What will happen if MGM Resorts International (NYSE:MGM) creates a real estate investment trust (REIT) and lodges C-corporation? Well, that is yet to be decided, but as of now, an investor’s thesis report on the same scenario allowed MGM to strive for higher altitudes in the market.
Effects of REIT and C-corporation on MGM
Given that MGM adopts the aforesaid two scenarios, the company shall be able to create the valuation of $55 per share. Land and Buildings presentation claims for the unlocked potential of the company through this.
REIT is considered as a beneficial activity for the companies since they receive special considerations in terms of tax. Also, REITs are known for offering higher and better yields to the investors, and also, they are the most liquid methods of real estate investments.
Meanwhile, C-corporation is a kind of legal structure which enables a business to organize itself in a way that it can restrict the financial and legal liabilities of its owners.
The further plans
In the times ahead, the real estate specialist has planned to suggest the names of four people who will make it to the MGM Board. This will keep the matter current. MGM Resorts International (NYSE:MGM) had already pointed towards the set-up of REIT. During its previous earnings call, the company had indicated consideration of REIT conversion, as well as a few more strategic options.
Let’s just say that if MGM retorts to this kind of a proposal, it shall look more or less like diverting the attention of everyone from the issues that it is presently facing in hand. The larger liquidity event is awaiting MGM and addition of capacity, without considering the deterioration of MGM China’s substantial higher margin and revenue, is something that is not healthy. The project pipeline or intensive capex shall have to be financed, but at the same time, what MGM is eyeing is just the tip of the iceberg, without realizing the underlying issue.