Blackstone Agrees to Sell Cosmopolitan Hotel, Casino in Las Vegas to MGM for $5.6B

by Taylor Williams

LAS VEGAS — Blackstone (NYSE: BX) has entered into an agreement to sell The Cosmopolitan hotel and casino in Las Vegas to locally based hospitality and entertainment owner-operator MGM Resorts International (NYSE: MGM) for $5.6 billion.

Blackstone originally acquired The Cosmopolitan in 2014 for approximately $1.6 billion, according to The Wall Street Journal. The firm subsequently invested more than $500 million in capital improvements to renovate the property’s 3,000 existing hotel rooms; add 67 new rooms and suites; enhance and expand the food and beverage offerings; and upgrade common areas and amenity spaces.

Under the terms of the agreement, MGM will acquire the operations of The Cosmopolitan and sign a long-term net lease with a partnership between Cherng Family Trust, alternative investment firm Stonepeak Partners and Blackstone Real Estate Income Trust Inc. The deal is expected to close in early 2022.

The Journal also reported that as of Friday, Sept. 24, The Cosmopolitan’s hotel rooms had been 87 percent occupied during the current month, with an average daily room rate of $448.

The Cosmopolitan originally opened in 2010. In addition to its 3,000-plus hotel rooms, the development features a 110,000-square-foot casino; 300,000 square feet of retail and restaurant space; 150,000 square feet of meeting and event space; a 3,200-seat theater; three pools; and a 40,000-square-foot spa and fitness center.

“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,” says Tyler Henritze, head of acquisitions Americas for Blackstone.

“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,” he adds.

According to the Las Vegas Convention & Visitors Authority, the market has seen a strong rebound in visitor traffic and spending through the first seven months of 2021. In April and May, Las Vegas respectively welcomed approximately 2.5 million and 2.8 million visitors for year-over-year increases of 2,307 percent and 1,802 percent.

Total hotel occupancy rates for those two months were 65.6 and 70.9 percent, respectively. The market has since seen its occupancy numbers climb even further, registering citywide rates of 75.9 and 79.4 percent in June and July, respectively.

Deutsche Bank Securities Inc. and PJT Partners served as financial advisors to Blackstone. Simpson Thacher & Bartlett LLP served as legal counsel to the New York City-based real estate giant. Latham & Watkins LLP served as legal counsel to the Cherng Family Trust and Stonepeak Partners.

Blackstone’s stock price opened at $124.28 per share on Monday, Sept. 27, up more than 100 percent from $51.88 per share a year ago. The stock price of MGM opened at $44.67 per share this morning, up from $22.61 per share in late September 2020.

— Taylor Williams

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