Blackstone Sells Stake in Two Vegas Hotels for $5.5B
Vici Properties, majority owner of MGM Grand, Mandalay Bay, acquires Blackstone's 49.9%.
Blackstone continues to cash out a big bet it made on Las Vegas hotels and scoop up its winnings.
Vici Properties, majority owner of the MGM Grand Las Vegas and the Mandalay Bay, has acquired Blackstone’s 49.9% stake in both hotels for $5.5B, the largest hotel-casino trade in Las Vegas this year.
Earlier this year, Blackstone sold the Cosmopolitan casino and hotel on the Las Vegas Strip for $5.65B, which the firm said was its most profitable transaction of single asset.
Blackstone will receive $1.27B in cash and Vici will assume Blackstone’s share of about $3B in debt, according to a report in the Wall Street Journal.
According to the WSJ, the NY-based investment firm is reaping a profit of $700M in the deal, including rent from operators during the past three years.
Blackstone bought the two hotels in 2020 from MGM Resorts in deal that let MGM remain the owner of the casino businesses at both venues. A joint venture of Blackstone and MGM Growth Properties took ownership of the hotels; Blackstone subsequently sold a 50.1% majority stake to the Vici REIT.
The move is part of a strategy by Blackstone to divest properties that have fixed returns and focus on assets that have more growth potential, the report said, noting that MGM Resorts International’s rent for the MGM Grand is $300M but only increases 2% annually.
The stake in the two hotels was sold by Blackstone REIT. According to the Journal, if Blackstone doesn’t flip the proceeds from the sale into new assets with higher yields, it may use the cash to cover a rise in redemptions by investors in its REIT.