A Wall Street analyst says there will be plenty of buyers should Blackstone Group follow through on selling half of its interest in the land on which the Bellagio sits on the Las Vegas Strip.
Blackstone, a New York-based real estate investment trust, bought the real estate in 2019. Bellagio operator MGM Resorts International retained a 5 percent stake, and pays Blackstone $245 million in annual rent.
Last month, Bloomberg reported that the REIT is interested in selling half its interest in the Bellagio land.
John DeCree, an analyst with CBRE Equity Research, recently sent out a note to investors that the “Bellagio sale could be positive for valuation signal. Given the iconic nature of Bellagio, we suspect any real estate investor with the financial means would likely be at the table, even for a minority stake in the asset,” DeCree said, according to CDC Gaming Reports. “In fact, a partial sale could appeal to a broader set of interested buyers, considering the potential price tag.
“In spite of tight credit markets and higher rates, casino real estate cap rates have held up very well. We wouldn’t be surprised if Bellagio commanded a similar cap rate to 2019, given the strong fundamental backdrop in Las Vegas and the solid performance at Bellagio specifically, the significant replacement value of Strip resorts, and the scarcity of assets of this nature.”
In an interview last week with CDC Gaming Reports, DeCree said it’s clear “that the Las Vegas assets are performing well” and in terms of the Blackstone portfolio, a Bellagio sale is “a great way to raise a lot of money” to handle investor redemptions.
“That’s several billion dollars in revenue and the (Bloomberg) article says they would sell part of it, which makes sense,” DeCree said. “It’s a quick way to raise money. There are probably a lot of interested parties, but only a handful of buyers that are equipped to get that done quickly for Blackstone. VICI comes to mind, since they transacted with Blackstone not that long ago on the MGM Grand and Mandalay Bay. They seem like a logical counterpart to this trade, but we’ve had a flurry of Las Vegas Strip real estate transactions over the last couple of years, probably because of the REITs and what they’ve done for the space.”
