REIT Merger Consideration, which, based on VICI’s trailing 5-day volume weighted average price of $31.47 as of July 30, 2021, reflects an agreed-upon price of $43.00 per MGP Class A Common Share, and represents:

 

•

an approximately 16% premium to the closing price of MGP Class A Common Shares on August 3, 2021; and

 

•

an approximately 16% premium to the closing price of MGP Class A Common Shares on July 14, 2021, the date immediately prior to the date of VICI’s final proposal.

 

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Management of MGP’s views, which were based on their expertise and experience in the gaming, triple net lease market, regarding the Combined Company, including its support of the Transactions, the potential growth opportunities for VICI as a result of engaging in the Transactions, and the potential stock price performance for VICI following the announcement of the contemplated Transactions through the Closing.

 

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•

As part of the MGP Conflicts Committee’s evaluation of the Transactions, the MGP Conflicts Committee’s and MGP’s advisors conducted due diligence on VICI and evaluated the strength of the VICI Common Stock to be received by the MGP Class A Common Shareholders in the REIT Merger. The MGP Conflicts Committee members participated in this due diligence, including speaking directly with representatives of VICI management regarding VICI’s views of the Transactions and the benefits of the VICI Common Stock to be received by the MGP Class A Common Shareholders.

 

•

The Exchange Ratio is fixed at signing and therefore the value of the REIT Merger Consideration will increase in the event that the market price of VICI Common Stock increases prior to the REIT Merger Effective Time.

 

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The alignment of interests of VICI and MGP on the key terms and conditions of the MGM Master Lease for the MGM properties subject thereto, in their respective capacities as current landlord and future landlord of the subject properties.

 

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The following procedural safeguards involved in the negotiation of the Master Transaction Agreement:

 

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The MGP Conflicts Committee consisted solely of directors who (i) are not directors, officers or employees of MGM, (ii) are not directors, officers or employees of any of MGM’s affiliates (other than MGP and its subsidiaries treated as a single consolidated entity), (iii) are not holders of any ownership interest in MGM, other than an ownership interest in the publicly traded common stock of MGM with an aggregate value of up to one percent of the respective director’s net worth as of the date of formation of the MGP Conflicts Committee (as determined by the MGP Board in good faith) and (iv) have been determined by the MGP Board to be independent under the independence standards required for directors who serve on an audit committee of a board of directors established by the Exchange Act and the rules and regulations of the Securities and Exchange Commission thereunder and by the NYSE, who thereby satisfied the requirements under the MGP LLCA for service on the MGP Conflicts Committee.

 

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The MGP Conflicts Committee was charged with evaluating and negotiating the terms and conditions of the Master Transaction Agreement, the REIT Merger and the other Transactions on behalf of MGP, with the authority to approve or reject the Transactions.

 

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Other than with respect to any awards under MGP’s deferred compensation plan for non-employee directors and with respect to any restricted stock units held by such directors, the members of the MGP Conflicts Committee will not personally benefit from completion of the Master Transaction Agreement, the REIT Merger and the other Transactions in a manner different from the MGP Class A Common Shareholders.

 

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The terms and conditions of the Master Transaction Agreement, the REIT Merger and the other Transactions were determined through arm’s-length negotiations between the MGP Conflicts Committee, MGP, MGM and VICI and their respective representatives and advisors.

 

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The value of the REIT Merger Consideration to be received by the holders of MGP Class A Common Shares represents an improvement over VICI’s initial proposal on June 3, 2021 of $39.00 for each MGP Class A Common Share.

 

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The MGP Conflicts Committee retained and was advised by independent, experienced and qualified advisors, consisting of Potter Anderson as legal counsel and Evercore as financial advisor. The MGP Conflicts Committee also consulted with Baker Botts L.L.P., in its capacity as legal advisor to MGP.

 

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No member of the MGP Conflicts Committee has been asked to serve on the VICI Board or the board of directors of MGM following the Transactions.

 

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The terms of the Master Transaction Agreement, principally:

 

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MGP Class A Common Shareholders will receive 1.366 shares of VICI Common Stock per MGP Class A Common Share.

 

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The consummation of the Transactions is not contingent upon financing.

 

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The operating covenants to which VICI and its affiliates are subject in the Master Transaction Agreement provide protection to MGP and the MGP Class A Common Shareholders by restricting VICI’s ability to take certain actions prior to the REIT Merger Effective Time that could reduce the value of the VICI Common Stock to be received by the MGP Class A Common Shareholders in the REIT Merger.

 

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The provisions stating that VICI will be required to pay MGP a termination fee of $709 million, in the event that certain events happen under the Master Transaction Agreement, including (i) MGP’s or VICI’s termination of the Master Transaction Agreement as a result of VICI’s failure to receive stockholder approval of the VICI Stock Issuance and, prior to the VICI stockholder meeting to consider the VICI Stock Issuance, an announcement was made to the VICI stockholders regarding an acquisition proposal for VICI and, within twelve (12) months of the termination date, VICI consummated such acquisition proposal or VICI entered into a Parent Alternative Acquisition Agreement in respect of an acquisition proposal that is later consummated, or (ii) the termination of the Master Transaction Agreement by MGP as a result of an adverse recommendation change by the VICI Board.

 

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Any amendment to or waiver under the Master Transaction Agreement by MGP requires the MGP Conflicts Committee’s approval.

 

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The provisions allowing MGP to provide information to, and participate in discussions and negotiations with, a third party in response to an unsolicited alternative proposal, which may, in certain circumstances, result in a superior proposal (an “Alternative Acquisition Agreement”).

 

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The provisions allowing the MGP Conflicts Committee and MGP Board to change its recommendation regarding the Transactions in the event of a superior proposal or an intervening event, if the MGP Conflicts Committee and the MGP Board make a good faith determination (after consultation with their respective outside legal advisors) that the failure to change its recommendation would be inconsistent with its duties under applicable law (an “MGP Adverse Recommendation Change”).

 

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That MGM, in its capacity as the holder of the MGP Class B Common Share, was to execute and deliver a written consent within 24 hours of the execution of the Master Transaction Agreement, which would constitute the approval of the Members required under the MGP LLCA, which MGM has the right to rescind in the event of an MGP Adverse Recommendation Change.

 

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The benefits from the Transactions, including:

 

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That MGM has been pursuing an asset-light strategy in recent years and intends to continue pursuing such a strategy, which limits the dropdown opportunities available to MGP, and that future acquisitions of real estate assets from third parties and accessing the debt or equity markets to fund such acquisitions would require the consent of MGM due to MGM’s voting control over MGP as the holder of the MGP Class B Common Share. The MGP Conflicts Committee recognized that such limitations could adversely affect future growth prospects and the ability to make future acquisitions.

 

•

The fact that VICI has been successful in undertaking major acquisitions with multiple third parties since its formation, as well as the prospect that VICI has a significant embedded acquisition pipeline.

 

•

The prospect that VICI has expressed a desire to continue to expand its geographic and tenant diversity, seek out additional opportunities with respect to gaming real estate and also consider new real estate opportunities, including experiential real estate focused opportunities, and the international real estate markets in both gaming and non-gaming.

 

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•

The prospect that the Combined Company would become a preeminent and the largest experiential triple net REIT, which would allow VICI to reduce its cost of capital to undertake additional acquisitions and produce growth for the stockholders of the Combined Company.

 

•

The prospect that the Combined Company would be viewed as a top ten U.S. REIT and that the consummation of the Transactions would enhance its potential for inclusion in the S&P 500.

 

•

That the form of MGM Master Lease as compared against the Existing Master Lease provides, among other things, (i) for a longer lease term (inclusive of all renewal terms), (ii) for annual rent escalation through the removal of a provision that subjected escalation to a 6.25x Net Revenue to Rent Ratio escalator cutoff (such removed provision, the “Escalator Cutoff”), (iii) for annual rent escalation (after the tenth lease year) to increase by the greater of 2% or the CPI Increase (as defined in the MGM Master Lease) subject to a 3% cap, and (iv) that, during the second and third renewal terms, rent payable by MGM Tenant is reset to the greater of (a) the rent for the immediately preceding year plus the escalation or (b) the Fair Market Rent (as defined in the MGM Master Lease), and, in either (a) or (b), rent will continue in those renewal terms to be escalated as outlined in the MGM Master Lease.

 

•

That the Combined Company would consist of greater geographic and tenant diversity than currently exists in MGP’s portfolio of assets and would have a top tenant concentration of 41% compared to MGP’s 100% tenant concentration.

 

•

That the REIT Merger Consideration is comprised of VICI Common Stock, which provides the ability for the MGP Class A Common Shareholders to benefit from an ownership stake in a larger, more diversified REIT and participate in the upside of any growth in VICI’s stock price.

 

•

That the VICI Common Stock offers greater liquidity for the MGP Class A Common Shareholders due to VICI’s inclusion, and potential for inclusion, in major benchmark equity indices.

 

•

That VICI is consistently ranked among the leaders in corporate governance measurements by market evaluators.

 

•

The process run by MGM and reviewed by the MGP Conflicts Committee, which consisted of contacting logical potential strategic and financial counterparties for an acquisition of MGP, involved extensive bidding and rounds of due diligence and ultimately resulted in selecting VICI, which had presented the highest price per share for the MGP Class A Common Shares.

 

•

That each of MGM and MGP was incentivized to get the best price per share in the Transactions and negotiated for a higher price, despite the fact that MGM and the MGP Class A Common Shareholders would receive different forms of consideration in the Transactions.

 

•

That, based on the Exchange Ratio, the MGP Class A Common Shareholders are expected to own approximately 22% of the Combined Company.

 

•

That the holders of MGP Class A Common Shares will transition from being shareholders in a controlled company to shareholders in a non-controlled company, which provides opportunities to participate in any future control premium that may be available to VICI stockholders.

 

•

That the REIT Merger is structured to be tax free to the MGP Class A Common Shareholders, except with respect to the Fractional Share Consideration.

 

•

That the MGP Class A Common Shareholders will receive, as consideration for their shares, equity in a corporate entity with traditional fiduciary duties owed to stockholders.

 

•

VICI’s status as a corporation and its size following the transactions provide a number of benefits relative to MGP’s structure as a limited liability company, including that index funds are generally permitted to include corporations as compared to non-corporate entities because of certain prohibitions or limitations on investing in entities other than corporations.

 

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•

The public listing of VICI Common Stock, which will allow the holders of MGP Class A Common Shares to either sell the VICI Common Stock they receive in the REIT Merger for cash or retain the VICI Common Stock they will receive and participate in the equity value of VICI, including the potential future growth resulting from the Transactions.

The MGP Conflicts Committee considered the following factors to be generally negative or unfavorable in arriving at its determinations and approvals, and the related recommendation to the MGP Board:

 

•

The absence of certain procedural safeguards, including:

 

•

The MGP Class A Common Shareholders are not entitled to appraisal rights with respect to the Mergers or the other Transactions.

 

•

MGM directly controls MGP through its ownership of the MGP Class B Common Share and, following the extensive bidding process, indicated its support of a Potential Transaction with VICI based on the benefits of VICI’s proposal as compared to the other bidders in the process. The MGP Conflicts Committee was not authorized to and did not separately conduct an exploration of any alternative transactions.

 

•

Certain executive officers and directors of MGP have interests in the Transactions that are different from, or in addition to, the interests of the MGP Class A Common Shareholders as discussed in the section entitled “The Transactions—Interests of MGP’s Directors and Executive Officers in the Transactions.”

 

•

By obtaining Special Approval, approval by the holders of MGP’s outstanding voting shares (excluding those shares owned by MGM and its affiliates) is not required under the MGP LLC Agreement and accordingly the Transactions are not conditioned on such approval.

 

•

Certain terms of the Master Transaction Agreement, principally:

 

•

The provisions limit the ability of the MGP Conflicts Committee to solicit, or to consider unsolicited, offers from alternative third parties for MGP.

 

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The operating covenants to which MGP is subject in the Master Transaction Agreement restrict MGP from taking certain actions prior to the REIT Merger Effective Time that could be beneficial to MGP and the MGP Class A Common Shareholders, including limits on MGP’s ability to raise its dividend between signing and Closing, subject to certain pre-approved increases.

 

•

MGP’s obligation to pay a termination fee of $421 million to VICI in connection with the termination of the Master Transaction Agreement under certain circumstances, including (i) the termination of the Master Transaction Agreement by VICI as a result of an MGP Adverse Recommendation Change, MGM’s failure to deliver the Written Consent or MGM’s decision to rescind or withdraw the Written Consent, or (ii) the termination of the Master Transaction Agreement, prior to the receipt of VICI stockholder approval, by MGP to enter into an Alternative Acquisition Agreement for a superior proposal.

 

•

The possibility that the termination fee could discourage other potential parties from making a competing offer (although the MGP Conflicts Committee believes that the termination fee was reasonable in amount and would not preclude any interested party from making a competing proposal).

 

•

The covenants to which VICI or its affiliates are subject in the Tax Protection Agreement require VICI to take certain actions or restrict VICI from taking certain actions that could be beneficial to VICI, including limits on the ability to dispose of the property acquired from MGP in the Transactions or reduce debt, and a breach of the Tax Protection Agreement would result in material payments to MGM or its affiliates.

 

•

Unlike the MGP Class A Common Shareholders that will receive public equity in the Transactions, most of the consideration to be paid to MGM in the Transactions is cash and therefore fixed in value at the time of signing.

 

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•

The negative impact or potential consequences of the Transactions:

 

•

The Exchange Ratio is fixed at signing and therefore the value of the REIT Merger Consideration payable to the holders of MGP Class A Common Shares will decrease in the event that the market price of VICI Common Stock decreases prior to the REIT Merger Effective Time while the value of the REIT Merger Consideration payable to MGM will not similarly be affected.

 

•

If VICI issues additional equity in the future, it may potentially impact the value of the VICI Common Stock to be received by the MGP Class A Common Shareholders in the REIT Merger.

 

•

The MGP Class A Common Shareholders will receive shares of VICI Common Stock, which currently receive a materially lower dividend per share as compared to the current per share dividend payable by MGP to the MGP Class A Common Shareholders.

 

•

The risk that the REIT Merger and the other Transactions might not be completed in a timely manner, or that the Transactions might not be consummated at all as a result of a failure to satisfy the conditions contained in the Master Transaction Agreement (including with respect to regulatory and gaming approvals) and the risk that a failure to complete the Transactions could negatively affect the trading price of the MGP Class A Common Shares or could result in significant costs and disruption to MGP’s normal business.

 

•

The risk that the potential benefits anticipated pursuant to the Master Transaction Agreement, the REIT Merger and the other Transactions might not be realized, might not be fully realized or might not be realized within the expected time period, as a result of possible changes in the real estate market, the real estate gaming sector or the larger economic market.

 

•

That the form of MGM Master Lease as compared against the Existing Master Lease provides, among other things, that (i) although, as noted above, the MGM Master Lease eliminates the Escalator Cutoff, a limited exception to the annual rent escalation provides that the rent will not escalate under the MGM Master Lease for the following year if 75% or more of the facilities under the MGM Master Lease cease operations for 90 days or more due to an Unavoidable Delay (as defined in the MGM Master Lease); provided, however, that such exception is limited to two times during the initial 25-year lease term and three times during the entire 55-year lease term, assuming exercise of all renewal options, (ii) that an Unavoidable Delay constitutes an exception to the requirement of MGM Tenant to continuously operate the facilities, and (iii) that MGM Tenant can cure a failure to meet the Financial Covenant (as defined in the MGM Master Lease) by posting cash or a letter of credit equal to one (1) year’s rent (or six (6) months’ rent if the reason for the failure is an Unavoidable Delay lasting longer than 30 days).

 

•

The risk that litigation may occur in connection with the Transactions and any such litigation may result in significant costs and a diversion of management’s focus.

 

•

The potential for diversion of management and employee attention as a result of the Transactions and the potential negative effect of the Transactions on MGP’s business and business strategy.

 

•

That MGP has incurred and will continue to incur significant transaction costs and expenses in connection with the Transactions, whether or not those Transactions are completed.

 

•

That MGP will reimburse MGM at Closing for certain out-of-pocket expenses (including legal expenses and investment banking expenses) incurred by MGM in connection with the Transactions that generally otherwise would have been incurred by MGP, if MGP itself had undertaken the sale process.

 

•

The types and nature of risks described in the document entitled “Risk Factors”.

After taking into account all of the factors set forth above, as well as others, the MGP Conflicts Committee concluded that the potential benefits of the transactions outweighed any negative or unfavorable considerations

 

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and determined that the Master Transaction Agreement, the REIT Merger and the other Transactions are in the best interests of MGP and in the best interests of the MGP Class A Common Shareholders.

The MGP Conflicts Committee, in the exercise of its sole and absolute discretion, determined to consider the interests of the MGP Class A Common Shareholders, in addition to the interests of MGP, in connection with making its determinations, recommendations and approvals, and engaged independent legal and financial advisors to assist the MGP Conflicts Committee in its review and evaluation of the Transactions in consideration of those interests.

The foregoing discussion of the factors considered by the MGP Conflicts Committee is not intended to be exhaustive but provides an overview of material factors that the MGP Conflicts Committee considered. In view of the variety of factors considered in connection with its evaluation of the Master Transaction Agreement, the REIT Merger and the other Transactions and the complexity of these matters, the MGP Conflicts Committee did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors considered in making its determination and recommendation. In addition, individual members of the MGP Conflicts Committee may have given differing weights to different factors.

Recommendation of the MGP Board

In view of the potential conflicts of interest associated with a Potential Transaction, pursuant to resolutions approved by the MGP Board on June 28, 2021, the MGP Board authorized and empowered the MGP Conflicts Committee to (i) review and evaluate the terms and conditions of a Potential Transaction on behalf of MGP, (ii) negotiate, or delegate to any person or persons the ability to negotiate, the terms and conditions of a Potential Transaction, and (iii) determine whether or not to approve and recommend for approval to the MGP Board a Potential Transaction, any such approval of a Potential Transaction to constitute Special Approval pursuant to Section 7.9(b) of the MGP LLCA.

Immediately following the meeting of the MGP Conflicts Committee on August 3, 2021, the MGP Board met to receive the report of the MGP Conflicts Committee and its advisors and to consider the Transactions. At the request of the MGP Conflicts Committee, Evercore’s fairness opinion was provided for the benefit of the MGP Board (in its capacity as such) in connection with its evaluation of the Transactions. Five of the seven members of the MGP Board, including all three of the members who were also members of the MGP Conflicts Committee, were present. At the meeting, all three members of the MGP Board who were also members of the MGP Conflicts Committee voted to (a) approve the Master Transaction Agreement, the REIT Merger and the other Transactions, (b) direct that the Master Transaction Agreement, the REIT Merger and the other Transactions be submitted to the Members (as defined in the MGP LLCA) and (c) resolve to recommend that the Members approve the Master Transaction Agreement, the REIT Merger and the other Transactions. The two members of the MGP Board present who were not members of the MGP Conflicts Committee abstained from voting.

The MGP Board considered a number of factors, including:

 

•

The unanimous determinations and recommendations of the MGP Conflicts Committee, including the MGP Conflicts Committee’s Special Approval under Section 7.9(b) of the MGP LLCA, and

 

•

The process undertaken by the MGP Conflicts Committee.

Opinion of VICI’s Financial Advisor

VICI retained Morgan Stanley to provide it with financial advisory services in connection with the Transactions and to provide a financial opinion to the VICI Board. VICI selected Morgan Stanley to act as its financial advisor based on Morgan Stanley’s qualifications, expertise and reputation, its knowledge of and involvement in recent transactions in VICI’s industry, and its knowledge of the business and affairs of VICI. As

 

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part of this engagement, the VICI Board requested that Morgan Stanley evaluate the fairness to VICI, from a financial point of view, of the Transaction Consideration pursuant to the Master Transaction Agreement. On August 3, 2021, at a meeting of the VICI Board, Morgan Stanley rendered its oral opinion, subsequently confirmed in writing by delivery of a written opinion to the VICI Board dated August 3, 2021, that, as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in the written opinion, the Transaction Consideration pursuant to the Master Transaction Agreement was fair, from a financial point of view, to VICI.

The full text of the written opinion of Morgan Stanley, dated as of August 3, 2021, is attached to this proxy statement/information statement/prospectus as Annex B and is hereby incorporated into this proxy statement/information statement/prospectus by reference in its entirety. You should read the opinion in its entirety and the summary of the opinion below for a discussion of the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion. This summary of the opinion of Morgan Stanley set forth in this proxy statement/information statement/prospectus is qualified in its entirety by reference to the full text of the opinion. Morgan Stanley’s opinion was directed to the VICI Board, in its capacity as such, addressed only the fairness of the Transaction Consideration pursuant to the Master Transaction Agreement, from a financial point of view, to VICI as of the date of the opinion and did not address any other aspects or implications of the Transactions. The opinion did not in any manner address the prices at which shares of VICI Common Stock will trade following consummation of the Transactions or at any time. Morgan Stanley’s opinion was not intended to, and does not, constitute a recommendation to any holder of shares of VICI Common Stock as to how to vote at the VICI Special Meeting to be held in connection with the Transactions or whether to take any other action with respect to the Transactions. Morgan Stanley was not required to opine as to, and its opinion does not in any manner address, the underlying business decision by VICI to proceed with or effect the Transactions, or the likelihood that the Transactions are consummated. Morgan Stanley’s opinion did not address the relative merits of the Transactions as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available.

In connection with rendering its opinion, Morgan Stanley, among other things:

 

•

reviewed certain publicly available financial statements and other business and financial information of MGP and VICI, respectively;

 

•

reviewed certain internal financial statements and other financial and operating data concerning MGP and VICI, respectively;

 

•

reviewed certain financial projections prepared by the management teams of MGP, VICI and MGM, respectively;

 

•

reviewed information relating to certain strategic, financial and operational benefits anticipated from the Transactions, prepared by the management teams of MGP, VICI, and MGM, respectively;

 

•

discussed the past and current operations and financial condition and the prospects of MGP, including information relating to certain strategic, financial and operational benefits anticipated from the Transactions, with senior executives of MGM;

 

•

discussed the past and current operations and financial condition and the prospects of VICI, including information relating to certain strategic, financial and operational benefits anticipated from the Transactions, with senior executives of VICI;

 

•

reviewed the pro forma impact of the Transactions on VICI’s earnings per share, cash flow, consolidated capitalization and certain financial ratios;

 

•

reviewed the reported prices and trading activity for MGP Class A Common Shares and VICI Common Stock;

 

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•

compared the financial performance of MGP and VICI and the prices and trading activity of MGP Class A Common Shares and VICI Common Stock with that of certain other publicly-traded companies comparable with MGP and VICI, respectively, and their securities;

 

•

reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;

 

•

participated in certain discussions and negotiations among representatives of MGP, MGM and VICI and their financial and legal advisors;

 

•

reviewed the Master Transaction Agreement and certain related documents; and

 

•

performed such other analyses, reviewed such other information and considered such other factors as Morgan Stanley deemed appropriate.

In arriving at its opinion, Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to it by MGP, MGM and VICI, and formed a substantial basis for its opinion. With respect to the financial projections, including information relating to certain strategic, financial and operational benefits anticipated from the Transactions, Morgan Stanley assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the respective managements of MGP, MGM and VICI of the future financial performance of MGP and VICI. These projections are discussed more fully below under the sections titled “—Certain VICI Unaudited Prospective Financial Information”, “—VICI Projections”, “—VICI Adjusted MGP Projections”, “—Certain MGP Unaudited Prospective Financial Information” and “—MGP Adjusted VICI Projections” beginning on pages 102, 104, 105, 105 and 106, respectively. In addition, Morgan Stanley assumed that the Transactions will be consummated in accordance with the terms set forth in the Master Transaction Agreement without any waiver, amendment or delay of any terms or conditions, including, among other things, that the Transactions will result in the Required Tax Treatment (as defined in the Master Transaction Agreement), including, without limitation, that the REIT Merger will be treated as a tax-free reorganization, pursuant to the Code. Morgan Stanley assumed that all acquisitions pending as of the date hereof by each of VICI and its subsidiaries and MGP and its subsidiaries will close in a timely manner in accordance with their terms, that VICI will obtain financing in accordance with the terms of the Master Transaction Agreement, and that the definitive Master Transaction Agreement would not differ in any material respect from the draft thereof furnished to Morgan Stanley. Morgan Stanley did not express any view on, and its opinion did not address, any other term or aspect of the Master Transaction Agreement or the transactions contemplated thereby or any term or aspect of any other agreement or instrument contemplated by the Master Transaction Agreement or entered into or amended in connection therewith, including, without limitation, the terms and conditions of the MGM Master Lease or the Tax Protection Agreement. Morgan Stanley was advised by MGP that MGP has operated in conformity with the requirements for qualification as a REIT for U.S. federal income tax purposes since its formation as a REIT, and Morgan Stanley assumed that the Transactions will not adversely affect such status or operations of MGP. Morgan Stanley assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the Transactions, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the Transactions. Morgan Stanley is not a legal, tax or regulatory advisor. Morgan Stanley is a financial advisor only and relied upon, without independent verification, the assessment of MGP and VICI and their legal, tax or regulatory advisors with respect to legal, tax or regulatory matters. Morgan Stanley expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of MGP’s officers, directors or employees, or any class of such persons, relative to the Transaction Consideration to be received by the holders of MGP Class A Common Shares in the transaction. Morgan Stanley was not requested to make, and did not make, any independent valuation or appraisal of the assets or liabilities of MGP or VICI, nor was it furnished with any such valuations or appraisals. Morgan Stanley’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it, as of the date of its opinion. Events occurring after such date may affect Morgan Stanley’s opinion and the assumptions used in preparing it, and Morgan Stanley did not assume any obligation to update, revise or reaffirm its opinion.

 

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Summary of Financial Analyses of Morgan Stanley

The following is a summary of the material financial analyses performed by Morgan Stanley in connection with its oral opinion and the preparation of its written opinion letter to the VICI Board dated August 3, 2021. The following summary is not a complete description of the financial analyses performed and factors considered by Morgan Stanley in connection with its opinion, nor does the order of analyses described represent the relative importance or weight given to those analyses. The various analyses summarized below were based on the closing prices for MGP Class A Common Shares and VICI Common Stock as of August 2, 2021, the last trading day prior to the delivery of the opinion. Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. The analyses listed in the tables and described below must be considered as a whole. Assessing any portion of such analyses and of the factors reviewed, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Morgan Stanley’s opinion. Furthermore, mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using the data referred to below.

Comparable Public Company Analysis

Morgan Stanley reviewed and compared certain publicly available ratios and consensus estimates of each of MGP and VICI with equivalent publicly available financial information and consensus estimates for companies that share business characteristics with MGP and VICI to derive an implied exchange ratio reference range with respect to MGP and VICI. Morgan Stanley reviewed the following publicly traded net lease REITs (which are referred to as “Comparable Companies” in this section): Realty Income Corporation, W.P. Carey Inc., Gaming & Leisure Properties, Inc., STORE Capital, Inc., National Retail Properties, Inc., Spirit Realty Capital, Inc. and EPR Properties.

For purposes of this analysis, Morgan Stanley analyzed and compared certain statistics for each of these Comparable Companies for comparison purposes, including the ratios of (i) share price to Wall Street research analyst consensus (referred to as “Street Consensus”) estimated adjusted funds from operations (which we refer to as “AFFO” and which ratio we refer to as “P/AFFO Multiples”), for calendar year 2022 and (ii) the aggregate value to Street Consensus estimated earnings before interest, taxes, depreciation and amortization, (which we refer to as “EBITDA” in this section and which ratio we refer to as “AV/EBITDA Multiples”), for calendar year 2022. Morgan Stanley also analyzed the implied capitalization rate for each Comparable Company published by Green Street Advisors (which we refer to as the “Implied Cap Rate”) and the premium or discount (the “P/(D)”) represented by the ratio of share price to Street Consensus estimated net asset value per share (the “NAV”, and which ratio we refer to as “P/(D) to NAV”). The multiples and ratios for each of the comparable companies were calculated using their respective closing prices on August 2, 2021 and were based on the most recent publicly available information and Street Consensus estimates. Morgan Stanley derived a range of multiples or discounts/premiums, as applicable, for each metric based on its professional judgment.

 

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Morgan Stanley then compared the P/AFFO Multiples, AV/EBITDA Multiples, Implied Cap Rate and P/(D) to NAV for each of the Comparable Companies to MGP and VICI to derive a range of implied share prices for each share of MGP Class A Common Shares and VICI Common Stock.

 

MGP

VICI

Comparable Companies Range

Implied Share Price Range

Comparable Companies Range

Implied Share Price Range

P/AFFO Multiples

14.6x to 16.6x

$ $

38.39 to 43.66

14.6x to 16.6x

$ $

28.31 to 32.19

AV/EBITDA Multiples

16.1x to 17.1x

$ $

38.28 to 41.99

16.1x to 17.1x

$ $

27.39 to 29.88

Implied Cap Rate

5.9% to 5.4%

$ $

41.92 to 47.93

5.9% to 5.4%

$ $

30.57 to 34.57

P/(D) to NAV

15% to 25%

$ $

39.09 to 42.48

15% to 25%

$ $

28.75 to 31.24

Average Range

N/A

$ $

39.42 - 44.01

N/A

$ $

28.75 - 31.97

Following this analysis, Morgan Stanley then compared the ranges of implied share prices for each of VICI and MGP. Morgan Stanley compared the average of the lowest implied equity values per share for MGP to the average of the highest implied equity values per share for VICI to derive the lowest exchange ratio implied by each pair of estimates. Similarly, Morgan Stanley compared the average of the highest implied equity values per share for MGP to the average of the lowest implied equity values per share for VICI to derive the highest exchange ratio implied by each pair of estimates. The implied exchange ratios resulting from this analysis, as compared to the Exchange Ratio of 1.366 provided for in the REIT Merger, were:

 

Implied Exchange Ratio Range

1.234x to 1.530x

No Comparable Company utilized in the selected publicly traded Comparable Companies analysis is identical to MGP or VICI and hence the foregoing summary and underlying financial analyses involved considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the Comparable Companies. In evaluating Comparable Companies, Morgan Stanley made judgments and assumptions based on its professional judgment and experience with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of MGP or VICI. Mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using publicly traded Comparable Companies data.

Dividend Discount Analysis

Morgan Stanley performed a dividend discount analysis of MGP Class A Common Shares to calculate a range of implied present values per share of MGP Class A Common Shares. To perform this analysis, Morgan Stanley calculated the aggregate implied present value of dividends per share that MGP was forecasted to generate for the period from July 1, 2021 through December 31, 2025 utilizing, based upon the guidance and direction of VICI management, expected rent terms from the MGM Master Lease, projections prepared and provided by MGP management, and Wall Street research analyst projections, discounted based on a derived cost of equity using the capital asset pricing model. Morgan Stanley then derived a range of implied terminal values per share of MGP Class A Common Shares by applying an estimated amount of AFFO per share to a range of estimated AFFO multiples per share (of 14.6x to 16.6x), each for the calendar year 2026, based on the range of P/AFFO Multiples determined for Comparable Companies discussed above. These implied terminal values were

 

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then discounted to present value by applying a range of derived costs of equity (from 5.9% to 7.9%) and added to the sum of the implied present value of dividends per share to arrive at implied present value per share. This analysis indicated the following implied per share equity value reference range for MGP:

 

Implied Per Share Equity Value         Reference Range

$38.82 to $46.40

Similarly, Morgan Stanley performed a dividend discount analysis of shares of VICI Common Stock to calculate a range of implied present values per share of VICI Common Stock. To perform this analysis, Morgan Stanley calculated the aggregate implied present value of dividends per share that VICI was forecasted to generate for the period from July 1, 2021 through December 31, 2025 utilizing, based upon the guidance and direction of VICI Management, internal estimates of VICI’s management, discounted based on a derived cost of equity using the capital asset pricing model. Morgan Stanley then derived a range of implied terminal values per share of VICI Common Stock by applying an estimated amount of AFFO per share to a range of estimated AFFO multiples per share (of 14.6x to 16.6x), each for the calendar year 2026, based on the range of P/AFFO Multiples determined for Comparable Companies discussed above. These implied terminal values were then discounted to present value by applying a range of derived cost of equity (from 6.7% to 8.7%) and added to the sum of the implied present value of dividends per share to arrive at implied present value per share. This analysis indicated the following implied per share equity value reference range for VICI:

 

Implied Per Share Equity Value         Reference Range

$26.27 to $31.39

Following this analysis, Morgan Stanley then compared the ranges of implied equity values for each of VICI and MGP. First, Morgan Stanley compared the lowest implied equity value per share for MGP to the highest implied equity value per share for VICI to derive the lowest exchange ratio implied by each pair of estimates. Second, Morgan Stanley compared the highest implied equity value per share for MGP to the lowest implied equity value per share for VICI to derive the highest exchange ratio implied by each pair of estimates. The implied exchange ratio range resulting from this analysis, as compared to the Exchange Ratio of 1.366 provided for in the REIT Merger, was:

 

Implied Exchange         Ratio Range

1.237x to 1.767x

Discounted Cash Flow Analysis

MGP

Morgan Stanley performed a discounted cash flow, or DCF, analysis to derive an implied equity value reference range for the MGP Class A Common Shares.

A DCF analysis is designed to provide an implied value of MGP by calculating the present value of estimated future unlevered free cash flows and terminal value of MGP. The “unlevered free cash flows” or “free cash flows” refer to a calculation of the future cash flows of an asset without including, in such calculation, any debt-servicing costs. The present value of a terminal value, representing the value of unlevered free cash flows beyond the end of the forecast period, is added to arrive at a total aggregate value. Outstanding debt and preferred equity is subtracted and outstanding cash is added to arrive at an equity value. The equity value is then divided by the fully diluted share count, in order to arrive at an implied value per MGP Class A Common Share.

Morgan Stanley calculated a range of implied present values (as of June 30, 2021) of the net free cash flows that MGP was forecasted to generate during the six months ending December 31, 2021 through the twelve

 

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months ending December 31, 2025. Based upon the guidance and direction of VICI management, expected rent terms from the MGM Master Lease, projections prepared and provided by MGP management, and Wall Street research analyst projections, Morgan Stanley extrapolated net free cash flows that MGP was forecasted to generate during such period and calculated a range of implied present values (as of June 30, 2021) of the net free cash flows during such period. The net free cash flows for such periods were discounted to present value using a range of discount rates from 5.4% to 6.7%, which was derived by taking a sensitized range of MGP’s weighted average cost of capital determined utilizing the capital asset pricing model to calculate MGP’s cost of equity and utilizing MGP’s current weighted average interest rate on its current indebtedness to calculate MGP’s cost of debt.

Morgan Stanley then calculated a range of implied terminal enterprise values of MGP as of December 31, 2025 by applying a range of AV/EBITDA multiples of 16.1x to 17.1x to the forecasted EBITDA of MGP for the twelve months ending December 31, 2026 based on the AV/EBITDA Multiples for Comparable Companies discussed above. These analyses resulted in a range of implied terminal values of MGP as of December 31, 2025 of approximately $17.3 billion to $18.4 billion.

Morgan Stanley discounted the range of estimated terminal values derived from these calculations to forecasted present value as of June 30, 2021 using a range of discount rates of 5.4% to 6.7%, which was derived by taking a sensitized range of MGP’s weighted average cost of capital determined utilizing the capital asset pricing model, and then added the resultant implied present values to the implied present value of net free cash flows as described above, subtracting forecasted outstanding debt and adding forecasted outstanding cash, and dividing by the number of fully diluted shares, all as provided by MGP’s management.

This analysis indicated an implied per share equity value reference range for MGP of $41.77 to $48.01.

VICI

Morgan Stanley performed DCF analysis to derive an implied equity value reference range for the VICI Common Stock.

A DCF analysis is designed to provide an implied value of VICI by calculating the present value of estimated future unlevered free cash flows and terminal value of VICI. The “unlevered free cash flows” or “free cash flows” refer to a calculation of the future cash flows of an asset without including, in such calculation, any debt-servicing costs. The present value of a terminal value, representing the value of unlevered free cash flows beyond the end of the forecast period, is added to arrive at a total aggregate value. Outstanding debt and preferred equity is subtracted and outstanding cash is added to arrive at an equity value. The equity value is then divided by the fully diluted share count, in order to arrive at an implied value per share of common stock.

Morgan Stanley calculated a range of implied present values (as of June 30, 2021) of the net free cash flows that VICI was forecasted to generate as contained in projections prepared by VICI management during the six months ending December 31, 2021 through the twelve months ending December 31, 2025. Morgan Stanley used the net free cash flows that VICI management forecasted to generate during such period and calculated a range of implied present values (as of June 30, 2021) of the net free cash flows during such period. The net free cash flows for such periods were discounted to present value using a range of discount rates from 5.9% to 7.3%, which was derived by taking a sensitized range of VICI’s weighted average cost of capital determined utilizing the capital asset pricing model to calculate VICI’s cost of equity and utilizing VICI’s current weighted average interest rate on its current indebtedness to calculate VICI’s cost of debt.

Morgan Stanley then calculated a range of implied terminal enterprise values of VICI as of December 31, 2025 by applying a range of AV/EBITDA multiples of 16.1x to 17.1x to the forecasted EBITDA of VICI for the twelve months ending December 31, 2026 based on the AV/EBITDA Multiples for Comparable Companies discussed above. These analyses resulted in a range of implied terminal values of VICI as of December 31, 2025 of approximately $26.6 billion to $28.3 billion.

 

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Morgan Stanley discounted the range of estimated terminal values derived from these calculations to forecasted present value as of June 30, 2021 using a range of discount rates of 5.9% to 7.3%, which was derived by taking a sensitized range of VICI’s weighted average cost of capital determined utilizing the capital asset pricing model, and then added the resultant implied present values to the implied present value of net free cash flows as described above, subtracting forecasted outstanding debt and adding forecasted outstanding cash, and dividing by the number of fully diluted shares, all as provided by VICI’s management.

This analysis indicated an implied per share equity value reference range for VICI of $27.57 to $31.72.

Following this analysis, Morgan Stanley then compared the ranges of implied equity values for each of VICI and MGP. First, Morgan Stanley compared the lowest implied equity value per share for MGP to the highest implied equity value per share for VICI to derive the lowest exchange ratio implied by each pair of estimates. Second, Morgan Stanley compared the highest implied equity value per share for MGP to the lowest implied equity value per share for VICI to derive the highest exchange ratio implied by each pair of estimates. The implied exchange ratio range resulting from this analysis, as compared to the Exchange Ratio of 1.366 provided for in the REIT Merger, was:

 

Implied Exchange         Ratio Range

1.317x to 1.741x

Premiums Paid Analysis

Using publicly available information, Morgan Stanley reviewed the terms of the following selected public company precedent transactions announced between January 1, 2000 to August 2, 2021 in which the targets were net lease publicly traded REITs (excluding mergers of equals and reverse mergers) for which sufficient information was available as of the date of the opinion.

 

Selected Precedent Transactions
Announcement Date		Acquirer		Target
May 2021		Equity Commonwealth		Monmouth Real Estate Investment Corporation
April 2021		Realty Income Corporation		VEREIT, Inc.
May 2018		The Blackstone Group L.P.		Gramercy Property Trust
October 2013		American Realty Capital Properties, Inc.		Cole Real Estate Investments
May 2013		American Realty Capital Properties, Inc.		CapLease, Inc.
September 2012		Realty Income Corp.		American Realty Capital Trust
November 2007		Gramercy Capital Corp.		American Financial Realty Trust
March 2007		Redford Holdco (Macquarie Bank/Kaupthing)		Spirit Finance Corp.
October 2006		GE Capital		Trustreet Properties
October 2006		Record Realty Trust (Allco Finance Group)		Government Properties Trust
September 2005		DRA Advisors, Inc.		Capital Automotive REIT
July 2001		Commercial Net Lease Realty		Captec Net Lease Realty, Inc.
March 2001		GE Capital		Franchise Finance Corporation of America

 

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Morgan Stanley reviewed the premiums paid to the target companies’ unaffected stock prices (defined as the average stock price for the ten trading days ending five trading days prior to the announcement of the transaction for such selected precedent transactions). Based on this analysis, Morgan Stanley derived a range of estimated implied per share equity values for MGP as follows:

 

		Selected Range								Implied MGP Class A Common Share Price
		3rd Quartile				1st Quartile
Premium to Unaffected Price			12	%			22	%		$	41.76 to $45.45

No transaction utilized in the premiums paid analysis is identical to MGP or the Transactions, or directly comparable to the Transactions in business mix, timing and size. The fact that points in the range of implied value per MGP Class A Common Share derived from the valuation of premiums paid in precedent transactions were less than or greater than the consideration is not necessarily dispositive in connection with Morgan Stanley’s analysis of the consideration for the Transactions, but is one of many factors Morgan Stanley considered.

Other Information

Morgan Stanley observed certain additional factors that were not considered part of Morgan Stanley’s financial analyses with respect to its opinion but were referenced for informational purposes, including the following:

Contribution Analysis

For reference only, Morgan Stanley also performed a contribution analysis which reviewed the pro forma contribution of MGP and VICI to the combined entity and implied contributions based on certain financial metrics using management plans for both MGP and VICI as provided by both MGP, MGM and VICI management for their separate companies, respectively, and the expected rent terms from the MGM Master Lease. Such financial metrics included estimated AFFO per share for the year ended December 31, 2022 and estimated EBITDA for the year ended December 31, 2022. Morgan Stanley derived an implied pro forma contribution for each of MGP and VICI by dividing each company’s AFFO and EBITDA estimates by the combined AFFO and EBITDA estimates for both companies, respectively. Morgan Stanley also noted the implied exchange ratio derived from the implied contributions for the selected metrics.

 

Contribution Analysis		Implied Exchange Ratio
AFFO			1.356x
EBITDA			1.402x

Historical Stock Price. Morgan Stanley reviewed the stock price performance of the MGP Class A Common Shares and VICI Common Stock during the 52 weeks ended on August 2, 2021, reflecting the unaffected price for such common stock.

 

		VICI				MGP
Range		$	21.40 to $33.35			$	25.84 to $38.34

Following this analysis, Morgan Stanley then compared the ranges of implied share prices for each of VICI and MGP. Morgan Stanley compared the lowest equity value per share for MGP in the range to the highest equity value per share for VICI in the range to derive the lowest exchange ratio implied by each pair of estimates. Similarly, Morgan Stanley compared the highest equity value per share for MGP in the range to the lowest equity value per share for VICI in the range to derive the highest exchange ratio implied by each pair of estimates. The

 

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exchange ratios resulting from this analysis, as compared to the Exchange Ratio of 1.366 provided for in the REIT Merger, were:

 

Implied Exchange         Ratio Range

0.775x to 1.792x

Research Analyst Price Targets and NAV Targets

Morgan Stanley reviewed public market trading price targets for each of MGP and VICI published by equity research analysts, which reflected low to high price targets for MGP and VICI of $37.00 to $43.00 and $31.41 to $38.00, respectively. Morgan Stanley then compared the low and high price targets to derive the following implied exchange ratio range:

 

Implied Exchange         Ratio Range

0.974x to 1.369x

Morgan Stanley also reviewed available equity research analyst estimates of NAV per share for each of MGP and VICI, which reflected lowest to highest NAV for MGP and VICI of $32.50 to $38.19 and $23.00 to $28.90, respectively. Morgan Stanley then compared the highest and lowest NAV to derive the following implied exchange ratio range:

 

Implied Exchange         Ratio Range

1.125x to 1.660x

The public market trading price targets and estimates of NAV per share published by equity research analysts do not necessarily reflect current market trading prices for the common shares of MGP and VICI and these targets and estimates are subject to uncertainties, including the future financial performance of MGP and VICI and future financial market conditions.

General

Morgan Stanley performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Morgan Stanley considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Morgan Stanley believes that selecting any portion of these analyses, without considering all analyses as a whole, would create an incomplete view of the process underlying its analyses and opinion. In addition, Morgan Stanley may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Morgan Stanley’s view of the actual value of MGP or VICI.

In performing its analyses, Morgan Stanley made numerous assumptions with respect to industry performance, general business, regulatory, economic, market and financial conditions and other matters. These include, among other things, the impact of competition on the businesses of MGP and VICI and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of MGP, VICI, or the industry, or in the financial markets in general. Many of these assumptions are beyond the control of MGP and VICI. Any estimates contained in Morgan Stanley’s analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.

 

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Morgan Stanley conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the Transaction Consideration pursuant to the Master Transaction Agreement to VICI, and in connection with the delivery of its opinion as of August 3, 2021 to the VICI Board. These analyses do not purport to be appraisals or to reflect the prices at which shares of VICI Common Stock might actually trade.

The Transaction Consideration provided for in the Transactions was determined through arm’s-length negotiations between VICI and MGP and MGM and was unanimously approved by the VICI Board. Morgan Stanley provided advice to the VICI Board during these negotiations but did not, however, recommend any specific elements of the Transaction Consideration or the aggregate Transaction Consideration to VICI or the VICI Board, or that any specific elements of the Transaction Consideration or the aggregate Transaction Consideration constituted the only appropriate consideration for the Transactions. Morgan Stanley was not requested to opine as to, and its opinion does not in any manner address, the underlying business decision of VICI to proceed with or effect the Transactions, or the likelihood that the Transactions are consummated. Morgan Stanley’s opinion did not address the relative merits of the Transactions as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available. Morgan Stanley’s opinion was not intended to, and does not, express an opinion or a recommendation as to how any holder of shares of VICI Common Stock should vote at the special meeting to be held in connection with the Transactions, or as to any other action that a holder of shares of MGP Class A Common Shares or VICI Common Stock should take relating to the Transactions.

Morgan Stanley’s opinion and presentation to the VICI Board was one of many factors taken into consideration by the VICI Board in deciding to approve the Transactions and other Transactions. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the VICI Board with respect to the Transactions or of whether the VICI Board would have been willing to agree to any different Transaction Consideration.

Morgan Stanley’s opinion was approved by a committee of Morgan Stanley investment banking and other professionals in accordance with its customary practice. Morgan Stanley is a global financial services firm engaged in the securities, investment management and individual wealth management businesses. Its securities business is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives trading, prime brokerage, as well as providing investment banking, financing and financial advisory services. Morgan Stanley, its affiliates, directors and officers may at any time invest on a principal basis or manage funds that invest, hold long or short positions, finance positions, and may trade or otherwise structure and effect transactions, for its own account or the accounts of its customers, in debt or equity securities or loans of MGP, VICI, MGM or any other company, or any currency or commodity, that may be involved in the Transactions, or any related derivative instrument.

Under the terms of its engagement letter, Morgan Stanley provided the VICI Board with financial advisory services and a financial opinion, and VICI agreed to pay Morgan Stanley an announcement fee of $5 million that became payable in connection with the delivery of the financial opinion by Morgan Stanley and an additional total transaction fee of up to $50 million payable upon the closing of the Transactions (against which the announcement fee may be creditable). In addition, the VICI Board has agreed to indemnify Morgan Stanley and its affiliates, their respective officers, directors, employees and agents and each person, if any, controlling Morgan Stanley or any of its affiliates against certain liabilities and expenses, including certain liabilities under the federal securities laws, relating to, arising out of or in connection with Morgan Stanley’s engagement.

In the thirty months prior to the date of its opinion, Morgan Stanley and its affiliates have provided financial advisory and financing services to VICI and have received approximately $30 million to $55 million in connection with such services. In the thirty months prior to the date of its opinion, Morgan Stanley and its affiliates have provided financial advisory and financing services to MGP and have received approximately $10 million to $20 million in connection with such services. In the thirty months prior to the date of its opinion, Morgan Stanley and its affiliates have provided financial advisory and financing services to MGM and have

 

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received approximately $5 million to $15 million in connection with such services. As of the date of the opinion, affiliates of Morgan Stanley are lenders to each of VICI, MGP and MGM under their respective credit facilities. Morgan Stanley also is a participant in the MGP Exchange Offers as discussed more fully above under the section entitled “—Description of Debt Financing Transactions” beginning on page 53 and a Lender under the contemplated Bridge Facility as discussed more fully above under the section entitled “—Bridge Financing Commitment Letter” beginning on page 54. Morgan Stanley and its affiliates may seek to provide financial advisory and financing services to MGM and VICI and their respective affiliates in the future and would expect to receive fees for the rendering of these services.

Opinion of the MGP Conflicts Committee’s Financial Advisor

Opinion of Evercore Group L.L.C.

At a meeting of the MGP Conflicts Committee held on August 3, 2021, Evercore rendered to the MGP Conflicts Committee its oral opinion, subsequently confirmed by delivery of a written opinion dated August 4, 2021, that as of the date of such opinion and based upon and subject to the assumptions, limitations, qualifications and conditions described in Evercore’s written opinion, the Exchange Ratio pursuant to the Master Transaction Agreement was fair, from a financial point of view, to the holders of the MGP Class A Common Shares other than holders of Cancelled Shares and MGP Class A Common Shares held by MGM and its affiliates.

The full text of the written opinion of Evercore, dated as of August 4, 2021, which sets forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken in rendering its opinion, is attached as Annex C to this proxy statement/information statement/prospectus and is incorporated by reference in its entirety into this proxy statement/information statement/prospectus. You are urged to read this opinion carefully and in its entirety. Evercore’s opinion was addressed to, and provided for the information and benefit of, the MGP Conflicts Committee (in its capacity as such) in connection with its evaluation of the Transactions. At the request of the MGP Conflicts Committee, Evercore’s opinion was also provided for the benefit of the MGP Board (in its capacity as such) in connection with its evaluation of the Transactions. The opinion does not constitute a recommendation to the MGP Conflicts Committee, the MGP Board or to any other persons in respect of the Transactions, including as to how any holder of MGP Class A Common Shares should vote or act in respect of the Transactions. Evercore’s opinion does not address the relative merits of the Transactions as compared to other business or financial strategies that might be available to MGP, nor does it address the underlying business decision of MGP to engage in the Transactions.

In connection with rendering its opinion Evercore had, among other things:

 

•

reviewed certain publicly available business and financial information relating to MGP and VICI that Evercore deemed to be relevant, including publicly available research analysts’ estimates;

 

•

reviewed certain internal projected financial data relating to MGP prepared and furnished to Evercore by management of MGP and certain internal projected financial data relating to VICI prepared by management of VICI and adjusted and furnished to Evercore by management of MGP, each as approved for Evercore’s use by the MGP Conflicts Committee (the “Forecasts”), including certain synergies prepared by management of MGP expected to result from the Transactions, as approved for Evercore’s use by the MGP Conflicts Committee (the “Synergies”);

 

•

discussed with each of management of MGP and management of VICI its assessment of the past and current operations of MGP and VICI, the current financial condition and prospects of MGP and VICI, and the Forecasts including the Synergies;

 

•

reviewed the reported prices and the historical trading activity of MGP Class A Common Shares and VICI Common Stock;

 

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•

compared the financial performance of each of MGP and VICI and their respective stock market trading multiples with those of certain other publicly traded companies that Evercore deemed relevant;

 

•

compared the financial performance of MGP and the valuation multiples relating to the Transactions with the financial terms, to the extent publicly available, of certain other transactions that Evercore deemed relevant;

 

•

reviewed the financial terms of the Existing Master Lease and the form of the Seventh Amendment to Master Lease attached as Exhibit C to the Master Transaction Agreement, dated as of May 11, 2021, by and among Blue Tarp reDevelopment, LLC, MGP Lessor Holdings, LLC, the landlord, MGP OP, MGP, MGM and the tenant (the “Seventh Amendment to the Existing Master Lease”);

 

•

reviewed the financial terms and conditions of a draft, dated August 3, 2021, of the Tax Protection Agreement, a draft, dated August 3, 2021, of the MGM Master Lease, and a draft, dated August 1, 2021, of the form of redemption agreement (the “Redemption Agreement”);

 

•

reviewed the financial terms and conditions of a draft, dated August 3, 2021, of the Master Transaction Agreement; and

 

•

performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate.

For purposes of its analysis and opinion, Evercore assumed and relied upon the accuracy and completeness of the financial and other information publicly available, and all of the information supplied or otherwise made available to, discussed with, or reviewed by Evercore, without any independent verification of such information (and assumed no responsibility or liability for any independent verification of such information), and further relied upon the assurances of the managements of MGP and VICI that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the Forecasts, including the Synergies, Evercore assumed with the consent of the MGP Conflicts Committee that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of management of MGP as to the future financial performance of MGP and VICI and the other matters covered thereby. Evercore expressed no view as to the Forecasts, including the Synergies, or the assumptions on which they were based.

For purposes of its analysis and opinion, Evercore assumed, in all respects material to its analysis, that the final executed Master Transaction Agreement, Tax Protection Agreement, MGM Master Lease and Redemption Agreement (the “Transaction Documents”) did not differ from the drafts of the Transaction Documents reviewed by Evercore, that the representations and warranties of each party contained in the Transaction Documents were true and correct, that each party would perform all of the covenants and agreements required to be performed by it under the Transaction Documents and that all conditions to the consummation of the Transactions would be satisfied without waiver or modification thereof that would be meaningful to Evercore’s analysis. Evercore further assumed, in all respects material to its analysis, that all governmental, regulatory or other consents, approvals or releases necessary for the consummation of the Transactions including by any Gaming Authority (as defined in the Master Transaction Agreement) would be obtained without any delay, limitation, restriction or condition that would have an adverse effect on MGP, VICI or the consummation of the Transactions or reduce the contemplated benefits to the holders of MGP Class A Common Shares of the Transactions, in each case, in any way meaningful to Evercore’s analysis.

Evercore did not conduct a physical inspection of the properties or facilities of MGP or VICI and did not make or assume any responsibility for making any independent valuation or appraisal of the assets or liabilities (including any contingent, derivative or other off-balance sheet assets and liabilities) of MGP or VICI, nor was Evercore furnished with any such valuations or appraisals, nor did Evercore evaluate the solvency or fair value of MGP or VICI under any state or federal laws relating to bankruptcy, insolvency or similar matters. Evercore’s opinion is necessarily based upon information made available to Evercore as of August 3, 2021 and financial, economic, market and other conditions as they existed and as could be evaluated as of that date. Subsequent

 

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developments may affect Evercore’s opinion and Evercore does not have any obligation to update, revise or reaffirm its opinion.

Evercore was not asked to pass upon, and expressed no opinion with respect to, any matter other than the fairness to the holders of MGP Class A Common Shares (other than holders of the Cancelled Shares and MGP Class A Common Shares held by MGM and its affiliates), from a financial point of view, of the Exchange Ratio pursuant to the Master Transaction Agreement. Evercore did not express any view on, and its opinion does not address, the fairness of the Transactions to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors or other constituencies of MGP or any other entity, including any consideration to be received in connection with the Partnership Merger or in connection with the Partial Redemption, or the allocation of any consideration to be received in connection with the Mergers or in connection with the Partial Redemption between the holders of MGP Common Shares and holders of Common Units (as defined in the Second Amended and Restated Agreement of Limited Partnership of the MGP OP, as amended (the “MGP OP LPA”)) of the MGP OP, nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of MGP, or any class of such persons, whether relative to the Exchange Ratio or otherwise. Evercore was not asked to, nor did it express any view on, and its opinion does not address, any other term or aspect of Master Transaction Agreement, the Mergers or the Transactions, including, without limitation, the structure or form of the Transactions, the Debt Issuance and Distribution, the Bridge Financing and Distribution, the Redemption, and the Company Note Offers and Consent Solicitations (as such terms are defined in the Master Transaction Agreement), or any term or aspect of any other agreement or instrument contemplated by the Master Transaction Agreement or entered into or amended in connection with the Master Transaction Agreement, including the Tax Protection Agreement, the Existing Master Lease, the Seventh Amendment to Existing Master Lease, the MGM Master Lease and the Redemption Agreement. Evercore’s opinion does not address the relative merits of the Transactions as compared to other business or financial strategies that might be available to MGP, nor does it address the underlying business decision of MGP to engage in the Transactions. Evercore did not express any view on, and its opinion did not address, what the value of VICI Common Stock actually would be when issued or the prices at which MGP Class A Common Shares or VICI Common Stock will trade at any time, including following the announcement or consummation of the Transactions. In arriving at its opinion, Evercore was not authorized to solicit, and did not solicit, interest from any third party with respect to the acquisition of any or all of the MGP Class A Common Shares or any business combination or other extraordinary transaction involving. Evercore’s opinion does not constitute a recommendation to the MGP Conflicts Committee, the MGP Board or to any other persons in respect of the Transactions, including as to how any holder of MGP Class A Common Shares should vote or act in respect of the Transactions. Evercore did not express any opinion as to the potential effects of volatility in the credit, financial and stock markets on MGP, VICI or the Transactions or as to the impact of the Transactions on the solvency or viability of MGP or VICI or the ability of MGP or VICI to pay their respective obligations when they come due. Evercore is not a legal, regulatory, accounting or tax expert and has assumed the accuracy and completeness of assessments by MGP and its advisors with respect to legal, regulatory, accounting and tax matters.

Set forth below is a summary of the material financial analyses reviewed by Evercore with the MGP Conflicts Committee on August 3, 2021 in connection with rendering its opinion. The following summary, however, does not purport to be a complete description of the analyses performed by Evercore. The order of the analyses described and the results of these analyses do not represent relative importance or weight given to these analyses by Evercore. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data that existed on or before August 2, 2021, the last trading day before the day Evercore rendered its oral opinion to the MGP Conflicts Committee, and is not necessarily indicative of current market conditions.

The following summary of Evercore’s financial analyses includes information presented in tabular format. In order to fully understand the analyses, the tables must be read together with the full text of each summary. The tables are not intended to stand alone and alone do not constitute a complete

 

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description of Evercore’s financial analyses. Considering the tables below without considering the full narrative description of Evercore’s financial analyses, including the methodologies and assumptions underlying such analyses, could create a misleading or incomplete view of such analyses.

Summary of Evercore’s Financial Analysis

DCF Analysis

MGP

Evercore performed a DCF analysis to calculate ranges of implied present values per MGP Class A Common Share, utilizing estimates of the standalone, unlevered, after-tax free cash flows that MGP was expected to generate over the period from January 1, 2022 through December 31, 2026 based on the Forecasts.

For purposes of its DCF analysis, unlevered free cash flow was defined as earnings before interest, taxes, depreciation and amortization (“EBITDA”) (including MGP’s share of adjusted EBITDA from BREIT JV, based on MGP’s adjusted EBITDA reconciliation), less share of rent from joint ventures, plus general and administration expense from joint ventures, plus/(less) changes in net working capital, plus distributions/(contributions) from joint ventures, less capital expenditures, and less stock based compensation.

Evercore calculated ranges of terminal values for MGP as of December 31, 2026 using the following two alternative methods:

 

•

a perpetuity growth method – under which Evercore calculated a range of terminal values for MGP by applying perpetuity growth rates ranging from 1.50% to 2.50% to the estimate of 2026 unlevered free cash flow reflected in the Forecasts, and

 

•

a terminal multiple method (EV/EBITDA Multiple) – under which Evercore calculated a range of terminal values for MGP by applying enterprise value (“EV”) to EBITDA multiples ranging from 14.50x to 16.50x to the estimate of 2027 EBITDA reflected in the Forecasts.

Evercore discounted MGP’s projected, unlevered free cash flows over the period from January 1, 2022 through December 31, 2026 and the ranges of terminal values for MGP it calculated under each of the methods described above to present value as of December 31, 2021, using discount rates ranging from 8.0% to 9.0% to derive ranges of implied enterprise values for MGP. The discount rates were based on Evercore’s judgment of the estimated range of MGP’s weighted average cost of capital. Evercore then deducted from the ranges of implied enterprise values MGP’s management’s estimate of MGP’s net debt as of June 30, 2021 (pro forma for the Springfield acquisition) as reflected in MGP’s most recent public filings, and divided the results by the fully diluted outstanding MGP Class A Common Shares as of August 2, 2021, calculated based on information provided to Evercore by MGP management, to derive a range of implied equity values per MGP Class A Common Share as follows, which Evercore compared to the value per MGP Class A Common Share implied by the Exchange Ratio of $41.92 (calculated by multiplying the closing price of the VICI Common Stock on August 2, 2021 of $30.69 by the Exchange Ratio) and to the closing price per MGP Class A Common Share on August 2, 2021 of $37.33:

 

Method		Implied Per Share Equity Value Reference Ranges
Perpetuity Growth Rate Method		$	28.71 - $44.43
Terminal Multiple Method (EV/EBITDA Multiple)		$	32.72 - $40.59

VICI

Evercore performed a DCF analysis to calculate ranges of implied present values per share of VICI Common Stock, utilizing estimates of the standalone, unlevered, after-tax free cash flows that VICI was expected to generate over the period from January 1, 2022 through December 31, 2026 based on the Forecasts.

 

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For purposes of its DCF analyses, unlevered free cash flow was defined as EBITDA, less cash taxes, plus/(less) changes in net working capital, and less stock based compensation.

Evercore calculated ranges of terminal values for VICI as of December 31, 2026 using the following two alternative methods:

 

•

a perpetuity growth method – under which Evercore calculated a range of terminal values for VICI by applying perpetuity growth rates ranging from 1.50% to 2.50% to the estimate of 2026 unlevered free cash flow reflected in the Forecasts, and

 

•

a terminal multiple method (EV/EBITDA Multiple) – under which Evercore calculated a range of terminal values for VICI by applying EV to EBITDA multiples ranging from 16.50x to 18.50x to the estimate of 2027 EBITDA reflected in the Forecasts.

Evercore discounted VICI’s projected, unlevered free cash flows over the period from January 1, 2022 through December 31, 2026 and the ranges of terminal values for VICI it calculated under each of the methods described above to present value as of August 4, 2021, using discount rates ranging from 8.0% to 9.0% to derive ranges of implied enterprise values for VICI. The discount rates were based on Evercore’s judgment of the estimated range of VICI weighted average cost of capital. Evercore then deducted from the ranges of implied enterprise values VICI’s management’s estimate of VICI’s net debt as of June 30, 2021 (pro forma for the Venetian Acquisition and Great Wolf Mezzanine Loan), and divided the results by the fully diluted outstanding shares of VICI Common Stock as of August 2, 2021, calculated based on information provided to Evercore by MGP management, to derive a range of implied equity values per share of VICI Common Stock as follows, which Evercore compared to the closing price per share of VICI Common Stock on August 2, 2021 of $30.69:

 

Method		Implied Per Share Equity Value Reference Ranges
Perpetuity Growth Rate Method		$	21.95 - $32.89
Terminal Multiple Method (EV/EBITDA Multiple)		$	26.86 - $32.23

Selected Public Company Trading Analysis

MGP

Evercore reviewed and compared certain financial information of MGP to corresponding financial multiples and ratios for the following selected publicly traded companies in the gaming net lease industry (referred to in this section as the “MGP selected companies”):

 

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VICI

 

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Gaming and Leisure Properties, Inc.

Although none of these companies is directly comparable to MGP, Evercore selected these companies based on its professional judgment because they are gaming net lease companies with business characteristics that for purposes of its analysis Evercore considered similar to the business characteristics of MGP.

For each of the MGP selected companies and MGP, Evercore calculated:

 

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total enterprise value (defined as equity market capitalization plus total debt plus non-controlling interests, less cash and cash equivalents) as a multiple of estimated calendar year 2022 Adjusted EBITDA (referred to as “TEV/2022E Adjusted EBITDA”); and

 

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price per share as a multiple of estimated calendar year 2022 AFFO (referred to as “Price/2022E AFFO”).

 

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