MGM Resorts has announced a new multi-way deal under which it will acquire the operations of The Cosmopolitan of Las Vegas and lease the real estate assets from a group comprising Stonepeak Partners, Cherng Family Trust and Blackstone Real Estate Income Trust, Inc.
The deal forms part of a US$5.65 billion sale of the property by The Blackstone Group, announced overnight and coming some seven years after acquiring the property for US$1.7 billion from Deutsche Bank in 2014.
Under the terms of the arrangement, MGM Resorts will pay US$1.625 billion in cash for The Cosmopolitan’s operations and enter into a 30-year lease agreement, plus three 10-year renewal options, with the Stonepeak, Cherng Family Trust and Blackstone Real Estate Income Trust group. The group is acquiring The Cosmopolitan’s real estate assets from Blackstone as part of the multi-way deal.
MGM will pay an initial annual rent of US$200 million for use of those assets, escalating annually at 2% for the first 15 years and the greater of 2% or the CPI increase, capped at 3%, thereafter, the company said.
“We are proud to add The Cosmopolitan, a luxury resort and casino on the Las Vegas Strip, to our portfolio,” said MGM Resorts CEO & President Bill Hornbuckle.
“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 said The Cosmopolitan had generated US$959 million in net revenue and US$316 million of adjusted EBITDAR in the 12 months immediately prior to COVID-19.
The transaction comes almost three months after MGM reached an agreement to buyout the 50% stake it didn’t already own in another Las Vegas Strip property, CityCenter, which had been held by Infinity World Development Corp, then on-sell the entire real estate assets of the complex to Blackstone.
MGM has also sold off most of the operating partnership units it holds in real estate investment trust MGM Growth Properties LLC (MGP) to VICI Properties Inc via series of transactions worth more than US$7 billion combined.
It looms as a busy period for MGM, which is expected to be officially named as the preferred partner of Osaka city and prefecture at a press conference later today to develop one of Japan‘s first integrated resorts.
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