Over the past several years, MGM Resorts International has aimed to become asset-light, and hours before the company’s second quarter earnings call, the Las Vegas-based casino and resort operator announced a major step forward toward that goal.

MGM Resorts and Vici Properties, a real estate investment trust that specializes in casinos, said Vici would acquire MGM Growth Properties in a deal valued at $17.2 billion. MGM Resorts spun off MGP into a REIT in late 2015 and remained its controlling shareholder.

MGM Resort President and CEO Bill Hornbuckle said the company has been actively shedding assets over the past 90 days. Deals included a sale-leaseback of MGM Springfield’s underlying real estate to MGP.

In July, MGM Resorts announced it will acquire Infinity World’s 50% stake in CityCenter and entered into a sale-leaseback agreement with Blackstone for the gaming assets. CityCenter is the Las Vegas Strip complex that includes the Aria and Vdara hotels.

MGM Resorts has spent significant time and effort to deconsolidate MGP, Hornbuckle said. The deal with Vici achieves that goal while allowing the company to monetize a majority of its operating partnership units for about $4.4 billion in cash.

“This is a great win for MGM and MGP,” he said during the earnings call. “We're excited by our new long-term partnership with Vici.”

These transactions have granted MGM Resorts greater flexibility through $11.6 billion in domestic liquidity, he said. It also allows the company to intensify its focus on growing its core business and pursuing new opportunities that align with its long-term vision.

MGM Resorts' properties on the Las Vegas Strip reported net revenue of $1 billion, a 566% year-over-year increase but a 31% decrease compared to the second quarter of 2019, according to the company’s earnings release.

Occupancy grew year over year from 43% to 77% while average daily rate dipped from $154 to $149. Revenue per available room jumped from $66 to $115.

Pent-up consumer demand and high domestic casino spending drove domestic performance, Hornbuckle said. On the Strip, weekend volumes are back to normal because of leisure and domestic casino customers. ADR is now surpassing 2019 levels.

Weekday performance continues to improve but still lags behind weekend performance due to the lower level of group business, he said. However, citywide events in June drew some groups, and the company expects more events in the third and fourth quarter.

“Our lead volumes ... for the year ... [are] now close to normal levels, which we expect will help midweek occupancy uplift in the back half of the year,” he said.

Full convention business recovery will occur after 2021 and solidify in the second half of 2022, he said.

The rising number of COVID-19 cases from the Delta variant, subsequent guidance from the U.S. Centers for Disease Control and Prevention and reinstituted mask mandates in Las Vegas are a reminder the pandemic is not over, Hornbuckle said. The company continues to facilitate vaccinations for employees and guests. Starting in July, the company required mandatory COVID-19 testing for all Las Vegas employees who have not shown proof of vaccination.

Net revenue at MGM's regional properties reached $856 million in the quarter, aided by the continued easing of statewide restrictions, Chief Financial Officer Jonathan Halkyard said. That is 6% below net revenue in the second quarter of 2019. Adjusted earnings before, interest, taxes, depreciation, amortization and rent costs was $318 million, a 22% increase over 2019 levels. The second-quarter regional margin of 37% was an all-time record, growing 855 basis points over the second quarter of 2019.

“Our regional margin growth is a continued testament to all the great work that our teams have put into maximizing the effectiveness of our operating model and rethinking how we run our business,” he said.

Efforts including marketing reinvestment, procurements, energy use and labor management give him confidence the company will deliver $450 million of cost savings domestically, Halkyard said.

The company expects “to right-size labor” in the near team, Halkyard said. That will have a favorable affect on margins, but it has become a bottleneck in certain segments of operations, negatively affecting EBITDAR.

During the second quarter, MGM China’s properties in Macau delivered sequential improvements over the first quarter, Hornbuckle said. MGM Macau and MGM Cotai continue to outperform in the marketplace.

As vaccinations roll out through the region and there is sustainable easing of travel restrictions, Macau will recover, he said.

“While the region had felt some additional speed bumps in recent days, with the government's expeditious efforts to contain the outbreak and border restrictions easing over time, we expect gradual growth demand for travel to Macau throughout the end of the second half of the year,” he said.

Gross gaming revenue improved 7% across the market in the second quarter, but it remains depressed at only 35% of levels achieved during the second quarter of 2019, Halkyard said. Still, MGM China net revenue reached $311 million.