Las Vegas’ CityCenter, at one time the most expensive private development in U.S. history, will be owned by investment firm Blackstone after MGM Resorts consolidated its ownership of the property.
The project was developed by MGM and Infinity World, a unit of Dubai World. It took five years and 9,000 worker to build, and opened in December 2009. The project includes the Aria casino, the Veer residential towers, and the non-casino hotels, Vdara and the Waldorf Astoria (originally the Mandarin). The project was also to include the Harmon tower, but construction defects forced a halt to the building and an eventual demolition. Blackstone is only buying Aria and Vdara, however.
Last week, MGM Resort announced it would buy Infinity World’s 50 percent interest for $2.12 billion and then sell the complex to Blackstone for $3.89 billion. The original price tag for CityCenter was $8.5 billion. The deal values the property at $5.8 billion, including debt of $1.5 billion.
The sale continues MGM’s “asset light” strategy where the company has sold most of its real estate to real estate investment trusts (REITs) but continues to operate them on a leaseback arrangement.
“We expect to continue executing on our asset-light strategy and utilizing the proceeds from our real estate transactions to secure new growth opportunities,” MGM Resorts CEO Bill Hornbuckle said.
“Uniting all of CityCenter under MGM Resorts’ corporate structure and strategy will allow us to consolidate financial results, build on efforts to strengthen our operating model and guest experience and further our vision of becoming the world’s premier gaming entertainment company,” he continued.
Blackstone will lease back the Aria casino and Vdara to MGM for an initial annual rent of $215 million. The deal is set to close in the third quarter of this year.
