MGM Growth Properties (NYSE: MGP) is listed among the top travel and leisure equities. MGP, the owner of Excalibur, Mirage, and other gaming venues on the Las Vegas Strip, has been listed among firms with attractive equities.
MGP was among the best-performing groups in the first quarter of 2021. The demand for the gaming stock was being pent-up by increasing coronavirus vaccinations. However, the demand is about to be suppressed by the emergence of the delta variant of COVID-19. Some states are also telling their residents to stay away from Vegas.
However, MGP is proving resilient to that trend, its shares are up by 2.35 percent over the past month. MGM International (NYSE: MGM). MGP’s lone tenant is down by 10.11 percent over the same period.
MGP is proving hardy against the delta variant backdrop is that the company is not a casino operator. Rather, MGP is a gaming real estate investment trust (REIT). In other words, the firm is a property owner and rent collector.
MGP is also structured as a triple-net lease REIT, which means that the firm does not pay for property upkeeps or other related expenses. UBS analyst Robin Farley believes the model was important during the pandemic.
“The triple net lease structure was new to the gaming industry in the last couple of years, and it hadn’t been through a significant downturn. The pandemic has proven the business model.”
At the height of the coronavirus pandemic, casino REITs like MGP were in turmoil when gaming venues were closed. They feared that the operators would struggle to meet lease obligations without any revenue.
However, those concerns are reduced, particularly for MGP, whose lone tenant MGM has one of the strongest balance sheets. The chances of missing to pay rent are minimal.