MGM Resorts’ deal to purchase the operations of the Cosmopolitan (“Cosmo”) from prominent developer Blackstone Group for $1.625 billion has officially closed. According to the company, MGM will now offer access to their rewards program in the new location, in efforts to continue its strong performance and attract a larger, younger audience.
The deal is only one component of a larger, $5.65 billion transaction in which the property itself is being purchased by investors Stonepeak, Blackstone Real Estate and Cherng Family Trust.
Per the agreement, MGM will sign a 30-year lease broken down into three ten-year periods. Rent will start at $200 million annually, and will increase by two percent per year in the first 15 years and then by either two percent or the Consumer Price Index for the next 15, depending on which is greater.
The Cosmo, which opened in 2010, comes complete with over 3,000 rooms, 100,000+ square feet of gaming space and the 3,200-seat Chelsea theater.
MGM CEO Bill Hornbuckle said in a statement that the acquisition is “a big moment for our company and for the Las Vegas Strip.”
“The Cosmopolitan of Las Vegas has already established itself as one of the Strip’s premier resorts with an iconic brand, well-curated experiences, and a loyal customer base,” said Hornbuckle. “We look forward to offering their customers access to the extensive and exclusive amenities and other benefits only MGM Resorts can provide.”
Seen by many as a more eccentric option on the Strip in terms of both dining and entertainment, MGM hopes that the addition of the Cosmo to their existing portfolio will help improve the company’s popularity with visitors aged 30 or younger, which is a demographic that the company has not historically excelled with.
“MGM has some properties that do attract that kind of demographic, but none of them seem to draw that younger crowd as well as the Cosmopolitan has,” casino consultant Josh Swissman told CDC Gaming Reports. “For that reason, it’s a great feather in MGM’s cap.”
According to earnings reports, the Cosmo generated over $1 billion in total revenue in the 12-month period from March 2021 to March 2022.
Despite selling the Cosmo’s operational component, Blackstone Group will retain 80 percent ownership of the casino’s real estate components via their real estate investment trust (REIT).
Not only that, but Blackstone representatives indicated that the recent sale does not mean that the company would not consider new gaming ventures in the future.
At a recent employee appreciation event held at the Cosmo, Tyler Henritze, head of strategic investments for Blackstone Real Estate, said that he “remains very bullish on Las Vegas and on gaming.”
“We’ve had an incredible run with the Cosmopolitan here,” said Henritze. “If we had another opportunity to be back in Vegas operating an asset like this with people like this, we’d love that.”