MGM Resorts selling Bellagio for leaseback
MGM Resorts International is selling its Bellagio Hotel and Casino resort and leasing the property back to give the casino operator a cash injection of over $4 billion.
The Las Vegas-based MGM announced on Tuesday that it had reached a deal with New York finance firm The Blackstone Group which calls for their joint venture to acquire the Bellagio property and lease it back to MGM for an “initial” annual rent of $245 million.
MGM will then receive a 5 percent ownership stake in the joint venture and approximately $4.2 billion in cash, the company said. The deal is expected to close sometime this quarter.
Blackstone is led by billionaire Stephen Schwarzman, who is a regular purchaser of Las Vegas property. The purchase of the Bellagio makes Blackstone the landlord of a high-profile resort which is one of MGM’s most profitable on the Las Vegas strip.
MGM announced the deal only minutes after it said that it was selling its Circus Circus resort for $825 million to Treasure Island owner Phil Ruffin. The MGM said that the two transactions would let it “build a fortress balance sheet and return capital to shareholders.”
The Bellagio features over 3,900 rooms and 155,000 square feet of casino space which draws plenty of tourists to its outdoor fountain shows and indoor floral displays.
Spokeswoman confirms no changes will be made to the Bellagio
MGM spokeswoman Debra DeShong said that for guests, there would be “no changes” to the Bellagio from the deal, according to the Australian Financial Review.
“MGM Resorts will continue to operate the resort as we do for other properties that have been sold into real estate trusts,” she said in an email, reported by the Las Vegas Review-Journal. “Guests and employees should see no difference in their experience as a result of this transaction.”
These two resorts were the top two generators of operating income among MGM’s Las Vegas properties last year, generating nearly $710 million combined, according to a securities filing.
Blackstone stated in a press release Tuesday that MGM Resorts will continue to operate the Bellagio and “be responsible for all aspects of the property on a day-to-day basis,” including capital expenditures.
Blackstone President and Chief Operating Officer Jon Gray said in the statement, in part, that company officials are “big believers in MGM Resorts and Las Vegas.”
Over the past several years in Southern Nevada, Blackstone has acquired cheap properties in bulk and turned them into rentals. Acquisitions in Las Vegas for Blackstone include the Hughes Center office park, The Cosmopolitan of Las Vegas and the World Market Center furniture-showroom hall. It has also spent hundreds of millions of dollars buying local apartment complexes.
The Bellagio, situated at Las Vegas Boulevard and Flamingo Road, was developed by Steve Wynn and opened in 1998.
MGM Resorts International acquired the resort in 2000 as part of its $4.4 billion buyout of Wynn’s company Mirage Resorts.
MGM Resorts International is a global entertainment company with national and international locations that feature high end hotels and casinos, state-of-the-art conference spaces, live and theatrical entertainment experiences along with premium restaurant, nightlife and retail offerings.
The MGM Resorts portfolio extends beyond Las Vegas into the remainder of the United States and internationally. The company recently acquired the operations of the Empire City Casino in New York and Hard Rock Rock casino in Ohio, which was subsequently rebranded as MGM Northfield Park. In 2018, MGM Resorts opened the MGM Springfield in Massachusetts, MGM COTAI in Macau along with the first Bellagio-branded hotel in Shanghai.
The Bellagio in Las Vegas is a centrepiece resort within the Las Vegas strip and premium destination for all visitors.
