MGM Resorts Sells Two Las Vegas Casinos for $5 Billion

  • Circus Circus Las Vegas has been acquired by a Phil Ruffin affiliate for $825m
  • The Bellagio sale will see MGM Resorts cash in around $4.2bn as part of a joint venture
  • MGM Resorts will then lease the Bellagio property for $245m annually
  • The deals follow MGM's plans to solidify its balance sheet ahead of a potential recession
panoramic night shot of the Las Vegas Strip
MGM Resorts has agreed to the $5bn sale of its Circus Circus and Bellagio casino properties on the Las Vegas Strip. [Image: Shutterstock.com]

Two significant casino transactions

MGM Resorts has announced it is selling the Circus Circus on the Las Vegas Strip for $825m and the Bellagio for about $4.2bn.

The buyer of the Circus Circus is an affiliate of Phil Ruffin, who owns the Treasure Island. The affiliate will be paying $662.5m in cash and $162.5m through a note due in 2024. This is not the first dealing Ruffin has had with MGM. In December 2008, he bought the Treasure Island from the same company for $775m. 

MGM Resorts is forming a joint venture with the Blackstone Real Estate Income Trust for the Bellagio deal. This sees the new partnership acquiring the Bellagio real estate and then leasing it to MGM Resorts for $245m annually. The deal puts a $4.25bn value on the property.

MGM Resorts will just have a 5% stake in the joint venture. It will receive approximately $4.2bn in cash following the finalization of the deal. 

Reasoning behind the sales

The chairman of the real estate committee in MGM Resorts, Paul Salem, spoke about the reasoning behind these two sales. He said:

We want to make sure — if and when the next recession comes — we have a fortress balance sheet.”

According to Salem, the deal for the Bellagio was one of the biggest for an asset on the Las Vegas Strip. He says MGM may now look at other opportunities to liquidate its holdings, as people will now realize how valuable Las Vegas assets can be. 

Some of the company’s major holdings include the MGM Springfield, the MGM Grand, a 68% stake in MGM Growth Properties, and a 50% CityCenter stake.

Expectations are that the Las Vegas Strip casino deals will be finalized by the end of 2019. MGM Resorts has been looking at ways to monetize its property holdings through a recently created committee. A number of other properties on The Strip already have a similar lease-back arrangement in place.

Future outlook for MGM Resorts

MGM Resorts Chairman and CEO Jim Murren said the company can now return some capital to its shareholders, as well as strengthen its presence in the US sports betting market.

It also wants to focus on obtaining one of three resort casino licenses up for grabs in Japan, according to Murren. He said: “These transactions enhance the company’s strategic and operational flexibility and reinforce its commitment to targeted new growth opportunities.”