Deal values properties at $4.6 billion
MGM Resorts has announced that it is selling its MGM Grand and Mandalay Bay properties on the Las Vegas Strip in a deal worth $4.6 billion.
The properties are being sold to a joint venture that includes New York-based Blackstone Group. The real estate giant will be partnering with an MGM Resorts affiliate as part of this deal.
sold to a joint venture that includes New York-based Blackstone Group
It was in October that Blackstone purchased the Bellagio Hotel and Casino from MGM Resorts in a deal worth $4.25bn. The company is clearly betting big on the future of these gaming facilities in Las Vegas.
Blackstone’s growing portfolio
Blackstone is purchasing the properties in a joint venture with MGM Growth Properties REIT, a real investment trust that was created in 2016, which also happens to be a subsidiary of MGM Resorts.
MGM Resorts will remain the chief operator of these hotels. This includes operating the roughly 300,000 square foot casino floor that is now part of this new partnership’s portfolio in Las Vegas.
As part of this joint venture, the Blackstone Group controls 49.9%, with MGM Growth Properties holding a 50.1% majority stake.
Blackstone CEO Jon Gray commented on the company’s aggressive approach to acquisitions and investments, stating: “This transaction reflects our continuing strong conviction in Las Vegas.”
MGM Resorts slimming down
MGM Resorts has been strategically moving away from large holdings of gaming real estate in Las Vegas. It sold the Bellagio Hotel and Casino in October. The Circus Circus is also being sold to Phil Ruffin, the owner of the Treasure Island Casino.
With all of these various deals put together, MGM Resorts will gain approximately $8.2bn for selling these assets.
Jim Murren, chairman and chief executive of MGM Resorts, spoke about this latest deal. He said it is
a key milestone in executing the company’s previously communicated asset-light strategy.”
He went on to speak about how the company’s balance sheet has now been tightened up. MGM Resorts now has strong levels of free cashflow. This will give strategic flexibility to the company going forward, helping it to deliver value for shareholders.