LAS VEGAS — MGM Resorts International (NYSE: MGM) has agreed to sell its Bellagio and Circus Circus resort assets on the Las Vegas Strip in two different transactions for a combined price of approximately $5 billion.
Blackstone Real Estate Income Trust (BREIT) will acquire Bellagio in a $4.25 billion sale-leaseback deal. As part of the transaction, BREIT and MGM will form a joint venture ownership agreement, with BREIT owning 95 percent. MGM will continue to lease, manage and operate the property, with an initial annual rent of $245 million.
MGM also agreed to sell its Circus Circus Las Vegas resort to an affiliate of Treasure Island Hotel and Casino owner Phil Ruffin for $825 million. Both sales are expected to close by the end of 2019.
“We will use the proceeds from [these transactions] to build a fortress balance sheet and return capital to shareholders,” says Jim Murren, chairman and CEO of MGM Resorts International. “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.”
The sale-leaseback deal comes nine months after MGM formed a committee to evaluate its real estate portfolio in light of the company’s long-term $15 billion debt.
Bellagio is one of the Las Vegas Strip’s most iconic properties, featuring dancing fountains outside and a 14,000-square-foot floral playground inside. The property was featured in the blockbuster 2001 heist film Ocean’s 11. The resort features 3,933 guest rooms and 155,000 square feet of casino space.
MGM acquired Circus Circus Las Vegas in connection with its acquisition of Mandalay Resort Group in 2005. Originally opened in 1968, the property has 2,300 employees and is home to a 5-acre indoor amusement park, 10-acre RV park and 37-acre festival grounds. The resort features 3,764 guest rooms and 95,000 square feet of casino space.
In the Bellagio transaction, Weil, Gotshal & Manges LLP served as legal counsel to MGM Resorts and PJT Advisors and J.P. Morgan served as financial advisors to MGM Resorts. Citigroup Global Markets Inc. and Morgan Stanley & Co served as financial advisors to BREIT. Morgan Stanley & Co, J.P. Morgan, and Citigroup Global Markets Inc. served as BREIT’s financing advisors. Simpson Thacher & Bartlett LLP served as legal counsel to BREIT.
In the Circus Circus transaction, Morgan Stanley & Co. LLC and CBRE are serving as financial advisors to MGM Resorts.
— Alex Patton