MGM Growth Properties LLC
Q4 2018 Earnings Call Transcript

Published: 15 Feb 2019

[Operator:]

Good day, and welcome to the Fourth Quarter and Full-Year 2018 Financial Results for MGM Growth Properties. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Andy Chien, Chief Financial Officer. Please go ahead.

[Andy Chien:]

Thank you, Andrew. Good morning and good afternoon, and welcome to the MGM Growth Properties fourth quarter and full-year 2018 earnings call. This call is being broadcast live on the Internet at mgmgrowthproperties.com, and we have furnished our press release on Form 8-K to the SEC this morning. On this call, we will make forward-looking statements under the Safe Harbor provisions of the federal securities laws. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from these forward-looking statements is contained in today's press release and in our periodic filings with the SEC. During the call, we will also discuss non-GAAP financial measures in talking about our performance. You can find the reconciliation to GAAP financial measures in the press release, which is also available on our website. Finally, please note this presentation is being recorded. I will now turn it over to James.

[James Stewart:]

Thank you, Andy. I'd like to welcome everyone to MGP's fourth quarter and full-year 2018 conference call. Over the past year we successfully executed on all aspects of our business strategy and we are thrilled to share our results for 2018, as we look forward to 2019. A number of properties within the MGP portfolio set all-time fourth quarter revenue and EBITDA records, including MGM Grand Detroit, MGM National Harbor, Beau Rivage, Gold Strike Tunica and the Hard Rock Rocksino Northfield Park in Ohio. In 2018, we announced over $2.3 billion of acquisitions. Since our IPO in April 2016 we've announced acquisitions totaling over $4.7 billion. Both figures are amongst the highest acquisition volumes of any company in the entire triple net REIT space over the equivalent time period. On July 6, 2018, we completed the acquisition of both the real estate and the operations of the Hard Rock Rocksino Northfield Park just outside of Cleveland. We held this asset as taxable REIT subsidiary. On September 19th, we entered into an agreement to sell the operations to MGM Resorts, and add the property into our existing master lease. We believe this path will result in the best combination of security and growth for this asset. We anticipate that the transaction will close in the first half of 2019, and will increase rental revenues by $60 million. Until then, we will continue to collect the interim cash flows generated by the entire facility. Northfield Park is a perfect fit into our premier portfolio given its market-leading performance as the number one property in all of Ohio in gross gaming revenues. On December 20th, we announced that MGP entered into an agreement to pay MGM Resorts $637.5 million for investments made to reposition the former Monte Carlo in to Park MGM and NoMad Las Vegas. As part of this agreement, the annual rent under the master lease will increase by $50 million. This is another example of our tenant’s commitment to maintaining asset quality and the power of our partnership with MGM. This transaction is expected to close in the first quarter of 2019. Subsequent to the quarter’s end on January 29, 2019, we completed the acquisition of Empire City Casino’s real estate assets for $625 million. This transaction increased rental revenues under the master lease by $50 million and provided us with additional right of first offer opportunity on future gaming developments at the property. Gaming access to the high density in New York Metropolitan gaming market further diversifies our portfolio. In addition, this rent will also be included in the calculation of our third base rent escalator and this increasing rent will go into effect on April 1, 2019. These three transactions will increase rental revenues by approximately 21% or $160 million to $930 million annually on a pro forma basis, amongst the highest rental revenue figures in the entire triple net lease space. This represents a 69% increase since our IPO from our initial cash rent of $550 million. All three transactions are expected to be immediately accretive to AFFO. Our third consecutive rent escalator will go into effect on April 1, 2019 which will result in our annual cash rental revenue increasing to over $946 million. Our top priority remains to sustainably grow our dividend and create long-term sustainable value for our shareholders. Based on the results that MGM's Resorts reported yesterday, our next rent coverage currently stands at an industry-leading 6.2 times. In 2018, we paid total dividends of $1.74 per share for the year. In 2018, our Board approved three increases to the dividend from $1.68 per share at the beginning of the year to a $1.79 per share at year's end, a growth rate of 6.5% year-over-year and 25% since our IPO in April 2016. On the acquisition front the M&A landscape remains attractive and we continue to analyze multiple opportunities that fit within our criteria. I will now turn it over to Andy to discuss our financial results.

[Andy Chien:]

Thanks, James. In 2018, we continued to strengthen our balance sheet for future growth. In the first quarter, we repriced our term loan B facility to LIBOR plus 200 from LIBOR plus 225 and extended maturity by two years to March 2025. In the second quarter, we completed a repricing extension and an increase on the revolver and term loan A facilities. The maturities of both the revolver and term loan A were extended to 2023. Our revolver capacity was increased to $1.35 billion and we added $200 million to our term loan A. In addition the term loan A revolver were repriced based on the net leverage period and is currently at LIBOR plus 200. In 2018, we also received a BB plus issuer rating from Fitch with our senior secured credit facility receiving a BBB minus rating. The first time an MGP security received an investment grade rating. And finally, in 2018, we entered into a $400 million forward interest rate swap that will become effective at the end of the year and mature in 2024 with respect to debt outstanding under our term loan B facility. Once effective the average LIBOR rate we pay on our total of $1.6 billion in interest rate swaps will be approximately 2%. Subsequent to year end, we also opportunistically accessed the debt and equity markets. We successfully raised 750 million of senior notes at 5.75%, which was upsized from $500 million. This issuance is well over subscribed and improves our debt maturity profile by adding maturity tranche in 2027. Together with the interest rate swaps, our pro forma fixed rate debt includes 86% of our total debt outstanding. We also successfully completed a second follow-on offering of 19.55 million shares, which included the underwriters’ exercise of the overallotment option for the additional 2.55 million shares. Net proceeds were approximately 548.3 million. The 17 million shares prior to the exercise of the overallotment option was upsized from the originally announced offering size of 14.5 million shares. The equity offering increased our public flow by over 27%. These proceeds along with proceeds from the senior notes offering were used to fund the Empire City transaction, pay down the revolver borrowings for the Northfield Park acquisition, and will also be used to fund the Park MGM transaction. Pro forma for the announced transactions and capital markets activity, our pro forma net leverage will be at the low-end of our previously communicated target range of 5 to 5.5 times, and we will have over $1 billion of availability. These transactions will strengthen our portfolio and our balance sheet, and will provide us with significant flexibility for future accretive acquisitions. I'll now provide a few highlights of our fourth quarter results. For the quarter, we recognized a $186.6 million of rental revenue on a GAAP basis or $192.6 million on a cash basis. Net income was $68.6 million for the quarter. G&A expenses were $6.1 million, which included $2.9 million of costs incurred for transactions that did not sign or close. As a result, adjusted EBITDA and AFFO were $209.7 million and $152.4 million, respectively. AFFO per share for the quarter was $0.57 per share. Our TRS earned 22.6 million of EBITDA was taken into account a $1.7 million of management and license fees. For the fourth quarter, our dividend increased to $44.75 per share, which represents a $1.79 on an annualized basis. Our well-positioned balance sheet will allow us to continue to execute on our long-term strategies of growing the dividend, completing accretive acquisitions and expanding our best-in-class portfolio of premier real-estate assets. With that, I'd like to turn it back over to James.

[James Stewart:]

Think you, Andy. We'd like to take this time to thank all of our investors for their continued support through the year and Andrew we would like to now open it up for questions.

[Operator:]

We will now begin the question and answer session. [Operator Instructions]. The first question comes from Rich Hightower of Evercore ISI. Please go ahead.

[Rich Hightower:]

So I want to ask a question about MGM's ad-hoc real estate committee and as they kind of go through their process is there a scenario there where you think it might not make sense for MGP to be involved as we think about the additional dropdowns? Just help us understand maybe what the mentality is on just kind of coming from outside and what different scenario analysis might look like?

[James Stewart:]

Well, I guess first I would say I would refer to MGM's releases and their commentary on this topic. They are a separate public company with their own Board of Directors and the committee is part of their Board. I view this as a positive. I think as they stated yesterday on their call that demonstrates the seriousness with which they are looking at alternatives to maximize shareholders value with the real-estate that they own. MGP is the natural home in my view for the real estate of MGM, and overall I think it's positive.

[Rich Hightower:]

And then maybe let's assume that MGP does participate in some of those future deals. Do you think that the bias is up, down or kind of sideways as we think about cap rates on future deals now that MGP's cost of capital has had time to kind of settle out in the market on the debt and equity side and so forth especially compared to sort of the high 7% or 8% cap rate deals you guys have done recently?

[James Stewart:]

Yes, it's hard to say because it's very, very asset specific and transaction specific. And each transaction that we review has so many different angles to it that drives the overall cap rate that I would say is just impossible to really give any kind of meaningful guidance or impressions on that front.

[Andy Chien:]

And Rich from a cost of capital standpoint on the debt and equity side, we have to underwrite too certain sensitivity plus or minus on any transaction to make sure that it works and it's accretive for our shareholders and that can change at any point in time.

[Operator:]

The next question comes from Robin Farley of UBS. Please go ahead.

[Robin Farley:]

I wonder if that your press release mentions the $3 million that was spend in 2018 for deals that sort of didn’t come to fruition or rather you haven’t yet. So I guess I just wondered if you can comment a little bit on whether that's something that's active and still potentially likely to come to fruition. And I'm assuming that, that 3 million is a non-MGM operator given that you probably would have to spend that kind of money to get some MGM’s property so just kind of wondering what the timing likely of that might be?

[Andy Chien:]

We're working on potential deals and the 2.9 million that was just in Q4, it was an elevated amount, it was a significant amount of time and expense for meaningful transaction. We had these expenses in other quarters but not to this magnitude of profile. And to your direct question we are not really able to comment on the pace or the status of any specific deal, but we believe that the marketplace remains active and we will have meaningful activity over the course of the year. The 2.9 million was for transaction costs paid for deal that did not sign or close in the quarter and for an MGM deal we did sign a deal in the quarter in Park MGM, so those were that fell into the acquisition-related expense for something that did sign. And for everything else, like Empire, Rocksino et cetera those would all fall into the acquisition-related expense and not into this line item.

[Robin Farley:]

Thanks And then yesterday someone also was giving REIT space, commented that with market volatility that started in December that maybe it's not as active a space that maybe seller expectations haven't been adjusted the way they need to for that volatility. I don’t know if that's sort of a contrast to what you are saying, I don’t know if things still remain quite active or I don’t know if you have any thoughts on how things have changed in two months or so?

[James Stewart:]

You can imagine it's hard for us to comment on someone else's views, but I would say for just for our own view and I think that that fourth quarter overage expense sort of is very indicative of this. It's very active and there's a lot of potential for transactions and we really haven't seen much of a change from what was a pretty high level throughout the year last year.

[Robin Farley:]

And just one final question before -- just looking at MGM’s results yesterday, Springfield results the EBITDA maybe is a little bit late of expectations and I'm just wondering whether your thought is, do you give it more than 2019 to ramp-up maybe that was a transaction maybe we expected to happen in 2019, so it doesn’t make sense to wait, does it ramps up next year or at certain point you’d just say this is and the rent from that is going to be lower than what we thought?

[James Stewart:]

It's hard to predict exactly where the things go. But I think that for now we are continuing to closely monitor what's going on along with colleagues at MGM and once it hits the level when we feel comfortable with the ultimate stabilized EBITDA production would be then I think jointly we obviously have to both agree jointly want to go forward. I think it's still in the timeframe with which we’re talking to the second half of '19 but such things are unpredictable and the rents are unpredictable. So there is no absolute assurance, but I think things are still on track there.

[Operator:]

The next question comes from Daniel Adam of Nomura Instinet. Please go ahead.

[Daniel Adam:]

I guess my first question to what extent -- and are there any circumstances under which you might be willing to do a non-accretive deal assuming it involves trophy assets I am not sure if?

[James Stewart:]

Well, one of our primary criteria is that a decreased AFFO, for us the trophy asset angle is not as important, perhaps for other recent broadly similar spaces I'm not really thinking of the gaming space so much just because -- ultimately we have to be able to generate AFFO increases and dividend increases. So one of our key criteria is that the transaction would have to be accretive on a basis that fit within our leverage restrictions, which is a long-term 5 to 5.5 times debt-to-EBITDA.

[Andy Chien:]

And just an asset being call it trophy doesn't mean that what you pay for is the durability of the cash flow stream, durability of the rental stream that you put in place, the durability of how the rental stream is structured whether it's a master lease and what kind of tenant comes with that master lease, so those are the important things, not the trophy quality of any.

[Daniel Adam:]

And then just one follow-up, so I'm wondering if you see any other opportunities within the existing portfolio to do renovation back deal similar to the recently amended Park MGM transaction?

[Andy Chien:]

I think the most kind of center would be on Empire to the extent that MGM chooses to expand that property with additional gaming development in time, and we have ROFO on that, other assets are probably refer to MGM management to see where they might put their next dollars.

[Operator:]

[Operator Instructions] The next question comes from Barry Jonas of SunTrust. Please go ahead.

[Barry Jonas:]

So you covered a lot of base, but just wanted to clarify in terms of the pipeline for deals right now, would you say seller expectations have changed at all, given some of the volatility in the market, just curious on your thoughts on some of the bid ask spreads out there?

[James Stewart:]

Well it’s -- I would again say it's very, very property and management team specific around what expectations are for any one particular asset or transaction. The stocks in the REIT space have not been nearly as volatile as the stocks in the operator space and if anything the relative benefit of doing a transaction with someone like MGP has increased versus decreased given the multiple changes amongst the operator space. So for us, again it feels just as busy now as it did sort of anytime during last year.

[Barry Jonas:]

Got it and then maybe just a high level question, you guys have had amazing -- you have had amazing growth relative to the wider triple net leased space as well as a great pipeline of growth, but you really don't trade at a premium multiple just yet, maybe in your words what do you think needs to happen to getting credit evaluation?

[James Stewart:]

I think a lot of it is just going to be time. We've only been in existence since April 2016. And in our case in the entire space it’s really only been in existence a few years before that, whereas these other triple nets have been around for 20, 30 years. They have a very long and loyal, a long holding and loyal shareholder base and getting -- having the multiples compressed which I am convinced will happen over time, just a matter of educating and getting people over any concerns that come around something new in the space such as this. So I am a very, very big Christian believer that you are going to see significant multiple compression between what I would call sort of the retail triple nets in the entire gaming triple net space because I think pound for pound our type of investment is a much better investment. That said, it takes time and a leap of faith from some of these other investors to get there and we're still in the early innings in terms of the education process.

[Operator:]

The next question comes from John Massocca of Ladenberg Thalman, please go ahead.

[John Massocca:]

With regards to leverage with the recent raise is there may be a conscious effort on your end to operate at the low end of your kind of stated leverage blend just given the flexibility that gives you with regards to the acquisition market?

[Andy Chien:]

Hey John, so 5 to 5.5 times is the range that we're comfortable operating in and in any given point in time we may be at the high-end or low-end, and when we get to the low-end we have like you mentioned that flexibility to execute transactions quickly and effectively and have significant capacity to do so as I mentioned in the prepared remarks. And then once we execute on that transaction then we can opportunistically term out that revolver drawn just kind of keep repeating the cycle is kind of the plan, so like you see the other net lease, traditional net lease do and it has worked for them, something that will follow.

[John Massocca:]

Understood. And then maybe switching gears more to kind of the actual transaction front, I know you got to talk in the past about kind of a four on the size of acquisitions where you maybe kind of sharpen the pencil on. Would that be mitigated by doing a large portfolio transaction of smaller assets? I just want to make sure that it's not a commentary on your thoughts and the viability of smaller kind of lower EBITDA assets?

[James Stewart:]

Well, it partially is the commentary on that. I think our belief is when you see these smaller assets they are almost by definition drawn from a customer base that is not as big in as robust and I believe that, that will yield greater risk to those individual assets. Now with that said, with the larger portfolio of deal and we got comfortable with the cross-collateralization impact of a transaction would mitigate that, we want to look at something that is accretive within our leverage targets and has the enduring value such that they can pay the rent over the entire life of that 30-year lease. We are confident that the assets can do that, that’s something that we would want to do. We don't -- we have a belief that you have the -- a large asset that has proven through time that it has the same power and is drawn from big customer base, those are also the beginners and benefit of our shareholders through the increased security that comes from owning such an asset.

[Operator:]

The next question comes from Cameron McKnight of Credit Suisse. Please go ahead.

[Cameron McKnight:]

First of all on Springfield. Can you give some thoughts on the supply outlook and specially given the back-and-forth that’s occurring on the Connecticut side of the border?

[James Stewart:]

Well, I'll say this around that point. If you have been out there, you'll see that it is the best asset in that entire region meaning most beautifully built, has the most activities within it, and is the place that I think people who are the customers they would most want to draw will most want to go. So we're just going to be the class of that region for over the years and I think will stay that way. And when you have that kind of asset that is the type of asset that is able to withstand the ebbs and flows of the marketplace. So I guess I would refer you to MGM's comments around the public statements around that as well. But from our perspective, we are not concerned about that asset's ability to come into the master lease and pay the rent for 30 solid years, and be valuable at the end of that time.

[Cameron McKnight:]

And then as far as MGM's intentions and their desire to dilute themselves down over time. Does that mean they might -- or might that imply perhaps a greater preference external equity in funding future transactions?

[James Stewart:]

It could since, if we acquire things from within the MGM portfolio for cash, that would likely mean that the dilution to their ownership comes from sort of the equity offerings of the type that we did recently, as well as some third-party transactions where either other sellers take units or equity as part of their consideration or if we buy those for cash. I think the only way that that doesn't happen is if they take meaningful partnership units back as consideration for one of the MGM assets, so I think the likely path would be the first two that I mentioned. Q - Cameron McKnight Got it, that makes perfect sense providing the accretion stacks up.

[James Stewart:]

Yes.

[Operator:]

The next question comes from John DeCree of Union Gaming. Please go ahead.

[John DeCree:]

I guess to follow up on the previous question a little bit more. As you think about doing third-party transactions away from MGM I think we had this conversation a little bit around Northfield Park when you were acquiring that asset. But how are you thinking about identifying additional partners and some of the criteria you consider for taking on a second tenant? What opportunities might make for you and what parameters might you kind of consider at a high level?

[James Stewart:]

So, I'll start and then Andy can follow in with his thoughts as well, but I think first and foremost any transaction has to meet the criteria that I outlined earlier in terms of being accretive within our leverage targets and being of the size that it has an impact on our FFO line and has enduring value such that it can pay the rent over the entire life of the lease. Given that that plays into how we view an operator partner to the extent that they are enhancing to the security of those cash flows then that's someone that we want to partner with to the extent that we become concerned over the viability in a downturn for example of an operator and their ability to pay the rent and maintain the property, that's someone who we would shy away from. So companies whereby we can ensure our own shareholders are protected in terms of they will at the most basic level pay the rent and maintain the property are the ones who we want to partner with. There's also an angle of trust that comes into it in terms of you don't want to be reliant on the courts or any kind of venue like that to try and enforce your lease rights. It's really important that you know when trust the other partners -- the other operator partners such that they're going to want a partner on future deals and pay the rent and maintain the property.

[Andy Chien:]

In addition to that, I'll just add that for the partners that we do talk to that there's more than just this transaction that we're thinking about, right? And there could be a future relationship, a future partnership for their strategic goals and their strategic growth thereafter or otherwise it’s for funding purposes if they want to do a sale leaseback. So striking one deal is not the end game, it’s the beginning and those are the partners that we look for.

[John DeCree:]

That's helpful, I appreciate the color on that guys. One last question as it relates to MGM and what plans they may come up with their real estate. As we think about what that means for you in terms of a logical pipeline source and also you've commented earlier in the call James about your industry leading rent coverage which is a very strong attribute of your equity, how do you think about of participating in opportunities if MGM may or may not look to monetize its real estate with you and as you kind of balance your growth trajectory as well as that security a bit that you get from the master lease?

[James Stewart:]

Ensuring that the rent is paid through rainy weather and sunny weather and everything else is obviously critical to us. Our coverage is very, very high right now, which is a positive otherwise I'm not sure we are getting completely compensated by the market for that very high level of coverage. The other thing that I would point to is not only are we secured by cash flows that come in from the assets, but we’re also secured by things such as stakes in joint ventures like China Re and so on. So securities rent flow is very high. We both MGM and MGP are very cognizant of the importance of maintaining a stable and thriving rental payment and rental coverage scenarios. So certainly not lost on us, and it’s something that we have to balance off as we always do in terms of growth versus coverage, which we focus on a great deal.

[Andy Chien:]

And John just to add one point there, not all of our peers have reported yet, but based on our coverage this quarter we’re 2 times better than next guy. So doing additional transactions still won’t even get us close to the next person.

[Operator:]

And we have a follow-up from Robin Farley of UBS. Please go ahead.

[Robin Farley:]

I just wanted to circle back in terms of when you think about potential new acquisitions, you talked about not overpaying for something you don’t care about having trophy on the strip. But you don’t have any particular objection to just having more Las Vegas cash flow exposure right, I know you are already heavily weighted towards Vegas but just wanted to see just sort of clarify that? And then also what if there were an asset has sort of 300 million to 400 million EBITDA where so it may end up being something that's cost in the 2 billion to 3 billion range perhaps is that -- is that -- is there anything about a size -- that size that would be either two bigger transaction for what you're looking for right or too much additional Vegas exposure?

[James Stewart:]

So I'll start then Andy if you have any comments please feel free. But we have -- well first I guess I would say our Las Vegas strip versus other region mix in terms of percentage contribution to the rent is actually less than 50% of Las Vegas. So we’re not particularly skewed to Las Vegas. That was approximately 70% of that has come down pretty sharply over the past three years. Second, we have no issue at all taking on a large or another strip property. We analyze each transaction under the lens of its ability to grow our AFFO accretively and endure through the entire term of the lease. So, if you believe that those things will occur with the transaction, whether it be on the Las Vegas strip or in Ohio or in New Jersey, that's the transaction that we want to do. In terms of size, the only thing that we need to be cognizant of is not doing something that is just so large that either overweight the portfolio to that asset which I cannot think of a single one that would do that. And I think if you have a transaction that's attractive to our shareholders i.e. accretive and on a [non-leveraging] basis, the demand for providing the capital for such a deal will be there. So we're not really concerned about the size at this point.

[Andy Chien:]

And the only thing I'd add is from a master lease and corporate guarantee standpoint the Las Vegas regional mix actually hasn't changed since IPO, right? We're still getting paid by the same tenant. Their profile has expanded regionally so that's permanent. And so the Las Vegas regional mix when it comes down to the credit that's paying is rather static even if we buy additional Vegas assets.

[Operator:]

The next question comes from Dave Hargreaves of Stifel, please go ahead.

[Dave Hargreaves:]

Hi, when I consider the Empire asset that you’ve acquired versus the Northfield asset, I think the acreage was pretty much similar if I'm not mistaken. And so if I look at the different price paid sort of the value per acre would appear to value Northfield higher, I'm just wondering how you think about that and how we should think about that?

[Andy Chien:]

Hi Dave, this is Andy, so in terms of Empire City the parcels that we acquired were approximately 60 of the total in terms of acreage.

[James Stewart:]

50 acres.

[Andy Chien:]

50 acres out of the total, in Ohio you're right it's over 100 or thereabouts. Empire City real estate and the land 50 miles north of Midtown Manhattan I think that's a great transaction for New York City real estate, an A cap and we have a ROFO on any future development. From an acreage standpoint, we do think about it that is one of the pillars of our valuation but also the cash flow generation capability, the tenant, the structure of the lease, the durability of that cash flow, that all factors into what we look at when we underwrite these transactions and having a great base of land in its location really gives us additional comfort.

[Dave Hargreaves:]

I mean I agree it's a fantastic parcel rent. I would assume that you guys are going to develop that it's overlooking the Manhattan skyline, I think it's got great potential. So far it sounds like there aren't big plans, just wondering.

[Andy Chien:]

In terms of future development, yes, clearly that’s a great opportunity. Those would be MGM decisions. Initially MGM dollars and then once complete that could be a potential transaction for us as we start talking about a potential growth over there.

[James Stewart:]

We have ROFO.

[Andy Chien:]

Well taking that ROFO and turning into transaction and talking about what kind of lease it could support, what we're going to pay for that et cetera.

[James Stewart:]

Right so the initial development dollars wouldn't come from us, they would be MGM dollars, we would then potentially through our ROFO acquire the improvement similar to what we did with Park MGM.

[Dave Hargreaves:]

I apologize if I missed this in the release but in the rent coverage that you gave us, were the different components of that, was that included in the release, if not would you mind just walking us through that real quick, how you came to 6.2?

[Andy Chien:]

Sure so it was not in the release and we will be updating that over the next couple of weeks in our investor presentations and alike. And so, we will provide some of that detail forthcoming.

[Operator:]

The next question comes from RJ Milliken of Baird. Please go ahead.

[RJ Milliken:]

Hey guys just want to follow up on leverage question, you guys announced the Park MGM acquisition in December, the equity wasn't attractive at that time, you guys waited a month and then tapped the equity market at a much more attractive price. So I'm curious if that's going to be the funding strategy for additional acquisitions, not necessarily match funding equity with announcements. Clearly, there was an overhang this time around but how do you think about that potential issue for future acquisitions?

[Andy Chien:]

So in terms of timing and the funding, we have the flexibility between the 5 and 5.5 times and we had the capacity to close on Park MGM with or without the equity offering. And so in terms of equity we will be opportunistic to issue when it’s right that we want to make sure that we fund and keep the balance sheet flexible, but also to protect the shareholdings of our existing shareholders along the way. And so we're very cognizant of that, and ensure that we have the capacity to close and then pick our spots as far as turning that out whether in the bond market or the equity markets.

[RJ Milliken:]

So as long as it’s within the sort of the leverage constraints, do you guys put on yourselves, are you willing to do additional acquisitions and not necessarily fund it until the market might be more attractive?

[Andy Chien:]

Well, we -- I mean we would prefer to be able to do it.

[James Stewart:]

Sort of on announcement in that situation given we had ample capacity to close and we had a very good sense of where the debt markets were, we are willing to sort of wait on that front. Generally speaking, we want to do it currently if we can.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to James Stewart, Chief Executive Officer for any closing remarks.

[James Stewart:]

Thank you everybody for your continued support. We look forward to talking to you again next quarter.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.