MGM Resorts introduced that the Las Vegas-based gaming big bought the Cosmopolitan of Las Vegas from Blackstone for $1.625 billion.
Earlier this month, it was reported that the New York-based funding group was looking for to promote the Las Vegas Strip on line casino at a $5 billion price ticket. While this buy is for significantly lower than the asking value, Blackstone will nonetheless personal the underlying actual property and act as a landlord for MGM.
According to the press release, MGM will enter right into a 30-year lease settlement with Blackstone and can have three 10-year renewal choices. Blackstone will obtain $200 million in annual hire funds from MGM. At the top of the 30 years, Blackstone will obtain a complete of $6 billion in hire funds.
Blackstone already owns the actual property for a number of of MGM’s different Las Vegas properties and has been gathering hire from the corporate for almost two years.
The $1.625 billion buy value represents eight instances EBITDA (earnings earlier than curiosity, taxes, depreciation, and amortization), as nicely “expected operational synergies and identified revenue growth opportunities.”
“We are proud to add The Cosmopolitan, a luxury resort and casino on the Las Vegas Stirp, to our portfolio,” mentioned MGM Resorts CEO & President Bill Hornbuckle within the launch. “The Cosmopolitan brand is recognized around the world for its unique customer base and high-quality product and experiences, making it an ideal fit with our portfolio and furthering our vision to be the world’s premier gaming entertainment company. We look forward to welcoming The Cosmopolitan’s guests and employees to the MGM Resorts family.”
MGM’s buy additionally falls in step with its current “asset-light strategy” the corporate started implementing just a few years in the past. The thought is that the corporate will personal the personal the on line casino enterprise, however is not going to personal any underlying actual property, permitting it to have extra capital on the steadiness sheet.
MGM began transferring on this course in October 2019 when it offered Bellagio to Blackstone for $4.25 billion. It then offered MGM Grand and Mandalay Bay to Blackstone and its personal actual property funding belief, MGM Growth Properties, for a mixed $4.6 billion just a few months later. It capped off the technique by promoting Aria and Vdara to none aside from Blackstone for $3.89 billion.
The transaction is anticipated to be finalized within the first half of 2022 and is topic to the approval of Nevada’s regulators. There had been no issues with any earlier transactions made between the 2 firms.
