Investment giant Blackstone Group announced on an earnings call that its recent sale of The Cosmopolitan of Las Vegas was the “most profitable single asset sale” in its history.
The $5.65 billion deal closed back in May, and while Blackstone representatives did not disclose specific details of the deal’s profits, a previous report from the Wall Street Journal indicated that the company’s total gain, including cash flow, was likely over $4 billion.
The firm still has a large portfolio in and around the Las Vegas Valley, but the sale of the Cosmo represented the end of a radical transformation for the Strip resort, which had a rocky history of foreclosure and underperformance. Before the sale was made final, Blackstone announced $5,000 bonuses for the Cosmo’s staff of nearly 5,000 employees.
However, not everyone was thrilled about the transaction—despite the hefty price tag, the deal didn’t produce any real estate transfer taxes for the state, which is an issue that Nevada Governor Steve Sisolak has advocated for in the past.
At the time of the sale, Blackstone said in a statement that it had “abided by the tax code and paid hundreds of millions of dollars in state and local taxes, while also investing in the property, securing thousands of jobs, and giving $5,000 bonuses to all employees to acknowledge their amazing contributions.”
Clark County public records show that the property deed submitted by Blackstone featured no transfer tax value or sales price. In the filings, the company cited state laws that allow property owners to avoid paying transfer tax if the property is shifted to an affiliate. The standard rate is 0.51 percent of the purchase price, which would have amounted to about $29 million, based on the $5.65 billion closing tag.
There have been nearly two dozen high-dollar transactions in the area that have used similar tactics to circumvent the tax since 2007, according to an investigation by the Las Vegas Review-Journal. The report found that buyers often purchase a company that owns the property, rather than buying the property outright, which is not illegal under state law.
Gov. Sisolak said in a June interview with the Review-Journal that he hopes the Legislature will “look at this in its entirety” during its next session in February 2023, and that the state needs to “capture the transfer tax on those sales.”
