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Leases | 9 Months Ended
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Sep. 30, 2020
Leases [Abstract] |
Leases | NOTE 6 — LEASES The Company leases the land underlying certain of its properties, real estate, and various equipment under operating and, to a lesser extent, finance lease arrangements. The master lease agreement with MGP is eliminated in consolidation and, accordingly is not included within the disclosures below; refer to Note 11 for further discussion of the master lease with MGP. Bellagio real estate assets. The lease provides for an initial annual rent for the lease year beginning November 15, 2019 and ending November 30, 2020 of $245 million with a fixed 2% escalator for the first ten years and, thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3% during the 11th through 20th years and 4% thereafter. T he lease requires the Company to spend a specified percentage of net revenues at the property on capital expenditures and for the Company to comply with certain financial covenants, which, if not met, would require the Company to maintain cash security or a letter of credit in favor of the landlord in an amount equal to rent for the succeeding two-year period. The Company was in compliance with its applicable covenants as of September 30, 2020. Mandalay Bay and MGM Grand Las Vegas real estate assets. Pursuant to a lease agreement between a subsidiary of the Company and MGP BREIT Venture, the Company leases the real estate assets of Mandalay Bay and MGM Grand Las Vegas from the MGP BREIT Venture. The Mandalay Bay and MGM Grand Las Vegas lease has an initial term of 30 years with two subsequent ten-year renewal periods, exercisable at the Company’s option. The lease provides for an initial annual rent for the lease year beginning February 14, 2020 and ending February 28, 2021 of $292 million with a fixed 2% escalator for the first fifteen years and, thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3%. The Company does not consider the renewal options reasonably certain of being exercised and, accordingly, has determined the lease term to be 30 years. In consideration of such, the Company determined the expected lease term of 30 years to be less than 75% of the economic useful life of the real estate assets of Mandalay Bay and MGM Grand Las Vegas. Further, the MGP BREIT Venture provided its implicit rate to the Company, with which the Company determined that the present value of the future lease payments is less than 90% of the fair market value of the Mandalay Bay and MGM Grand Las Vegas real estate assets. Accordingly, in consideration of these lease classification tests, as well as the fact that the lease does not transfer ownership of the assets back to the Company at the end of the lease term or grant the Company a purchase option and the real estate assets have alternative uses at the end of the lease term, the Company classified the Mandalay Bay and MGM Grand Las Vegas lease as an operating lease. In addition, the lease requires the Company to spend a specified percentage of net revenues at the properties on capital expenditures and for the Company to comply with certain financial covenants, which, if not met, will require the Company to maintain cash security or provide one or more letters of credit in favor of the landlord in an amount equal to the rent for the succeeding one-year period. The Company was in compliance with its applicable covenants as of September 30, 2020. Other information. Components of lease costs and other information related to the Company’s leases was as follows:
| Three Months Ended |  |  | Nine Months Ended |
| September 30, |  |  | September 30, |
|  | 2020 |  |  |  | 2019 |  |  |  | 2020 |  |  |  | 2019 |
| (In thousands) |
Operating lease cost, primarily classified within "General and administrative"(1) | $ | 199,166 |  |  | $ | 25,520 |  |  | $ | 551,807 |  |  | $ | 75,777 |
Finance lease costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense(2) | $ | (5,990 | ) |  | $ | 208 |  |  | $ | (19,796 | ) |  | $ | 621 |
Amortization expense |  | 17,851 |  |  |  | 2,277 |  |  |  | 52,495 |  |  |  | 7,247 |
Total finance lease costs | $ | 11,861 |  |  | $ | 2,485 |  |  | $ | 32,699 |  |  | $ | 7,868 |
(1) | For the three and nine months ended September 30, 2020, operating lease cost includes $83 million and $248 million related to the Bellagio lease, respectively, and $99 million and $248 million related to the Mandalay Bay and MGM Grand Las Vegas lease, respectively.
(2) | For the three and nine months ended September 30, 2020, interest expense includes the effect of COVID-19 related rent concessions received on certain finance leases, for which such effect was recognized as negative variable rent expense.
| September 30, |  |  | December 31, |
| 2020 |  |  | 2019 |
Supplemental balance sheet information | (In thousands) |
Operating leases |  |  |  |  |  |  |
Operating lease right-of-use assets, net(3) | $ | 8,330,530 |  |  | $ | 4,392,481 |
Operating lease liabilities - current, classified within "Other accrued liabilities" | $ | 35,651 |  |  | $ | 67,473 |
Operating lease liabilities - long-term(4) |  | 8,380,341 |  |  |  | 4,277,970 |
Total operating lease liabilities | $ | 8,415,992 |  |  | $ | 4,345,443 |
Finance leases |  |  |  |  |  |  |
Finance lease right-of-use assets, net classified within "Property and equipment, net" | $ | 217,321 |  |  | $ | 93,437 |
Finance lease liabilities - current, classified within "Other accrued liabilities" | $ | 79,087 |  |  | $ | 27,975 |
Finance lease liabilities - long-term, classified within "Other long-term obligations" |  | 151,472 |  |  |  | 67,182 |
Total finance lease liabilities | $ | 230,559 |  |  | $ | 95,157 |
Weighted-average remaining lease term (years) |  |  |  |  |  |  |
Operating leases |  | 30 |  |  |  | 31 |
Finance leases |  | 3 |  |  |  | 4 |
Weighted-average discount rate (%) |  |  |  |  |  |  |
Operating leases |  | 8 |  |  |  | 7 |
Finance leases |  | 3 |  |  |  | 3 |
(3) | As of September 30, 2020 and December 31, 2019, operating lease right-of-use assets, net included $3.7 billion and $3.7 billion related to the Bellagio lease, respectively and $4.1 billion and $0 related to the Mandalay Bay and MGM Grand lease, respectively.
(4) | As of September 30, 2020 and December 31, 2019, operating lease liabilities – long-term included $3.8 billion and $3.7 billion related to the Bellagio lease, respectively and $4.1 billion and $0 related to the Mandalay Bay and MGM Grand lease, respectively.
| Nine Months Ended |
| September 30, |
|  | 2020 |  |  |  | 2019 |
Cash paid for amounts included in the measurement of lease liabilities | (In thousands) |
Operating cash outflows from operating leases | $ | 421,932 |  |  | $ | 66,562 |
Operating cash outflows from finance leases |  | 1,741 |  |  |  | 621 |
Financing cash outflows from finance leases |  | 19,514 |  |  |  | 5,533 |
ROU assets obtained in exchange for new lease liabilities |  |  |  |  |  |  |
Operating leases | $ | 4,120,312 |  |  | $ | 45,387 |
Finance leases |  | 175,446 |  |  |  | 4,215 |
Maturities of lease liabilities were as follows:
| Operating Leases |  |  | Finance Leases |
Year ending December 31, 2020 | (In thousands) |
2020 (excluding the nine months ended September 30, 2020) | $ | 152,226 |  |  | $ | 28,720 |
2021 |  | 610,886 |  |  |  | 73,951 |
2022 |  | 615,855 |  |  |  | 72,240 |
2023 |  | 625,365 |  |  |  | 63,718 |
2024 |  | 635,755 |  |  |  | 1,034 |
Thereafter |  | 20,445,881 |  |  |  | 517 |
Total future minimum lease payments |  | 23,085,968 |  |  |  | 240,180 |
Less: Amount of lease payments representing interest |  | (14,669,976 | ) |  |  | (9,621 | )
Present value of future minimum lease payments |  | 8,415,992 |  |  |  | 230,559 |
Less: Current portion |  | (35,651 | ) |  |  | (79,087 | )
Long-term portion of lease liabilities | $ | 8,380,341 |  |  | $ | 151,472 |

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