LEASES

6 Months Ended

Jun. 30, 2022

The Company leases real estate, land underlying certain of its properties, and various equipment under operating and, to a lesser extent, finance lease arrangements.

Real estate assets and land. The Company leases the real estate assets of its domestic resorts pursuant to triple-net lease agreements, which are classified as operating leases. The triple-net structure of the leases requires the Company to pay substantially all costs associated with each property, including real estate taxes, insurance, utilities and routine maintenance (with each lease obligating the Company to spend a specified percentage of net revenues at the properties on capital expenditures), in addition to the annual cash rent. Each of the leases also obligates the Company to comply with certain financial covenants, which, if not met, would 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 6 months or 1 year of rent, as applicable to the circumstances, under the VICI lease, 1 year of rent under the Mandalay Bay and MGM Grand Las Vegas lease, the Aria lease, and The

Cosmopolitan lease, and 2 years of rent under the Bellagio lease. The Company was in compliance with its applicable covenants under its leases as of June 30, 2022.

Bellagio lease. The Company leases the real estate assets of Bellagio from the Bellagio BREIT Venture. The Bellagio lease commenced November 15, 2019 and has an initial term of 30 years with two 10-year renewal periods, exercisable at the Company’s option, with a fixed 2% rent escalator for the first 10 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. Annual cash rent payments for the third lease year that commenced on December 1, 2021 increased to $255 million as a result of the 2% fixed annual escalator.

Mandalay Bay and MGM Grand Las Vegas lease. The Company leases the real estate assets of Mandalay Bay and MGM Grand Las Vegas from VICI BREIT Venture. The Mandalay Bay and MGM Grand Las Vegas lease commenced February 14, 2020 and has an initial term of 30 years with two 10-year renewal periods, exercisable at the Company’s option, with a fixed 2% rent escalator for the first 15 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%. Annual cash rent payments for the third lease year that commenced on March 1, 2022 increased to $304 million as a result of the 2% fixed annual escalator.

Aria lease. The Company leases the real estate assets of Aria (including Vdara) from funds managed by Blackstone. The Aria lease commenced September 28, 2021 and has an initial term of 30 years with three 10-year renewal periods, exercisable at the Company’s option, with a fixed 2% rent escalator for the first 15 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%. Annual cash rent payments for the first lease year that commenced on September 28, 2021 was $215 million.

The VICI lease and ground subleases. The Company leases the real estate assets of The Mirage, Luxor, New York-New York, Park MGM, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata, Empire City, MGM National Harbor, MGM Northfield Park, and MGM Springfield from VICI. The VICI lease commenced April 29, 2022 and has an initial term of 25 years, with three 10-year renewal periods, exercisable at the Company’s option, with a fixed 2% rent escalator for the first 10 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%. Additionally, the VICI lease provides VICI with a right of first offer with respect to any further gaming development by the Company on the undeveloped land adjacent to Empire City, which VICI may exercise should the Company elect to sell the property. Annual cash rent payments for the first lease year that commenced on April 29, 2022 was $860 million.

The Company is required to pay the rent payments under the ground leases of the Borgata, Beau Rivage, and National Harbor through the term of the VICI lease. The ground subleases of Beau Rivage and National Harbor are classified as operating leases and the ground sublease of Borgata is classified as a finance lease.

The Cosmopolitan lease. The Company leases the real estate assets of The Cosmopolitan from a subsidiary of BREIT. The Cosmopolitan lease commenced May 17, 2022 and has an initial term of 30 years with three 10-year renewal periods, exercisable at the Company’s option, with a fixed 2% rent escalator for the first 15 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%. Annual cash rent payments for the first lease year that commenced on May 17, 2022 was $200 million.

MGM China land concessions. MGM Grand Paradise has MGM Macau and MGM Cotai land concession contracts with the government of Macau, each with an initial 25-year contract term ending in April 2031 and January 2038, respectively, with a right to renew for further consecutive periods of 10 years, at MGM Grand Paradise’s option. The land leases are classified as operating leases.

Other information. Components of lease costs and other information related to the Company’s leases are:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In thousands)
Operating lease cost, primarily classified within “General and administrative”(1)	$	488,987	$	198,963	$	760,836	$	397,954

Finance lease costs
Interest expense(2)	$	1,811	$	(396)	$	2,704	$	(1,052)
Amortization expense	19,493		17,672		39,650		35,486
Total finance lease costs	$	21,304	$	17,276	$	42,354	$	34,434

(1)The Bellagio lease is held with a related party, as further discussed in Note 14. Operating lease cost includes $83 million for each of the three months ended June 30, 2022 and 2021 and $166 million for each of the six months ended June 30, 2022 and 2021 related to the Bellagio lease.

(2)For the three and six months ended June 30, 2021, interest expense includes the effect of COVID-19 related rent concessions which was recognized as negative variable rent expense.


	June 30, 2022		December 31, 2021
Supplemental balance sheet information	(In thousands)
Operating leases
Operating lease right-of-use assets, net(1)	$	24,773,652	$	11,492,805
Operating lease liabilities - current, classified within “Other accrued liabilities”	$	46,143	$	31,706
Operating lease liabilities - long-term(2)	25,135,947		11,802,464
Total operating lease liabilities	$	25,182,090	$	11,834,170

Finance leases
Finance lease right-of-use assets, net classified within “Property and equipment, net”	$	186,930	$	151,909
Finance lease liabilities - current, classified within “Other accrued liabilities”	$	73,034	$	87,665
Finance lease liabilities - long-term, classified within “Other long-term obligations”	121,758		75,560
Total finance lease liabilities	$	194,792	$	163,225

Weighted-average remaining lease term (years)
Operating leases	27		29
Finance leases	12		2

Weighted-average discount rate (%)
Operating leases	7		7
Finance leases	5		3

(1)As of June 30, 2022 and December 31, 2021, operating lease right-of-use assets, net included $3.6 billion related to the Bellagio lease.

(2)As of June 30, 2022 and December 31, 2021, operating lease liabilities – long-term included $3.8 billion related to the Bellagio lease.


	Six Months Ended June 30,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities	(In thousands)
Operating cash outflows from operating leases	$	588,690	$	309,321
Operating cash outflows from finance leases	2,686		2,576
Financing cash outflows from finance leases(1)	43,628		35,194

ROU assets obtained in exchange for new lease liabilities
Operating leases	$	15,528,718	$	1,651
Finance leases	87,840		—

(1)Included within “Other” within “Cash flows from financing activities” on the consolidated statements of cash flows.

Maturities of lease liabilities were as follows:


	Operating Leases		Finance Leases
Year ending December 31,	(In thousands)
2022 (excluding the six months ended June 30, 2022)	$	882,530	$	44,610
2023	1,792,609		72,205
2024	1,822,890		8,752
2025	1,853,797		8,250
2026	1,882,773		7,016
Thereafter	52,805,081		142,179
Total future minimum lease payments	61,039,680		283,012
Less: Amount of lease payments representing interest	(35,857,590)		(88,220)
Present value of future minimum lease payments	25,182,090		194,792
Less: Current portion	(46,143)		(73,034)
Long-term portion of lease liabilities	$	25,135,947	$	121,758