Investor Presentation

Transcription

1 Investor Presentation March 2017

2 Forward-Looking Statements Statements in this presentation that are not historical facts are "forward-looking" statements and "safe harbor statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and/or uncertainties, including those described in the Company's public filings with the Securities and Exchange Commission and any amendments thereto. The Company has based forward-looking statements on management's current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to, the Company s expectations regarding its ability to meet its financial and strategic goals, the Company s ability to further grow its portfolio on an accretive basis and the Company s expectations with respect to future rent growth, including potential rent from the ROFO properties. These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include risks related to the Company s ability to receive, or delays in obtaining, any regulatory approvals required to own its properties, or other delays or impediments to completing the Company s planned acquisitions or projects, including any acquisitions of properties from MGM Resorts International ( MGM ); the ultimate timing and outcome of any planned acquisitions or projects; the Company s ability to maintain its status as a REIT; the availability of and the ability to identify suitable and attractive acquisition and development opportunities and the ability to acquire and lease those properties on favorable terms; the Company s ability to access capital through debt and equity markets in amounts and at rates and costs acceptable to the Company; changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs or to the gaming or lodging industries; and other factors described in the Company's public filings with the Securities and Exchange Commission (the SEC ). In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements. In addition, the Company has included certain historical information in this presentation related to the Company and MGM, including historical information related to the Company s and MGM s business, financial condition and results of operations. The delivery of this presentation is not intended to and does not create any implication that there have been no changes to the Company s or MGM s affairs since the date of any of the historical information provided. Market and Industry Data This presentation also contains estimates and information concerning the Company s industry, including market position, rent growth and rent coverage of the Company s peers, that are based on industry publications, reports and peer company public filings. This information involves a number of assumptions and limitations, and you are cautioned not to rely on or give undue weight to this information. The Company has not independently verified the accuracy or completeness of the data contained in these industry publications, reports or filings. The industry in which we operate is subject to a high degree of uncertainty and risk due to variety of factors, including those described in the Risk Factors section of the Company s public filings with the SEC. Non-GAAP Disclaimer This presentation includes certain financial measures, such as MGM s Adjusted EBITDA and MGM s Adjusted Property EBITDA, which are not calculated in accordance with U.S. generally accepted accounting principles ( U.S. GAAP ). Management recommends that you focus on the U.S. GAAP numbers as the best indicator of financial performance. These alternative measures are provided only as a supplement to aid in your analysis. MGM uses Adjusted EBITDA and Adjusted Property EBITDA as the primary profit measure for its reportable segments. Adjusted EBITDA is a measure defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, and property transactions, net. Adjusted Property EBITDA is a measure defined as Adjusted EBITDA before corporate expense and stock compensation expense related to MGM s stock option plan, not allocated to each casino resort. Adjusted EBITDA or Adjusted Property EBITDA should not be construed as an alternative to operating income or net income, as an indicator of MGM s performance; or as an alternative to cash flows from operating activities, as a measure of liquidity; or as any other measure determined in accordance with generally accepted accounting principles. MGM has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in Adjusted EBITDA or Adjusted Property EBITDA. Also, other companies in the gaming and hospitality industries that report Adjusted EBITDA or Adjusted Property EBITDA information may calculate Adjusted EBITDA or Adjusted Property EBITDA in a different manner. Please see MGM s earnings releases which have been filed with the SEC and are available on MGM s website for a reconciliation of MGM s reported Adjusted EBITDA and Adjusted Property EBITDA to net income. Financial information for MGM included in this presentation has been derived from MGM s public filings, which includes certain expenses related to the Company that are not eliminated in consolidation. 1

3 MGM Growth Properties Publicly traded REIT engaged in owning, acquiring and leasing high-quality leisure, entertainment and hospitality assets with one of the largest portfolios of premier assets on the Las Vegas Strip based on hotel rooms and convention square footage Assets leased to MGM Resorts creating $650 million of annual revenues as part of a long-term triple net master lease Company Highlights 4.1x Corporate Rent Coverage (1) 1.8%+ Annual Increase Guaranteed Through 2022 (2) No Near Term Lease Expirations Embedded Growth Pipeline through ROFOs Las Vegas Assets Regional Assets 3 4 Right of First Offer ( ROFO ) (4) ~8.4% Dividend Growth since IPO % Dividend Yield (3) (1) See appendix slide 23 for additional details; as of 12/31/2016. (2) Based on 2.0% annual escalator on fixed rent (90% of total rent), compounded through (3) As of share price close on 03/15/2017. (4) The Master Lease provides us with a right of first offer with respect to MGM National Harbor in Maryland and MGM s development property located in Springfield, Massachusetts should MGM Resorts choose to sell such assets. 2

4 Significant Asset Value and Diversity of Tenant Revenues Portfolio Snapshot (As of 12/31/2016) 2016 Adjusted EBITDA Diversification (1) Significant Real Estate Asset Value # of Hotel Rooms 27,233 Total Acres (Las Vegas / Regional) Meeting / Convention Space Square Footage 465 (354 / 111) 2,582,000 Total Casino Square Footage 1,028,000 Gross Book Value of Assets ($ in millions) Land Value $4,144 Buildings Value $7,325 Gross Land & Building Value $11,468 (1) Pro forma to include Borgata full year results during 2016 of $235 million in Adjusted EBITDA. 3

5 Stable and Secure Rent MGM Resorts $30.8 billion of Enterprise Value (1) $15.4 billion of Equity Value (1) Ba3 / BB- (Moody s / S&P) Credit Ratings $9.5 billion of Consolidated Net Revenues (2) $2.8 billion of Consolidated Adjusted EBITDA (2) (3) $2.4 billion of Adjusted EBITDA + Dividends & Distributions (2) (4) Corporate Rent Coverage (4) Master Lease All Properties Under 1 Master Lease Corporate Guarantee from MGM Over 4x Corporate Coverage Coverage stress tested through both the Recession & Las Vegas supply increases Source: MGM Resorts International public filings, SNL Financial (1) Consolidated as of 12/31/2016; share price as of 03/15/2017. Enterprise value defined as the sum of equity market capitalization, non-controlling interests and long term debt less cash and cash equivalents. Equity value defined as share price as of 03/15/2017 multiplied by MGM common stock outstanding as of 02/24/2017. (2) For 12 months ended 12/31/2016. (3) See appendix slide 22 for definition and reconciliation. (4) See appendix slide 23 for additional details; as of 12/31/

6 Industry Leading Rent Security 4Q 2016 Rent Coverage (1) (5) % of Total Rent Income Disclosed 100% 44% (2) 50% (3) Tenants that Provide Only For Retail Information (4) 97% (4) 97% (6) Source: Company filings as of 12/31/2016 (1) The Rent Coverage calculations for each of the peer companies listed in the table are derived from disclosures in such company s periodic reports with the SEC. These calculations differ from how the Company calculates its Corporate Rent Coverage and such differences may be material. (2) National Retail Properties discloses Rent Coverage for its top 14 tenants, 44% of annualized base rent for all leases in place as of 12/31/16. (3) Spirit Realty Capital based on Company provided Unit Level Rent Coverage from tenants that provide unit level financial reporting. As of 12/31/16, represents 50% of rental revenue. (4) Realty Income based on the analysis of the most recently provided information from retail tenants that provide such information. Realty Income does not independently verify the information received. (5) Store Capital % based on locations subject to unit-level financial reporting. (6) Gaming & Leisure Properties based on weighted average rent coverage 12 months ended 12/31/16 of PENN & PNK excluding Meadows of 1.81x and 1.89x, respectively. 12 months ended 12/31/16 cash rental income from PENN of $442 million & PNK including land leases and excluding Meadows of $256 million. 5

7 Master Lease Provides Stable Income Plus Embedded Growth High Organic Growth $550 million Year 1 Rent increased to $650 million after giving effect to the Borgata acquisition Predictable Rent Growth (1) Illustrative 6-Year Embedded Growth: +9.4% 2% Escalator on $585 of $650 million Year 1 Rent ~$12 million annual rent increase on April 1, % Escalator Automatic through 2021 First test in 2022 ($ in millions) $65 of $650 million Year 1 Rent Stable 1 st Adjustment in 2022 based on prior 5 year Revenues 30 year total term 10 year Initial with (4) 5-Year Extensions (1) Illustrative Rent Growth based on current Master Lease; includes full year rent impact of the Borgata acquisition. 6

8 Strong Organic Growth with No Near Term Lease Turnover Same-Store / Contractual Rent Growth (1) % of Current Rental Revenue Expiring by 2026 (2) Source: Company filings as of 12/31/2016 (1) Realty Income based on same store rental revenue growth YTD Q4 2016; Spirit Realty Capital based on contractual cash rent growth 12 months ended 12/31/16; Gaming & Leisure Properties based on initial rent for Penn National and Pinnacle Entertainment leases assuming rent ratios are met for those portions of rent that have annual escalators; National Retail Properties based on same store rental income (Cash Basis) growth year ended 12/31/16. Store Capital based on company provided wgt. avg. annual escalation rate. MGP based on 2% annual contractual rent increases on 90% of initial rent; VEREIT based on same store contractual rental rev. growth 12 months ended 12/31/16 vs. 12/31/15; W.P. Carey based on same store ABR growth as of 12/31/16. (2) Based on current annualized rent. 7

9 Enhancing Growth through Acquisitions April 20, 2016 August 2016 April 1, 2017 Initial Public Offering Annualized Rental Revenue +18% Acquired Borgata For $ % Cap Rate First Escalator Annualized Dividend / Share +8% ($ in millions) 8

10 Growth Competitive with Peers 4Q 2016 vs. 1Q 2016 Dividend / Share Growth (1) (2) Source: Company filings, FactSet, SNL Financial as of 12/31/2016 (1) Based on most recent quarter dividend vs. 3 quarters prior dividend per FactSet. (2) Averages exclude MGP. 9

11 Growth Competitive with Peers Continued MGP acquired the Borgata for $1,175 million in 2016 and remains positioned to execute on embedded ROFO opportunities Net Acquisition / Investment Activity (1)(2)(3) ($ in millions) ($1,043) # of Properties Source: Company filings, Wall Street Research as of 12/31/2016 (1) (4) See appendix Slide 20. Footnotes 1 4, respectively (4)

12 Highly Visible Growth Path & Strategy Organic Growth ~$0.25 (1) of AFFO/unit from contractual rent growth over 5 years +$60 million over 5 years ROFO Properties National Harbor opened on December 8, 2016 MGM Springfield opening in Late 2018 Potential Rent: ~$156 million (2) MGM Wholly Owned, Joint Ventures & Add-ons Add-ons: Park Theater, Park MGM (Monte Carlo re-development) Wholly Owned: Bellagio, MGM Grand and Circus Circus Joint Ventures: CityCenter, Grand Victoria and T-Mobile Arena Wholly Owned & Joint Venture Total Potential Rent: ~$611 million (3) Asset & Tenant Diversification ~59 Target Gaming Properties across 20+ different owners Numerous other attractive net lease acquisitions in leisure, entertainment, hospitality and related sectors Gaming Properties potential rent of ~$2.5 billion (4) (1) ~242.9 million units outstanding as of 12/31/2016. (2) Based on 2.0x rent coverage on 2018E Consensus Wall Street EBITDA estimates for MGM National Harbor & 2019E Consensus Wall Street EBITDA estimates for MGM Springfield as of 03/07/2017. (3) Based on 2.0x rent coverage on LTM Adjusted EBITDA reported by MGM related to the Bellagio, MGM Grand Las Vegas, Circus Circus Las Vegas and CityCenter Holdings, LLC (excluding Crystals) as of 12/31/16 ($479.3, $330.7, $62.0 and $349.9 million, respectively, totaling ~$1.2 billion, 12 months ended 12/31/2016). (4) Based on 2.0x rent coverage on estimated total EBITDAR of target gaming opportunity universe. 11

13 Rent Growth Potential From the initial rent of $550 million at IPO, there is an achievable path to over $1 billion of rental revenue Total Potential Growth: 85%+ ($ in millions) (1) Source: Wall Street Research (1) Consensus Wall Street analyst Adjusted EBITDAR estimates for National Harbor based on 2018E, Springfield based on 2019E as of 03/07/2017. MGM National Harbor and MGM Springfield Rental Revenue based on rent coverage of 2.0x. 12

14 Conservative Balance Sheet with Flexibility to Grow Capitalization Table ($ in millions, except Per Share) As of 12/31/16 Capital Structure (3) Share Price as of: 03/15/2017 $25.82 Class A Shares 57.5 Remaining Operating Partnership Units Total Class A Shares & OP Units Equity Capitalization $6,271 Int. Rate Balance Senior secured revolving credit facility L+2.75% -- Senior secured term loan A facility L+2.75% $293 Senior secured term loan B facility (1) L+2.50% 1,841 Senior Notes due % 1,050 Senior Notes due % 500 Total Principal Debt / Wgt. Avg. (2) 4.54% $3,683 Less: Cash & Cash Equivalents (360) Net Debt $3,323 Total Capitalization (Debt+Equity Capitalization) $9,954 Debt / Total Capitalization 37.0% (1) $1.2 billion of notional amount has LIBOR swapped to fixed. $500 million swapped to 1.825% Fixed and $700 million swapped to 1.964% Fixed. (2) Weighted average interest rate includes floating to fixed interest rate swaps executed after 4Q'16 close. Interest rate on TL A facility and TL B facility based on interest rate as of 12/31/16 of 3.52% and 3.52%, respectively. (3) Pro Forma for interest rate swaps executed in January 2017; share price as of 03/15/2017. (4) See appendix slide 21 for definition of Adjusted EBITDA & additional details. (5) See appendix slide 21 for definition of Cash Interest Expense & additional details. Credit Ratios Leverage Metrics As of 12/31/16 Net Debt / Annualized Adjusted EBITDA (4) 5.2x Coverage Metrics Ann. Adj. EBITDA / Ann. Cash Int. Exp. (5) 3.9x Available Liquidity: ($ in millions) Cash & Cash Equivalents $360 Available Revolver Capacity 600 $960 13

15 Compelling Relative Valuation Dividend Yield (1) (2) Source: Company filings, SNL Financial, FactSet as of 03/15/2017 (1) Based on share price close as of 03/15/2017. (2) Averages exclude MGP; weighted by equity market capitalization as of 03/15/

16 Superior Portfolio and Growth 4.1x Corporate Rent Coverage (1) 1.8%+ Annual Increases Guaranteed through 2022 (2) No Annual Lease Expirations Embedded Growth Pipeline through ROFOs ~8.4% Dividend Growth Since IPO 6.0% Dividend Yield (3) (1) See appendix slide 23 for additional details; as of 12/31/2016. (2) Based on 2.0% annual escalator on fixed rent (90% of total rent), compounded through (3) As of share price close on 03/15/

17 Q&A 16

18 Appendix 17

19 ROFO Assets MGM National Harbor Opened December 8, 2016 Property Snapshot As of 12/31/16 # of Rooms 308 Casino Sq. Footage 125,000 Convention Sq. Footage 50,000 Slot Machines 3,241 Tables 126 (Incl. 39 Poker) Financial Performance Average market share of ~30% vs. fair share (1) of ~23% Achieved the highest table games revenue on record in January and February of 2017 for Maryland gaming YTD Feb total WPPD (2) of $366, 40% higher than its peers (3) Property is averaging >22,000 daily visitors Celebrity Chef Lineup 3,000 Seat Theater Performance Lineup Spa & Salon Sq. Footage - José Andrés - Marcus Samuelsson - Michael & Bryan Voltaggio - Bruno Mars - Cher - Ricky Martin - Sting - Lionel Richie 27,000, 2 Levels Source: MGM Resorts International public filings, Maryland Gaming commission Note: Financial performance statistics combine January 2017 and February 2017 based on Maryland Gaming Commission and West Virginia Lottery reports (1) Fair share is based on total table game and slot units for the D.C. Metro peer / competitive set. (2) Win per position per day; assumes 7 seats per table. (3) D.C. Metro peer / competitive set including MGM National Harbor, Maryland Live, Horseshoe Baltimore, Hollywood Perryville, Ocean Downs, Rocky Gap and Hollywood Charles Town. MGM National Harbor of $366 vs. peer / competitive set total WPPD weighted by total gross gaming revenue YTD as of February

20 ROFO Assets MGM Springfield NY Albany Rivers Mohawk VT NH MA Everett Wynn Boston PA Hartford CT Springfield RI Mohegan Sun Plainridge Park Twin River Providence Newport Grand Foxwoods Project Highlights NJ New York Other Casino Properties Planned Casino Projects Project Cost: ~$865 million Opening Date: Late 2018 Location: 14 acres of land in downtown Springfield, MA Casino with approx. 3,000 slots and 100 tables (1) Hotel with 250 rooms 100,000 sq.ft. of retail and dining 3,375-space parking garage Meeting & Event Space: ~44,000 sq. ft. Source: MGM Resorts International public filings (1) Includes Poker Tables. 19

21 Detailed Footnotes (1) Net Acquisition defined as acquisition volume less disposition volume. (2) 2016A Net Acquisition Volume: Realty Income based on New Property Acquisitions less Net Proceeds of total real estate dispositions; Spirit Realty Capital based on "Gross Investments less disposition of "Real Estate Investment"; EPR Properties based on acquisitions only and excludes development/redevelopment and investments in mortgage notes; EPR Properties dispositions based on sale of properties and excludes mortgage note payoffs; W.P. Carey based on Owned Real Estate Portfolio, acquisitions & dispositions only; National Retail Properties based on Total Dollars Invested in property acquisitions; National Retail Properties dispositions based on net sale proceeds of property dispositions; VEREIT based on purchase price of acquisitions; VEREIT dispositions based on Sale Price of dispositions. (3) Net acquisition guidance, based on midpoint of guidance, and if not formally provided: Spirit Realty Capital based on research estimates; VEREIT based on guidance of $450 million to $600 million of total disposition and acquisition volume; EPR Properties based on Investment Spending and includes planned investments associated with the CNL transaction of $700 million. (4) Based on 2016 number of acquisition transactions. 20

22 Adjusted EBITDA & Cash Interest Expense Reconciliation ($ in 000s) 3 Mo. Ended Reconciliation of Net Income to Adj. EBITDA 12/31/2016 Net Income (Loss) $50,999 Depreciation 61,808 Property transactions, net 2,033 Funds from Operations $114,840 Amortization of financing costs 2,803 Non-cash compensation expense 184 Net effect of straight-line rent & amortization of deferred revenue (757) Acquisition-related expenses 79 Amortization of above market lease, net 172 Provision for income taxes 1,349 Adjusted Funds from Operations $118,670 Interest Income (774) Interest Expense 43,898 Amortization of Financing Costs (2,803) Adjusted EBITDA (1) $158,991 Annualized Adjusted EBITDA $635,964 Interest Expense $43,898 Less: Amortization of Financing Fees (2,803) Less: Interest Income (774) Cash Interest Expense $40,321 Annualized Cash Interest Expense $161,284 (1) Adjusted EBITDA is net income (computed in accordance with U.S. GAAP) as adjusted for gains and losses from sales or disposals of property (presented as property transactions, net), real estate depreciation, interest income, interest expense (including amortization of financing costs and the net amortization of the above market lease), non-cash compensation expense, acquisition related expenses, provision for income taxes and the net effect of straight-line rents and amortization of deferred revenue. Our EBITDA may not be comparable to EBITDA reported by other companies that interpret the definitions of EBITDA differently than we do. Management believes EBITDA to be a meaningful measure of a REIT s performance because it is widely followed by industry analysts, lenders and investors. EBITDA should be considered along with, but not as an alternative to, net income as a measure of our operating performance. Our ratio of debt to EBITDA, which is used by management as a measure of leverage, is calculated by annualizing quarterly EBITDA and then dividing by our total debt per the consolidated balance sheet. 21

23 MGM Supplemental Data Non-GAAP Financial Measures MGM RESORTS INTERNATIONAL AND SUBSIDIARIES RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED PROPERTY EBITDA AND ADJUSTED EBITDA (In thousands) (Unaudited) Twelve Months Ended December 31, 2016 Operating NV Energy exit Preopening and start-up Property transactions, net and gain on Borgata Depreciation and income (loss) expense expenses transaction amortization Adjusted EBITDA Bellagio $ 366,543 $ 23,815 $ - $ 118 $ 88,783 $ 479,259 MGM Grand Las Vegas 231,327 25, ,719 72, ,681 Mandalay Bay 114,202 29, ,377 89, ,609 The Mirage 85,300 13, , ,427 Luxor 57,653 11,594 1, , ,192 New York-New York 93,169 7, , ,729 Excalibur 71,885 9,083-4,405 16, ,525 Monte Carlo 33,291 8,409 1,929 1,131 34,102 78,862 Circus Circus Las Vegas 33,516 10, ,963 61,989 MGM Grand Detroit 147, (59) 23, ,414 Beau Rivage 68, (172) 25,880 93,762 Gold Strike Tunica 39, ,792 49,690 Borgata (1) 38, ,652 33,923 81,281 National Harbor (2) (13,626) - 17,986-5,236 9,596 Other resort operations (3) Domestic resorts 1,367, ,335 22,443 20, ,596 2,063,016 MGM China 255,264-27,848 (216) 237, ,736 Unconsolidated resorts (4) 524,448-3, ,616 Management and other operations 4,316-1, ,505 13,000 2,151, ,335 54,609 19, ,941 3,124,368 Stock compensation (44,957) (44,957) Corporate (26,910) - 85,466 (432,869) 90,586 (283,727) $ 2,079,787 $ 139,335 $ 140,075 $ (413,040) $ 849,527 $ 2,795,684 (1) Represents operating results of Borgata for the period from August 1, 2016 (the first day of the Company's full ownership) through December 31, (2) Represents operating results of National Harbor for the month ended December 31, (3) Sold in (4) Represents the Company's share of operating income (loss), adjusted for the effect of certain basis differences. Includes the Company's share of Borgata results for the twelve months ended December 31, 2015 and the seven months ended July 31,

24 Calculation of MGM Historical Corporate Rent Coverage Ratio (1) ($ in 000s) Year Ended December 31, (2) Adjusted EBITDA Related to: Domestic Resorts $1,901,031 $1,343,562 $1,165,413 $1,298,116 $1,325,220 $1,442,686 $1,518,307 $1,689,966 $2,063,016 Management & Other Operations 16,894 18,322 (12,158) 287 9,947 25,777 35,984 37,419 13,000 Corporate (Excluding Stock-Based Compensation) (95,862) (131,142) (109,911) (156,086) (215,757) (200,708) (220,664) (254,104) (4) (264,160) Subtotal $1,822,063 $1,230,742 $1,043,344 $1,142,317 $1,119,410 $1,267,755 $1,333,627 $1,473,281 $1,811,856 Dividends & distributions received by MGM (3) CityCenter $200,000 $540,000 MGM China ,355 30, , , , ,159 52,902 Grand Victoria 41,125 33,750 33,500 30,000 22,000 16,275 15,450 16,850 14,250 Borgata 19,579 60, , ,094 (5) 2,654 Subtotal $60,704 $93,886 $339,277 $60,513 $225,886 $328,500 $405,189 $535,103 $609,806 Total Adj. EBITDA & Div. & Dist. $1,882,767 $1,324,628 $1,382,621 $1,202,830 $1,345,296 $1,596,255 $1,738,816 $2,008,384 $2,421,662 Corporate Rent Coverage Ratio 3.4x 2.4x 2.5x 2.2x 2.4x 2.9x 3.2x 3.7x 4.1x (1) MGM s historical corporate rent coverage ratio is calculated by dividing (a) the sum of Adjusted EBITDA as reported by MGM related to domestic resorts, management and other operations, and corporate (excluding stockbased compensation and MGP corporate expense), plus dividends and distributions received by MGM from CityCenter, Borgata, Grand Victoria and MGM China, by (b) year one rent under the Master Lease of $550.0 million for December 31, 2015 and prior periods. On August 1, 2016, Borgata was added to the existing Master Lease between the Landlord and the Tenant. As a result, the initial annual rent amount under the Master Lease increased by $100.0 million to $650.0 million, prorated for the remainder of the first lease year. The calculation of MGM s historical corporate rent coverage ratio includes the impact of the Borgata Transaction for the year ended December 31, 2016 including Borgata Adjusted EBIDTA for the period from August 1, 2016 through December 31, 2016 and increased annual rent for 5 months. (2) Ratio of Adjusted EBITDA reported by MGM related to Domestic resorts, Management and other operations, and Corporate (excluding stock-based compensation) plus Dividends and Distributions received by MGM to year one rent under the Master Lease of $550 million for the years ended December 31, 2015 and previous periods. For the period ended December 31, 2016 annual rent was increased for the Borgata transaction to include 5 months of increased rent during (3) The numerator to the historical corporate rent coverage ratio includes special and ordinary dividends and other cash distributions actually received by MGM from CityCenter, Borgata, Grand Victoria and MGM China for the years ended December 31, 2008, 2009, 2010, 2011, 2012, 2013, 2014 and Dividends and distributions are made at the discretion of each relevant entity s board of directors or similar body, and depend on several factors, including financial position, results of operations, cash flows, capital requirements, debt covenants, and applicable law, among others. Accordingly, historical dividends and distributions may not be indicative of future dividends or distributions and should not be relied upon as an indicator of MGM s historical corporate rent coverage ratio for future periods. In addition, as described in note (1) above, Borgata was acquired by MGM on August 1, The historic dividends and distributions related to Borgata have not been adjusted as a result of the Borgata Transaction for the period ended December 31, 2015 and previous periods. (4) Excludes MGP general & administrative expenses. (5) Represents dividends and distributions received during 2016 from Borgata prior to the date of acquisition. 23