Blackstone is folding its hand at a pair of Las Vegas hotels, selling to its stake partner at the properties.
The investment firm is selling its 49.9 percent stake in the MGM Grand Las Vegas and Mandalay Bay to Vici Properties, which owns the remaining stake, the Wall Street Journal reported. Blackstone is set to receive almost $1.3 billion in cash and Vici will assume $3 Blackstone’s share in a $3 billion debt.
The deal values the properties at $5.5 billion, making this one of the year’s biggest casino transactions. People familiar with the transaction told the outlet Blackstone is set to profit $700 million in the next three years.
Rent for MGM Resorts International’ at the properties is $300 million and rises roughly 2 percent every year.
Blackstone’s motivation for the sale is twofold. The company told Bloomberg it will use proceeds from the sale to invest in other core assets like multifamily buildings and industrial properties. People familiar with the deal told the outlet it can help the company cover a rise in redemptions from Blackstone Real Estate Income Trust investors, which is the seller of the property stakes.
The sale is expected to close in the first quarter.
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Blackstone purchased the properties from MGM Resorts in 2020, though MGM Resorts continued to own the casino business. Blackstone and spinoff MGM Growth Properties owned the underlying real estate. Vici, a REIT, agreed last year to buy MGM Growth Properties in a deal valuing the latter at $17.2 billion.
This is Blackstone’s second massive sale in Las Vegas this year. The firm also sold the Cosmopolitan casino and hotel for $5.65 billion, which the company hailed as the most-profitable sale of a single asset in its history.
Blackstone purchased the Cosmopolitan eight years ago for $1.8 billion. The company stood to make nearly $4.1 billion in profit from the sale, while making back close to 10 times the equity it invested in the business.
— Holden Walter-Warner