MGM Resorts entering Ohio through acquisition of Hard Rock Rocksino operationsHoward Stutz, CDC Gaming Reports · September 19, 2018 at 11:41 amMGM Resorts International will move into the Ohio gaming market after acquiring the operations of a Cleveland-area Hard Rock casino property that is owned by the company’s real estate investment trust.MGM said Wednesday it will pay $275 million to acquire the operations of the Hard Rock Rocksino Northfield Park. The casino will be added to the existing master lease between MGM Resorts and MGM Growth Properties and the annual rent payment will increase by $60 million.MGM Growth bought the property in July for $1.06 million from Milstein Entertainment LLC.“We anticipated MGM would be the (operations) buyer, but MGM Growth was willing to passively take interest from other suitors,” Union Gaming Group analyst John DeCree told investors. “Ultimately, we suspect it was easier to get a mutually beneficial deal between existing partners.”In a statement, MGM Resorts Chairman and CEO Jim Murren welcomed the property’s 700 employees but did not give details if the casino will be rebranded and drop the Hard Rock name.“We believe the Rocksino is a great fit for the MGM portfolio and will benefit from our capabilities as a leading global entertainment company and our award-winning M life Rewards Program,” Murren said in a statement. “We anticipate revenue and profit growth from this combination.”In addition to its Las Vegas Strip resorts, MGM operates casinos in Atlantic City, Detroit, Mississippi, Maryland and Massachusetts.Ohio voters passed a casino referendum in 2009, allowing the state to have four Las Vegas-style casinos and seven slot machine-only racetrack casinos. The full-scale casinos are operated by Dan Gilbert’s Jack Entertainment (Cleveland and Cincinnati) and Penn National Gaming (Toledo and Columbus).Hard Rock Rocksino Northfield Park sits on 110 acres and is located 17 miles southeast of Cleveland and 18 miles north of Akron. The facility includes a 200,000-square foot casino and the Northfield Park harness racetrack, which operates year-round.Rocksino has more than 2,300 video lottery terminals, retail and food and beverage outlets, and entertainment venues, including a 1,900-seat music arena and a 250-seat event space.MGM said the property has reported $293 million in net revenues and approximately $94 million in cash flow over the last 12 months that ended June 30. The casino has led the Ohio gaming market in total revenue for 35 of the last 39 months.The transaction, which is subject to regulatory approvals, is expected to close in the first half of 2019.In a note to investors Wednesday, Deutsche Bank gaming analyst Carlo Santarelli said his “view of the deal is somewhat mixed, as we believe MGM Growth paid a relatively full multiple and while the deal remains accretive, it’s largely due to the lower rent coverage in the current structure.”MGM Growth owns the real estate and buildings associated with 11 hotel-casinos operated by MGM Resorts, including six on the Las Vegas Strip and the Borgata in Atlantic City. The REIT also owns The Park dining and entertainment area in Las Vegas.MGM Growth, which is 70 percent owned by MGM Resorts, is also involved in the company’s planned purchase of the Empire Casino and Yonkers Raceway in New York.Murren said in August that MGM Resorts plans to reduce its ownership stake in MGM Growth to below 50 percent over the next few years.DeCree said he believes targeted acquisitions like Rocksino and Empire City “actually make a lot of sense for MGM, particularly with the help of MGM Growth. This is one of the reasons creating MGM Growth was so valuable as it allows MGM to acquire cash flow at low entry multiples.”The transaction was announced before the markets opened Wednesday. Shares of MGM Resorts closed at $28.38, up 79 cents or 2.86 percent. MGM Growth closed at $29.88, down 15 cents or 0.50 percent. Both companies are traded on the New York Stock Exchange.Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at email@example.com. Follow @howardstutz on Twitter.