Blackstone Sells Stake of MGM Grand and Mandalay Bay Hotels
The deal is one of largest U.S. casino transactions this year.
Blackstone will sell its 49.9 percent stake in the MGM Grand Las Vegas and Mandalay Bay hotels in Las Vegas to Vici Properties, giving a $5.5 billion valuation to both properties, The Wall Street Journal reported.
The deal — one of the largest for a casino in the country this year — gives Vici Properties full ownership of both properties, as it already owns a 50.1 percent stake, according to The Wall Street Journal. Vici will take over Blackstone’s share of nearly $3 billion in debt while Blackstone will get $1.27 billion in cash as part of the deal, the Journal reported.
“Aside from the size of the deal, the transaction is noteworthy given Vici’s partner and seller of the interest is Blackstone Real Estate Income Trust,” said Al Otero, portfolio manager at Armada ETF Advisors. “Another noteworthy aspect of the deal is that the venture’s attractive debt structure will remain in place, with a fixed interest rate of 3.55 percent through 2030, a financing cost which could not be replicated in the current environment.”
The sale is said to bring a profit of more than $700 million for Blackstone less than three years after it bought stakes in both hotels, WSJ reported.
Blackstone bought the properties from MGM Resorts in 2020, in a deal that valued them at $4.6 billion. The structure of that sale allowed MGM to operate the casinos at both hotels while paying Blackstone rent, according to the Journal. And a Blackstone and MGM Growth Properties joint venture owned the underlying real estate of them, according to the Journal.
Vici bought MGM Growth for $17.2 billion earlier this year, making it the largest casino owner on the Las Vegas Strip with a portfolio totaling 1.2 million square feet of gaming space, nearly 40,775 hotels and 5.9 million square feet of meeting and convention space.
Meanwhile, Las Vegas continues to be a cash cow for Blackstone. The New York investment firm sold the Cosmopolitan casino and hotel on the Las Vegas Strip for $5.65 billion earlier this year, the most profitable sale of a single property ever for Blackstone, according to a Blackstone release.
Officials at Blackstone and Vici Properties did not immediately respond to a request for comment.
Update: This story originally misattributed source material. This has been corrected. We apologize for the error.
Emily Fu can be reached at efu@commercialobserver.com.
