Blackstone Stake Sale Values MGM Grand, Mandalay Bay at $5.5 Billion
Blackstone Inc.
has agreed to sell its 49.9% stake in two Las Vegas hotels in a deal that values the properties at $5.5 billion, marking one of the largest U.S. casino transactions this year.
The New York investment firm is selling its stake in the MGM Grand Las Vegas and the Mandalay Bay to Vici Properties Inc., which owns the other 50.1% stake in the properties, the companies said. Blackstone would receive $1.27 billion in cash, and Vici would assume Blackstone’s share of some $3 billion in debt, according to the companies.
The sale, which is expected to close early in the first quarter, would bring a profit of more than $700 million for Blackstone in less than three years, including rent from the operator, according to people familiar with the matter.
Blackstone has been reacting to the sharp increase in interest rates this year in part by exiting real-estate investments that have fixed returns and focusing on those that have more growth potential.
MGM Resorts International
‘s rent is currently about $300 million and increases about 2% annually. Blackstone said it can use the proceeds from the sale to buy higher-returning assets, including rental apartments and industrial properties.
Additionally, Blackstone can build up its cash position to cover a rise in redemptions by investors in Blackstone Real Estate Income Trust, its nontraded real-estate investment trust, which is selling the stake in the two properties, the people said.
Blackstone purchased the properties in 2020 from
MGM Resorts
in a complicated transaction in which MGM Resorts continued to own the casino businesses, and a venture of Blackstone and MGM Growth Properties, a spinoff, acquired the underlying real estate. The Blackstone venture collected rent from MGM Resorts. MGM Growth Properties was subsequently acquired by Vici, a real-estate investment trust.
Las Vegas is enjoying increased tourism and gambling. Hotel revenue in Las Vegas was up 51% in October compared with October 2019, according to the Las Vegas Convention and Visitors Authority.
Blackstone’s investments in Las Vegas have been a big moneymaker for the firm. Earlier this year, Blackstone sold the Cosmopolitan casino and hotel on the Las Vegas Strip for $5.65 billion. It was the firm’s most-profitable sale of a single asset ever, according to a letter Blackstone sent to investors.
Blackstone has said it remains bullish on the city because of its high growth, low taxes and popularity as a leisure travel destination.
Write to Peter Grant at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Blackstone Inc.
has agreed to sell its 49.9% stake in two Las Vegas hotels in a deal that values the properties at $5.5 billion, marking one of the largest U.S. casino transactions this year.
The New York investment firm is selling its stake in the MGM Grand Las Vegas and the Mandalay Bay to Vici Properties Inc., which owns the other 50.1% stake in the properties, the companies said. Blackstone would receive $1.27 billion in cash, and Vici would assume Blackstone’s share of some $3 billion in debt, according to the companies.
The sale, which is expected to close early in the first quarter, would bring a profit of more than $700 million for Blackstone in less than three years, including rent from the operator, according to people familiar with the matter.
Blackstone has been reacting to the sharp increase in interest rates this year in part by exiting real-estate investments that have fixed returns and focusing on those that have more growth potential.
MGM Resorts International
‘s rent is currently about $300 million and increases about 2% annually. Blackstone said it can use the proceeds from the sale to buy higher-returning assets, including rental apartments and industrial properties.
Additionally, Blackstone can build up its cash position to cover a rise in redemptions by investors in Blackstone Real Estate Income Trust, its nontraded real-estate investment trust, which is selling the stake in the two properties, the people said.
Blackstone purchased the properties in 2020 from
MGM Resorts
in a complicated transaction in which MGM Resorts continued to own the casino businesses, and a venture of Blackstone and MGM Growth Properties, a spinoff, acquired the underlying real estate. The Blackstone venture collected rent from MGM Resorts. MGM Growth Properties was subsequently acquired by Vici, a real-estate investment trust.
Las Vegas is enjoying increased tourism and gambling. Hotel revenue in Las Vegas was up 51% in October compared with October 2019, according to the Las Vegas Convention and Visitors Authority.
Blackstone’s investments in Las Vegas have been a big moneymaker for the firm. Earlier this year, Blackstone sold the Cosmopolitan casino and hotel on the Las Vegas Strip for $5.65 billion. It was the firm’s most-profitable sale of a single asset ever, according to a letter Blackstone sent to investors.
Blackstone has said it remains bullish on the city because of its high growth, low taxes and popularity as a leisure travel destination.
Write to Peter Grant at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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