MGM Resorts Stock Rises Among Hedge Fund Proposal

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By Jacob Maslow

mandalay hotelMGM Resorts International (NYSE:MGM) saw a surge in stock prices early Tuesday morning. Land and Buildings Investment Management, a hedge fund based in New York, suggested the company take on an REIT conversion.

Johnathan Litt, owner of the hedge fund, suggests that MGM can reduce their debt by $5 billion dollars by converting. The conversion would put the company’s land holdings and hotels into a separate business away from the company’s casino operations.

Litt suggests that the company’s value would rise to $55 a share instead of the current valuation price of $33 a share as a result.

Under an REIT, the company would not pay federal income taxes on real estate. This would require MGM to distribute 90 percent of their earnings to shareholders. Converting would maximize shareholder value and keep costs low for the company.

At the time of the announcement, Litt’s company only owned 1 percent of all MGM stocks. A spokesperson for MGM has not been able to be reached for comment. No news has been reported on Litt’s company buying further shares of MGM stock.

MGM’s stock is up 1.8 points, or 9.21%, as a result of the proposal. The current trading price for MGM is 21.48.

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