MGM Resorts International announced it will sell Circus Circus Las Vegas and Bellagio Las Vegas. In the same announcement, made Tuesday, October 16, the company also said there is a deal with Blackstone Real Estate Income Trust to lease back Bellagio.
The news comes just shy of two weeks after it was announced that MGM reached a settlement with the victims of the October 2017 Las Vegas Harvest music festival mass shooting from MGM’s Mandalay Bay property. MGM will pay up to $800 million.
“These transactions enhance the company's strategic and operational flexibility and reinforce its commitment to targeted new growth opportunities, including securing and investing in one of the integrated resort licenses in Japan and becoming an industry leader in sports betting in the U.S,” said Jim Murren, MGM Resorts International CEO and chairman, in a statement.
MGM will sell Circus Circus Las Vegas to an affiliate of Treasure Island owner Phil Ruffin for $825 million.
For the Bellagio deal, Blackstone Real Estate Income Trust and MGM will form a joint venture to acquire MGM’s Bellagio real estate and lease it back to an MGM Resorts subsidiary. The deal values the property at $4.25 billion and MGM resorts unit will pay $245 million in annual rent.
MGM Resorts will get a 5% ownership stake in the joint venture and about $4.2 billion in cash.
In a statement, Paul Salem, chairman of MGM’s real estate committee of the company’s board of directors said, “We want to make sure—if and when the next recession comes—we have a fortress balance sheet.”
Salem added that the Bellagio deal, which MGM valued at roughly 17.3 times rent, was “one of the highest ever paid for a [Las Vegas] strip asset.
The hospitality and entertainment company’s other holdings include MGM Grand in Las Vegas; MGM Springfield in Massachusetts; its 50% stake in CityCenter, a mixed-used development in Las Vegas; and 68% economic ownership in MGM Growth Properties.
According to multiple news sites, both deals are expected to close by the end of the year.
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