$3B Bellagio Loan From Morgan Stanley, Citi, Chase Hits CMBS Market


The three big banks behind one of the year’s biggest single-asset CMBS deals are hoping their latest loan isn’t a dice roll.

Morgan Stanley, Citigroup and J.P. Morgan Chase have teamed up to lend $3.01 billion to fund Blackstone‘s acquisition of the fee interest in the Bellagio resort in Las Vegas, according to Kroll Bond Rating Agency (KBRA), which analyzed the CMBS deal.

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A $2.05 billion portion of the debt will be securitized into BX Trust 2019-OC11, an upcoming single-asset CMBS deal.

Commercial Observer broke the news in October that J.P. Morgan would lead the deal, which funds Blackstone’s $4.25 billion acquisition of a 95 percent stake in the storied hotel and casino. MGM Resorts, which will continue to operate the resort as Blackstone’s leasehold tenant, retains a 5 percent fee-interest ownership share as well.

As the ground-lease owner, Blackstone stands to earn lease payments starting at $245 million per annum from MGM, a sum that will increase 2 percent per year for the first 10 years, as per KBRA. (After a decade, the terms can be renegotiated.) Blackstone, in turn, will pay a fixed 3.67 percent interest rate on the 10-year debt, with no principal payments due until the loan matures. 

KBRA’s financial analysis of the CMBS debt shows that the Bellagio earned nearly $400 million — about 30 percent of its total revenue — from its casino in the 12-month period that ended in September. Lodging and food-and-beverage operations generated slightly smaller shares of the total haul.

All told, the resort earned $1.35 billion during that yearlong period, which amounted to $474.1 million in net cash flow after taking expenses into account.

A Blackstone spokeswoman declined to comment.