Blackstone Sells The Cosmopolitan for $5.65B

Real estate deal-making continues in a flurry along Las Vegas Boulevard.

Blackstone announced that Blackstone Real Estate Partners has reached an agreement to sell The Cosmopolitan of Las Vegas for $5.65 billion.

The transaction is expected to close in early 2022, subject to regulatory approvals and other customary closing conditions.

Since acquiring The Cosmopolitan in 2014, Blackstone, alongside a best-in-class management team, transformed the resort into the leading destination on the Las Vegas Strip. The Cosmopolitan opened between the Bellagio and Crystals in 2010.

Blackstone implemented significant operational changes and invested over $500 million into the property to renovate nearly 3,000 guest rooms, build 67 new rooms and suites, enhance the food and beverage offerings and dramatically improve the gaming amenities and common areas. 

Tyler Henritze, head of acquisitions Americas for Blackstone Real Estate, said: “This transaction underscores Blackstone’s ability to acquire and transform large, complex assets. As owners of The Cosmopolitan, we invested strategic capital and brought our expertise and experience in the lodging space to create the most dynamic destination on the Las Vegas Strip. 

Asset’s Operations and Underlying Real Estate Valued Differently

Under the agreement, MGM Resorts International will acquire the operations of The Cosmopolitan and sign a long-term net lease with a partnership between Cherng Family Trust, Stonepeak Partners and Blackstone Real Estate Income Trust, which will acquire The Cosmopolitan’s real estate assets.

“Stonepeak, in partnership with the Cherng Family Trust, believes this transaction represents a fantastic opportunity to invest in the underlying real estate of The Cosmopolitan of Las Vegas, a solid asset with an irreplaceable location, durable cash flows and the potential for additional upside,” said Phill Solomond, head of real estate at Stonepeak.

Plenty of Deals on Las Vegas Boulevard

This isn’t the first time MGM Resorts entered a similar deal. In 2019, the company sold the Bellagio’s real estate for $4.2 billion to Blackstone and now pays $245 million a year to rent the land, reported Vegas Eater. Just last week, MGM Resorts bought out Dubai World’s stake in CityCenter, giving the company full ownership of Vdara and Aria. When that $2.1 billion deal closes, MGM Resorts plans to sell both resorts to Blackstone for $3.89 billion and lease back the resorts for $245 million a year.

It continues a trend of deals along Las Vegas Boulevard, the Las Vegas Review-Journal reported.

Last month, Vici Properties announced that it would acquire MGM’s real estate investment company MGM Growth Properties in a massive $17.2 billion deal, with MGM continuing to operate the properties that Vici is acquiring. MGM expects to receive roughly $4.4 billion in cash from that transaction.

MGM last week got regulator approval to buy out Dubai World’s 50 percent stake in CityCenter for roughly $2.1 billion, giving MGM full ownership of the Aria and Vdara resorts. Once that deal closes, MGM intends to sell both properties to Blackstone for $3.89 billion as part of a lease-back deal, with MGM paying $215 million in rent annually.