Blackstone sells The Cosmopolitan

blackstone-sells-the-cosmopolitan


MGM Resorts will take over operations at the Las Vegas Strip resort, which sits between two of the company’s properties, the CityCenter and the Bellagio.

Blackstone Real Estate h a s announced an agreement to sell The Cosmopolitan for $5.65bn. The private equity firm’s Blackstone Real Estate Partners VII is selling the hotel and casino’s real estate assets to the Cherng Family Trust, Stonepeak Partners and Blackstone Real Estate Income Trust for more than $4bn.

Meanwhile, MGM Resorts International will take over operations at the Cosmopolitan. Once the deal closes, MGM will enter into a 30-year lease agreement with three 10- year renewal options. The casino operator will pay $200m in rent per year, which will increase by two percent annually for the first 15 years.

“This transaction underscores Blackstone’s ability to acquire and transform large, complex assets. As owners of The Cosmopolitan, we invested strategic capital and brought our expertise and experience in the lodging space to create the most dynamic destination on the Las Vegas Strip,” Tyler Henritze, head of acquisitions Americas for Blackstone Real Estate, said in a statement. “The management team and employees at The Cosmopolitan, led by CEO Bill McBeath, flawlessly executed an ambitious business plan, including navigating a challenging period for the entire industry, to position the property for such a high level of success.”

The transaction is expected to close in early 2022, subject to regulatory approvals and other closing conditions.

MGM CEO Bill Hornbuckle lauded the company’s acquisition of the Cosmopolitan’s resort operations as “an incredible opportunity to expand our customer base”.

“The Cosmopolitan brand is recognized around the world for its unique customer base and high-quality product and experiences, making it an ideal fit with our portfolio and furthering our vision to be the world’s premier gaming entertainment company,” Hornbuckle said.

The Las Vegas Strip property is located next to MGM’s other resort operations, including the Bellagio, the Aria, Park MGM and the MGM Grand.

Brian Egger, senior gaming industry analyst at Bloomberg Intelligence, characterised the sale as “a smart deal at a fair price”. “The Cosmopolitan, which sits between MGM’s CityCenter and Bellagio, advances the company’s strategy to string together contiguous Strip-fronting luxury resorts,” he said.

Since acquiring The Cosmopolitan in 2014, Blackstone has introduced significant operational changes and has invested over $500m into the property, renovating nearly 3,000 guest rooms, building 67 new rooms and suites, enhancing the food and beverage offering and improving gaming amenities and common areas. The Cosmopolitan has a 110,000 sq ft casino, 26 restaurants and bars, a 3,200-seat theatre, a nightclub and 243,00 sq ft of meeting space.