Blackstone to sell Las Vegas Cosmopolitan for $ 5.65 billion

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MGM Resorts International will acquire the operations of The Cosmopolitan, the luxury casino and hotel on the Las Vegas Strip, for $ 1.625 billion from private equity giant Blackstone.

MGM and Blackstone both announced the deal on Monday.

Private equity firm Blackstone Real Estate Partners VII LP sells hotel and casino real estate assets to Cherng Family Trust, which was started by billionaires Andrew and Peggy Cherng of fast food chain Panda Express, the company alternative real estate investment firm Stonepeak Partners and Blackstone Real Estate Income Trust, Inc. for more than $ 4 billion.

Once the transaction is completed, MGM will enter into a 30-year lease with three 10-year renewal options. The casino operator will pay $ 200 million in annual rent, which will increase by 2% per year for the first 15 years.

Blackstone first bought The Cosmopolitan from Deutsche Bank for $ 1.7 billion in 2014. According to the the Wall Street newspaperBlackstone told its investors in a private letter that the deal marked its most profitable sale of a single real estate asset ever. Profits from the sale would amount to more than $ 4.1 billion, the WSJ reported.

Bill Hornbuckle, CEO and President of MGM Resorts, said in a statement that The Cosmopolitan is an “ideal fit” for the company’s portfolio, which includes 31 hotels and casinos in the United States, Macau and Japan like the Mandalay Bay, the Bellagio and MGM Grand.

Blackstone has injected $ 500 million in renovations into The Cosmopolitan, which has 3,032 rooms, since purchasing the property. The Cosmopolitan also has a 110,000 square foot casino, 26 restaurants and bars, a 3,200 seat theater, nightclub and 243.00 square feet of meeting space.

The property sits on the Las Vegas Strip alongside other properties operated by MGM including the Bellagio, Aria, Park MGM, and MGM Grand.

This is not the first time that MGM and the Blackstone Real Estate Investment Trust have done business together in Las Vegas. In 2019, Blackstone Real Estate Income Trust, Inc. purchased the Bellagio from MGM for $ 4.25 billion in a sale and leaseback transaction. In 2020, Blackstone Real Estate Income Trust, Inc. and MGM Growth Properties acquired the real estate assets of MGM Grand and Mandalay Bay for $ 4.6 billion.

Las Vegas is Blackstone Real Estate Income Trust, Inc.’s largest marketplace – 17% of its portfolio is in Sin City, the largest percentage of its portfolio in any US city.

After a long recession due to the Covid-19 pandemic, Las Vegas is booming. In July, Sin City posted its best financial performance in eight years with $ 794 million in gaming revenue. July posted a 46% increase over pre-pandemic revenue in July 2019, according to Nevada Gaming Control. Board. Statewide, gaming revenue reached $ 1.36 billion for the month, making July the fifth consecutive $ 1 billion month and a 33% increase from July 2019.

In August, Macquarie Research called the outlook for Las Vegas “optimistic” with hopes that Sin City will return to pre-pandemic levels by mid-2022.

Earlier this summer, Vici Properties, a casino-focused real estate investment trust, announced that it will acquire MGM Growth Properties, which is controlled by MGM Resorts International, for $ 17.2 billion.

In March, nearly two months after the death of casino mogul Sheldon Adelson, Las Vegas Sands struck a deal to sell its Las Vegas properties, which include the Venetian Resort and the Sands Expo and Convention Center, to Apollo Global Management for $ 6.25 billion.

The transaction is expected to be finalized in early 2022.


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