Blackstone, the investment group that bought the Cosmopolitan of Las Vegas for $1.7 billion in 2014, has agreed to sell the property’s operations to MGM Resorts International for cash consideration of $1.625 billion. The land on which the resort sits will be sold to a partnership of Stonepeak Partners, the Cherng Family Trust and Blackstone Real Estate Investment Trust for $4 billion, making the entire transaction worth $5.62 billion.
Under the agreement, MGM will operate the 3,000-room Cosmopolitan under a 30-year lease arrangement with the REIT partnership. The contract includes three 10-year renewal options. MGM Resorts will pay an initial annual rent of $200 million, which escalates annually by 2 percent for the first 15 years and the greater of 2 percent or the consumer price index increase, capped at 3 percent, afterwards.
The sale will increase MGM’s dominance on the Las Vegas Strip, where it will operate 10 casino resorts, not counting attached specialty hotels such as the Delano at Mandalay Bay and the Nomad at Park MGM.
“We are proud to add The Cosmopolitan, a luxury resort and casino on the Las Vegas Strip, to our portfolio,” said MGM Resorts CEO & President Bill Hornbuckle in a statement. “The Cosmopolitan brand is recognized around the world for its unique customer base and high-quality product and experiences, making it an ideal fit with our portfolio and furthering our vision to be the world’s premier gaming entertainment company. We look forward to welcoming The Cosmopolitan’s guests and employees to the MGM Resorts family.”
“With over $500 million of capital invested to upgrade the property since 2014, The Cosmopolitan offers an incredible opportunity to expand our customer base and will provide greater depth of choices for our guests in Las Vegas,” said MGM Resorts CFO Jonathan Halkyard in a statement. “We believe that we can leverage MGM Resorts’ expertise, operating platform and other highly achievable synergies to continue providing best-in-class service, while driving growth for the property.”
MGM operates the properties on either side of the Cosmopolitan, Bellagio and Aria/CityCenter. The Nevada Gaming Commission last week approved MGM Resorts’ plan to buy out the partner that helped build CityCenter, Dubai World.
Commissioners unanimously approved the $2.1 billion transaction that will give Dubai World’s 50 percent stake in CityCenter to MGM. Dubai World initially contributed $5 billion in the partnership.
CityCenter is a 16.8 million-square-foot complex on 76 acres that includes Aria, the 1,500-room Vdara, the 392-room Waldorf-Astoria with 225 condominium units, the 674-unit Veer Towers condominium complex, and the 500,000-square-foot Crystals retail mall.
The deal is the latest mega-transaction involving MGM and its Strip properties. In July, Blackstone reached a deal to buy the Aria and Vdara hotels for nearly $3.9 billion from MGM Resorts and lease them back to the casino operator. Blackstone also partnered with MGM Resorts’ real estate spinoff, MGM Growth Properties, on a $4.6 billion deal early last year to acquire the MGM Grand and Mandalay Bay and lease them back to MGM Resorts.
MGM also sold off most of the operating partnership units it holds in real estate investment trust MGM Growth Properties LLC to VICI Properties Inc. via series of transactions worth more than $7 billion combined.
