MGM Offloads Bellagio to Blackstone for $6.3bn


Global casino giant MGM Resorts International has agreed to sell the Bellagio resort in Las Vegas to Blackstone Group for US$4.25 billion (A$6.3bn) and will continue to operate the property under a lease arrangement.

MGM, the largest operator of casinos on the Las Vegas Strip, has been under severe pressure by investors to unload its remaining company-owned casinos, cutting and reorganising management, and previously sold all but four of its wholly-owned casinos.

The sales have allowed MGM to free up cash to expand while letting them continue to manage their resorts.

MGM Resorts will sign a long-term lease and continue to be responsible for all operations and capital expenditures of the Bellagio, with the joint venture owning the property and receiving rent payments.

The company is keeping a 5 per cent stake in the Blackstone-led venture that’s buying Bellagio.

The resort operator’s other holdings include MGM Grand, MGM Springfield, its 50 per cent stake in CityCenter and 68 per cent economic ownership in MGM Growth Properties.

“This transaction confirms the premium value of our owned real estate assets, highlights the unique value of Bellagio as a premier asset in gaming and solidifies our status as a premier operator of gaming and entertainment properties,” MGM Resorts chief executive Jim Murren said.

▲ Blackstone Real Estate has a deep history and expertise in the Las Vegas real estate market across asset classes including office, hospitality and residential. Image: Alamy

New York-based private equity giant Blackstone—which has $794 billion in real estate under management—is familiar with the gaming industry.

The firm's holdings include Cirsa Gaming Corp in Spain which it acquired last year for about US$1.8 billion, and the Cosmopolitan of Las Vegas, which it acquired in 2014 for US$1.7 billion.

Blackstone’s expertise in operational improvement also gives it confidence to chase the largest and most complex deals, which few other firms have the capabilities to look at.

“As big believers in MGM Resorts and Las Vegas, we are thrilled to partner with MGM to acquire the Bellagio on behalf of our BREIT investors,” Blackstone president Jon Gray said.

“We look forward to a long and productive partnership with this world-class company.”

MGM also agreed to sell the Circus Circus property on the Strip, along with 47 adjoining acres, to real estate mogul Phil Ruffin for US$825 million.

The two deals come of the back of adding Keith Meister to their board earlier this year.

Meister is the chief investment officer of Corvex Management, which owned roughly 3 per cent of MGM’s shares as of January.

Back home, Blackstone set a new Australian record for office property when it paid Scentre $1.52 billion for the office towers above Westfield Sydney earlier this year.

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