MGM sells Las Vegas properties for $5bn

January 2020 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

January 2020 Issue

In a joint venture (JV) transaction that will see iconic Las Vegas properties change hands, Blackstone Real Estate Income Trust (BREIT) is to acquire the Bellagio real estate from MGM Resorts International for $4.25bn in a sale-leaseback transaction.

As part of the transaction, MGM Resorts will lease the property from the JV and continue to manage, operate and be responsible for all aspects of the property on a day-to-day basis. Additionally MGM Resorts will sign a long-term lease and continue to be responsible for all operations and capital expenditures of the Bellagio, with the JV owning the property and receiving rent payments.

Acquirer BREIT has a deep history and expertise in the Las Vegas real estate market across asset classes, including office, hospitality and residential.

“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,” said Jim Murren, chief executive of MGM Resorts. “We look forward to partnering with Blackstone on this asset and believe that this transaction will create significant value for our shareholders.”

A global leader in real estate investing, Blackstone’s real estate business was founded in 1991 and has $154bn of investor capital under management. Blackstone is one of the largest property owners in the world, owning and operating assets across every major geography and sector, including logistics, multifamily and single family housing, office, hospitality and retail. Blackstone’s opportunistic funds seek to acquire undermanaged, well-located assets across the world.

Blackstone’s strategy is to invest in substantially stabilised real estate globally through regional open-ended funds focused on high-quality assets, and BREIT, a non-listed REIT, invests in US income-generating assets. BREIT also operates one of the leading global real estate debt businesses, providing comprehensive financing solutions across the capital structure and risk spectrum, including management of Blackstone Mortgage Trust.

MGM Resorts, the owner of BREIT’s acquisition, is a global entertainment company with national and international locations featuring best-in-class hotels and casinos, state-of-the-art meetings and conference spaces, live and theatrical entertainment experiences, and an extensive array of restaurant, nightlife and retail offerings. The MGM Resorts portfolio encompasses 28 unique hotel offerings including some of the most recognisable resort brands in the industry.

Serving as legal counsel to MGM Resorts is Weil, Gotshal & Manges LLP, with PJT Partners and J.P. Morgan serving as financial advisers. Citigroup Global Markets Inc. and Morgan Stanley & Co are financial advisers to BREIT, with Morgan Stanley & Co, J.P. Morgan, and Citigroup Global Markets Inc. serving as financing advisers. Simpson Thacher & Bartlett LLP are acting as legal counsel to BREIT.

The sale of the Bellagio real estate is expected to close by the end of 2019, subject to customary closing conditions.

Jon Gray, president and chief operating officer at Blackstone, concluded: “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. We look forward to a long and productive partnership with this world-class company.”

Fraser Tennant