New York-based private equity firm The Blackstone Group is in advanced talks to buy and lease back MGM Resorts International’s marquee properties the Bellagio and MGM Grand Las Vegas, Bloomberg reports citing unnamed sources familiar with the ongoing talks.
The two companies are yet to agree on a transaction and one may even not be reached. The terms of the potential deal are unknown at this point.
News about MGM exploring the sale of the two hotel and casino resorts separately or bundled together first emerged in July. It became known back then that the Las Vegas casino giant had formed a committee this past January that had been tasked with assessing ways in which the company could extract value from its portfolio of real estate assets.
MGM is expected to reveal the results of the review in early fall, according to information provided by the company’s CEO, Jim Murren.
Blackstone, which boasts a formidable portfolio of real estate, is the owner of The Cosmopolitan of Las Vegas on the Las Vegas Strip. It emerged late last year that Hard Rock International was in due diligence to purchase Cosmo. Back then, Blackstone said in an emailed statement to Casino News Daily that “rumors regarding the sale of The Cosmopolitan are false.”
However, those same rumors reemerged this past spring, with sources claiming that the private equity firm was working with Deutsche Bank and PJT Partners Inc. to seek potential buyers for the luxury resort.
Raising Capital for Japanese Resort
MGM is among the frontrunners in the race for up to three gaming licenses in Japan, where casino gambling became legal not long ago. The company recently reaffirmed its commitment to building a luxury integrated resort with dedicated casino space in the City of Osaka. It previously said that its Japan expansion plans included investing more than $10 billion in developing a property of this kind.
According to Bloomberg gaming analyst Brian Egger, “a Blackstone deal to buy and lease back Bellagio and MGM Grand […] could raise $6.5-$7 billion for a $10 billion resort in Osaka, Japan, where MGM will vie for a license.”
The Bellagio and MGM Grand, both located on the Strip, are two of the casino operator’s flagship properties. Together, they feature more than 10,000 hotel rooms and a combined 315,000 square feet of gaming space.
MGM could trouser up to $4 billion from the sale of the Bellagio and nearly $3 billion from selling MGM Grand, according to Bloomberg Intelligence analysts.
There has been growing interest in Las Vegas Strip properties in recent months. In addition to Blackstone and its reported appetite for MGM’s two flagship resorts, the billionaire owner of Treasure Island, Phil Ruffin, has expressed interest in buying Strip properties from Caesars Entertainment Corp.
Caesars is in the middle of a $17.3 billion merger with Eldorado Resorts and it has emerged that the company could sell some of its Strip resorts in order to be given regulatory approval to close the deal sometime next year.
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